A recent proprietary estoppel case heard in the High Court in November 2024 serves as a reminder of how emotionally challenging - and sometimes detrimental to family relationships – this type of claim can be. Armstrong v Armstrong showed how a fractured family relationship led to a father disinheriting one of his sons who then claimed against his father’s estate on two grounds: proprietary estoppel and for financial provision under the Inheritance (Provision for Family and Dependants) Act 1972 (the 1975 Act). Although this two-pronged approach is not unusual, the family history, sequence of events, and promises made and broken lent an air of inevitability.
To summarise, Richard Armstrong, the second son of Alan and Margaret Armstrong discovered after his father’s death that he had been disinherited. This meant that not only was he not to inherit the farm he had been promised all his adult life, but no additional financial provision or housing had been made either, potentially leaving him and his family destitute. The court case revealed that his younger brother, Simon, appeared to have manipulated his father to change his will shortly before he died, leaving Richard with nothing and, instead, gifting the farm Richard had been promised to his nephew, George, Simon’s son.
The deteriorating family relationship
The family partnership consisted of two farms: North Cowton, farmed by Richard, and Allerton Grange, farmed by Simon. Simon and Richard’s relationship was not amicable, and it deteriorated further following a fracas between Richard’s son, Thomas, and his father in 2013. As a result, Simon threatened Thomas, earning the former a police warning. Thomas also challenged Simon over certain unexplained outgoings from the partnership account into Simon’s personal account.
After this altercation, family relations soured to the point where a third-party mediator was appointed to try and resolve the situation. Among the solutions proposed was the sale of North Cowton and the purchase of a house for Richard and his family in the village. However, Alan and Margaret were persuaded that the separation of North Cowton and Allerton Grange’s finances would be a better bet, allowing Richard to prove that he could turn round the business.
The road to disinheritance
Both Richard and Simon had been repeatedly told by their parents that they would inherit North Cowton and Allerton Grange respectively, a promise that was reinforced after the farms’ finances were split, and one that was reflected in both parents’ wills. After Margaret died in 2018, matters became considerably more complicated with issues arising over legal advice to vary the terms of Margaret’s will in order to leave everything to Alan, because it was deemed more tax efficient, and over the proposed dissolution of the North Cowton partnership. In January 2020, Alan made a new will naming Simon and his son George as the majority beneficiaries and excluding Richard. Alan died in November that year. There was considerable correspondence during the course of the year from three different firms of solicitors purportedly advising Alan (but involving Simon) on both his will and the North Cowton partnership agreement in which it was revealed that Simon was ‘contemplating the possibility that Richard might be written out of Alan’s new will.’
What the court decided
The judge was very clear in his assessment of the evidence before him. He found Richard a credible and truthful witness whereas he found Simon quite the opposite. The issues the judge sought to resolve were:
- Were promises made to Richard of sufficient clarity to found a claim of proprietary estoppel? The short answer is yes. The judge accepted Richard’s evidence that his parents had ‘made promises and assurances to him which caused him to expect that he would inherit North Cowton.’
- Did Richard rely on those promises to his detriment: Again, the answer was yes. First, Richard’s decision not to go to university had been influenced by his parents’ promise that he would inherit North Cowton. Second, Richard relied on continuing promises made to him and had no contingency plans in the event he might have to leave North Cowton; third, he reasonably relied on those promises when he assumed responsibility for the North Cowton partnership debts after the farm businesses were split; and fourth, he relied on Alan’s promise that he would inherit North Cowton when he agreed to the deed of variation, in which he surrendered his interest in Margaret’s estate.
- Did Alan renege on his promises and, if he did, was it unconscionable for him to do so? Yes, the judge found he did, stating ‘given the nature and extent of the promises made to Richard by Alan over a period extending for more than 35 years…it was plainly unconscionable for Alan to act as he did by making a new will in those terms.’
- Did Richard receive countervailing benefits and if so, do they affect the remedy to which he is entitled? In answering this question, the judge referred to Guest v Guest in which the Supreme Court ruled that ‘the aim of the remedy for proprietary estoppel is the prevention or undoing of unconscionable conduct, not expectation fulfilment or detriment compensation.’ Nonetheless, the question of detriment needs to be addressed once the principle of fairness has been established. Simon’s position was that the countervailing benefit enjoyed by Richard was that he occupied a position and income that his father did not wish him to occupy, and thus enjoyed a higher standard of living that he would otherwise have done. The judge dismissed this argument, holding that Richard suffered greater detriment by devoting his life to the farm, and relying on Alan’s promise that he would eventually inherit it. Furthermore, he suffered considerable detriment by agreeing to sign the deed of variation to his mother’s will, thereby giving up the assets he was due to inherit under that will, roughly assessed at around £1m.
The 1975 Act claim
The judge acknowledged that a decision was required on the 1975 Act claim, under which Richard sought reasonable financial provision from his father’s estate, should the proprietary estoppel award be insufficient to meet his needs, or if the Appeal Court should overturn his decision on the proprietary estoppel claim. To do this he outlined the two questions that needed answering:
- Was Richard financially dependent upon Alan? This was answered in the affirmative: by living and working at North Cowton Farm for over 34 years, his financial and housing needs were being met by Alan.
- Does Alan’s will fail to make reasonable financial provision for Richard and, if so, what would be reasonable financial provision? By cutting him out of his will, Alan had self-evidently not made any financial provision for Richard, leaving it to the court to determine what would be reasonable.
The judge concluded that any decision on Richard’s 1975 Act claim would have to made after he had considered the appropriate relief to be given to Richard on his proprietary estoppel claim.
In summary
As the judge pointed out, this case arose from a particularly unpleasant falling out between brothers and, as such, he recommended a clean break whereby neither brother could be liable for any losses arising from the other one’s farming operation.
Although we repeatedly recommend farming families to address the issue of succession and inheritance as early as possible, this is not always possible. If a family dynamic is as fractured as the Armstrongs, it can be difficult to agree a fair resolution – and even if such a resolution is arrived at, it can be quickly unpicked after the next family fall-out. Court is not always the right answer for most disputes of this kind, but we see many cases issued at court but then later settled by way of a mediation. With careful guidance, most families will find a resolution that works, albeit with some compromises. In some cases, proceeding to trial is the only way to reach a conclusion but before reaching that point, it is important to consult a lawyer who has considerable experience of exploring the options before (and after) a claim is issued. We have dealt with many similar claims and would be happy to discuss your options with you in confidence.
The information provided in this article is provided for general information purposes only, and does not provide definitive advice. It does not amount to legal or other professional advice and so you should not rely on any information contained here as if it were such advice.
Wright Hassall does not accept any responsibility for any loss which may arise from reliance on any information published here. Definitive advice can only be given with full knowledge of all relevant facts. If you need such advice please contact a member of our professional staff.
The information published across our Knowledge Base is correct at the time of going to press.
