Proprietary promise

A proprietary estoppel claim is based on one person promising another that one day they will be given property, and the person to whom the promise is given then relies on it to their detriment. Proprietary estoppel claims sadly do arise in farming families and it’s not uncommon to be asked to advise on the issue.

The classic example in farming families is where a parent tells their child that “one day the farm will be yours” and the child then works on the farm for most of their life for limited financial reward. Most importantly, they often give up other opportunities in the expectation that one day they will inherit the farm. However, in some cases the parent(s) give the farm to someone else, either during their lifetime or in their will upon death.

The Court of Appeal’s recent decision in the case Winter v Winter is an important example of proprietary estoppel claims in farming families. 

The facts and initial decision

Richard Winter was one of three brothers who worked in his parents’ multi-million pound strawberry farming business in Somerset. Due to a disagreement about business finances, Richard’s father amended his will so that when he died in 2017, he left his share in the business to just one of the brothers, Philip. Richard then brought a proprietary estoppel claim against his father’s estate, arguing that he should be entitled to a third of his father’s interest in the business. Richard’s claim was that his father had promised him that he would inherit one-third of his father’s share in the business, and that as a result of this, Richard decided to put aside his ambition to join the Royal Marines and work in the family business.

At the trial, the High Court accepted Richard’s proprietary estoppel claim and ordered that he should be given a share in the business worth approximately £1m.

The appeal

Philip then appealed the case to the Court of Appeal, arguing that Richard had not actually suffered any detriment (one of the three key elements of a proprietary estoppel claim).

Philip argued that if Richard had joined the Royal Marines, rather than working for the family business, he would have in fact been worse off because working for the family business had made Richard a millionaire, and far wealthier than he would have been if he had worked in the military.

Consequently, while Richard may have suffered some non-financial detriment by not following his dream career, that had to be weighed against the significant financial benefit he had received from being part of the family business. Therefore, they argued that Richard had in fact received a net benefit rather than a net detriment.

On 21 June 2024, the Court of Appeal upheld Richard’s claim. The court decided that the trial judge was entitled to conclude that Richard’s decision to commit to the family business was a detriment that outweighed the financial benefits that derived from that course of conduct.

The court also decided that, more broadly, in a case where a claimant has devoted their entire working life in reliance on a promise, the claimant does not necessarily need to show that, but for their reliance on that promise, they would otherwise have taken a specific alternative course of conduct that would have been more beneficial to them. The court concluded by stating: “To succeed in a proprietary estoppel claim, a claimant needs to show sufficiently substantial net detriment of whatever kind. Where, however, a claimant has made a life-changing choice and over many years undertaken work in reliance on an assurance, the court will probably be prepared to treat loss of opportunity to lead a different life as itself detrimental without requiring the claimant to prove, or itself trying to determine, quite what the claimant would have done and with what consequences. The fact that the claimant ‘deprived [himself] of the opportunity of trying to better [himself] in other ways’ … will itself be taken to amount to detriment; the court will not be inclined to attempt the (probably unrealistic) exercise of ‘recreat[ing] an alternative life … without the assurances’.” 

Impact of the case

This is potentially a very important decision for future proprietary estoppel claims that are made in the context of farming businesses.

Many of these cases revolve around a child returning to work on the family farm after being promised by their parents that they will inherit the land and business. Often the child does so before they have had the chance to pursue a career elsewhere.

The practical problem faced by many claimants in this situation is this: how can they prove they have suffered a net detriment from returning to the farm when they cannot evidence how successful they would have been, and how much they would have earned, in an alternative career?

The Court of Appeal’s decision is likely to significantly mitigate that particular issue, as claimants in this position may now be able to argue that this in itself amounts to a net detriment.

This may have the effect of opening the door to more proprietary estoppel claims, highlighting the importance of careful succession planning and facilitating clear, open and honest communication between family members.