Safety First: Three tips to avoid legal action
Keep it in the family: Inheritance disputes and farming families
For many farming families, passing the business down through the generations is a key priority, secured via legally binding documents. However, where this succession relies on a promise, a failure to keep this promise can result in a claim against either an individual or the estate.
These ‘inheritance’ cases, known as ‘proprietary estoppel claims’, have become increasingly prevalent in farming families, possibly because of the facts which must be established in order to prove a proprietary estoppel claim.
Whilst there is no definitive definition, there are three distinct elements, namely:
- A representation or assurance is made, such as ‘the farm will be yours one day’;
- Reliance is then (reasonably) placed on it, giving rise to an expectation about inheritance, and;
- The person to whom the assurance is made suffers a detriment as a consequence, such as working the long hours farm work demands, possibly for limited pay, and over the course of many years.
It’s easy to see why proprietary estoppel cases arise in farming families; how should you approach succession planning when so often the responsibility of the farm may be assumed by only one child or other siblings have chosen alternative life options? How do you balance treating each child equally with safeguarding the future of the farm, when one or more of the children involved may want to sell the land in order to realise their inheritance? What if a family feud has prompted a parent to ‘disinherit’ a child? Estate planning in these circumstances is rarely straightforward; something which the courts have had to grapple with.
In April 2018 the case of Gee -v- Gee concerned an Oxfordshire farm which had been passed down the generations of the family since the mid 1920’s. In 2014 the patriarch, John Richard Gee, fell out with his son, John Michael Gee, the only one of his children who had worked the farm his entire working life, his other son having had an alternative career before returning to the farm later in life and his daughter having married a farmer and running a different farm close by.
Upon their disagreement, John Richard transferred his land and shareholding to his other son, Robert, effectively cutting John Michael off. John Michael then brought a claim based upon the doctrine of proprietary estoppel.
Over the course of five days, the court heard evidence purporting that John Michael had relied on his father’s representations that he would inherit the farm and that this was much to his detriment, working long hours for low wages and forgoing opportunities to better himself and work elsewhere. John Richard denied making these representations and contended that John Michael was a bad farmer and Robert was best placed to manage the farm properly.
The court accepted John Michael’s evidence and decided that his claim should succeed. The judge thought that it would be unconscionable for John Richard to go back on assurances made to John Michael and wanted Robert to transfer the farm land and the shares back to his father, and for them to then be transferred to John Michael.
Whilst no two cases are ever identical, and these inheritance claims are always fact specific and never without risk, the Gee decision serves as a reminder that estate planning in farming families can have a unique perspective. Proprietary estoppel in particular can be especially complex and specialist legal advice should sought at an early stage.
This article was first published in the July 2019 edition of South East Farmer.
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