March 6, 2018High Court awards £1m in inheritance claim

Inheritance claims - dairy farm

In a recent decision regarding an inheritance dispute, the High Court has awarded over £1 million to a daughter who spent her life working on the family farm in the expectation of one day inheriting it.

The farm belonged to her parents Jane and Frank, with the dispute arising following Frank’s death in April 2014. Frank and Jane held the farm as ‘beneficial joint tenants’ which meant that on Frank’s death, Jane was the sole owner of the farm.

The farm itself was purchased in 1961 and initially was run as a partnership between Frank and his two brothers; but subsequently it was transferred to Frank and Jane and from then on, it was run as a partnership between the couple.

The property incorporated various assets: the business, the farm house where Jane lived at the time the claim was made and 104 acres of land at Mudford which was bought in 1989. The total value of the business and all the land and buildings including the farm house was around £2.5 million.

The daughter, Lucy, had three older siblings: Emily (known as Emma), Andrew and Sarah.

Lucy claimed that she was entitled either to the whole farm or such lesser share of it as the Court should see fit. She submitted a claim (i) on the basis of ‘proprietary estoppel’ and additionally (ii) a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

Although the two claims were started separately, they proceeded together and were managed together. The case was heard by the Honorable Mr Justice Birss.

What is ‘proprietary estoppel’?

The doctrine of proprietary estoppel is used by the Courts to achieve a fair outcome where:

  1. Person A promises something to Person B;
  2. Person B relies on that promise;
  3. To the detriment of Person B.

All three elements must exist for the claim to succeed, and the circumstances must be such that it would be unconscionable not to make an award. However, note that even if the Court agrees that relief is appropriate, Person B will not necessarily get everything that was promised by Person A. The Court will take into account the degree of detriment that Person B has suffered and their award will be proportionate to that. You can find out more about proprietary estoppel claims here.

An example of a proprietary estoppel claim:

Person A promises Person B, “If you quit your job and care for me until my death, this house will be yours”. Relying on that promise, Person B quits their job and cares for Person A until their death. It then transpires that Person A has left their house to someone else in their Will. Person B would have a claim on the basis of ‘proprietary estoppel’.

What is an Inheritance (Provision for Family and Dependants) Act 1975 claim?

The Inheritance (Provision for Family and Dependants) Act 1975 gives certain people the right to claim against a Deceased Person’s estate if the Deceased did not provide for them. Only certain people may bring a claim – you can find out more about Inheritance Act claims here.

An example of an Inheritance Act claim:

For 5 years prior to his death, a father makes a regular monthly payment of £400 to his only daughter who is widowed and has 4 children to care for. On his death, a Will is discovered which the father made 10 years ago. The Will makes no provision for the daughter and instead leaves the entire estate to charity. The daughter can bring a claim under the Inheritance Act because the Will does not make ‘reasonable financial provision’ for her.

Lucy’s account of events

Returning to the High Court decision, Lucy claimed that she had spent her life working on the farm because of her father’s promise that she would take it over on his retirement. She began work on the farm when she left school and continued to do so whilst raising a family. However, Lucy left the farm in 2013 following a fight with her sister Sarah. The work at the farm was continued by Sarah, her husband William and their 19 year old son James.

Jane’s account of events

Lucy’s mother Jane argued that she had never assured or promised Lucy that Lucy would take over the farm. She also denied that Frank had made such assurance but argued that if he did, Jane was not aware of it and therefore could not be bound by it. Even if the alleged assurances were proved, Jane claimed they were not sufficient for a proprietary estoppel claim. She argued that the amount of work Lucy did on the farm was exaggerated and further, that Lucy had minimalised the work carried out by other employees and her siblings in her account of events.

Jane also pointed out that Lucy had received benefits whilst she was working such as accommodation at the farm, before she moved out to live with her partner; and childcare from Jane when her children were born. Additionally Jane argued that even if the claim was successful out, it is submitted that Lucy should not receive the entire farm – and at best a modest cash payment would be appropriate.

Was a promise or assurance made?

On the point of whether one co-owner of land could bind another with their promises, Birss J cited the 2015 case of Fielden v Christie-Miller in which Sir William Blackburne at para 26 notes one owner must have the authority to bind the other. Any assurance made by Frank to Lucy needed to have the authority of Jane as a coowner of the farm for it to be binding.

Birss J accepted that some of the statements that Lucy relied on were made by Jane but those were not frequent. However, in any event, the evidence showed that Jane knew that statements were being made by Frank throughout, what those statements meant and the fact that Lucy was taking them seriously.

A key piece of evidence was a letter from Andrew Robinson, a Chartered Surveyor who gave  advice to Frank and Jane about passing on the farm in 2008. The letter was written based on instructions provided to Mr Robinson by Frank and Jane. This included the following:

“In the longer term, you made it clear that it was your desire that Lucy should end up being the owner of the overall farming unit including the farm and live and dead farming stock. This would only happen on the latter of your two deaths although agricultural property relief should ensure that no inheritance tax will be payable. In doing this you do wish to look after Andrew, Sarah and Emma. As far as Andrew is concerned we considered the possibility of erecting a barn on part of the off lying land, in due course obtaining planning permission for an agricultural occupancy dwelling and then passing the barn and agricultural occupancy building plot perhaps to your son Andrew during your lifetime. On the later of your two deaths, I think we then also felt that you would wish to ensure that Sarah and Emma received a bequest and we felt that this could be done by leaving them a given amount of money within your will with these sums then being raised against the value of the farm; Lucy therefore effectively having to take out a loan.”

This section of the letter firmly supports key aspects of Lucy’s case. It showed that Frank and Jane were expressly contemplating that the farm was to pass to Lucy. The Judge therefore concluded that to the extent that any assurances were made when Jane was not present, they were made with her authority.

The representations that were made to Lucy used different words each time, and were not always explicit; but the Judge found that they fitted together and amounted to a coherent promise to Lucy that she would inherit a viable dairy farm.

However, the Judge noted that Lucy did not and could not have expected that no provision of any kind would be made for her siblings, including in particular some land for Andrew.

To what extent did others work on the farm?

Birss J noted the work carried out by others on the farm. As noted above, Lucy, had three older siblings: Emily (known as Emma), Andrew and Sarah.

The farm was managed by Frank with Jane helping out with calves, cows, sheep, pigs and chickens together with household chores for the benefit of the family. Lucy’s sister Emma worked on the farm whilst she was at school and helped out from time to time. Lucy’s brother Andrew worked on the farm and was paid a wage, although it was not his sole occupation. His interest was machinery and Birss J accepted that he had contributed to the farm substantially in that way.

Sarah also worked on the farm and although she attended college, she continued to help out. From 1988 the amount of work she did increased although she also did other jobs. She was paid a wage for her work.

The farm also had employees which were mentioned, some of whom helped Lucy with her duties.

Did Lucy rely on the assurance to her detriment?

It was noted that Lucy was paid a wage for her work and additionally received free board and lodging for some of the time. Further, Lucy had use of use Jane’s car, had free keep of eight beef cattle a year and had some other benefits.

However, expert evidence suggested that Lucy was paid less than the sum which an agricultural worker doing her work (including accounting for the value of the board and lodging) would ordinarily be paid. Further, Lucy also claimed she worked long hours and only had 5 weeks holiday in more than thirty years. The judge accepted this, so far as ‘holiday’ meant extended vacation, as oppose to days off here and there (which were also taken).

The judge therefore found Lucy’s work on the farm could properly be characterised as a relevant ‘detriment’ for the purpose of a proprietary estoppel claim. The acts of detriment include the long hours, low pay and few holidays Lucy took. The judge noted that the fact family members do often work very long hours on a family dairy farm and take very few holidays does not mean this sort of work is not a detriment to the person doing the work. A person employed in an arm’s length transaction would simply not have put in the hours Lucy worked nor accepted the pay she was paid nor accepted the number of holidays she took.

Further he noted that Lucy had committed herself not just to dairy farming as a career but to dairy farming at the family farm. It never occurred Lucy to leave and go elsewhere, largely because of the assurances that had been made. She relied on those assurances and that is what kept her at the family farm. The judge therefore found that, in addition to the terms on which Lucy was employed (hours, pay and holidays) the detrimental reliance also included the commitment to farming at the family farm rather than going elsewhere.

The benefits she received – which included childcare from Jane, the use of Jane’s car, beef cattle upkeep and various other benefits – were difficult to quantify and it was not possible to say whether these would cancel out the difference between what Lucy was paid and what the typical remuneration for someone doing that work would have been. The Judge concluded that to put numbers on all these things and attempt to add them up would “fall into the familiar trap of spurious precision”.

The Judge concluded that Lucy’s case of proprietary estoppel was established and that Lucy was therefore entitled to something in the interests of equity/justice.

How much should Lucy receive?

On the question of how much Lucy should receive, the judge found that Lucy was being asked to work on the dairy farm until Frank was no longer capable and Lucy has kept her side of the bargain. Therefore, the Judge reasoned that unless there were strong reasons why not, Lucy ought to receive compensation based on what she was promised, subject to any relevant deductions. What she was promised was a viable dairy farm. However, as noted the estate comprised of more than this: it also included land at Mudford which was not essential to that diary operation. He therefore concluded the most Lucy should receive was Woodrow itself with the farmhouse but without Mudford, or the equivalent in money terms.

Having then taken into account all the factors, the judge concluded Lucy should receive a cash payment of the value of the Woodrow farmland and farm buildings (excluding Mudford and the farmhouse). Based on the February 2017 valuation this equated to a cash payment of £1,170,000 (subject to any difference in the actual value of the property when the judgement was made). The reason that the farm itself was not to be transferred is that the judge felt it would not be fair to require the farmhouse to be split from the rest of the holding; nor to force Jane to leave her home. Although the judge recognised that it might not be possible to raise the money due without selling all the property, by making the award he allowed for the possibility.

Inheritance Act claim

The Judge found it unnecessary to consider the Inheritance Act claim, given that the claim of proprietary estoppel was proven.

Resources and citations

Habberfield v Habberfield [2018] EWHC 317 (Ch) (23 February 2018)

Fielden v Christie-Miller [2015] EWHC 87 (Ch)

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