Proprietary estoppel (pronounced “Es-TOP-l”) is, in simple terms, where a person has been promised an interest in a property (such as a farm business) and has acted to their detriment in reliance on that promise. This may have resulted in the person incurring costs, working for no money or making sacrifices (e.g. not taken up a job offer elsewhere) that they would not have done if they had not relied on the promise.
Many of the cases in law involve farmers and the passing on of farming businesses, either on retirement or by inheritance.
As an example, a case in 2018 (Habberfield v Habberfield 2018), involved a farm belonging to Frank Habberfield and his wife Jane. The brief details of the case are:
- Frank and Jane Habberfield operated the farm as a partnership, and when Frank died the farm passed by survivorship to his wife.
- The couple had 4 children, the youngest of whom Lucy had worked on the farm since childhood and her partner Stuart had also worked on the farm for a number of years. Lucy claimed that her late father had assured her that she would take over the farm when he retired.
- Jane Habberfield opposed the case on the grounds that she nor Frank had ever made any promises to Lucy.
- Evidence was produced from a surveyor’s letter recording a proposal to include Lucy in the partnership.
It was ruled that Lucy had proved her claim to a significant part of the farm – around 45% valued at around £1.2M. If Lucy had not had sufficient evidence to argue her claim, she would have been left in a very different situation.
Whilst the outcome for Lucy was favourable, the outcome for her mother was not. The legal costs, the family fall out, and no doubt the effect on both of their wellbeing could have been easily avoided if Frank had sought the appropriate advice.
It is essential that farming families take the appropriate advice about agricultural estate and inheritance tax planning and partnership agreements. AWB Charlesworth Solicitors have experts in both these areas and would be happy to provide the relevant advice.
Umberto Vietri (Partnership Agreements)
01274 352056 or email@example.com
Jenny Barron (Agricultural Estate and Inheritance Tax Planning)
01756 793333 or firstname.lastname@example.org
14 September 2023