Proprietary Estoppel – Relying On The Assurances Of Others

Kevin Lynch, Partner in the Contentious Probate department at The Wilkes Partnership examines the recent case of Habberfield -v- Habberfield [2018] EWHC 317 (Ch) and how a proprietary estoppel heavily influenced the outcome of the case.

A proprietary estoppel operates where one party has been induced to act on the basis of a proposition made by another in circumstances where that other party has subsequently sought to rely on that proposition to their detriment. Should that party prove that they have reasonably relied on such assurances (and suffered a detriment) then an equity may have arisen in that party’s favour. Where it is established that an equity has arisen/been established, the party that made those assurances will be bound by them.

In such cases, the burden of proof rests on the Claimant. The Claimant must show the following elements that are key to proving its case:-

• Party A is given clear assurances by Party B that they will acquire a right over property;
• Party A reasonably relies on the assurances of Party B;
• Party A acts to their detriment as a result of the assurances made by Party B;
• It would be unconscionable for Party B to go back on those assurances given to Party A.

Habberfield -v- Habberfield [2018] EWHC 317 (Ch)

Facts:-

Frank Habberfield (deceased) and his wife Jane Habberfield owned a 220 acre farm, (Woodrow farm) which was worth around £2.5 million. Their daughter, Lucy, worked full time on the farm from 1983-2013.

The couple had four children, their youngest, Lucy, worked at the farm full time from when she left school. Over the years, Lucy worked for long hours, low wages and had few holidays. She also lived at the farm until 1998, until she moved to a house nearby with her partner, Stuart, who also worked at the farm full time from 2007. Lucy’s other three siblings worked only part time at the farm and helped with some of the more administrative duties.

In 2008, Lucy refused an offer from her parents to enter a new limited partnership to run the farm. Lucy left the farm in 2013, which closed down in 2015.

The Estoppel:-

Over the years, Frank (and sometimes Jane) had made various representations to Lucy that she would take over the farm when he was unable to continue to do so. Lucy was told that she would benefit in the future. Further, in 2007, Lucy, Stuart and her parents met with their account to discuss how the farm could be transferred to her in the future and inheritance tax issues were discussed.

It was Lucy’s case that in reliance on the promises that she would take over the farm resulted in a her suffering a detriment being that she worked long hours on low pay and with few holidays over a 30 year period.

The Decision:-

The High Court’s decision was based on Lucy’s time working at the farm for 30 years and the commitment she had shown to the farm.

• The representations over the years were (although not always explicit) together, a coherent promise that Lucy would inherit the farm;
• Lucy’s detrimental reliance included the long hours, low pay, limited holidays and her commitment to the farm;
• Lucy kept her side of the bargain and was compensated on the basis of the promises and not just her reliance losses as that would not have been equitable.
• Lucy’s refusal to form the new limited partnership with her parents in 2008 (which did not give Lucy the control she was promised) did not entitle Jane or Frank to go back on the representations;
• Frank’s assurances bound his wife Jane, even though she was not so overt/explicit in her representations.

The High Court therefore held that Lucy’s proprietary estoppel claim succeeded and ordered her mother to pay £1,170,000, which was equivalent to the value of the farm land and farm buildings.

Kevin Comments:-

This case shows another example of equity ‘stepping in’ at the right time. Lucy had worked for 30 years to her detriment and her family had tried to waive the promises made at the last moment. The representations made by her parents were not simply statements made about what they were going to do/plans for the future. They were assurances that specified that Lucy would receive something in the future for the work she was doing at the time. Lucy relied on those promises to her detriment and, as a result, gave rise to an equity in her favour.

This case is a reminder that succession planning is not easy and great care should always been taken when doing so. Open conversations would need to be had with legal advisers (keeping all family members informed) together with well drafted Wills to ensure that every family member understands their position, and why in order to negate potential challenges and difficulties in the future.

The Contentious Probate Team at The Wilkes Partnership advises executors and beneficiaries faced with an uncertain or ambiguous Will.  If you wish to discuss any aspect of Will drafting or interpretation issues please get in touch with Kevin Lynch on 0121 233 4333 or via email on [email protected].