Proprietary Estoppel in an Inheritance Dispute
Proprietary Estoppel is a legal term that can mean very little to anyone who isn’t a lawyer. In an inheritance dispute, proprietary estoppel can offer a small but practical ray of hope when a will doesn’t reflect a promise that was made to someone by the testator while he or she was alive.
What is Proprietary Estoppel?
Proprietary estoppel is a principle used in the courts to allow individuals to gain certain rights over property that legally belongs to someone else. This method is used when the legal owner of property enforces his or her strict rights in a way that is unfair to someone with an interest in that property. The principle of proprietary estoppel is based on a promise by the owner, upon which someone else has acted to their detriment.
On example of proprietary estoppel at work in an inheritance dispute is the case of Gillett v Holt [2001] Ch 210. In this inheritance dispute, the legal owner of a farm made promises that Mr Gillett would inherit his property, and Mr Holt acted to his detriment by working on the farm for decades and turning down other employment due to Mr Holt’s repeated promises that Mr Gillett would inherit the farm. The court decided that it would be unconscionable for Mr Holt to break that promise and ruled in Mr Gillett’s favour.
Another proprietary estoppel case involving a farm, is the recent High Court case, Habberfield v Habberfield [2018] EWHC 317 (Ch). Lucy Habberfield successfully claimed over £1 million after her father died, leaving his farm to his wife.
The inheritance dispute in Habberfield v Habberfield
For over 30 years, Lucy Habberfield worked on Woodrow Farm, which belonged to her father Frank. When Lucy left school at 16 years old, her father introduced cows onto the farm because Lucy had agreed to look after the dairy farm operation. Mr Justice Birss, the judge in the case, commented,
“Based on the evidence of a number of witnesses before me, it is plain that the work done by family members on a family run dairy farm involves an intense degree of commitment and effort.”
Frank Habberfield died in 2014, leaving the farm and all of his property to his wife Jane Habberfield, Lucy’s mother, in a will that was written in 1998. Lucy made a claim of proprietary estoppel on the basis that she had worked on the farm because of her father’s repeated promises that she would run the farm upon his retirement, and eventually inherit the property. Lucy’s mother Jane contested this view, and claimed that no such promises had been made.
The Judgement
As well as evidence from witnesses describing Lucy’s position on the farm, Lucy’s case relied heavily on a letter written in 2008 from a chartered surveyor to Jane and Frank. The letter advised the couple to establish a limited partnership on the basis that their plan was to leave the farm property to Lucy when they both died. The letter was considered to be evidence of Frank’s intention that Lucy should inherit the farm eventually, and supported her claims that Frank had repeatedly promised that she would inherit the farm.
Proprietary estoppel requires the claimant to have acted to their detriment on the basis of promises made. Lucy and her husband raised their children on the farm, and Lucy claimed she had worked long hours and holidays for low pay, based on the promises her father made that she would inherit a dairy farm at Woodrow. The judge found that Lucy had kept her end of the bargain by working on the farm, and therefore it would be unfair not to enforce the promise.
Remedy
Jane, her son and grandson were still living in the farmhouse, so the judge said it would be unfair to split the property, or to remove Jane from her home. Instead, the judge decided to award the cash value of Woodrow Farm including the dairy farm buildings: a total award to Lucy of £1,170,000.
Conclusions
It is common for proprietary estoppel cases to involve farmland. It is therefore important for people who own a farm, or another form of family business, to establish with transparency, a clear plan for what happens to the business when the person in charge dies or retires. The case of Habberfield v Habberfield serves to illustrate the importance of making up-to-date wills, especially for family business owners, to avoid broken promises.
If you are considering an inheritance dispute, it is always worth talking to a solicitor who specialises in contentious probate and will disputes. We offer a free claim assessment to take a look at your inheritance dispute and provide initial advice. If you decide to proceed, we can usually act on a no win no fee basis too.