What is estoppel?

Proprietary estoppel sounds very complex and ‘legal’.  In summary, proprietary estoppel is a concept which provides rights in land to a person (let’s call then “A”) which A was led to believe by another (“B”) that they had such rights, and it would be unjust to deprive them of those rights.

There are other types of ‘estoppel’ but where the matter involves property or land, it will always be ‘proprietary estoppel’.  In simplest terms, estoppel can be thought of as the courts enforcing a promise or holding a person to their word.

There are several elements to a claim for estoppel:

• There must be a promise or assurance that A has an interest in land or property.  This assurance must be ‘clear enough’ to establish a right in land.  It is not enough to promise someone ‘financial security’ for example, however if B told A “once I’m gone, you will get my house” that might be a clear enough assurance.

• There must be reliance on the promise or assurance.  This is often linked with the final requirements of detriment because acting to your detriment would show you had relied on the promise. However it is a distinct requirements in and of itself.  If B had told A that they would get the house, and person A had not believed it and carried on as normal, an estoppel claim would likely fail.

• Person A must act to their detriment.  Normally detriment will mean spending money, but it need not always be. For example, if in the “you’ll get the house” example above, if A then spent money repairing and maintaining the house, believing that they would one day own it, then that would likely be evidence of reliance and detriment.  However A might also be able to show detriment if, for example, they had turned down a lucrative career opportunity in another country to remain living close to the house they would one day own.

Estoppel claims are always fact dependant but for a claim to succeed all three elements must be established. 

How does this apply to farming families?

Many estoppel claims which reach the courts relate to farms and farming families.  The main reason for this is probably because farms are valuable and therefore worth incurring the cost of proceedings.

The 2016 case of Davies v Davies is a classic example of estoppel claims involving farming families.  James Davies brought a claim concerning his father, Tom’s, will.  His father had owned a farm worth in the region of £1 million.  James’ evidence was that he had dreamed of being a police officer but gave this up to work on the farm, being paid “a pittance”, and investing his own money into the business following his parents’ retirement, all on the basis that his father had assured him that he would inherit the farm. 

James said that his father often told him “one day this will all be yours”.  However when Tom died, his will actually split the farm equally between his 5 children.  James’ other four siblings had not worked on the farm.

The court found in James’ favour, deciding that Tom’s repeated statement that “one day this will all be yours” was sufficient to amount to an assurance, and that James had relied on this to his detriment by failing to pursue his dream career, working for low wages, and investing his own money in the business.

There are many cases like Davies, and of course some where the claimant failed in their claims. They arise commonly in farming families where the children or other relatives of farmers accept low wages or forgo other career opportunities in the belief that they are helping to ensure the success of a business that they will one day own.

Avoiding estoppel claims

As with any court claim, estoppel claims are best avoided where possible.  Court proceedings are incredibly time consuming and expensive.  The impact on family dynamics also cannot be underestimated - do we think James Davies’ siblings are speaking to him now he’s inherited their parents’ entire estate and left them with a chunky legal bill? Probably not.

There are a number of steps which can be taken to avoid claims, either during your lifetime or following your death:

1. Take steps to ensure that any promises made or fulfilled.  If you have promised one of your children that they will inherit your business or property, make sure that is reflected in your will.

2. Tell your children (or others affected) what your will says. A will is a private document and you don’t need to tell anyone what it says or does.  However, we often find that the hurt of finding out that someone has been excluded from a loved one’s will after their death can be a major cause of disputes. It may be tempting to avoid the fallout during your lifetime, but often the hurt and grief cause parties to become entrenched in their positions which can make claims very difficult to resolve.

3. If you are farming in partnership, whether with your family or otherwise, having a written partnership agreement can ensure parties know where they stand, which can prevent claims or even defeat any claims which are brought.

4. If you are employing family or friends, you should ensure that they are properly remunerated and employed.  You should also put in place contracts and pensions.

5. Take advice on the extent of your estate.  A solicitor can help you to deal with your assets and plan accordingly. They can discuss the best ways to ensure your family are taken care of and discuss potential claims which may be brought – all whilst helping to ensure that your assets or will are structured in the most efficient manner for inheritance tax.

What to do if you have not been given what you were promised?

If you have been left in a position where you have understood you would be receiving or already had an interest in land, but have not received it, it is important to take legal advice at the earliest opportunity.  Particularly when dealing with wills, there are a number of claims which can be explored and the earliest these are raised, the better.  When dealing with estates, it is always better to raise any issues before the assets have been distributed (which may also mean that they have been sold) and control lost.

Should you have queries about 1975 Act claims, please contact Toby Walker by email or on 01494 893512.