In May 2014 I wrote a blog about the dairy farming case of
Davies v Davies  EWCA Civ 568 (click here to view). Almost exactly 2 years
later, the Court of Appeal judgment quantifying Eirian's claim
has been published.
The essence of the doctrine of proprietary estoppel is to do
what is necessary to avoid an unconscionable result. The judge at
first instance found that the appropriate equitable relief would be
a financial award to Eirian from her parents, rather than a
transfer of property, licence to occupy or interest in the farming
business. Whilst neither party questioned that decision, Mr and Mrs
Davies appealed the amount. They had offered their daughter
£350,000, but the judge decided that they should pay
£1.3m. The Court of Appeal ruled that the award was too high,
and instead ordered them to pay £500,000.
The Court of Appeal paid particular attention to Eirian's
expectations during her relationship with her parents. Unlike many
other proprietary estoppel cases, there was not a consistent
promise or assurance that was relied upon by the claimant. In this
case Eirian had at different times expected different things: to
inherit the farm and land; to succeed her parents in running the
farm when they retired; to attain an interest in the farming
partnership; or to attain a shareholding in the family company.
Some of these expectations were relatively short lived – for
example Eirian acknowledged in evidence that she effectively gave
up any notion of inheriting the farm when she chose to marry
against her parents' wishes in 1989.
The Court of Appeal confirmed the requisite ingredients of
proprietary estoppel as being (a) an assurance (promise) of
sufficient clarity, (b) reliance by the claimant on that assurance
and (c) detriment to the claimant in consequence of reliance on the
assurance. Lewison LJ approved of the idea that there should be 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. Given this was a case
where expectations moved significantly over time, and where the
Court of Appeal emphasised the need for proportionality of remedy
sought to detriment suffered, it is un surprising that the Court
concluded that the original award of £1.3m was too high.
The Court has to look at both expectation and detriment to find
a proportionate solution – if the detriment is minimal but
the expectation large, it would not be proportionate to fulfil the
claimant's expectations. In this case, many of Eirian's
expectations were short lived, and the detriment relatively small.
For example, whilst the Court of Appeal accepted that Eirian had
suffered a detriment by giving up her job outside of the farm,
which she enjoyed and where she was better paid and had shorter
working hours, it was not an irretrievable detriment. She was young
enough to get another job and fulfil her ambitions elsewhere.
During the period when she expected to be made a partner, the
partnership made a profit of £21,419 (in 1997) and a loss of
£9,609 (in 1999) These factors should be reflected in the
amount of her award.
The Court of Appeal took quite a mathematical approach to
calculating the award. It looked at the following heads in
quantification of the award: accommodation element (Eirian had been
promised she could live in the farmhouse for life); partnership
element (profits to which she would have been entitled between
during the period she expected to be partner); company element
(share of the profits made by the company for the period she
expected to be a shareholder); compensation for underpayment for
the work Eirian had carried out on the farm in the early years; and
finally the non-financial aspects of detriment, such as the
disappointment of not inheriting the land.
Having considered all those elements, the court decided that
£500,000 was the right amount. It is interesting that with
all the same facts and evidence as the trial judge, the Court of
Appeal came to a figure £800,000 lower. As I said in my
earlier blog, uncertainty is inevitable in these esoteric cases,
and it is clear from reading the judgment that when the court has
such a wide ambit of discretion there are wide boundaries within
which decisions can be made.
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The well documented case of Heather Ilott and her attempt to overturn her Mother's will appears to have come to an end with the Supreme Court ruling that, whilst she may have be granted some money from her Mother's estate, it is a far smaller sum than the Court of Appeal awarded.
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