Anyone observing family disputes over farming businesses over the past few years will probably have reflected on the wisdom of making succession plans as clear as is practical. Unfortunately, family ‘understandings’ lack clarity and formal undertakings. Chapter 3 of my book, ‘The Absolute Essence of Inheritance Tax Planning’ looks at some of the consequences of this fuzziness – – http://amzn.to/2rboWdG
A very recent case once again draws attention to the unintended consequences for all concerned – http://bit.ly/2oHt6Xe
The England and Wales High Court has granted the youngest daughter of a Yeovil farmer a substantial cash payment in lieu of her rightful share of Woodrow Farm.
The 220-acre Woodrow Farm, at Mudford near Yeovil, belonged to Frank Habberfield and his wife Jane, who had bought it in stages between 1961 and 1989. It was operated by them as a partnership, and they held the property as beneficial joint tenants until Frank Habberfield’s death at the age of 74, when the title passed by survivorship passed automatically to his wife. He had, in any case, left a will giving her his entire estate.
However, the couple had a son and three daughters, the youngest of whom, Lucy Habberfield, had worked on the farm since her childhood. Since 2007, her partner Stuart Parker had also worked full time at the farm. Now aged 50, Lucy claimed that her late father had assured her that she would take the farm over when he retired. She therefore brought an action in proprietary estoppel claiming the whole property, although she and her partner had in fact left the farm in 2013, after a fight with one of her sisters, apparently in the milking parlour. For several years before that, there had been long arguments, and even litigation, among the family about what benefits they ought to be receiving from the business for their work.
Lucy’s mother Jane Habberfield, now 81, opposed her claim, on the ground that neither she nor Frank had ever made any promises to Lucy. Even if Frank Habberfield had made such a promise behind her back, it could not be binding on his wife, she said. She also denied that any such promises could amount to proprietary estoppel, because Lucy had exaggerated her work on the farm and had received some benefits from it anyway.
As always in such cases, the judge reached his decision on the specific facts. In this case, there was written evidence – a letter written in 2008, from a surveyor employed by Frank and Jane Habberfield, recording a proposal to be put to Lucy for a new limited partnership to run the business and that Lucy should end up being the owner of the overall farm after her parents’ deaths, with some of the property to go to her brother and sisters.
Birss J concluded that Lucy had proved her claim, though only to the extent that she was entitled to a significant part of the farm – about 45 per cent – rather than all of it. He was reluctant to split the farm property up, partly for business reasons, but also because Lucy’s mother would then need to leave her home. He duly ordered Mrs Jane Habberfield to pay Lucy the cash equivalent of her interest in the farm, which would be GBP1.17 million by the valuation of a year ago, although he left it up to the family to try and agree the actual figure (Habberfield v Habberfield, 2018 EWHC 317 Ch).
As a fallback, Lucy also brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Her success with the proprietary estoppel claim meant that this was not needed.