By Nicola Laver
In the contentious probate arena, 2018 is fast making its mark for court rulings on the equitable doctrine of proprietary estoppel, with five or so cases by June alone. Ten years ago such claims were comparatively rare.
This increasing trend for aggrieved claimants to rely on the doctrine of proprietary estoppel to stake a claim in property reflects a greater confidence in taking proceedings, and the court’s increasing willingness to take a wider, common sense approach to claims against estates.
By relying on proprietary estoppel, an individual - who may not otherwise be entitled to an asset under a Will or intestacy, or under the Inheritance (Provision for Family and Dependants) Act 1975, could nevertheless be legally entitled to an estate asset.
What is Proprietary Estoppel?
Proprietary estoppel operates to give an individual a proprietary interest in property. The four-part test for a successful proprietary estoppel claim was set out by the House of Lords in 2009 . Each part must be satisfied. There must have been:
- a representation or assurance made to the claimant
- reliance on it by the claimant
- detriment to the claimant resulting from their reasonable reliance on the representation or assurance, and
- it would be unconscionable for the defendant to renege on the assurance
So how have the courts been approaching recent claims? While January’s judgment in James v James is particularly noteworthy for its clarification of what testamentary capacity means in light of the definition of ‘mental capacity’ under the Mental Capacity Act (see our article in the Spring edition of Entitlement) – the claimant had also relied on proprietary estoppel in his claim to the family farm.
Unfortunately for him, his claim failed: it was not enough simply for him to believe he would inherit the farm. The court found nothing in his evidence of a promise or assurance by his late father, either in word or conduct, concerning the farm. Nor could he show reliance on a promise to his detriment. Though he was a hard worker, he had been properly paid for his work on the farm – with some substantial bonuses to boot - and had enjoyed working there and did not want to leave. Nevertheless, this did not amount to a proprietary interest in the farm.
In February 2018 came the ruling in Habberfield v Habberfield in which the claimant was successful in her proprietary estoppel claim. She had worked on her parents’ farm since she was 16 but had, some years earlier, rejected a partnership proposal. On her father’s death, her mother inherited the farm by right of survivorship.
The High Court accepted the claimant’s evidence that her father had given her assurances she would take over the farm on his death, and that she would later receive the freehold to the farm. Furthermore, she had relied on this to her “significantly longlasting” detriment - working at very little pay and foregoing any other career and lifestyle.
Though she was successful, her rejection of the reasonable partnership proposal was taken into account in calculating the quantifiable reliance loss.
Fast forward to June, and two further High Court rulings were handed down – both in the claimant’s favour. In Thompson v Thompson, the deceased’s son successfully relied on proprietary estoppel. The only son of five children, he had relied on his parents’ representations, assurances and promises that he would inherit the farm. He thus worked on the farm at a low wage, with no life outside of the farm. His sisters had all left the farm over the years.
The claimant’s mother denied any such assurances and representations had been made to him. However, the written evidence contradicted her. This included contemporaneous attendance notes of meetings with solicitors which clearly stated that she and the deceased always wanted the farm to go to the claimant – partly as he had worked hard on the farm with very little return, no promises had been made to any other family, and it was vital that he have a completely free hand to manage and run the farm. The judges also preferred the claimant’s honest and reliable oral evidence, which was consistent with the written evidence.
Just a week after Thompson came the ruling in Gee v Gee. The farm, in this case, had been in the family since 1924. The claimant son had worked on the farm throughout his adult life - from the 1970s until 2016. Brother Robert had studied agriculture for a year on leaving school, but he was a builder and property developer until 2012. Two years later, their father (who has not yet died) transferred the farm to Robert who continued to manage the farm.
The claimant relied on proprietary estoppel citing his father’s repeated assurances (specifying at least six occasions) that he would inherit the lion’s share of the farm, and he relied on those representations to his detriment - devoting his working life to the farm and working long hours for low wages. The judge preferred his evidence to that of the defendants – including his elderly father whose evidence denying making any such representations began to unravel to the point of becoming contradictory.
The judge ruled that it was reasonable for the claimant to have relied on two of the specific representations made, and this was sufficient for his claim to succeed. He also noted that other family members knew for many years that he would succeed his father – though this on its own is insufficient to establish proprietary estoppel.
The common feature to these cases is, of course, that they all involve farms, reflecting the continued inter-generational management and transfer of many farms, and the succession risks involved.
Further proprietary estoppel cases will undoubtedly arise, but what’s noteworthy is that none has yet reached the Court of Appeal. Whether the appeal judges may one day take a different approach remains to be seen (and clarity on the appropriate remedies would certainly be welcomed).
What does this mean for practitioners?
Firstly, strong and clear evidence is necessary to establish a proprietary estoppel claim. Wherever there is a potential claim in proprietary estoppel, unequivocal evidence must be gathered to satisfy each strand of the test – otherwise, the claim will fail.
Secondly, the court will look at all the evidence, i.e. the whole picture, before reaching its conclusion. A person’s belief, however genuinely held, will not be anywhere near enough.
Thirdly, the importance of documenting promises, assurances, representations and agreements concerning property in writing cannot be underestimated. Relying on familial bonds of trust, particularly in family businesses, can prove costly. Relying on faded recollections of conversations dating back many years ago can be difficult without supporting written evidence.
This blog is featured in the Summer-Autumn Edition of the quarterly news digest, Entitlement. Download your free copy of Entitlement for more informative articles and interesting case studies.