20 March 2019

Legal actions speak louder than words

James Lloyd Consultant

ESTOPPEL: You would be forgiven for not even knowing this was a word in the English language. That said, you may have heard of people making claims after being promised that ‘one day this will be yours’ only to find that it is not (commonly after a lifetime of working on that basis). That is in spite of other legal documentation to the contrary.

Although there are not that many successful cases, this unusual area of the law is one that farming families should take careful note of, especially given the number of recent farming cases involving it. Such cases are usually very destructive – both personally and to the businesses involved - being long, hugely expensive, risky and very hard fought. All to be avoided.

Regrettably, the law is quite complex and very much rests on the facts in each particular case. By way of example, the Court of Appeal recently gave judgement on the principles involved, but the decision on the practical consequences is still awaited. More than two years down the line, the situation remains unresolved.

It involves a son, his father and uncle. The son bought his uncle’s share of the family farming business upon his retirement on the verbal understanding that he would always inherit his father’s share – eventually taking ownership of the whole business.

The son had always worked on the farm - often long hours and with minimum pay as he assumed his long-term future was secure, although there were no written agreements in place.

However, father ultimately decided his share of the business would not pass to his son. When this emerged, an estoppel claim was launched by the son who argued that he had always been told the business would be his and all actions previously had led to that assumption. This, in turn, had impacted upon the life choices he had made over a long period and therefore his father could not simply change his mind. The Court of Appeal agreed.

This very definitely is a matter of preventing such situations. Families should be completely clear and open between themselves as to their intentions both now and in the future, including the right to change their mind if they want to be able to. This should be done in writing so there is no doubt that everyone knew, understood and only made decisions accordingly.

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