The judgment in a recent farming proprietary estoppel case, Cleave v Cleave, focuses on how to meet the requirements of equity either by reference to compensation for the detriment suffered or by the promise made, taking in to account the financial circumstances of the person who made the promise.
This article looks at the case, explains the decision and discusses two possible outcomes.
This case involves a farm on the Devon/Cornwall border. The farm includes a farmhouse, a barn conversion, a yard and buildings and farmland. The farm was inherited by the defendant, Mary Cleave. Mary was married to Elwyn and together they had one child, Irving, the first claimant in the case.
Irving worked on the farm from a very young age. Throughout his life he was assured that the farm would be his on his mother’s death but that if he left the farm, it would have to be sold. He declined alternative job opportunities based on those assurances, and received a wage of £125 per month over a period of 37 years, rising to £250 per month for the next six years.
As his parents grew older, Irving assumed more responsibility until he was largely managing the farm singlehandedly. In 2016 he was diagnosed with Parkinson’s, believed to be linked to the use of pesticides as part of the farming activities, such that the farming activities were gradually reduced.
In 2018 Irving began a relationship with Caroline, the second claimant, who moved into the farmhouse with Irving, Mary and Elwyn. Together they supported Irving’s elderly parents and ran what remained of the farm.
In 2020, Irving’s father suggested they convert a disused dairy barn so that they could stay living on the farm. Irving and Caroline duly applied for planning permission and moved into a caravan to supervise the building works.
Elwyn died shortly after leaving Mary, then aged 88, unable to manage in the farmhouse on her own. Irving and Caroline continued to care for her daily and applied to amend the planning permission for the barn conversion to include an annexe for Mary to live in.
The barn conversion works were significant and the construction was specifically adapted to Irving’s increasing needs. He and Caroline invested all their savings and cashed in their pensions to try to complete the project.
Further plans were made to downsize the farm, which Irving could no longer run by himself. The proceeds would help to fund the barn works.
Those plans included Mary selling various small plots of land and, on the advice of their family accountants, settling the farm yard and buildings into a discretionary trust. The trust would benefit Irving and Caroline with 90% and Mary would receive 10%. The parties duly obtained planning permission to develop the trust land with a view to selling it on for development purposes.
Unfortunately, a week after moving into the Annexe, Mary had a dramatic reaction to moving out of the farmhouse where she had lived all her life. Hospitalised after a suicide attempt, she then moved into a care home.
She changed her will, accused Irving and Caroline of financial and domestic abuse, and sought to unravel the various land transactions that had occurred following Elwyn’s death.
Irving and Caroline brought a claim, under the doctrine of proprietary estoppel, for an interest in the farm and for a determination on the transfers of land. Mary disputed their claim and counterclaimed alleging that:
The fraud element was dropped shortly before trial.
The trial was heard over seven days in June 2024. There were 14 lay witnesses and four professional witnesses, including the solicitors who advised the parties on the property transfers and the trust as well as the family’s accountants.
On giving evidence, Mary conceded that she and Elwyn had told Irving that he would be getting the farm, stating ‘we were farmers with one son - we were not going to give it to anyone else’, and that he had worked on the farm for little to no wages.
As regards the property transfers, she agreed that she had been professionally advised, and that she had been looking forward to moving into the annexe with Irving and Caroline with whom she had been close.
Unsurprisingly given Mary’s evidence, the judge found in favour of Irving and Caroline on all fronts. Irving had acted to his detriment in relying on the assurances and understanding that he would inherit the farm on his parents' death, such that it would render it unconscionable for Mary to resile from those promises.
The judge concluded that an estoppel had arisen in respect of the barn conversion and of the farm as a whole.
The judge also accepted that Irving and Caroline hadn't bullied, oppressed or taken advantage of Mary in respect of any of the disputed transactions as she had alleged. The parties had taken and relied on professional advice throughout their joint endeavours, and there was little more that could have been done to ensure everything had been properly conducted.
On the issue of the appropriate remedy, the judge referred to a previous case, Guest v Guest case, commenting that:
'The aim of the remedy for proprietary estoppel is the prevention or undoing of unconscionable conduct, not expectation fulfilment or detriment compensation. In many cases, once the equity is established, the fulfilment of the promise is likely to be the starting point. Although considerations of practicality, justice between the parties and fairness to third parties might call for a reduced or different award.'
The judge went on to say that 'The starting point in this case is, in my judgment, the fulfilment of the promise.'
However, the judge stated that an important factor to consider was Mary's financial circumstances, which have been the subject of 'inadequate financial disclosure'. A , further hearing would therefore be needed following proper disclosure of Mary's financial position.
In the meantime, his provisional judgment to achieve justice between the parties was to order that:
As to the remainder of the farmland, and subject to the required further financial disclosure, the judge’s preliminary view was that it should be held in the most tax efficient way. This would allow the land to pass to Irving after Mary's death, while also enabling Mary to access the capital value of this land as was reasonably required for her care and accommodation. The judge recognised that Mary may need the income it can generate - depending on her financial position.
If you read the judgment you will probably wonder whether Mary had capacity to conduct the litigation at all. The judge himself noted that some aspects of Irving and Caroline’s claim were “almost irrefutable”.
Despite this, Mary’s case proceeded to trial at huge expense to the parties, financially and emotionally.
As the parties wait on Mary’s further disclosure, the difficult question of costs remains. On the assumption that Mary will have to pay Irving and Caroline’s costs, how will that sit against the judge’s understandable desire to ensure Mary has sufficient assets to meet her care costs going forward?
It seems that there are two possible outcomes. The first is that the judge will deal with the issue of costs independently from the issue of the final award he makes in respect of the remainder of the farm.
If that should happen, Mary might get the remainder of the farm on trust for her lifetime, but she will have a massive cost bill, which will require the sale of that land.
The second is that the judge’s award is deliberately structured to leave Mary with sufficient farmland to enable her to discharge her liability for costs.
For further information, please contact the wills and inheritance disputes team.
