Law of the land: Farming families and Inheritance

England's reputation as a "green and pleasant land" is based on more than the verse of the Romantic poet William Blake.

It has, in part, been forged over centuries by the endeavour of farmers who have kept the nation fed in peacetime and during war.

Despite that resilience, it is a different and more personal form of conflict which has called the future prosperity of the UK's agricultural economy into question.

The issue is one which has pitted parents against children and returned to the headlines once more thanks to a new Supreme Court judgement featuring a family-run dairy farm in south east Wales (https://www.supremecourt.uk/cases/docs/uksc-2020-0107-judgment.pdf).

The case hinged on the promise made to Andrew Guest that he would inherit a proportion of Tump Farm, in Monmouthshire, after he left school in 1982 to work on the 300-acre property.

However, in 2014, his parents, David and Jacqueline, made new wills under the terms of which he would be entitled to live in one of the farm's cottages but would receive no financial inheritance.

The decision prompted him to begin legal proceedings on the basis of something called proprietary estoppel.

It not only involves establishing a proprietary interest in a particular asset on the basis of a promise being made but requires claimants to show that their reliance on that promise has been to their detriment.

These sorts of cases are fact-specific and can be difficult to prove.

In fact, one notable House of Lords' ruling in 2009 noted the observation that "there is no definition of proprietary estoppel that is both comprehensive and uncontroversial" (https://publications.parliament.uk/pa/ld200809/ldjudgmt/jd090325/thorn-1.htm).

If they are able to justify their arguments, claimants also need to understand that the courts have great discretion in determining how successful claims are realised.

For instance, given that proprietary estoppel cases relate to claims about inheritance brought before the individuals owning the assets in question have passed away, settlements often involve claimants receiving a sum smaller than their full entitlement in return for not having to wait until the other person's death.

Andrew Guest's position had prevailed three years ago in the High Court.

The judge hearing those proceedings appreciated that Mr Guest Junior had not expected to acquire any interest in Tump Farm until his parents died. Nevertheless, the extent of the breakdown of his relationship with them made a clean break essential.

He concluded that an immediate lump sum payment of half the value of Tump Farm as a business and a further 40 per cent of the market value of the land and buildings was an appropriate resolution to the dispute.

Mr Guest's parents took their objections to that verdict first to the Court of Appeal and then the Supreme Court.

It has now ruled that although the initial ruling was broadly correct, it erred in failing to make "allowance for acceleration": Andrew Guest's not having to wait until his parents' deaths to acquire the amounts involved.

As a result, he will receive half of the farm business's value - £610,000 - immediately with his 40 per cent share of the value of the farmland and buildings either place in trust and paid to him after David and Jacqueline's deaths or paid now, albeit with a discount applied.

That guidance about the flexibility and range of possible fair solutions to such a delicate issue is one of the most notable and useful aspects of this case.

Furthermore, I believe that it is a ruling which has wide significance.

In recent years, I have handled an increasing number of proprietary estoppel, the majority of which have involved farming families like the Guests.

It is possible that factors which have been affecting the agricultural community in recent years are to blame.

Figures released by the Department for Environment, Food and Rural Affairs (DEFRA) late last year showed that the UK's agricultural workforce was continuing to shrink, something perhaps due to sons and daughters choosing to pursue other careers rather than working the land (https://www.gov.uk/government/statistics/farming-statistics-land-use-livestock-populations-and-agricultural-workforce-as-at-1-june-2021-england).

To that can be added another economic consideration. Even as commentators warn about reductions in house prices, the value of farmland continues to rise.

One real estate firm has documented that while arable and pasture land have risen by five and almost eight per cent in a year, farming "lifestyle land" - cottages and buildings - have gone up by nearly 16 per cent over the same period (https://www.carterjonas.co.uk/rural-research/farmland-market-update-q2-2022).

On the basis of my workload, it is likely that the case involving Andrew Guest and his parents will not be the last proprietary estoppel of its kind.

More than familial fractures, what this example underlines, though, is the need to engage in clear and effective succession planning.

In contesting their son's claim on the basis of their promises, David and Jacqueline reportedly took on additional debt (https://www.thetimes.co.uk/article/cc19666e-5231-11ed-bb65-87f2b7644902).

That financial strain and the findings of the Supreme Court will no doubt compound the "dislocation and distress" referred to during the proceedings.

Good preparation and communication may not completely avoid other families enduring a similar experience but they may help in the defence against costly and complicated claims.