A Cautionary Tale: Parents v Proprietary Estoppel
A recent decision in Davies v Davies , illustrates just how family relations can turn sour and how the law can step in on the grounds of ‘fairness’.
Eirian and her two sisters grew up on the family farm in Carmarthenshire which their parents, Mr and Mrs Davies had run for 50 years. It became clear by the time Eirian was 17 years old that neither of Eirian’s two sisters had any intention or interest in running the farm in the future. Eirian was the only one of the sisters who had seemed keen. This would fulfil the parents’ wish that the farm, which at the time of this case was worth in the region of £7 million, would remain in the family. Whilst there was never a clear, explicit and binding promise that Eirian would inherit the farm, it was found that her father had said to her that she would be left the farming business in return for the work she had done on the farm over the years. Was this fair? Even though Mr and Mrs Davies were still alive, and in control of their business, could they be forced to relinquish some of their farm to Eirian?
Eirian relied on the fact that, on her case, her parents had promised her the farm. Her understanding was that, initially, she would work on the farm for no wages, but she did receive board and accommodation, and money for clothes and leisure. In reliance on this promise, to her detriment she had not pursued other career avenues, and had worked long hours without pay/ or for reduced pay. Therefore, in equity or fairness, her parents should be prevented from not making good on their earlier promises.
It appears that there was a tumultuous relationship between Eirian and her parents which resulted in Eirian leaving the farm on a number of occasions, the first time being aged 21. She reconciled with her parents and returned a year later.
In 1990, Eirian returned to the farm with her new husband, and carried out various milking, veterinary and general farming work. In 1997, a partnership agreement was drawn up between Eirian and her parents, which indicated she would receive a 49% shareholding, but this was never signed. By 1998, Eirian and her husband were living in one of the farm houses rent free. At this point, Eirian believed she was a partner in the business and would be entitled to an equal share in the profits of the business.
In 2001, Eirian again left the farm as, by her own admission, she had had enough and had given up any expectation of a future in the business. She again returned in 2007 following the breakdown of her marriage. Further arguments with her parents ensued and she again left, later returning at her father’s request. For the following 4 years, Eirian worked on the farm and received payment of £1,500 per month, which had increased to £2,000 by 2012. During this time, Eirian was shown a draft will whereby she was left the land and buildings of the farm and shares in the business. In 2012, there was a further altercation which resulted in Eirian leaving the farm for the last time.
In 2013, Eirian brought a claim seeking an interest in the land and business by virtue of the doctrine of proprietary estoppel. In essence, her argument was that had she not worked on the farm, she would have pursued a career elsewhere , working shorter hours and for better pay. Originally, Eirian’s claim was successful and it was determined by the court that she was entitled to stop her parents reneging on their promise and was awarded £1.3 million as a reflection of the detriment suffered. Her parents appealed.
The Court of Appeal found that the judge had applied too much of a broad brush approach, particularly taking into account the complicated facts and Eirian’s resulting differing expectations. After all, she had walked out of the farm previously and had admitted she had ‘given up’ on a number of occasions. The Court of Appeal awarded a more modest £500,000.
Whilst this case turns around a bitter family dispute and a complicated set of facts, what it does demonstrate is that there are far reaching consequences for all land owners where similar circumstances may arise. An entitlement to an interest in land can be created without formalities or documentation in support, or even an intention to give away such an interest. All Eirian had to show was that there was an ‘assurance’, she had relied on that assurance and suffered detriment as a result.
The key is to make sure any arrangements are documented to avoid any such claims. If there is a clear and unequivocal agreement, all parties will know where they stand. Whilst this can be somewhat unpalatable, particularly in a family context such as this, the outcome here appears to have been all the more bitter as a result of not having done so.