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Proprietary Estoppel: Court rules in favour of the son of a farming property and business
In the case of Guest v Guest, the High Court has recently upheld a son’s (A) claim for proprietary estoppel against his parents in relation to a family farm.
The background to this case brings about some very important factors which were taken into consideration when the Court ruled in favour of A’s claim. Firstly, unbeknown to A at the time, both of his parents made wills in 1981 which left the farm property and business to A and his brother (B).
From a young age, A worked 60 hour weeks at the farm in return for a very low pay until 2015. In light of this, two farming partnerships were set up in 2012, one run by A and the other by B.
In 2014, A fell out with his father due to a disagreement with regards to the preservation of the value of the farm. Subsequently, both of his parents removed him from their will save for a clause stating that he may occupy a farm cottage.
A received a notice in 2017 evicting him from the farm cottage. At this point, A’s father removed him from his will entirely.
A was successful in his claim and the High Court awarded him a lump sum payment which was calculated from 50% of the market value of the farming business and 40% of the market value of the farming land and property.
This case is important because not only did the Court find that A’s parents consistently led him to believe that he would succeed the farming business, it also used its discretion in awarding the remedy. A did not expect to inherit the farm until his parents’ death but the Court awarded the lump sum now to remedy the detriment he suffered. In consequence, it is likely that the farm will need to be sold to realise the funds. This will have an adverse effect on tax and wealth planning.
It is fair to say that this case demonstrates the importance for families to be open with each other in relation to the succession of businesses, particularly in an agricultural and farming context.