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Inheritance and farming businesses: promises, promises

There have been several recent High Court cases which have been concerned with deciding whether legally binding promises or assurances have been made by farming parents to their children. In both cases, the provisions in the Last Will and Testament of the Deceased parent were overridden by the verbal promises made by them during their lifetime.

The facts of these cases are strikingly similar and highly relatable to scores of family run farming businesses: the parents have several children, one of whom works on the farm from a young age at a low wage in return, they say, for the promise that one day the farm will be theirs. On the death of one or both of the parents and usually after some fallout in the family, it transpires that the informal arrangement is not reflected in the parent’s Last Will and the child who has spent their adult life working on the farm is faced with it being sold from under them to pay their siblings an equal inheritance.

Essentially the legal question to be determined is whether there has been a promise or assurance made by one or both of the parents, which has been relied upon to the detriment of the receiver of the promise. Usually, the detriment is that the adult child has worked for little or no wage.

Interestingly, the success of both cases discussed below hinged on the discovery of highly relevant yet historical documentary evidence, no doubt sought out by the solicitors representing the successful parties.

The arrangements in farming families are often informal yet complicated and it is imperative that all parties seek specialist legal advice, to ensure that proper investigations by solicitors who know what to look for are made and their interests are properly protected.

Case Focus

In Habberfield v Habberfield [2018] EWHC 317, Frank and his wife Jane ran their farming business as a partnership, but their youngest child of four Lucy had worked on the farm since childhood. When Frank died, he left everything to his wife, but Lucy claimed he had promised her that she would take over the farm. Jane denied the fact that Frank had ever made such a promise and argued that even if he had, it could not legally bind her. She also alleged that Lucy had exaggerated her involvement in the business and denied her claim entirely.

Lucy was able to produce a letter from a surveyor who was employed by her parents in 2008, which recorded a proposal for a new partnership between Lucy and her parents which also indicated that Lucy would take over the business after her parents’ deaths.

Based on the evidence, the High Court found that Lucy had proved her claim for ‘proprietary estoppel’, albeit he determined that she was entitled to 45% of the business only. The judge was reluctant to split the business up so instead he ordered Jane to pay Lucy the equivalent value – £1.7 million.

In Thompson v Thompson [2018] EWHC 1338, Norman and Doreen had run their farm in partnership with their son Gilbert, who had worked on the farm since adolescence. He had only ever drawn a meagre wage.

Their other four children had moved away from the farm. After Norman’s death and a fall-out between Doreen and Gilbert, Doreen denied entirely that Gilbert had ever been promised that the farm would be his after the death of his parents. However, documents from solicitors’ files revealed that both Norman and Doreen had always indicated that Gilbert was to ultimately receive the farm.

Doreen’s position (and her recollection it seemed) had been affected by events that took place once Gilbert and his new romantic partner moved back to the farm to live.

Gilbert’s claim was successful. The High Court found that a promise had been made to Gilbert and he had relied upon that promise to his detriment by working on the farm throughout his adulthood.