Analysis
The claimant and her husband owned and farmed College Farm in Cambridgeshire. They had three children – two daughters and one son. The defendant, who was their son, owned and farmed the adjoining Whitleather Lodge Farm and had joined his parents’ farming partnership on an equal basis.
After separating from her husband in 2011, the claimant moved into a property which had previously produced a rental income and she was concerned to secure her financial independence. This led to the claimant, her ex-husband and the defendant setting in motion the steps required for a partnership agreement to regulate the affairs of the farming business. Protracted negotiations ensued and the first draft included an option to buy out the share of a retiring partner; subsequently this was amended at the claimant’s insistence, following advice she had received, to ensure that the land would be valued at market value, rather than at book value. The partnership agreement was signed on 19 June 2012 (the 2012 PA), the claimant and her husband signed notices of severance in respect of their joint tenancy of part of College Farm and all three partners executed declarations of trust in respect to their beneficial interests in the farmland.
The claimant retired from the partnership by a notice dated 15 December 2016 and the defendant served an option notice to buy out her interest in the partnership assets on 23 November 2017. Following the appointment of a valuation expert, the market value of the farmland was determined on 3 December 2018. The claimant claimed payment of £2.52m as the price for her share of the partnership assets, payable in half-yearly instalments over five years. The defendant failed to pay his mother and she issued proceedings against him on 9 March 2018. The defendant defended the claim and counterclaimed on the grounds that he had an equity arising by way of proprietary estoppel as a result of his having relied to his detriment on assurances by his parents that he would inherit their shares in the partnership assets on death.
Held (allowing the claim and dismissing the counterclaim):
The evidence did not establish that the claimant and her husband had made irrevocable assurances; merely statements of intention that the claimant would inherit the land and farming business. They needed to retain the authority and freedom to act as they thought was best and questions as to future ownership were subject to issues of fairness and some approximation towards equality between the three siblings. What and how much the daughters should have by way of compensation or balancing transfers was not finally settled. The defendant could not have understood statements of intention to constitute promises or assurances in those circumstances. Moreover, he had not suffered any significant net detriment on any assurance that he would inherit or, indeed, his expectation to that effect. On the contrary, by the time he entered into the 2012 PA, he was a wealthy man and, during cross-examination, he accepted that his decision to farm with his parents had been beneficial – partly due to them and partly due to his own hard work.
This case differed from the usual proprietary estoppel case where the alleged promisor owned the property and the alleged promisee sought an order that the property be transferred to them or that they be granted an interest in respect of that property; in the present case, the claimant already had acquired a property interest by virtue of the vesting provisions of the 2012 PA. It was therefore impossible for the court to make a discretionary order requiring the claimant to transfer her interest and no previous case could be found where a claim to a proprietary estoppel equity had been made, still less granted, where a deed had been entered into after the alleged equity arose with provision specifically governing what was to happen to the property. Moreover, where a person has rights in respect of property, and then enters into a contract which is inconsistent with the continued existence of those rights, that person is estopped from asserting those rights. Those rights were extinguished by the contract and, in the same way, any previous inconsistent rights of the defendant would have been replaced by the terms of the 2012 PA.
There was no basis for claiming unconscionability on the party of the claimant – she was perfectly entitled to retire from the partnership on the terms set out in the 2012 PA. The consequence for the claimant, as contracted for, was that she was entitled to the debt owed by the defendant as a result of the 2012 PA. As to the question of whether the land was to be valued as if sold on the open market as a whole, or as if sold on the open market in separate parcels, it should obviously be valued as a whole because it would achieve a higher price and it was a general principle of open market valuations that, when different properties are being valued, they are worth more if sold together than separately. Consequently, it would make no sense to ignore the so-called ‘marriage values’.
JUDGMENT ROSEN QC: (1) Introduction: [1] The Claimant, familiarly known as Marian, is now 88 years old. She married Davis Horsford in 1954 and they had three children, Helen (now Mrs Blunn) born in 1957, Elizabeth (Liz, now Mrs Koufou) in 1960 and the Defendant Peter (now married to Gail) in 1964. Marian and Davis …Continue reading "Horsford v Horsford [2020] WTLR 519"