Estate planning lessons from a family farm dispute

A Welsh farmer wanted to leave his wealth to his family but had already promised it to one particular son. Estate planning chaos ensues. Richard Manyon explains

Some people say that promises are made to be broken. Frequently, the courts do not agree.

So it was with the estate of Tom Davies (now deceased) in a case decided by the High Court this May.

Tom was a proud Welsh farmer. He had started out as a tenant and, by the sweat of his own brow, had become the outright owner of 87 acres together with a farmhouse and bungalow.

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Estate planning case study

Tom died on 31 May 1999 at the age of 76. He left behind him a wife and five children. By his last will, he instructed that the farm should be sold and that the proceeds should be divided into five shares, one for the family of each of his children.

The contents of the will were not disclosed for some years due to Tom’s wife wanting to avoid family discord.

On the face of it, Tom’s will was not an unusual one and would certainly not offend the fundamental principle that under English and Welsh law, a testator is able to dispose of his estate as he sees fit.

Most testators who divide their assets equally between their children will hope to avoid contentious probate actions after their death.

However, Tom was to come up against one of the restrictions on this general rule. Much earlier, in the 1970s when his children were starting out in life, Tom had been extremely eager that the family farming business should continue.

Four of his children showed no interest in farming but one, James, was persuaded and gave up a possible career with the police force to work on the farm.

James received very little remuneration for his contribution, working about 80 hours per week and earning, at the outset, about £30 per month plus board and lodging. The profits from the farm were ploughed back into the business.

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Is your word your bond?

At this time, and subsequently, Tom was said to have made various promises to James regarding the future of the farm. In particular Tom apparently told James that if he “came home the place is yours”.

Also, in 1984 after a few years of successful work on the farm Tom moved out of the farmhouse, handed the keys to James and apparently said “there we are then, it is all yours now, you have done a good job”.

Some years later, the relationship between Tom and James became more strained as a result of Tom disapproving of James’ wife. It was in these circumstances that Tom, in January 1996 and then in 1999, made wills providing for the farm to be divided.

There was no written evidence before the Court that the words asserted by James had been spoken, and the oral evidence supporting the making of these promises came mainly from James and his wife.

James’ siblings lined up to testify that they had no knowledge of any promise, and his mother gave evidence to the same effect.

Court ruling

In the circumstances of the case, however, the Court accepted that Tom had given assurances to James that the farm would be his. This did not amount to a contract because there are statutory requirements for contracts relating to land which had not been met.

The Court did, however, find that an estoppel had taken place. This occurs when a promise is made, and then relied upon by the recipient to their detriment.

In this case the Court, having found that Tom had made the relevant promise to James, did not hesitate to decide that by giving up a potential alternative career and working long hours at the farm for very low pay,

James had indeed relied on the promise to his detriment.

In these circumstances, the law provides that it would be unconscionable for the promisor to be allowed to go back on his word, and the Court has a broad discretion to deal with the property which was the subject of the promise as it deems appropriate.

In this instance, and contrary to the provisions of Tom’s will, James received the entirety of the farm save for the bungalow (where his mother still lives).

This case forms part of an increasing stream of estoppel disputes. For those wishing to avoid these post-death complications, the lesson can be seen as simple.

Do not make promises if you think you might change your mind. If you do, you might well be held to your word.

Richard Manyon is an associate at Payne Hicks Beach