Land – Proprietary estoppel – Remedy – Respondent found to have equity arising by proprietary estoppel in relation to appellant father’s share in farm and partnership business on death of surviving parent – Appropriate remedy to give effect to respondent’s equity – Whether judge erring in finding that respondent established equity – Whether judge’s order making proper provision for parents during remainder of lives – Appeal allowed in part
The appellant and his brother (G) had owned and run Manor Farm in Stapleford, near Salisbury, Wiltshire, as equal partners since 1966. The appellant and his wife (the parents) occupied the farmhouse and their son (the respondent) occupied a bungalow on the farm. The respondent had worked on the farm since childhood and became an equity partner in 2003. In 2007, the parents executed mirror wills and appointed the respondent as an executor. Discretionary nil-rate band trusts were created. The parents, their children and grandchildren were potential beneficiaries. The parent beneficiaries had the greatest claim on the capital. On the death of the surviving parent, the respondent was to inherit all the appellant’s interest in the farm.
The relationship between the respondent and his parents broke down and the parents executed new wills which removed the respondent as executor and did not provide for discretionary trusts. However, there was an absolute gift of residue to the survivor of the parents and, on the second death, a specific gift to the respondent of the father’s share in the farming business and partnership assets.
The appellant subsequently served a notice purporting to dissolve the partnership. The respondent disputed its validity, arguing that the partnership was for the joint lives of himself and the survivor of his parents. The appellant’s application for a winding-up order was resisted by the respondent. He claimed that he had been promised from childhood that he would inherit the appellant’s interest in the farm, subject only to adequate provision for his mother. The promises had been made orally and repeatedly and he had relied on them to his detriment by committing himself to the farm from childhood, working for low wages and without exploring alternative careers.
The judge held that the respondent had an equity, by reason of proprietary estoppel, over the entirety of the appellant’s interest in the farm, including his interest under the partnership and the farm assets. He ordered that the respondent should take over the business and the assets be transferred into his sole name. His parents were to be granted a licence to remain in the farmhouse for as long as it met their needs and the respondent was to pay them a weekly sum during their lifetimes: [2016] EWHC 2202 (Ch).
The appellant appealed but was unable to participate in the trial because he was then suffering from Alzheimer’s disease and lacked capacity to conduct legal proceedings.
Held: The appeal was allowed in part.
(1) It was impossible for the court to interfere with the judge’s clear findings about the underlying intentions of the parents when the 2007 wills were executed. The judge heard and reviewed all the evidence and there were no grounds for saying that his conclusion was “plainly wrong” in the sense that no reasonable judge could have reached it. Nothing in the wills was incompatible with the firmly expressed underlying intention of both parents that the appellant’s share of both the farm and the business should devolve in due course on the respondent. The judge directed himself appropriately, he considered the evidence carefully and his conclusions were not open to challenge. The questions whether the assurances which the judge found the appellant to have made to the respondent were objectively intended to be acted upon, or whether the respondent should reasonably have regarded them as no more than non-binding statements of intention, were quintessentially matters of fact and evaluation for the trial judge, as were the interlocking questions of reliance and detriment.
(2) The respondent’s expectation was a future one and he must objectively have realised that his eventual inheritance would be subject to such reasonable provision as the appellant might choose to make for his wife, both before and after his death. Moreover, the assurances upon which the respondent relied envisaged that the partnership would continue until the appellant’s death or retirement, and that relations within the family would remain harmonious. However, the parties had become increasingly entrenched and the rift between the respondent and his mother had deepened. In those circumstances, the need for a clean break solution was compelling. The judge should have focused on the minimum provision required to satisfy the respondent’s equity. The respondent’s expectation had always been that he would inherit the farm on the death of the survivor of his parents, with proper provision being made for his mother in the meantime. By the time of the trial, it was clear that that was no longer a realistic scenario. The appellant’s worsening health meant that the partnership could not continue, relations within the family had irretrievably broken down, and it was clear that fresh arrangements would have to be made in light of the changed circumstances: Jennings v Rice [2002] EWCA Civ 159; [2003] 1 P & CR 8 followed.
(3) In principle, the appellant’s share in the land and the partnership assets should be transferred to the respondent. Given the appellant’s incapacity, he could not continue to farm during the remainder of his life and it made sense to bring forward the implementation of that key aspect of the overarching plan identified by the judge. On the other hand, the acceleration involved should not prejudice the interests of the parents, including the reasonable expectations of the appellant’s wife. The respondent should provide her with a lump sum to be raised in months rather than years. Tax advice would be needed on the most efficient way of raising the lump sum and of transferring the appellant’s interest in the relevant assets to the respondent. Any tax liabilities which arose had to be borne by the respondent; and he had to indemnify the appellant and his estate for any such liabilities which fell upon the appellant. An appropriate lump sum was between £1 million and £2 million. Until the lump sum had been raised and paid to the wife, and she had been rehoused, the provisions of the judge’s existing order had to remain in force, but with an increase in the weekly payment to the parents from £200 to £300. Once the clean break had been effected, the wife should be responsible for her own future health and care costs from her own capital resources. On the other hand, the respondent should continue to be responsible for the costs of the appellant’s care and comply with his other financial obligations under the judge’s order during the transitional period, without any set off, whether in respect of costs or otherwise.
Christopher Pymont QC and Nigel Thomas (instructed by Thrings LLP) appeared for the appellant; Caroline Shea QC and Ciara Fairley (instructed by Michelmores LLP) appeared for the respondents.
Eileen O’Grady, barrister
Click here to read a transcript of Moore (by his litigation friend Pamela Moore) v Moore and another
