When a person relies on a promise made by another person to their detriment, the law provides a mechanism by which the promise made can, when the circumstances permit, be legally enforceable.
Such cases are particularly common in agricultural and other businesses in those instances in which a child works for many years for reduced wages on the promise that they will inherit the business in due course.
Recently, a case came to the Court of Appeal which dealt with this type of dispute. It involved a farming family. A couple’s daughter had worked on their farm since childhood and had, until she was 21 years old (in 1989), done so only for board and lodging and pocket money. Her two sisters left the farm and she worked on it thereafter except for a period of some months in 2000, a period between 2001 and 2005 and a period in 2007/2008, the gaps in the employment history being due to family spats.
The facts were convoluted, but the gist of the case was simple.
The daughter maintained that she had continued to work for her parents at considerably less than the going market rate because they had promised her that she would become a part-owner of the farm. Promises had been made that she would be made a partner in the farm (or have a substantial shareholding in the family farming company when it was proposed to restructure the business) or inherit the farm.
A partnership deed was drafted in 1998, which she signed but which was never signed by her parents.
Her parents had wills made in 2001 which divided the farm equally between their three daughters and at no point was the daughter who had stayed working on the farm ever granted shares in the company.
After yet another falling out in 2012, her parents sought possession of the house on the farm in which she lived with her partner and daughters. She claimed that she should have rights over it because of her ‘detrimental reliance on the representations’ made by her parents.
The Court of Appeal concluded that, as a matter of fact, representations had been made to her on which she had relied to her detriment and thus she was entitled to an equitable interest in the farm, the nature and extent of which is to be decided at a subsequent hearing.
Cases such as this, as Lord Justice Floyd commented, are ‘tragic’ and led in this instance to great bitterness in the family. Much of this could have been avoided if the circumstances had been put in writing and agreed clearly at an early stage, with variations also agreed in legal form.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.