Darlington law firm's warning for those in farming business
Darlington-based law firm Latimer Hinks has highlighted to the agricultural community just how important it is to undertake proper planning at an early stage following a landmark proprietary estoppel judgment relating to a family farming business.
The recent case centred on the estate of farming business owner Frank Habberfield, and a dispute between his 82-year old widow and youngest daughter about ownership. When Frank passed away in 2014, he left his entire estate to his wife. However, his daughter Lucy brought a claim against her mother alleging that her parents had promised her ownership of the farm upon their retirement. Mrs Habberfield denied this claim.
The England and Wales High Court found in favour of Lucy, and her mother will now be forced to sell the home she has occupied for 40 years in order to fulfil the £1.17 million cash settlement awarded to her daughter.
Rosanne Tweddle, a solicitor at Latimer Hinks who specialises in agricultural and commercial property, said: “Proprietary estoppel relates to promises being made with regard to the ownership of property or land and reliance upon those promises. There have been several cases about proprietary estoppel over the past few years involving farming families as children regularly play an active role in the running of the business, often under the impression that one day, the farm will become theirs.
“Due to the multi-generational nature of farming and a commonplace reluctance of families to discuss succession planning, arguments can easily arise, especially if children feel they are contributing as much as, or even more than their parents to the day-to-day running of the farm. This, coupled with words of encouragement by parents, can lead to disputes if their expected stake in ownership doesn’t materialise.”
Elizabeth Armstrong, a director and solicitor in the Private Client Department and Head of the Tax and Trust Department at Latimer Hinks, said: “It is essential that all business families, particularly those involved in farming, make it clear exactly what their businesses own, who owns which properties, and who will eventually inherit which assets when the senior members of the family pass away.
“This case has also shown that if promises are made regarding ownership, they should be clearly thought through, written down and agreed by all those involved. In this instance, an 82-year old will lose the home she has occupied for approximately half her life based on the fact that things she and her late husband had said – alongside their daughter’s reliance on those things – have resulted in assets passing to the daughter when perhaps that wasn’t the parents' intention.
“Much of the lengthy and costly dispute which involved court proceedings and an appeal could have been avoided had the family put in place a properly thought out succession plan.”