The Habberfields and the Hab-not-a-fields

This is a guest post by Charlotte John.

“The woods are lovely, dark and deep,
But I have promises to keep.”

Robert Frost, Stopping by Woods on a Snowy Evening

Last year saw an abundant crop of “proprietary estoppel” disputes between farming families, with no fewer than 12 such claims being heard by the High Court. Of those claims, only 3 were successful – which points to the factual and legal difficulties that claimants face in invoking this doctrine. Behind each of these cases lies human tragedy: a deeply, and most likely irretrievably, fractured family.

At its simplest essence, proprietary estoppel may be invoked to assist a claimant where:
• they have been promised that they will ultimately receive an interest in property;
• the claimant relies upon those promises; and
• in so relying, the claimant incurs detriment.

Translated into the farming scenario, this often consists of “one day, all this will be yours” type discussions coupled with the recipient of this sort of assurance, in expectation of their inheritance, working long hours on the family farm for little to no pay. However, the doctrine may just as well be invoked in a range of other scenarios, such as in the case of a family member who cares for an elderly relative in reliance upon a promise that they will eventually be left their bungalow.

Lucy Habberfield is one of the successful claimants of the last year and the decision of the judge who tried the case, Mr Justice Birss, was upheld by the Court of Appeal last month (see Habberfield v Habberfield [2018] EWHC 317 (Ch), affirmed [2019] EWCA Civ 890).

These sorts of disputes, being narratives that are rich in human interest, are often of interest to the press. The Daily Mail’s headlines on this case (post judgment at trial, pre-appeal and post-appeal) give a flavour of the angle that reporting on this sort of case usually takes – heavy on the colourful aspects of the dispute and light on legal content:

[As you may have noted, there was a fight in the cowshed]

The decision at trial

The dispute concerned a family farm in Somerset. The Claimant, Lucy, was one of the four children of the deceased, Frank Habberfield. The farming business had been operated as a partnership between Frank and his wife, Jane. The main business had been dairy farming, however that had ceased when Lucy had departed from the farm following a disagreement with other family members and the now infamous fight in the cowshed. Frank upon his death had left the farm to Jane (who was aged 81 by the time of the trial). The farm was worth about £2.5 million.

A variety of representations had been made to Lucy by her father. By way of example:

• From time to time, Frank told Lucy that she would take the farm over when he could not do farming any more.
• Shortly after the re-establishment of the dairy herd, Frank told her that “they are your cows, and if you want them you should milk them”.
• On occasions when Lucy wanted to take time off, she would be told that if she wanted the farm then she had to stay to ensure the work was done.

The trial judge considered that, whilst some of the representations related to the running of the business rather than the ownership of the farm, overall they did amount to assurances that the farm business and land would be Lucy’s one day.

He further found that Lucy had incurred detriment: she had worked very long hours, for little pay over 30 years and she had lost the opportunity to build a life for herself elsewhere. By considering expert evidence on agricultural wages, the judge concluded that the financial loss to Lucy could be valued at around £220,000.

The basic elements to establish a proprietary estoppel interest were successfully proven by Lucy. The more difficult question, and the question with which the Court of Appeal was primarily concerned, was that of how to compensate Lucy.

There is a lively debate about the approach to be taken to calculating the resulting award when a claimant has successfully established that an estoppel has arisen on the facts. This stems from controversy about the essential aim of proprietary estoppel – is it to compensate the claimant for the detriment they have suffered or is it to give effect to the promises that have been made to them? Another concept that creates difficulty is that of ‘proportionality’: is it right to give the claimant what they have been promised if that would be disproportionate to the detriment they have incurred?

In his judgment at trial, Birss J decided that Lucy ought to receive broadly what she had been promised – namely a cash payment, which he considered to be equivalent to the value of a viable dairy farm. He did not consider it fair simply to award Lucy a cash equivalent to the quantifiable detriment that she had suffered, because a value could not be readily put on her lost opportunity to build a life for herself elsewhere. Other factors leading to the conclusion that Lucy should receive what she had been promised were that the expectation that her parents assurances had created was certain and capable of being given effect to, Lucy had held this expectation for a very long period of time, and she had substantially done what had been expected in return of her.

However, Birss J did not consider that Lucy should receive the entire farm. She had always understood that some land would pass to her siblings, she had not necessarily expected to inherit before her mother passed away and the farmhouse was her mother’s home. Furthermore (and an issue of particular focus on appeal) Lucy had turned down an offer of partnership in 2008, which, whilst the judge did not consider it a reason to refuse Lucy’s claim, had been a genuine offer by her parents to resolve the succession dispute and would have meant that there would still have been a dairy farm at Woodrow if she had accepted it.

Lucy was therefore awarded a cash award of £1.17 million (out of an estate worth c. £2.5 million). Jane sought to argue that Lucy should not receive this money until after Jane’s death, as Jane lacked the funds to pay Lucy without a sale of the farm and of her home, but the judge disagreed, stating that the “desperately difficult situation” in which Jane found herself was of her own making.

The decision on appeal

Jane appealed to the Court of Appeal. Her appeal focused on the following issues:
• Lucy’s refusal of the offer made in 2008, which would have resulted in her ultimately receiving a viable dairy farm, meant that it was not inequitable or unconscionable for Frank and Jane to resile from their earlier assurances.
• In the light of that refusal, the judge was wrong in principle in treating Lucy’s continued work on the farm after 2008 as relevant detrimental reliance.
• The judge’s award was disproportionate to the detriment that Lucy suffered.
• The judge was wrong to order the cash sum to be paid during Jane’s lifetime.

Lucy also crossed appealed on the basis that the judge ought to have awarded her more and that he should have taken into account her husband’s work on the farm and should not have taken into account her failure to accept the 2008 offer as a matter that justified reducing the award to her.

In approaching the appeal, the Court of Appeal reminded itself that a trial judge had a wide discretion in these sorts of cases and that the Court of Appeal could only interfere if (a) the judge had got the law wrong, or (b) he had taken into account something irrelevant, or (c) he had failed to take something relevant into account, or (d) his decision was one that no reasonable judge could have reached.

The 2008 offer and its rejection

Citing the line at the opening of the post from Robert Frost’s poem, Stopping by Woods on a Snowy Evening, the Court of Appeal emphasised that the doctrine of proprietary estoppel is underpinned by the idea that promises should be kept.

The judge had been entitled to conclude that the making of the offer did not amount to a complete defence to Lucy’s claim. If Lucy was to be taken to have waived whatever rights she might have had by 2008, it would have been necessary for her to have known that she had such rights; and to have communicated the fact that she was giving them up. None of that happened on the facts.

In addition, there was no evidence that Frank or Jane thought that Lucy had abandoned her expectations and Frank and Jane had not changed their position in the belief that Lucy had no further claim upon them, save that they had ceased the dairy farming (which the judge had taken into account in any event in quantifying Lucy’s claim).

Detriment

Jane argued that the judge should not have taken into account Lucy’s activities on the farm after the rejection of her parent’s offer 2008, in quantifying her claim. The argument was that, since no further representations were made after Lucy had refused her parents offer, any work undertaken by Lucy after that date could not have been in reliance upon promises made by her parents.

However, the judge had found on the facts that Lucy had remained on the farm because she hoped she would get what she expected in the long run and staying was the way to do that. Since the offer to Lucy had not been phrased as a final offer and it had not been suggested to Lucy that she would forfeit her inheritance if she failed to accept it, the Court of Appeal considered that the judge had not made an error in taking into account her activities after 2008.

The Court of Appeal also dismissed Lucy’s argument that her husband’s activities on the farm should be taken into account in assessing the detriment to Lucy – even if a value could be put upon her husband’s contributions, it would have made no difference given that the award made was in any event very much greater than the combined detriment incurred by Lucy and her husband.

Proportionality

The nub of the argument on this issue was whether or not the disparity between the quantifiable detriment suffered by Lucy (£220,000) and the award (£1,170,000) ought to justify the Court of Appeal interfering with the judge’s decision.

In relation to this issue, the Court of Appeal in Habberfield considered the case of Davies v Davies [2016] EWCA Civ 463, reported in the press at the time as the “cowshed Cinderella” case. This was another case featuring a dairy farm and a daughter, Eirian Davies, who claimed to be entitled to the farm on the grounds of proprietary estoppel.

As an interesting aside, it was reading about the case of Davies v Davies that had prompted Lucy to bring her claim – which indicates the importance of press coverage of these sorts of cases in alerting people to their rights.

In Davies v Davies, the trial judge’s decision to award £1.3 million was overturned on appeal on the basis, in essence, that the award was disproportionate to the quantifiable detriment suffered by the claimant (c. £350,000). The Court of Appeal in Davies noted that proportionality was at the heart of the doctrine of proprietary estoppel and reduced Eirian’s award to £500,000.

The Court of Appeal in Habberfield reiterated the importance of proportionality. A claimant’s expectation to receive what has been promised to them is not necessarily what they will receive. The relevant question is whether or not giving effect to what had been promised to the claimant would be “out of all proportion to the detriment” suffered. Furthermore, proportionality is not an issue to be approached on a strictly mathematical basis.

The Court of Appeal in Habberfield did not consider that the award of £1.17 million to Lucy was disproportionate and the judge’s decision was therefore upheld.

The reader may wonder why the Court of Appeal considered that Lucy’s award was not disproportionate (£1.17 versus detriment of £220,000) whereas the award by the trial judge in Davies (£1.3 million versus detriment of £350,000) was held on appeal to be disproportionate. The answer lies in the fact that Lucy, in contrast with Eirian, had gone much further in doing all that could have been expected of her and had performed her side of the bargain.

The Court of Appeal considered that the trial judge had further been right to scale back the provision for Lucy to reflect the fact that, had she stayed and worked with the offer that her parents had made, there would have been a viable farm at Woodrow and therefore dismissed Lucy’s appeal on this issue.

Time for payment

The most difficult aspect of the appeal was the question of whether or not Lucy should receive her award now or after Jane’s death and the impact of the award upon Jane, who would lose her home as a result of the judge’s decision.

The Court of Appeal acknowledged that this was a very hard result for an 82-year-old lady who would lose her home of 40 years as a result of the judge’s decision. However, Jane would still be left with enough to rehouse herself and to supplement her income (although one wonders what the impact of the costs orders in what was described as “ruinously expensive” litigation will be).

Ultimately, and with some reluctance, the Court of Appeal upheld the judge’s decision – Lucy’s need to establish a new life, at the age of 51, also needed to be taken into account, as did the need for a clean break between the parties – and it could not be said that the judge’s decision was outside of his discretion.

Undoubtedly, an unhappy conclusion to what the Court of Appeal described as being the “sad tale of a farming family”. The decision illustrates the very hard decisions that have to be made in these sorts of cases and just how much is at stake for the parties in a dispute of this nature.

Charlotte John is a practising barrister based at Hardwicke chambers, who specialises in trusts, wills, probate, inheritance and property law. She also writes the Equity’s Darling blog, where she previously wrote about the judge’s decision in a post entitled Dust up in the Dairy: proprietary estoppel in Habberfield v Habberfield.

Photo by Lukas Hartmann from Pexels.