On 11 October 2024 HHJ Berkley handed down judgment in the case of Cleave v Cleave. The case built on the decision in the Guest v Guest case, and on the issue of how to satisfy the equity, whether by reference to compensation for the detriment suffered or by reference to the promise made, having regard to the promisor’s financial circumstances.
In this article we explore the Cleave v Cleave case in detail, reveal the decision and provide insight on two possible outcomes of the case.
This case involves a farm known as Great Knowle located on the Devon/Cornwall border. The farm includes a farmhouse, a barn conversion, a yard and buildings and farmland. The farm was inherited by the defendant, Mary Cleave, from her parents. Mary was married to Elwyn and together they had one child, Irving, the first claimant in the case.
Irving worked on the farm from a very young age. Throughout his life he was assured that the farm would be his on his mother’s death, but that if he left the farm, it would have to be sold. He declined lucrative alternative job opportunities in reliance on those assurances, and was rewarded with princely wages in the sum of £125 per month which continued for 37 years, after which it rose to an eye-watering £250 per month for the next six years.
As his parents grew older, Irving assumed more responsibility until he was largely managing the farm singlehandedly. In 2016 he was diagnosed with Parkinson’s, believed to be linked to the use of pesticides as part of the farming activities, such that the farming activities were gradually reduced.
In 2018 Irving began a relationship with Caroline, the second claimant, who moved into the farmhouse with Irving, Mary and Elwyn. Together they supported Irving’s elderly parents and ran what remained of the farm.
In 2020, Irving’s father suggested they convert a disused dairy barn so that they could stay living on the farm. Irving and Caroline duly applied for planning permission and moved into a caravan to supervise the building works. Shortly after Elwyn died, leaving Mary, then aged 88 and unable to manage in the farmhouse on her own. Irving and Caroline continued to care for her daily and applied to amend the planning permission for the barn conversion to include an annexe for Mary to live in.
The barn conversion works were significant and the construction was specifically adapted to Irving’s increasing needs. He and Caroline invested all their savings and cashed in their pensions to try to complete the project.
Further plans were made to downsize the farm which Irving could no longer run by himself, the proceeds of which would help to fund the barn works. Those plans included Mary selling various small plots of land and, on the advice of their family accountants, settling the farm yard and buildings into a discretionary trust for the benefit of Irving and Caroline as to 90%, and 10% to Mary. The parties duly obtained planning permission to develop the trust land with a view to selling it on for development purposes.
Unfortunately, a week after moving into the Annexe, Mary had a dramatic reaction to moving out of the farmhouse where she had lived all her life. She took an overdose of paracetamol, and after going into hospital moved into a care home. She changed her will, accused Irving and Caroline of financial and domestic abuse, and sought to unravel the various land transactions that had occurred following Elwyn’s death.
Irving and Caroline brought a claim, under the doctrine of proprietary estoppel, for an interest in the farm and for a determination on the transfers of land. Mary disputed their claim and counterclaimed alleging that:
The fraud element was dropped shortly before trial.
The trial was heard over seven days in June 2024. They were 14 lay witnesses and four professional witnesses, including the solicitors who advised the parties in respect of the property transfers and the trust as well as the family’s accountants.
On giving evidence (the transcript is worth a read), Mary conceded that she and Elwyn had told Irving that he would be getting the farm, stating ‘we were farmers with one son - we were not going to give it to anyone else’, and that he had worked on the farm for little to no wages. As regards the property transfers, she agreed that she had been professionally advised, and that she had been looking forward to moving into the annexe with Irving and Caroline with whom she had been close.
Unsurprisingly given Mary’s evidence, HHJ Berkley found in favour of Irving and Caroline on all fronts - Irving had acted to his detriment in relying on the assurances and understanding that he would inherit the farm on his parents' death, such that it would render it unconscionable for Mary to resile from those promises. The judge concluded that an estoppel had arisen in respect of the barn conversion and of the farm as a whole.
The judge’s assessment as to why and how the situation had arisen reflected our own:
'I can only conclude that the move from the farmhouse into the Annexe triggered a reaction in Mary which has given rise to her current position. Whether this was a delusional episode or something else is not clear, but the effect was to cause Mary to behave in an irrational and incoherent way, inconsistent with her previous behaviour.'
HHJ Berkley also accepted that Irving and Caroline hadn't bullied, oppressed or taken advantage of Mary in respect of any of the disputed transactions as she had alleged. The parties had taken and relied on professional advice throughout their joint endeavours, and there was little more that could have been done to ensure everything had been properly conducted.
On the issue of the appropriate remedy, HHJ Berkely referred to the Guest v Guest case, commenting that:
'The aim of the remedy for proprietary estoppel is the prevention or undoing of unconscionable conduct, not expectation fulfilment or detriment compensation. In many cases, once the equity is established, the fulfilment of the promise is likely to be the starting point. Although considerations of practicality, justice between the parties and fairness to third parties might call for a reduced or different award.'
He went on to say that 'The starting point in this case is, in my judgment, the fulfilment of the promise.'
However, HHJ Berkley deemed that a key consideration which must be weighed in the balance is Mary's financial circumstances, which have been the subject of 'inadequate financial disclosure', such that a further hearing would be required following proper disclosure of Mary's financial position. In the meantime, his provisional judgment to achieve justice between the parties was to order that:
As to the remainder of the farmland, subject to the required further financial disclosure, HHJ Berkley’s preliminary view was that it should be held on such terms as is most tax-efficient, passing to Irving upon Mary's death, whilst allowing Mary to access the capital value of this land as was reasonably required for her care and accommodation. The judge recognised that Mary may need the income it can generate - depending on her financial position.
Most of you who read the judgment (warning: it is over 100 pages long) will probably wonder whether Mary had capacity to conduct the litigation at all, so outlandish were her answers in cross examination and her apparent refusal to accept the evidence before her. The judge himself noted that some aspects of Irving and Caroline’s claim were “almost irrefutable” and his assessment of Mary was unambiguous. He said:
’Mary is and was capable of making very strong accusations against people without appropriate evidence to support them, and then sometimes (when it suits) feeling free to withdraw them at will.’
And
’it is crystal clear that Mary's role as an historian is very unreliable. Mary stands out in my judgment as a person who, once she has made up her mind, nothing will shake her from that belief. Even in the face of almost incontrovertible evidence…’
Despite this, Mary’s almost unarguable case proceeded to trial at huge expense to the parties, financially and emotionally.
As the parties wait on Mary’s further disclosure, the elephant in the room is the issue of costs. On the assumption that Mary will be required to pay Irving and Caroline’s costs, how will that sit as against the judge’s understandable desire to ensure Mary has sufficient assets to meet her care costs going forward?
It seems that there are two possible outcomes. The first is that the judge will deal with the issue of costs independently from the issue of the final award he makes in respect of the remainder of the farm. If that should happen, Mary might get the remainder of the farm on trust for her lifetime, but she will have a massive cost bill which will require the sale of that land. The second is that the judge’s award is deliberately structured to leave Mary with sufficient farmland to enable her to discharge her liability for costs. Watch this space!
For further information, please contact the wills and inheritance disputes team.
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