Moore v Moore & anr [2019] WTLR 233

Analysis

In 1966 the claimant and his brother became the joint owners of a substantial farm in Wiltshire and began farming in partnership. The claimant’s son, the defendant, worked on the farm from childhood and became a salaried partner in 1998.

The brother retired from the partnership in 2008 and gave his partnership share to the defendant in return for a payment of £500,000 from the partnership. The claimant and the defendant also incorporated a company, of which the defendant was 51% shareholder, and to which various partnership assets were transferred in 2010.

Relations between the parties deteriorated from 2009 and in February 2013 the claimant issued proceedings for the winding up of the partnership. The defence and Part 20 claim pleaded a proprietary estoppel, namely that from his childhood, and for as long as he could remember, it had been envisaged and promised by the claimant that the defendant would inherit the claimant’s interest in the farm, subject only to adequate provision being made for the claimant’s wife (in the event she should outlive him). By the date of trial, the claimant had lost capacity to conduct proceedings, and was represented by a litigation friend.

At first instance, Mr Monty QC (sitting as a deputy high court judge) found by words and conduct a promise was made to the defendant which reasonably conveyed an assurance that he would inherit the whole farm and business following his parents’ deaths, and that the defendant relied upon those promises by devoting his entire working life to the farm business. He dismissed arguments that the receipt of the brother’s share of the farm business satisfied the defendant’s expectation, and found that the defendant’s equity extended to the whole of the claimant’s interest in the farm, the farm assets (including the farming assets of the company), the partnership (including his current account), his share of the company’s cash and profits and his director’s loan account.

The trial judge went on to order that: (a) the entirety of the property subject to the equity be transferred to the defendant within 28 days; (b) the claimant and his wife be granted a licence to live in the farmhouse for so long as they (or the survivor of them) wished or were capable of doing, free of charge, and with the defendant assuming responsibility for payment of all outgoings and for keeping the property in good repair; (c) the claimant and his wife had the option of moving to another property on the farm if and when they chose to do so, in which case a licence of that property would be granted to them on the same terms; (d) the defendant make weekly payment of £200 to his parents (or the survivor of them) during their lifetimes; and (e) the defendant would also be obliged to pay the reasonable costs of care for his parents, whether at home or in residential accommodation.

The claimant appealed, challenging several key factual findings and also the judge’s decision as to how the equity should be satisfied, and the conclusions that the partnership was one for joint lives rather than a partnership at will. On appeal, the parties were agreed that the principles applicable to proprietary estoppel claims were those set out in Davies v Davies [2016] EWCA Civ 463.

The issues on appeal were:

1. 1) Were the factual findings made by the trial judge ‘plainly wrong’?
2. 2) Did the judge err in determining how the defendant’s equity should be satisfied?

Held

1. 1) The factual findings made by the judge were open to him based upon the evidence and there were no grounds for saying that his conclusion was ‘plainly wrong’ in the sense that no reasonable judge could have reached it – McGraddie v McGraddie [2013] UKSC 58, [2013] 1 WLR 2477, and Henderson v Foxworth Investments Limited [2014] UKSC 41, [2014] 1 WLR 2600 applied. In particular, the defendant’s unexpected receipt of the brother’s share of the farm business in 2008 did not extinguish his entitlement to the claimant’s share. The equity can only have operated in relation to the claimant’s share.
2. 2) No primacy could be afforded to either of the two competing lines of authority regarding the nature of the court’s discretion in satisfying the equity arising by proprietary estoppel, as identified in Davies v Davies [2016] EWCA Civ 463. Obiter where the assurances and reliance are not far short of an enforceable contract, it will often be appropriate to provide the claimant with the specific property which he was promised. Where the claimant’s expectations are uncertain, they may be taken as a starting point, but no more – Crabb v Arun District Council [1976] Ch. 179 followed.
3. 3) The order as to the satisfaction of the equity was wrong in principle and could not stand.
   1. a. The judge had wrongly sought to replicate what would have happened had no dispute arisen, rather than attempting to satisfy the defendant’s equity in light of present circumstances. The assurances upon which the defendant relied envisaged the partnership would continue until the claimant’s death and that family relations would remain harmonious, neither of which was the case. The judge’s order required the claimant’s wife to live in her home as a mere licensee, dependent upon the defendant for her weekly income and relying upon him to discharge her outgoings and undertake repairs. The order would inevitably lead to disputes as to the nature and cost of the parents’ care. The court cannot compel people who have fallen out to live peaceably together – Jennings v Rice [2002] EWCA Civ 159 applied.
   2. b. Although accelerating the defendant’s interest was permissible in principle, this could not be at the expense of proper provision for the claimant and his wife during their lifetimes. The defendant’s claim was not in the first category identified in Jennings v Rice, being one where the assurances assumed a character not far short of an enforceable contract. That would only be the case after both parents’ deaths, where there had been no material change in circumstances in the interim. The defendant’s pleaded expectation was that he would inherit his father’s share of the farm on the death of the survivor of his parents and subject to reasonable provision being made for his mother during her widowhood. The mother was always intended to have access to both capital and income in her husband’s estate. The advancement of the defendant’s interest created by the order unfairly prejudiced the mother’s interest in her husband’s estate. [91-92]
   3. c. The judge was provided with no evidence as to the likely tax consequences of any order he might make. Such evidence is essential to any court making such a determination. The judge also failed to consider the impact of the costs orders made on the financial arrangements laid down in his order, and did not provide for limiting any rights of set-off which the parties might otherwise have had.

1. 4) The matter would be remitted back to the trial judge to reconsider how the equity should be satisfied. The view of the court was that the claimant’s share in the land and partnership assets should be transferred to the defendant, but subject to providing the claimant’s wife with a lump sum to enable her to rehouse herself comfortably, enjoy a reasonable income, provide for her husband and other relatives and have sufficient capital to enjoy occasional luxuries and to have a cushion for contingencies. Any tax liabilities arising would be borne by the defendant, as would the costs of the claimant’s care. [103-107]

Appeal allowed in part.

JUDGMENT HENDERSON LJ: Introduction and background [1] This is a case about proprietary estoppel. As so often, it involves a family farm, and a sad breakdown in relations between members of the family. Indeed the dispute has already been ruinous in both human and financial terms. We were told that the total costs so far …

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