The recent Supreme Court judgment in Guest and another v Guest [2022] marks the latest in a long line of farming disputes dealing with the expectations of claimants involved in farming businesses.
Summary
The case centred on the Claimant Andrew Guest, who had worked on his parents’ farm for over 30 years in the expectation that one day he would inherit the family farming business.
After a breakdown in relations with his parents in 2014, Andrew was excluded from their Wills. At this point his parents offered him a new farming business tenancy but this was rejected by Andrew.
The breakdown of the farming partnership resulted in Andrew starting legal proceedings in 2017 seeking a declaration of entitlement to a beneficial interest in the family farm. Andrew’s claim was brought under doctrine of proprietary estoppel.
This is a complex area of law with numerous cases redefining the Courts approach to remedies. In essence, the doctrine of proprietary estoppel operates to stop a person reneging on a promise that they have made, for instance, where a farmer promises their children the family farm on the parent’s death.
A claimant must establish the following three elements to successfully claim an award from the Court:-
1. A representation, promise, assurance or other encouragement by the defendant giving rise to an expectation by the claimant that he/she would have a certain proprietary interest.
2. Reliance by the claimant upon that expectation.
3. Detriment to the claimant in consequence of the reasonable reliance
The concept of detrimental reliance is particularly important in the context of family owned farming businesses which often operate with assurances to the next generation as to the inheritance of the farm business. Notable cases in relation to proportionality of a claimant’s expectation include Davies v Davies [2016], where the award of monetary sum was made to represent the detriment the Claimant had suffered. By contrast, the remedy granted by the Judge in Gee v Gee & Anor [2018] was based on the Claimant’s expectation rather than the detriment that they had suffered.
Amongst others, this line of cases has demonstrated that the Court will consider the impact of promises which are relied on by a claimant and ultimately influence their life decisions.
The Case
The foundation of Andrew’s case stemmed from his claim that he had been promised by his parents that he would inherit a sizeable part of the family farm. He successfully argued that his decades working on the farm on a low wage meant that he had suffered a detrimental reliance on their promise.
In the High Court, the Judge at first instance found that there was an assurance in his favour. The remedy ordered by the Judge was a substantial lump sum payment to be made by his parents based on the value of the farm and farm business. This would however, require a sale of the farm in the parent’s lifetime.
Hence Andrew’s parents appealed to the Court of Appeal. They argued that any remedy awarded to Andrew should have been based on his detrimental reliance during his working life or alternatively based on the extent that he had contributed to the farm’s value , as opposed to what Andrew’s expectation was. Their appeal was dismissed by the Court of Appeal.
The case ultimately reached the Supreme Court on further appeal by the parents. The Supreme Court considered whether Andrew’s expectation was an appropriate starting point when considering what an appropriate remedy should be in this case.
The remedy ordered by Lord Briggs in October 2022 departed in some ways from that of the Judge at first instance and, it was decided that Andrew should receive either an immediate reduced lump sum payment, taking into account accelerated receipt of the benefit by the Claimant in the parent’s lifetime, or alternatively, subject to a life interest for the parents, an award of the family farm being placed into a trust for him.
This was a significant legal outcome and the case is a sad, but not uncommon, example of the emotional and financial distress caused generally by a lack of proper estate and business succession planning and the absence of any legally binding written agreement.
It will be interesting to see how the Court’s deal with remedies in similar cases in future in light of the comprehensive and extensive guidance in the judgement in this case.