Summary

A son was entitled to his father's interest in a farm and farming business by virtue of a proprietary estoppel, since he had been promised that the farm and business would pass to him and had relied on those promises to his detriment.

Facts

The first defendant and Part 20 claimant claimed an equitable interest in his father's share in a farm and farm assets by way of proprietary estoppel.

The first defendant's father had run the farm in a partnership with his brother. They had been gifted the farm by their father. The farm was a successful and profitable business. Both the father and his brother took modest drawings and most of the profit went back into the business. The father took the lead in most farming issues. The first defendant had worked on the farm since his childhood. He became a salaried partner and then an equity partner. The father's brother retired from the business and gave his half share of the partnership to the first defendant in return for a payment from the partnership. It was agreed that the first defendant and his father would continue to farm in partnership together. The second defendant company was set up for tax reasons and also became a partner. Farming assets were transferred to the company, which was owned as to 51% by the father and 49% by the first defendant. After the first defendant took over the running of the farm relations with his father became difficult. The father brought proceedings for dissolution of the partnership. The first defendant claimed an equity over the farming business, including the freehold land, operated by the partnership. The issues were (1) whether there were promises to the first defendant by his father that he would one day have his father's share of the farm and assets; (2) whether there was reliance by the first defendant on those promises; (3) whether there was detriment; (4) whether it would be unconscionable for the father to resile from the promises; (5) what order should be made to give effect to any proprietary estoppel. The father suffered from Alzheimer's disease; he lacked capacity to conduct the proceedings and his wife had been appointed as his litigation friend.

Held

(1) The first defendant had established that his father had promised him the farm and the business. He and his wife were reliable and convincing witnesses. There was also clear evidence that the father had discussed with others the matter of his son succeeding to the farm and business, Thorner vMajor [2009] UKHL 18, [2009] 1 W.L.R. 776 considered. The allegations of bad behaviour made against the first defendant were so trivial as to be of no effect, Uglow v Uglow [2004] EWCA Civ 987, [2004] W.T.L.R. 1183 considered. The first defendant had established that his father's words were promises and not mere indications of intention, Cook v Thomas [2010] EWCA Civ 227 considered (see paras 145-147 of judgment).

(2) The first defendant had relied on the promises made to him, and devoted his entire working life to the farm and the business. He based his whole life on the assurances given to him and which were reasonably believed by him. His commitment to the farm and the business precluded him from pursuing any alternatives, Suggitt v Suggitt [2012] EWCA Civ 1140, [2012] W.T.L.R. 1607 applied (para.148).

(3) The first defendant had suffered detriment in reliance on the promises (para.150).

(4) It would be unconscionable for the first defendant not to receive his father's share of the farm and business. His alleged bad behaviour was trivial and the receipt of his uncle's share was irrelevant. The interests of other family members were not relevant to unconscionability, but might be considered when deciding how the equity should be satisfied (paras 162-166).

(5) The court should exercise its discretion, when deciding how the equity should be satisfied, by mirroring as closely as possible the arrangements which would have obtained had the dispute not arisen, and that meant that the father's partnership share should be transferred to the first defendant, Seward vSeward considered and Davies v Davies [2016] EWCA Civ 463, [2016] 2 P. & C.R. 10 followed. He had established his entitlement to an equitable interest in his father's share in the farm and the farm assets, which included his current and capital accounts, his share of the company's cash and profits, and his director's loan account, all of which fell within the pleaded definition of the father's share in the partnership. The first defendant would take over the farm for practical purposes, but that would be subject to an obligation to pay out agreed sums to support his father and his father's wife. That was just and equitable and proportionate to the detriment (paras 16-17, 175-178, 194).

(6) The partnership was not a partnership at will but a partnership for the joint lives of the first defendant and his father. It should be dissolved but only on the ground that it could not continue because of the father's lack of capacity, and not for any other reason (paras 179-192, 195).

Judgment for Part 20 claimant