Don't make promises you can't keep...

Promises that are relied upon to their detriment by those to whom they are made are enforceable by the courts. In one case that demonstrated this point, a daughter of a farmer who worked long hours for low pay on her family farm, after her father assured her that she would have her reward in time, was awarded a seven-figure stake in the business.


Don't make promises you can't keep...The claimant, in her 50s, began working on the farm after leaving school and was instrumental in establishing its dairy herd. She milked the cows twice daily and said that she worked 60 to 70 hours a week for meagre wages. After she married, her husband also helped out on the farm. Following a dispute in 2013 the claimant had in fact left the farm. Her father then died in 2014 and bequeathed the whole of his interest in the property to the defendant mother.

The claim was brought based on proprietary estoppel for the whole farm, valued at £2.5 million. Proprietary estoppel requires 'a representation or assurance made to the claimant, reliance on it by the claimant, and detriment to the claimant as a result of his (reasonable) reliance'.

In upholding her claim to a share of the farm a judge found that her father, and sometimes her mother, had on several occasions assured her that her efforts would not be in vain. Their statements to her were not idle or casual remarks and she had relied upon them. By maintaining her commitment to the farm for over 30 years, she had kept her side of the bargain.

Although the judge rejected arguments that she had been promised the entirety of the farm, he found that she was entitled to a lump sum equivalent to the value of certain land and farm buildings. Those assets had recently been valued at £1.17 million!

The judge concluded “The appropriate compensation is a cash payment rather than a transfer of property for two reasons. I am not satisfied it would be fair to require the farmhouse to be split from the rest of the holding. Nor am I satisfied that I should make an order for transfer which inevitably forces Jane to leave her home. It may not be possible to raise the money due without selling all the property but at least by making the award in this way it allows for the possibility.”

So it seems that proprietary estoppel does not give the certainty of a contract, but in cases such as this, where the detriment is significant and continued for many years, a claimant can come away with close to what they were promised.

This case also highlights that a valid Will should be drawn up as early as possible and reviewed upon significant changes to the family circumstances and business structure. It is also important to formulate a succession plan for the business.

Case: Habberfield v Habberfield [2018] EWHC 317

Further Reading:

Buying a Company: Do You Really Know What You Are Taking On?

A reminder of the importance of due diligence!

Why you should take legal advice when considering assigning a lease or exercising a break clause

 
If you believe you might have a potential claim similar to this scenario then bear in mind that there are strict time limits so please contact Justin Sadler at Barrett and Co as soon as possible for an assessment of your case. Justin offers an initial one hour confidential fixed fee meeting for £95 including VAT please call 01189589711 or e-mail [email protected]

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