Proprietary estoppel – Remedy – Respondent found to have equity arising by proprietary estoppel in relation to appellant parents’ farm – Appropriate remedy to give effect to respondent’s equity – Whether judge erring in awarding money sum reflecting one-third of value of farm – Appeal allowed in part
The respondent was one of three daughters of the appellants, who owned a pedigree dairy farm in West Wales. Following an argument between the parties in August 2012, at which time the respondent was living and working at the farm, the appellants terminated her employment and brought proceedings to evict her and her family from the farmhouse. A preliminary issue was tried as to whether the respondent was entitled to a beneficial interest in the farm, or other equitable relief, by proprietary estoppel.
The judge found that the respondent had worked at the farm for four years until 1989, when she was 21 years old, in reliance on earlier representations by the appellants that the farm would one day be hers. He found that the respondent had left in 1989 owing to a disagreement with the appellants over her choice of husband but had returned to live and work at the farm from 1991 to 2001. She had then left again after she discovered that a partnership agreement that she had signed in 1998, which she understood would bring her into the family farming partnership, had never been signed by the appellants themselves.
The respondent had returned to the farm in 2006, after her marriage broke down, and had been told by the appellants that it would be her home for life. For a time in 2007, she had worked elsewhere as a technician for a company that offered livestock reproduction services, while also continuing to do some work on the farm. In 2008, the parties had discussed giving to the respondent a 49% shareholding in the company which then ran the faming business, although it did not own the land; however, draft wills produced by the appellants in 2009 did not reflect that position. The judge found that the respondent had not received full recompense for her work on the farm, which had involved long hours on most days.
On the basis of his findings, he held that there was a proprietary estoppel giving rise to an equity in favour of the respondent: see [2013] EWHC 2623 (Ch). That conclusion was upheld by the Court of Appeal: see [2014] EWCA Civ 568; [2014] PLSCS 143.
A further hearing was held to determine the nature and extent of the equity to which the respondent was entitled. The judge held that the proportionate remedy was to award a lump sum of £1.3m to the respondent, representing roughly one-third of the net value of the farm and farming business. The appellants appealed. They were willing to offer the respondent a sufficient sum for accommodation and for a share in the farm and the business. They offered a total of £350,000, representing the sum needed to pay off the mortgage on the respondent’s own property and a share in the profits of the farming business.
Held: The appeal was allowed in part.
(1) Any case based on proprietary estoppel was fact sensitive. The essence of the doctrine of proprietary estoppel was to do what was necessary to avoid an unconscionable result. In deciding how to satisfy any equity, the court had to weigh the detriment suffered by the claimant in reliance on the defendant’s assurances against any countervailing benefits enjoyed in consequence of that reliance. Proportionality lay at the heart of the doctrine. In particular, there had to be proportionality between the remedy and the detriment suffered; that did not mean that the court should ignore the claimant’s expectations and seek only to compensate detrimental reliance, but, if the expectation was disproportionate to the detriment, then the court should satisfy the equity in a more limited way: Jennings v Rice [2002] EWCA Civ 159; [2003] 1 P&CR 8 and Henry v Henry [2010] UKPC 3; [2010] 1 All ER 988 applied.
In a case where the assurances and reliance had a consensual character not far short of a contract, and where both the claimant’s expectations and the element of detriment would be defined with reasonable clarity, the court was likely to vindicate the claimant’s expectation. In a case where the claimant’s expectations were uncertain, then they still provided a starting point for the court. A useful approach might be a sliding scale by which the clearer the expectation, the greater the detriment, and the longer the time during which the expectation was reasonably held, the greater the weight that should be given to it.
(2) The judge in the instant case had applied too broad a brush and failed to analyse the facts that he found with sufficient rigour. So far as the appellants had assured the respondent that she would inherit the farm, the respondent knew that her expectation of doing so was conditional on her remaining on the farm and working in return. At the time when those assurances were given, the expectation must have been conditional on several decades of work. Since the respondent had left only four years later, dashing her parents’ hopes, it did not seem equitable to hold them to that assurance at least to its full extent. Had this been a contract, then the respondent’s decision to leave the farm after only four years would surely have been regarded as a repudiatory breach.
The respondent’s later expectation that she was a partner with her parents in the faring business, based on the draft partnership agreement, was a different expectation from an expectation of inheritance. It was an expectation of participation in profits, and exposure to losses, during the subsistence of the partnership. The respondent’s expectation was falsified in 2001 and it was that which caused her to leave the farm once again.
The respondent had no expectation about the farm after she had left it in 2001. Moreover, the later discussions about a shareholding in the company would have superseded any previous expectation of partnership. The appellant also knew that the company did not own the land which was the subject of the present dispute. In those circumstances, there was no subsisting expectation, at the time when the appellants attempted to assert their strict legal rights, which equity would intervene to protect.
The court was therefore dealing with a series of different, and sometimes mutually incompatible, expectations, some of which were repudiated by the respondent herself and others of which were superseded by later expectations.
(3) As found by the judge, the detriment suffered by the respondent broadly consisted of working for long hours on the farm without full payment, in circumstances where, had she not done so, she could have worked shorter hours in a working environment of her choosing, without having to deal with the difficult working relationship that she had with her parents. Placing a money value on both the financial and non-financial aspects of the detriment that the respondent suffered, as well as on the expectations that were aroused, the equity in the respondent’s favour would be satisfied by increasing the amount offered by the appellants to make a total award of £500,000.
(5) Per curiam: There was some controversy about the essential aim of the court in exercising that broad judgmental discretion. One line of authority, the aim was to give effect to the claimant’s expectation unless it would be disproportionate to do so. On the other, the aim was to ensure that the claimant’s reliance interest was protected, so that she was compensated for such detriment as she had suffered. Logically, there was much to be said for the second approach. Since the essence of proprietary estoppel was the combination of expectation and detriment, then if either was absent, the claim had to fail. If, therefore, the detriment could be quantified fairly and a claimant received full compensation for that detriment, then that compensation ought, in principle, to remove the foundation of the claim. However, it was not necessary to resolve that controversy to determine the appeal in the instant case.
Timothy Fancourt QC and Elizabeth Fitzgerald (instructed by Michelmores LLP, of Bristol) appeared for the appellants; Leslie Blohm QC and Adam Boyle (instructed by Hugh James Solicitors, of Cardiff) appeared for the respondent.
Sally Dobson, barrister
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