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Branded by a High Court Judge as “one of the most regrettable pieces of litigation that I have ever come across”, the recent case of Teasdale v Carter [2023] is an example of how not to conduct a family farming dispute.
The case stemmed from circumstances, already sad in their own right, namely divorce proceedings, and was one of profound consequence, both emotionally and financially. Not only did the astronomical legal costs expended by the parties (over £1 million) far exceed the value of the property in question (£245,000), the family relationship was fractured as a result.
This case provides important guidance on proprietary estoppel, separate representation and costs orders.
Background
The case primarily concerned the beneficial ownership of Cow House; a property on the family farm held in the joint names of Mr Teasdale (“Father“) and Mrs Teasdale (“Mother“) and subject to financial remedy proceedings on divorce. As an ancillary matter to the substantive proceedings, the daughter (“Rebecca“), sought a declaration that the beneficial interest in Cow House rested in her by virtue of proprietary estoppel.
Leeds Family Court
Rebecca’s claim was founded on expenditure of £200,000 (predominantly raised through a mortgage which she paid) and associated labour in renovating a former barn into her ‘forever’ family home. This was in reliance of the Father’s repeated promises (known to the Mother) that the property would be hers, which he did not contest. The Mother asserted that Rebecca’s payments amounted to no more than her putting her ‘stamp’ on Cow House, which she occupied as tenant.
HHJ Shelton found that estoppel was made out and that the ‘minimum award necessary’ to do justice was the transfer of Cow House to Rebecca upon discharge by her of the outstanding mortgage.
As Rebecca and her father were separately represented, the Mother was ordered to pay one half of their respective costs.
Appeal
The Mother appealed on four grounds, which were all subsequently dismissed.
Ground 1 – findings of fact
The finding of proprietary estoppel was upheld as it was enough that the Mother had been aware of the promise and authorised it. Reliance and detriment were demonstrated by Rebecca’s exclusive occupation, significant financial contribution to the property’s construction and payment of the mortgage.
Ground 2 – minimum equity to do justice
The Mother argued that the judge should have awarded a lump sum to Rebecca, rather than transfer Cow House into her sole name.
The court differentiated between situations where (a) a party has lived in a property for many years and was intimately involved in its construction, and (b) where a party merely has a right to reside in the property. In the former, where proprietary estoppel is established, the correct remedy is the transfer of the property as promised, as opposed to a lump sum in order to achieve a clean break. Being mere financial compensation, this may be viewed as a form of compulsory purchase against the wishes of the beneficial owner, which is not an equitable remedy.
Ground 3 – costs order in favour of Rebecca
The Mother appealed on the basis that this did not adequately reflect that Rebecca had been unsuccessful on other parts of her case.
This was dismissed as Rebecca was successful on the issue of Cow House, being the central part of the litigation, which the costs reflected. The costs order properly reflected the level of success achieved.
Ground 4 – costs order in favour of the Father
It was further appealed that it was not reasonably necessary for the Father to be separately represented. Instead, he should have shared representation with Rebecca.
The court found that the Father was entitled to separate legal representation, as this case was ancillary to financial remedy proceedings for divorce, which raised issues of conflict of interest and legal professional privilege. A costs order was therefore justified against the Mother in favour of both the Father and Rebecca.
Practical Considerations
In summary, key takeaways from this case are as follows:
- Proprietary Estoppel: Although the grounds on which proprietary estoppel is established are fact specific, exclusive occupation coupled with financial contributions to a property’s construction and payments discharging the mortgage are likely to suffice as reliance and detriment. In these circumstances, the transfer of property is the correct remedy, as opposed to a clean break.
- Costs and Separate Representation: If an estoppel claim is ancillary to financial remedy proceedings for divorce, which raises issues of conflict of interest and legal professional privilege, a costs order can be made in favour of multiple persons who are separately represented.
In future claims, the judge suggested that the parties could obtain a preliminary ruling to determine whether costs would be recoverable, which would enable them to make an informed choice as to whether they should be separately represented. The clarification of their potential exposure to costs orders would no doubt help obviate the type of argument raised in this case.
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