The case of Gee -v- Gee decided on 11 June 2018 is the latest in a line of Proprietary Estoppel cases involving farming families.
The Claimant, John Michael Gee (called Michael here for simplicity), was the son of Pamela and John Richard Gee (called Richard here for simplicity). The family ran a farming business in Oxfordshire. The business was run through a family owned limited company, in relation to which Richard owned the entire shareholding except for one share which Pamela owned.
Michael worked on his parents' farm from the 1970's until 2016, working long hours for low pay. Michael and his father did not have an easy relationship, but they worked together all the same.
In 2014 Richard and Michael had a major falling out and Richard transferred all of his property, including his shareholding in the family company, to his other son Robert. At the same time Pamela transferred her interest in the freehold land to Michael, together with her single share in the company. From that time onwards Robert, who had until then been in property development, managed the farm.
Michael brought a claim for the interests allegedly promised to him on the basis of a "proprietary estoppel".
On the evidence the Court was satisfied that Richard had assured Michael that he would inherit the lion's share of the farm. Although the representation had not specified the shares in the company or the landholdings that Michael was to receive, that had not meant they were not to be relied on. The representations Richard had made over the 20 year period were serious, and had been understood as such. The Court was also satisfied that the representations had been made on behalf of both Richard and Pamela.
The defendants claimed that Michael had poor farming skills and that he had negligently performed his tasks, but the Court concluded that even if these allegations were made out, they did not negate the representations that had been made.
As to reliance, the Court held that Michael had relied on those representations to his detriment in devoting his working life to the farm, and working long hours for low wages.
The Judge undertook a detailed analysis of how Michael's pay compared to other farm workers. The Judge observed that detriment to family life could not be measured on a lost overtime basis, but concluded that in purely financial terms Michael's loss was approximately 50% of what he had actually been paid.
On the issue of detriment the court took the view that part of this was that Michael had to work with his rather difficult father. The Judge found this reinforced the effectiveness of the representations because Michael understood he needed to stay to inherit, even if things were difficult from time to time.
It was argued that Michael had received free housing, but the Judge noted that Robert had also been living rent free when he was not working on the farm, so that argument was rejected.
The argument that Michael had been protected from employment risks that he would have faced elsewhere due to his allegedly poor skills was also rejected. The Judge accepted that Michael had "positioned his life" based on the representations.
The Court took the view that the transfer of the company share and the transfer of land to Michael was relevant, but concluded that this could not justify his father resiling from the representations. They were, however, issues relevant to the question of what award to make.
As to the sum required to satisfy the equity, the Court took the view that the underpayment of salary (the financial detriment) was not the appropriate approach, as that did not get anywhere near the value of the equity required. The major consideration was that Michael had in effect given up his life for the farm for a period of over 20 years. The award should therefore be based on the expectation and not simply the financial detriment.
As to the shareholding, the expectation was of a controlling interest, not a 100% share. The Judge concluded that a split of the shares should be 52% for Michael and 24% each for Robert and his sister. As to the land, the Judge decided that it should be divided 46% to Michael and 27% to each of Robert and his sister, undoing the transfer by Pamela to achieve that.
This case is another example of how factually complex the evidence on a proprietary estoppel can be, going back over a great many years.
In addition, even when an estoppel is made out in principle, the question of the action required to satisfy that equity is difficult. An analysis of direct financial loss alone is unlikely to be conclusive. Every case will require careful scrutiny of the factual matrix over the entire period the representations were potentially operative for a meaningful assessment of the merits to be undertaken. There is no substitute for seeking specialist legal advice at an early stage.