Proprietary estoppel

The Court of Appeal has confirmed that a judge had been entitled to award, on the basis of proprietary estoppel, £1.2 million to a claimant who had spent 30 years working on a family farm on the basis of her father’s assurances that she would take over the business when he retired and then inherit the whole farm when both her parents died. The case, Habberfield v Habberfield [2019] EWCA Civ 890), provides a helpful reminder of the principles of proprietary estoppel. The principles of assurance, reliance and detriment can be very difficult to understand and sometimes result in harsh outcomes.

The dispute in this case concerned a farm, near Yeovil in Somerset, worth some £2.5 million and with a total acreage of 220 acres, which the claimant’s parents had run in partnership. The claimant, Lucy Habberfield, was the youngest child  and had worked on the farm for 30 years on the basis of assurances by her father, Frank, that she would take over the dairy unit when he retired, and would inherit the whole farm when he and her mother Jane (the defendant) died.

In 2008, Lucy declined an offer to run the farm in partnership with her parents, on the basis that she would not have been in control and her siblings’ interference with the farm would continue. In addition, what was proposed did not include an offer to her husband of immediate partnership. In 2013, Lucy left the farm after a dispute with her sister. Frank died in 2014, leaving the farm to Jane, and she then closed the dairy unit. In 2016, Lucy issued proceedings to have the farm transferred to her.

The High Court judge found that Lucy had established equity based on proprietary estoppel, having suffered a detriment in reliance on her father’s assurances. It was found that whilst part of the claim (including the 30-years of work on the farm) was a detriment that could not be quantified; there was an element of detriment that could be valued and was worth £220,000. The Judge found that Lucy’s rejection of the offer of partnership did not defeat her claim, but was a factor to be taken into account in determining how the equity should be satisfied.

The Court of Appeal dismissed the claims of Jane that an offer to Lucy was adequate or sufficient to act as a defence to her daughter’s claim. It would be “practically unjust” to deny the daughter a remedy merely because she had refused an offer which would not have satisfied her expectation.

Even though in order to settle the claim meant selling the farm, including the house where the mother still lived, this did not mean that any financial award should be deferred until Jane’s death. There was no evidence that Jane (who was in early 80s) would be left destitute. The question before the Court of Appeal was whether the order lay outside the ambit of the High Court’s “wide judgemental discretion”. The Court of Appeal found that it was not.

Should you require any advice or assistance in connection with the subject matter, please do not hesitate to contact Stephen Foote.