Roger and Stephen Moore had farmed Manor Farm, comprising 650 acres in Wiltshire. Roger had previously been in partnership with his brother Geoffrey. On Geoffrey’s retirement in 2008 he sold his share to Stephen and father and son became equal partners. Stephen’s relationship with his parents broke down and, in 2012, Roger gave notice that the partnership was dissolved.
Roger issued proceedings for the winding up of the partnership in 2013. Stephen entered a defence and counterclaim which was disputed by Roger.Stephen claimed to be entitled to his father’s share of the partnership under the doctrine of proprietary estoppel, that is that he had relied upon promises made to him by Roger and Geoffrey that he would get Roger’s share in the farm on his father’s death or earlier retirement.
At a nine-day High Court trial in 2016 Stephen succeeded in his claim.The judge found that there had been an overarching plan under which Stephen would inherit the whole farm and business from his father and uncle.Relying on those promises Stephen had worked on the farm since he was a child, continuing to work on the farm in his adult life for low rates of pay, when he could have looked for an alternative, better paying career.
The judge discounted that Stephen had already received Geoffrey’s partnership share, the partnership having paid Geoffrey a much reduced figure of £500,000 for his interest, as the promises made related to Roger’s share.
With immediate effect Stephen was to take over the business and the assets were to be transferred into his sole name, including three properties, one of which was his parents’ home.The judgement also provided that Roger and his wife Pamela would continue to live on the farm and that Stephen was to pay them a weekly sum from partnership funds.Roger challenged the decision and the appeal hearing took place in October 2018.By the time of the appeal Roger was suffering from dementia and Pamela, was representing his interests.
The appeal succeeded in part.The Court of Appeal upheld Stephen’s proprietary estoppel claim.
It found that the assurances he relied on envisaged that the partnership would continue until his father’s death or retirement.Wills made by Roger and Pamela in 2007 and 2011 showed that the intention was that she should have access to capital and income after Roger’s death if he died before her.The Court of Appeal found that the original judgement was too generous towards Stephen.The court should provide for the minimum to satisfy his expectations.
In the absence of sufficient information regarding valuation and the tax position, the Court of Appeal returned the matter to the High Court for a final decision, but provided the following guidance:
The overall effect of whatever final Order is made will be a clean break between Stephen and his parents.The Court of Appeal was concerned that the original judgement created a continuing dependency, when relations between the two generations had soured permanently.
The farm assets in dispute were valuable.Roger’s share was estimated by the Court of Appeal to be perhaps in the region of £5 million.The combined costs of the two sides were estimated in the region of £2.5 million, a figure which Lord Justice Henderson described as “shockingly high”.
The relationship between Stephen and his parents first broke down as long ago as 2009.Nine years on and over five years after the issue of proceedings the dispute has still not been concluded.
Despite the level of costs there was no expert tax advice before the Court of Appeal even though Roger and Pamela’s Q.C. advised that the original Order would give rise to significant CGT and income tax liabilities.
The Moore case points to the importance of parties exploring potential settlement, including through mediation, at an early stage, before escalating costs make the possibility of a settlement increasingly remote.If a satisfactory compromise cannot be achieved, at least have the good sense to ensure that all necessary expert evidence is available to enable the court to reach a final decision, rather than dragging out the proceedings, even further.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.