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Trouble on the family farm – Proprietary estoppel and the case of Gee v Gee

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In yet another high-profile proprietary estoppel case, the High Court has found in favour of a Claimant who alleged his father promised him the family farm but later turned around and gave it to the Claimant’s brother. This case comes right on the heels of the very similar Habberfield decision I previously looked at. You can read the blog here.

Both cases featured the application of the equitable claim known as “proprietary estoppel”, which can occur where a person acts in a certain way, to their own detriment, based on a promise made by somebody else.

The Facts

The Claimant was John Michael Gee, who is now in his sixties, who asserted that his father had promised him the lion’s share of the £8.5 million farm known as Denman’s Farm, in Oxfordshire. Like in Habberfield, the claimant son stated his father had made this promise to him several times over the course of some thirty years, and that because of these promises he stayed and worked on the farm for low wages.

The Claimant maintained that he and his father got on well and had worked on the farm together for many years. The Claimant’s brother, Robert, worked as a builder and property developer. The Claimant’s case is that his father only recently turned against him, and that this was in part due to the influence of Robert and Robert’s wife. The Defendants – the father and Robert – argued that the Claimant had always been a poor farmer, that the father never promised him the farm, and that it was in the best interests of the farm for Robert to manage it.

As is usual in this type of case, the Court considered whether there were any specific examples of the promises his father made him. The Claimant remembered six such occasions, which were described by the Judge as follows (referring to the Claimant as “JM” and to the father as “JR”):

“i) In 1988 when JM was about 30, JM told his father than he wanted to farm on his own account and take on JR's role and ownership of the farm and JR assured him that he would one day.

ii) In about 1993 at a shoot on the farm of a neighbour Geoff Barnett, there was a discussion between various farmers about the inheritance of their farms and JR agreed, within JM's hearing, that such farms should pass to the son who stayed on the farm and worked and farmed there.

iii) In about 1995 JM and JR conducted the farm's bank manager on a tour. JM commented to the bank manager that he hoped to pass the farm on to his own children. JR did not object or contradict this thus, contends JM, confirming JM's view that he was to succeed to the company and the farm in order to be able to pass it on to his own children.

iv) In about 1998 JR told JM that the Burnt House land was JM's land and that in due course he could use it as collateral to buy out Robert's and [a third sibling’s] shares in the farm land. JR also told JM that JM could farm that land on his own account.

v) In about 2008 JM objected to JR's plan to build a new dwelling on gardens of a farm cottage at 24 High Street, Cumnor and JM told JR that it would be better built at the rear. JR replied that JM could build a dwelling there using company collateral "when it's yours".

vi) In August 2009 JR told JM that he had a discretion as to how to spend the company's income which JM understood to mean that JM now controlled the business.”

The Court went on to hear many witnesses including a local priest, a former farm staff member, and a smattering of family and friends. The Claimant’s mother gave evidence in his favour. She said that the relationship between the Claimant and his father got noticeably worse in 2014 and that prior to that time she and her husband had always intended to give the lion’s share of the farm to the Claimant.

The Court seems to have been particularly impressed by the evidence given by the Claimant’s mother. The Judge noted that it “cannot have been an easy thing” to give evidence “against her husband JR and her other son Robert”. He went on to find that “[i]n all probability the true source of JR’s opinion about JM’s competence today has been the criticisms of his brother aired to his father by Robert.”

The Law on Proprietary Estoppel

The Court held that the fundamental legal principles of proprietary estoppel were not in dispute. It is not simply a question of finding a fair outcome. The claimant must satisfy the legal test and show on the balance of probability that (1) a representation or assurance was made, (2) the claimant reasonably relied on this representation, and (3) the claimant suffered a detriment due to this reliance.

In relation to the first element of the test, the Judge felt that the six examples given by the Claimant were “only a very few instances spread over a long period of time”. However, the Judge felt the additional contextual evidence was enough to satisfy him that the Claimant had been promised the lion’s share of the farm.

The Judge also felt that there was sufficient evidence that the Claimant had relied on this promise. JR “was a man of his word… not given to changing his mind at all” and it was reasonable to rely on the promise. The Judge held that the assurances made by JR were “a material consideration in JM staying on the farm, farming the family land and making his life there.”

In relation to the third prong of the test, the Claimant alleged that his detriments included (1) working for long hours for low pay and (2) giving up the chance to better himself and work elsewhere. The Judge agreed that both were detriments suffered by the Claimant.

The Court’s Decision

Like in Habberfield, the Court in Gee v Gee, [2018] EWHC 1393 (Ch), felt that the Claimant should receive compensation for more than the monetary value of the reliance loss. The quantifiable loss was approximately £180,000 but “[p]roviding compensation to JM measured in that way or gauged in some way in proportion to that figure would not satisfy the equity in this case.”

Instead, the Judge felt the remedy should be determined with reference to what had been promised to the Claimant. “The appropriate approach is to base the remedy on the expectation, not the financial value of the measurable parts of the detriment.” In this case, the Claimant was promised that he would succeed his father as the controlling shareholder of the family farming business. The Claimant also reasonably expected to have the largest share of the landholding. The Judge felt that the appropriate remedy was for the Claimant to have 52% of the shares and 46% of the land .

Interestingly, the Defendants submitted that it was not open to the Court to make the award it was proposing to make. They argued that this would involve unwinding a number of property transfers and that the Court did not have the jurisdiction to do so. The Court agreed that the parties should make further submissions on whether the proposed approach was feasible as a matter of law. The manner in which the Court decides to proceed could have a significant influence on future proprietary estoppel cases.

If you have been promised a property and did not receive it, or if you are seeking to defend a proprietary estoppel claim, please contact Nicholas Choiniere at 0113 336 3349 or by email at nicholas.choiniere@clarionsolicitors.com.

 

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