The Court of Appeal handed down its judgment in June 2024 in Winter v Winter, which we reviewed earlier this year as part of our 2023 round up of cases. The central question at first instance was whether the two claimants had suffered detriment in that they had given up the idea of pursuing different careers as their parents had promised them an equal share in the family business (a market garden). The Judge ruled in their favour, but the third brother appealed the decision on the basis that they had not suffered detriment as they had both ended up being very wealthy as a result of staying in the business. The issue of ‘countervailing benefits’ is fast becoming the new catchphrase in proprietary estoppel claims.
Background to the case
Mr & Mrs Winter ran a successful market garden in Somerset and owned various other parcels of land acquired over the years. Their three sons joined the partnership on the understanding that they would inherit the land and business in equal shares after their parents’ deaths. In the event, after Mr Winter’s death in 2017 (his wife had died in 2001) it transpired that he had changed his will in 2015, leaving his share of the business to Philip, his middle son.
Richard and Adrian Winter (the eldest and youngest son respectively) issued a claim of proprietary estoppel on the basis that throughout their lives all three brothers had been given assurances on numerous occasions by both parents that they would inherit equally. This promise lay behind their decision to abandon their nascent careers.
The judge was persuaded that Mr & Mrs Winter had fully intended to divide the partnership and business assets equally between their sons. Ultimately the judge found that the claimants had relied to their detriment on assurances that they would inherit – they had devoted long hours to the business, received minimal remuneration, and foregone other opportunities in expectation of their promised inheritance. The judge found that the assurances given by Mr & Mrs Winter ‘were sufficient to give rise to proprietary estoppel in favour of Richard and Adrian’ in relation to the partnership assets and business.
Detriment does not have to be financial
One of the elements required to establish a proprietary estoppel claim is that the claimant must have suffered detriment by relying on the promise made. Often ‘detriment’ is evidenced by reference to financial benefits where a claimant has lost out on years of earnings in an alternative job or career, in expectation of inheriting the farm. In Winter v Winter, financial detriment was not the issue as both claimants had accrued significant assets from their involvement in the market garden. Nonetheless, the Judge determined that they had suffered detriment, albeit non-financial, as the promises made to them by their parents influenced their decision to continue working in the family business.
Countervailing benefits
In the High Court, counsel representing Philip contended that his brothers had not suffered detriment because the ‘countervailing benefits’ they had received, namely the value of the partnership assets and company shares valued at c.£2m each, more than made up for the detriment of long hours and poor pay. In dismissing this argument, the judge referred to Spencer v Spencer where counsel maintained that “it is not possible to put a money value on the unquantifiable detriment of committing an entire working life to a family business, giving up the chance to build an alternative life elsewhere, and that commitment is likely to constitute detrimental reliance.”
At Appeal
Philip appealed. The Court of Appeal upheld the judgment, concurring with the reasoning of the original trial judge. The very fact of Richard and Adrian giving up any future aspirations away from the farm on the promise that they would inherit the family business, amounted to detriment, regardless of the financial benefits that subsequently accrued from that decision. The Court went on to clarify that “the Court will probably be prepared to treat loss of opportunity to lead a different life as itself detrimental without requiring the claimant to prove, or itself trying to determine, quite what the claimant would have done and with what consequences.”
How this judgment may affect farming businesses
The upholding of the original judgment by the Court of Appeal may open the door for more farming-related proprietary estoppel claims. This ruling makes it clear that detriment does not need to be judged on a financial basis alone – non-financial disadvantages should also be considered such as making a lifetime commitment at the exclusion of other alternatives because of a promise made. The fact that in this case the commitment led to greater wealth than would have been accrued elsewhere was not considered relevant. But for the assurances they were given by their parents about inheriting the business equally, Richard and Adrian would probably have pursued other careers (the Royal Marines and an independent contractor respectively) despite them not being ultimately as lucrative as staying on the farm.
Although we always encourage people to make a will to ensure their assets are distributed as they would wish after they die, this case is an example of where a promise made on which a person had relied to their detriment took precedence over the will. We have considerable experience of dealing with claims of this sort and would be happy to have an initial chat to see if we can help.
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