Proprietary estoppel claims; Detriment and expectation
Proprietary estoppel claims are in the news again with the case of Davis v Davis and Davis, an appeal against a lower court’s ruling on how a child’s contribution to her parents’ farming business should be recognised – a perenial problem for lawyers and judges where informal agreements are reached between family members without a legal document being drawn up. Where there is no legal agreement, uncertainty thrives and interests are left unprotected.
When it comes to beneficial interest claims and proprietary estoppel the courts enjoy a wide and unfettered judgmental discretion. The aim of the court is to ensure fairness and give protection to people who make a material contribution in the expectation that their investment will be secure. The watchwords are ‘detriment’ and ‘expectation’.
Daughter works on parents’ farm for minimal wages in return for promise that the farm will be hers
In this case the claimant’s parents, Mr and Mrs Davies, were dairy farmers with a farming business (including land) worth around £4.4m. The claimant worked on the family farm for many years. Her wages were low, but she was assured by her parents that the farm would be her’s one day.
However, the relationship between daughter and parents broke down and court action was taken by the parents to evict their daughter from the farm. This sparked the daughter’s beneficial interest claim.
Court rules that daughter has a valid proprietary estoppel claim
The court ruled that the daughter had a valid proprietary estoppel claim and that her work on the family farm should be rewarded. But how should that equitable interest should be satisfied?
The judge had the power to order the parents to make a payment to their daughter. Alternatively the daughter could be granted a right to remain living on the farm.
The claimant wanted the land and the business that had been promised to her. Her parents offered her £350,000. What did the court do?
What did the court originally award the daughter?
The judge in the original trial looked at the detriment the daughter had suffered by working on the farm for long hours and receiving only minimal pay and made an award which attempted to strike a balance between that detriment and the claimant’s expectations based on the promises made to her.
The daughter was awarded £1.3m, a figure that represented just over a third of the of the net value of the farming business.
Outcome of the parents appeal.
The parents thought the decision was too generous and appealed. The Court of Appeal was sympathetic to the parents’ case. Various promises had been made by the parents over the years but the earlier judge had failed to identify precisely what the daughter’s expectations were, given these differeing representations.
The Court of Appeal also felt it was important that the claimant had voluntarily left the farm for 5 years between 2001 and 2006, before returning for another 3 years. This was relevant in terms of both detriment and expectation.
The court therefore concluded that the parent’s offer of £350,000 had gone a long way towards meeting their daughter’s expectations, but decided that she should be awarded £500,000; less than half of the court’s earlier award.
If you have acted to your detriment in expectation that you would ultimately be rewarded but have been let down then call us now for a free initial assessment of your claim.