The Court of Appeal (CoA) was faced with a case of proprietary estoppel and detrimental reliance of the sons on the assurance that they would inherit equal shares.
Background:
The claimants, Richard and Adrian Winter, and the first defendant, Philip Winter, are the sons of Albert and Brenda Winter. The parents married in 1964. The same year the father bought "Bower Farm" which was transferred into joint names in 1988. The couple lived in a bungalow on the farm and carried on a market garden business from it.
All three sons helped on the farm and after leaving school, worked there full time. Richard and Adrian both left the business for short periods. In 1988, a Partnership – Team Green Growers – was established to run the market garden business with all the family members having equal shares.
In 2000, Albert and Brenda declared that they held Bower Farm in trust for the Partnership. A year later, Brenda died leaving a will pursuant to which her interest in the Partnership passed to her sons. Richard, Philip and Adrian thus came to have 26.66% shares. Their father retained a 20% share but he exercised effective control over the affairs of the Partnership and then the Company.
The father wanted each son to have his own farm and the Partnership acquired two more farms. One of them became Adrian’s home and the other Philip’s, while a new home was constructed at the Partnership's expense on Bower Farm in 2011 and became Richard's home.
Until 2009, all sons were paid low wages. In 2014, the relationship between the father and the claimants deteriorated. Due to financial difficulties, Richard took over management in 2014. From 2015 the claimants were receiving earnings of over £100,000 with significant pension contributions, while the father and Philip received smaller salaries and dividends but did not contribute much to the business.
In 2017, Albert died and left a gift of £20,000 in his will to his then-partner and the residue of his estate, including his interests in the Partnership and the Company, to Philip. The High Court Judge found the parents had led their sons to believe that, if they committed to working in the market garden business, it would be left to them all equally. Philip appealed the decision.
Decision:
The CoA dismissed the first defendant’s appeal against a decision in favour of the claimants on a proprietary estoppel claim that they had made concerning property comprised in their father’s estate.
The appeal focused on the concept of detriment.
The Court found that the parents had led their sons to believe that, if they committed to working in the market garden business, it would be left to them equally and that the claimants had relied on those assurances by devoting their lives to the business. The Judge also noted that the benefits they received did not outweigh this detriment.
Applying Gillett v Holt [2000], the Court held that where a Claimant had devoted his working life to a particular course in reliance on an assurance, it might be proper for the Court to find detriment to establish proprietary estoppel, even if the Claimant had not shown that he would otherwise have been likely to take a specific alternative course which would probably have been more beneficial.
While the Court acknowledged that they received good benefits, their commitment to the family business had a detrimental effect on some of their decisions such as education, career or training and the ensuing consequences of their omission.
Implications:
This case highlights the importance of careful estate planning. It reaffirmed the principle of proprietary estoppel and the importance of assurances, reliance and detriment in such claims. Once all the elements of a proprietary estoppel claim are met, it will be used by the Court to prevent the holder of legal rights from enforcing those rights where it would be unconscionable for them to do so, even if there is a valid will or estate planning in place.
This decision also makes clear that dedicating an entire working life to a family business and giving up the possibility of other options is likely to amount to detrimental reliance.