6th August 2018 ❘

Farming proprietary estoppel claims and how to avoid them

Farming proprietary estoppel claims and how to avoid them

Farming proprietary estoppel claims and how to avoid them…

Two recent cases, Gee v Gee and another [2018] EWHC 1393 (Ch) (11 June 2018) and Thompson v Thompson [2018] EWHC 1338 (Ch) (1 June 2018) demonstrate the increase in the number of farming proprietary estoppel claims reaching the Courts and highlight the importance of succession planning in agricultural businesses to avoid this.

What is Proprietary Estoppel?

A successful proprietary estoppel claim involves the following:

  • An assurance of sufficient clarity;
  • Reliance by the claimant on that assurance; and
  • Detriment to the person making the claim in consequence of his reasonable reliance on the assurance.

The ultimate test is whether it would be “unconscionable” for the assurance to be repudiated.

Recent Case Law

The High Court in the Thompson case emphasised the importance of succession planning. The claimant’s parents faced the common quandary of wanting to treat their children equally, yet passing the farm, unbroken, to one child.

The case also underlines the importance of professionals taking careful file notes of family meetings. The claimant’s case was supported strongly by the contemporaneous documentary evidence.

How to Avoid Claims of Proprietary Estoppel

Whilst the recent case law indicates that more proprietary estoppel claimants are successful in their claims, the personal and monetary costs of such action should not be underestimated.

These claims can be avoided with proper succession planning and taking the right professional advice. Succession planning involves proper consideration of your assets, business structures, what succession planning is required for the business and formalising this with the correct documents.

In the absence of successful succession planning, the parties involved in such claims are able to take the right professional advice to resolve the dispute at an early stage to reach a compromise without incurring the further damage to pocket and relationships associated with court action.

Burnetts have a specialist agribusiness team able to help with all of these issues, from succession planning, considering tax and business structures, to resolving disputes including proprietary estoppel. If you have any queries or would like to discuss any of the issues mentioned above, please contact Head of Agribusiness, Joanne McKenzie on 01228 552222 or email Joanne at jmc@burnetts.co.uk.