Farming Proprietary estoppel: Spencer v Spencer

Many farmers work on their parents’ farms on the assumption that they will one day inherit the same and be able to leave legacies to their own children. Although promises may be made, they are not always followed through to an individual’s final will and this can be detrimental for those who have relied on such assurances.

Facts of the case

In the recent case of Spencer v Spencer, the High Court considered a farming proprietary estoppel claim. A father had promised his son that he would inherit the family farm of around 405 acres on his death, if he worked on the farm with his father. The son relied on this statement, and worked on the farm for 40 years, but his father changed his will shortly before his death, leaving the farm to a discretionary trust with other beneficiaries.

Consideration by the High Court

The High Court identified a series of key factors which have been determined in decisions handed down in previous cases of this type – known more widely as proprietary estoppel. For a proprietary estoppel claim to be successful, there needs to be an assurance, reliance and detriment in that:

• There must be an assurance by the person making the promise, which must be reasonably understood and unambiguous. In this case, the judge accepted the son’s account of his father’s promise for him to inherit the farm, even though the father had made some general assurances. The assurance must have been a sufficient inducement for the conduct which was detrimental. It does not however have to be the sole factor. In this case, it was accepted that the son had arranged his working life based on the assurances that he would inherit the farm.
• The conduct of the individual relying on the promise must be detrimental to them if the promise is not kept. The court held that an individual giving up other options for a large part of their working life was a sufficient detriment, as you cannot put a monetary value on this. The son had relied on the assurances to his detriment by not pursuing other opportunities and staying on the farm despite his difficult relationship with his father. The son had “…positioned his working life in significant part on the basis of the assurances that he will receive the farm. It is impossible now to unpick what he might have done differently with his life over 40 years if there had never been such assurances.“
• Finally, the court looked at the equity of the situation to determine whether the detriment for the son outweighed the consequences of enforcing the assurance against the father , who made the promise. The court held that “the appropriate remedy has to be determined by a court of equity having regard to all the circumstances at the time at which it is called upon to satisfy the equity.” Part of the farm known as “New Quarry” had been granted planning permission for mineral extraction after the father’s death. This increased the value of New Quarry and the court could not ignore this, even though the permission had been obtained two years after the father’s death.

The court held that the provisional remedy would be to transfer the farmland to the son, excluding the New Quarry. The New Quarry was excluded because it would represent a windfall to the son which was not in line with the son’s expectation of inheriting the farmland before his father’s death.  However, the son would be entitled to the agricultural value of the New Quarry so that he could acquire new fields to replace the New Quarry fields if he wished to do so.

The case demonstrates the power of proprietary estoppel and is a reminder to have a clear succession plan in place which is communicated within the family.