Proprietary Estoppel: Habberfield and Guest confirm the direction of the Courts

In our spring 2018 edition of Agricultural Lore we reported on the first instance decision in the farming proprietary estoppel case of Habberfield v Habberfield [2019].

The Court of Appeal has now presided over the case and upheld the first instance decision of Justice Birrs, who awarded the successful claimant, Lucy, a sum of £1.2m in satisfaction of her claim.

Jane, the defendant who is Lucy’s mother, appealed on the following grounds:-

1. that an offer made to Lucy in 2008, which would have resulted in Lucy receiving a viable dairy farm, meant that it was not unconscionable for Jane and her late husband, Frank, to resile from their assurances;
2. the award was disproportionate to the detriment; and
3. the cash award should not have to be paid during Jane’s lifetime.

The appeal and cross-appeal were dismissed.

Court of Appeal decision

The Court of Appeal found that:-

• Lucy’s rejection of the offer was not a complete defence to the claim; it was a factor to be taken into account when determining how the equity was to be satisfied.
• The 2008 offer was not put to Lucy on the basis that if she rejected it that she would lose all prospects of future inheritance. Lucy continued to rely on the assurances that had been made to her after 2008 and the Judge at first instance had been right to conclude so.
• When looking at proportionality, Lucy’s expectation is not determinative of the relief to be granted. The question was whether the award was out of all proportion to the detriment suffered. Unless there are exceptional circumstances, it would not be equitable to award a claimant more than their expectation.
• Payment had to be made during Jane’s lifetime. The inevitable consequence of this is that the farm must be sold.

The Court of Appeal took the opportunity to emphasise the wide discretion that Judges have when determining proprietary estoppel claims. This makes it increasingly difficult, if an estoppel claim is litigated through the courts, to predict with any certainty how the Court might apply its discretion and what the outcome might be.

Guest v Guest [2019]

In yet another recent successful farming proprietary estoppel case, Guest v Guest [2019], the judgment of which was handed down back in April, the Judge was clear that the breakdown in family relations meant that a clean break solution had to be achieved. In exercising his discretion, the Judge decided that the appropriate remedy was for a lump sum to be paid to the claimant, Andrew, by his parents, David and Josephine, the defendants.

The lump sum to be awarded was 50% (after tax) of the market value of the dairy farming business that was carried on at the farm together with 40% (after tax) of the value of the farm land and buildings. A significant sum is going to have to be raised by David and Josephine, which is likely to lead to the farm or parts of it having to be sold.

In proprietary estoppel cases so much depends on the witness evidence at trial and the view taken by the judge. Early resolution is always in the best interests of the parties.