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Posted 30 November 2018
by Martin Laver

Court of Appeal Reduces Daughter’s Award in Proprietary Estoppel Claim

Countryside on a cloudy day

A Court of Appeal decision has reduced a daughter’s proprietary estoppel award from £1.3million to £500,000, citing that in granting the original award, the Judge did not properly analyse a previous offer made by the Defendants and failed to appreciate that the offer already contained much of what would satisfy the Claimant’s expectations.

Background

Eirian Davies was one of three daughters born to Evan and Elizabeth Davies. Mr and Mrs Davies owned extensive farmland and a successful farming business, which was principally a dairy farm. From a young age, Eirian was the only daughter to show any interest in the farm and worked on the farm intermittently over many years in return for a low rate of pay.

Although Mr and Mrs Davies did not make any clear and binding promises that she would receive the farming business on their deaths, Mr and Mrs Davies did make comments to the effect that one day she would have the farming business and that she shouldn’t ‘kill the goose that lays the golden eggs’. Eirian left the farm after working on it for four years, but returned a couple of years later. Mr and Mrs Davies later purchased another farm consisting of a farmhouse and 89 acres which they later sold to Eirian and her then husband. Eirian and her husband lived in the farmhouse and Eirian continued to work on the farm, primarily milking (for which she was paid the going rate) but also doing some veterinary work and general farming, which she was not paid for.

Mr and Mrs Davies had discussions about taking Eirian into the farming partnership which resulted in the preparation of a draft partnership agreement. Although Eirian signed the agreement, her parents did not. Nevertheless, the Court accepted Eirian’s evidence that at the time she signed the partnership agreement, she thought she had become a partner and that she was told the farm would be left to her.

In 1998, Eirian and her husband moved into another farmhouse, Henllan, belonging to Mr and Mrs Davies (separate to the partnership) and lived there rent free. Eirian and her husband made improvements to the property, some of which they were reimbursed for, some were not. At the time, Eirian was still under the impression that she was a partner although no further representations were made to her at that time. In addition to the farmhouse at Henllan, Eirian was paid £3,000 per annum. She continued to work on the farm based on the belief that she would be entitled to an equal share in the profits of the business. Eirian’s work on the farm ceased in 2001 after she was kicked by one of the cows while pregnant with her second child. At this time, she also discovered that she was not a partner as she had thought and so she fell out with her parents. Eirian and her husband purchased their own home by way of mortgage. Eirian’s evidence was that at that time, she accepted that her expectation of the farm and business was “dependant on her continuing to work in the business” and that when she left, she had “no expectations regarding the farm”. Eirian’s work on the farm ceased until 2006 apart from a few occasions when she attended to a sick cow at her father’s behest.

After Eirian’s marriage broke down in 2006, she filed ancillary relief papers with the Court in which she acknowledged she was removed from her parents’ will and blamed her husband for the breakdown of the relationship between her and her parents. She also admitted that she was aware she would have no future inheritance because she “gave it up for my loyalty towards my husband and our marriage.”

Eirian’s case was that she should be awarded what was promised to her; the land and the business. Mr and Mrs Davies argued that Eirian should be given £350,000 comprising of £180,000 as an accommodation element, £22,000 partnership element, £120,000 company element and £28,000 represented underpayment for the work Eirian had done on the farm in the early years.

The First decision

The Court rejected both arguments on the basis that neither approach reflected the expectation and detriment to Eirian. The Court considered that £1.3 million covered the financial value of the accommodation Eirian was promised in 2007 (that she could live in the farmhouse for life), a share of the profit from 1999-2001 and 2008-2012 and substantial periods up until 2001 and from 2009 to 2012, Eirian’s expectation that she would succeed to the farming business.

Court of Appeal Decision

The case was appealed on the award only. The Court carefully considered Mr and Mrs Davies’ previous position together with all the circumstances. It determined that Eirian should receive £500,000 as compensation for past expectations (in particular the partnership element, the company element and underpayment of wages element), an additional sum which reflected the delay in payment and the changes in value for money. This represents that the expectation arising from Mr and Mrs Davies’ assurance was somewhat unclear and so the detriment to the Claimant is less.

The Law

Where an estoppel is established, it will typically bind the other party to the original proposition. In this case the type of estoppel claimed is proprietary estoppel as it relates to property rights.

To raise an equity claim by proprietary estoppel, the following elements must exist:

An assurance of sufficient clarity– there must be an intention of making an assurance which raises an expectation of an interest in the land, i.e. Party B must have intended Party A to act upon the assurance.

Reliance by the Claimant on that assurance – a claimant will be required to show that they relied on the assurance. This is most commonly shown through conduct; and

Detriment to the Claimant– the Claimant must have suffered a detriment in consequence of relying on a reasonable assurance.

Once the Claimant has established an assurance, reliance and detriment, they will fulfil the requirements for a proprietary estoppel claim for interest in land or property. In this case, the Court found that even a statement such as “don’t kill the goose that lays the golden eggs” could be construed as an assurance together with other vague statements as to the future of the farm. However, this case highlights that the clarity of the assurance will have an impact on the detriment to the client and subsequently the value of such a claim.

If you would like more information or a free initial discussion about a case, contact our team of experienced disputed will solicitors on 01392 207020.

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About the author

Martin Laver

Partner and Solicitor

Partner in the commercial litigation team specialising in disputed trusts and Wills