The Difficulties of Proprietary Estoppel Claims

G later retired and sold his share to S at an undervalue. Thereafter, R took on a reduced role and left S to run the business. Following a breakdown in relations between R and S, R amended his will to prevent S from inheriting the freehold farm property.

S pursued a claim based on proprietary estoppel in relation to R’s half share of the farm and the partnership business.

The High Court allowed S’s claim and held that S was entitled to R’s interest in the farm, the partnership and the farm assets. The court held that the overarching plan had been that S would inherit the whole farm and business. This was a “clear understanding and intention” and underpinned all the decisions made in relation to the farm, in particular G’s retirement.

In an attempt to recreate the arrangements which would have occurred had the dispute never arisen, the High Court ordered that R and his wife could live at the farmhouse as long as they lived, free of charge, and that all of the property’s upkeep and their care needs should be financed by S.

R appealed the High Court’s decision on the basis that an immediate transfer of the farm and assets was beyond what was necessary to satisfy S’s claim. R had clearly intended for his wife, P, to have access to capital and income after his death and inherit the non-farming assets. The Court of Appeal agreed.

The Court of Appeal held that the High Court’s decision failed to ensure that R and P had proper provision for the rest of their lives, or that a clean break could be achieved between the parties.

The Court of Appeal remitted the case for a further hearing on how the equity should be satisfied.

James v James [2018] EWHC 43 (Ch)

CJ (deceased) had built up a farming and haulage business, including several parcels of land. His son, S, had worked for the business for several years, living rent-free in a property (Chequers) belonging to CJ. S had become a partner in the business, and when the partnership was dissolved

Claims of this nature could be avoided by succession planning and putting formal written agreements in place with family members and employees so that no party is in doubt as to their respective interests.

However, it is evident from the recent case law that the high level of judicial discretion inherent in proprietary estoppel claims is capable of producing variable, and consequently, unpredictable, results.

Accordingly, prospective claimants and defendants are strongly advised to seek expert legal advice as soon as a claim is anticipated.

About The Author

Mandeep Chima is an associate solicitor in Shoosmiths Disputed Wills and Trusts team specialising in these claims.

https://www.shoosmiths.co.uk/ expertise/services/other-legalservices/disputed-wills-and-trusts Northamptonshire Law Society

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