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Promises, promises and the cow shed Cinderella

In the case of (1) Davies, (2) Davies –v- Davies (2016) EWCA CIV C463 the Court of Appeal had to consider the doctrine of Proprietary Estoppel relating to parents and their daughter.
The Appellants owned a family farm that had been operating for over 50 years and ran it with their daughter, the Respondent and dubbed at the time “the cow shed Cinderella”.  The daughter was only one of three children interested in working on the farm. A draft Partnership Agreement had been drawn but this was never signed by the parents.  The working relationship between the daughter and her parents was at times acrimonious and resulted in the parents changing their Wills several times and the daughter on several occasions temporarily ceasing to live and work on the farm including to marry and start a family.
On leaving the farm in 2001 the daughter accepted that she had no expectation of the promise of the farm, however when she returned to work on the farm, on each occasion, different assurances were made for example in 2007 the daughter was promised that she could live there for life and even after 2008, discussions related to a shareholding in the business.  From 2009 there was a draft Will leaving the farm to the daughter, but arguments soon followed after seeing the document and correspondence suggesting that she knew the promises made to her would not be kept.  The daughter left the farm permanently in 2012.
At first instance, the Judge was satisfied that the parents had at one stage allowed their daughter to hold an expectation of inheriting the farm and an expectation of a partnership in the business.  The daughter had suffered detriment in reliance by working and living on the farm for many years, had received little remuneration and had given up an alternative career opportunity.  The Judge also took into account that the daughter’s expectation was dependent on her continuing to work on the farm for the rest of her life and the expectation she held had varied over time.  The Judge rejected the daughter’s claim to be awarded the land and business, however he did award the sum of £1.3M which represented around one third of the net value of the farm and business which was considered to be a fair reflection of the expectation, the detriment suffered and other factors.
Challenging the quantum of equitable relief, the parents subsequently took the case to the Court of Appeal.
The Court of Appeal unanimously allowed the Appeal but reduced the award to £500,000.00.  The Court considered that the Judge at first instance had applied a far too broad a brush and failed to analyse the facts that he found with sufficient rigour in deciding to award the Claimant £1.3M.
The Court of Appeal stressed that the proportionality “lies at the heart of the doctrine”. In particular there must be proportionality between the remedy and the detriment.  This is not to suggest that the Court abandons expectation only to compensate detrimental reliance, but rather to accept that if the expectation is disproportionate to the detriment, then the equity may be satisfied in a more limited manner.
The Court stated that it was implicit that in such a case the person claiming must have performed their part of the quasi-bargain.  Where the expectation was uncertain, that specific vindication cannot be the appropriate test.  The clearer the expectation, the greater the detriment and the longer the expectation is held, the greater the weight to be given to the expectation.
The Court of Appeal agreed with the Trial Judge that this was not a case where the Respondent had “positioned her whole life” on the basis of the assurances.  The daughter had been underpaid and it was considered that she had sacrificed the opportunity to work shorter hours, in alternative employment, away from the somewhat strained relationship that she had with her parents.  The Court found that the expectation had not been held for very long and at some points the expectation the daughter held was not reasonably derivable from what she was told (particularly in light of the changing nature of her parents Wills).
Giving up the shorter working hours to work for her parents was a detriment, but this had not been consistent as she had worked elsewhere and was now free to retrieve that situation.  There was no evidence that the daughter had made life changing choices based on her expectations. While non-financial aspects are difficult to assess, the Court clearly determined that the amount awarded had been excessive and stated that the award under this head should be relatively modest.  The Court of Appeal reduced the award to £500,000.00 which is made up of an accommodation element, a commercial element and a non-financial element.
If you are dealing with a case of Proprietary Estoppel, then a means of approaching the position of expectation would be to adopt a “sliding scale” by which the clearer the expectation, the greater the detriment and the longer the passage of time during which the expectation was reasonably held, the greater would be the weight that should be given to the expectation.
Proprietary Estoppel can be used as a remedy in Contested Probate, Co-habiting couples and for other family relationships.  For further information, call 0800 088 6004 to see how we can help you.