Farmers and Estoppel

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Case: Davies v Davies [2016] EWCA Civ 463

    1. I had a client many years ago who was being cross examined by counsel for the other side. Counsel said: ‘Mr X I put it to you that you are a liar’. The reply flashed: ‘No. I am not. I have never had any legal training’.
    1. Well, lots of farmers and non-legal advisers may not have had legal training, but many are barrack-room lawyers. That is not a criticism. Indeed, it has been a pleasure to operate in that environment for almost forty years. One thing that all farmers know is that a handshake is a deal done. Likewise, a promise is a promise and it is to be relied on.
What is estoppel?
    1. The concept of a promise brings us to estoppel. In broad terms estoppel is a legal concept where the courts are prepared to step in where a promise has been made (or there is ‘encouragement’) but there is no enforceable agreement.
    1. The essence of the so called equitable doctrine of proprietary estoppel has three limbs: –
      • The owner of land induces, encourages or allows the claimant to believe that he or she has or will enjoy some right or benefit over the owner’s property.
      • In reliance upon this belief, the claimant acts to his or her detriment to the knowledge of the owner and
      • The owner then seeks to take unconscionable advantage of the claimant by denying him or her the right or benefit which he or she expected to receive.
Farming cases
    1. Farming is not just about earning a living. What I have learnt is that it is a way of life. It is no surprise that so many estoppel cases arise in the agriculture industry. Indeed my own notable cases list is peppered with estoppel cases.
What is promised? What is fair?
    1. Analysing a case about estoppel often starts with the Jennings v Rice [2008] Having found that promises had been made, and relied on to create detriment, the Court of Appeal decided that there should be a fair reward for services. Robert Walker LJ said: ‘… the court must take a principled approach and cannot exercise a completely unfettered discretion according to the individual judges’ notion of what is fair in any particular case…’. But fairness is central to the courts’ approach and it can be flexible.
    1. Where a benefactor creates a clear understanding that the inheritance of the property is the expectation, fulfilling that expectation is the appropriate court remedy. These types of cases are often described as quasi-contracts. Gillet v Holt [2001] is a farming case where the farm was promised to be left in a Will. It was not. The court was satisfied that it should have been and made an order to that effect. It is a straightforward application of the principle that goes back to Inwards v Baker in 1965 when Mum said to her son, build me a garage at your cost and I will leave my house to you. The son did so. Her Will did not leave the house to him. The court remedied that.
    1. The encouragement of a benefactor can be active or passive. The owner must have encouraged the claimant by words or conduct to believe that he or she has or will in the future enjoy some right or benefit over the owner’s property. Active encouragement includes requesting the claimant to act in a particular manner or a written or oral assurance or consent to undertake some construction work or something of a similar nature.
    1. Passive encouragement occurs where the owner stands by and allows the claimant to act to his or her detriment knowing that he or she mistakenly believed that he or she has or will obtain an interest in or a right over the owner’s land.
Change in expectation
    1. This is trickier. Circumstances change over a period of time. How does the law cope with that? The answer is that it has given rise to a number of reported cases. In another farming case that went to the House of Lords, Thorner v Major [2009], the court stressed that any remedy ordered had to be proportionate.
    1. Before getting to the effect of change, it is first necessary to consider detriment. The claimant must establish that he or she has acted to their detriment in reliance on the belief that he or she would acquire some right over the benefactor’s land.
    1. Expenditure, such as building the garage in the Inwards case, as an obvious example, but it can take other forms. For example: –
      • Refusing employment with tied accommodation and working unpaid for the owner for many years
      • Giving up a career or education opportunities
      • Looking after the owner or members of the owner’s family without payment
      • Working for the owner for forty years for below market wages, forgoing other employment opportunities
      • Selling off part of the claimant’s land in the belief that he would obtain a right of access over property belonging to the owner
    1. In the Gillet case it was described as ‘positioned his whole life on the basis of the assurances given to him and reasonably believed by him’.
Davies v Davies
    1. This case went to the Court of Appeal twice. On the second occasion I had taken over conduct. The case was unsatisfactory because (as the Court of Appeal said) it was decided at the outset to do it in two stages. The first was to establish whether there were promises, reliance and detriment. The second only followed if the claimant won the first stage. The second was to deal with satisfying the equity, ie what should the successful claimant receive?
    1. Stage one was lost. The High Court decision in relation to that was unsuccessfully appealed to the Court of Appeal on the issue of detriment. The claimant, Eirian Davies (Cinderella, as the Western Mail described her) put her case that she worked on the farm because it had been promised to her (while her two sisters attended Balls?!). By the time the dispute arose, her parents were trying to get possession of the farmhouse where she lived.
    1. The first thing to take on board in relation to the Davies case is that the vast majority of farming estoppel cases arise after the death of the benefactor. In Davies (and more cases since then) this was a dispute during the lifetime of the benefactors.
    1. In round one of Davies, Eirian established the promises, reliance and detriment. Round two was to decide how much she got. The High Court said £1.3 million. The Court of Appeal said £500,000. The Court of Appeal wanted to avoid an unconscionable outcome. In the Jennings case, the Court of Appeal there had identified that the aim of the remedial discretion is to ascertain the minimum equity to do justice. In Davies, the Court of Appeal recognised in its decision to reduce the sum ordered by the High Court, the changed assurances and the passage of time, as well as the acceleration of the interest received by Eirian during her parent’s lifetime.
Moore v Moore [2018]
    1. This is another case in which I acted for the successful party: this time on the side of the claimant. The High Court decided that, unlike the Davies case, the assurances were consistent over the years to hold the farm together. We were in quasi-contract territory. The court gave effect to the expectation because the assurances were clear over the years. The substantial farm and the business were transferred to my client during his father’s lifetime, albeit (very sadly) his father had Alzheimer’s diagnosed during this dispute which ended up being between my client and his mother. The resounding success in the High Court was subject to an appeal. Mother appealed everything: thirteen separate grounds for appeal, including whether the promises had been made. Only one limb of the appeal succeed. The Court of Appeal did agree that, as a result of the acceleration of my client’s interest before his father’s death, that should be subject to a greater provision for mother than the High Court had allowed. What that provision will be will never be known as that stage of the proceedings was then settled.
Other cases
    1. There have been many other farming cases reported since Moore was in the High Court. For example, Sam James [2018] failed to persuade the court that encouragement was given to him. In Habberfield [2018], longer working hours was sufficient detriment. In Smyth-Tyrrell v Bowden [2018], it was found that there were no positive assurances.
    1. More recently, in the Guest case of 2019, the farmer’s son established that he had an equitable interest in the family farm where he had worked for over thirty years for low pay in reliance on his father’s assurances that he would inherit a proportion of the farm. The breakdown in family relations caused the court to decide that the way to satisfy the equity was by way of a clean break which required a lump sum payment to the son, represented by a percentage value of the farm property and the business.
    1. The most recent leading judgment in a farming/estoppel case is Horsford, where judgment was handed down in March 2020. The case involved a not unusual mix of partnership dispute and estoppel. Mother claimed sums due to her from her son under a written partnership agreement. The son defended on the basis that he had been given assurances that he would receive the farm following his parent’s death. The Judge decided that no assurances had been made. Statements made to the son were equivocal. The outcome was that the son had to pay the mother just over £2.5 million over five years.
Charlton v Hawking [2005]
    1. Whenever I think about estoppel cases, this one brings back fond memories. I was appointed to act for the wife where a bank had appointed administrators in relation to the business carried on by her husband and her mother in law. The issue which arose was whether my client had any rights inspect of her self contained equestrian business which had been developed at the heart of the farm. The High Court decided that there was no landlord and tenant relationship but the investment made by my client had been in reliance upon promises. She was rescued by estoppel. The court decided that the appropriate order was to give my client an irrevocable licence for her use and occupation of the area in dispute which would only terminate on my client ceasing to carry on her business.
Beyond claims to the farm
    1. It needs to be remembered that estoppel can arise in different circumstances. For example, I had a case that went to the Court of Appeal (and succeed), Munday v Commercial First [2016], where estoppel was successfully relied upon in respect of procedure before the court. However, of great interest to the rural practitioner this way estoppel can apply to the validity and effectiveness of a notice to quit: see John v George [1996] and Frankland v Capstick [1959].
    1. What have I learned from my involvement in these sort of cases? The answer to that is simple. A good witness statement is critical. If a client’s evidence is not persuasive in a witness statement, it is highly unlikely that it would persuade a judge.

P R Williams

© May 2020

Contact: P R Williams, Ebery Williams – author of Scammell, Densham & Williams Law of Agriculture Holdings

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