In Agricultural Brief Issue 30 (Winter 2015/16) an article on pages 8 and 9 by Richard Eaton and Laura Tanguay discussed the case of Davies v Davies of 2015.
In Agricultural Brief Issue 30 (Winter 2015/16) an article on pages 8 and 9 by Richard Eaton and Laura Tanguay discussed the case of Davies v Davies of 2015. This was a case on proprietary estoppel, which can arise where promises are made, which are relied upon, to the detriment of the person receiving the promise. Where the rule applies, the courts will enforce the promise, even though none of the individuals involved may have thought there was any legal obligation.
In the Davies case Evan James Davies (EJD) had worked on his parents’ farm from age 16, for low wages, and did not pursue his ambition to become a police officer. His siblings pursued more lucrative careers away from the farm. EJD also spent his own money renovating the farm. He said he did all this because of promises made by his parents, that he would inherit the farm. But when his father died the farm was not left to him. EJD made a court application, under proprietary estoppel, arguing that his parents were bound to pass the ownership of the farm to him. The court ordered that the farm should be transferred to EJD absolutely. It found that promises had been made to him, which had been relied upon, to EJD’s detriment. Against this sort of background, the courts will apply the principles of proprietary estoppel to give a ‘just and equitable’ outcome, effectively treating the promise as binding.
There was a second case concerning a Welsh farm involving a second Davies family. Here Miss Eirian Davies, the so called ‘Cowshed Cinderella’, lived on the family dairy farm in Carmarthenshire, with her parents and her two sisters. Eirian was the only daughter who was happy working with the cows on the farm. From the age of 16 she worked on and off the farm at various times. Her two sisters may not have spent all their time at the Ball, but they chose to make their lives off the farm. Eirian was not paid a wage, but was given pocket money. Her relationship with her parents was troubled. On one occasion there was something nasty in the dairy shed. A bucket of milk was thrown over her head by her parents. She bit her father on the leg. Nevertheless her parents allowed her to move into the farmhouse and run the farm. But then there was a further fall out and the parents sought to evict her. She claimed they were estopped from doing so. The court found that promises had been made to her, and that she had relied on these to her detriment, so that she was entitled to an award. In this case the farm, worth £1.3m, was not transferred to her, but she was awarded a cash sum of £500,000, which had to be found by her parents.
The most recent case is Moore v Moore, reported in late 2016. This concerned a family farm in Wiltshire. The 650 acre farm belonged to brothers Roger and Geoffrey. They had inherited the farm from their father. Geoffrey’s children were not farmers. Roger’s son Stephen had worked on the farm since boyhood, for modest pay. Roger, Geoffrey and Stephen were partners in the business. Geoffrey retired in 2008 and, perhaps surprisingly, gifted his share in the farm (worth around £3m) to Stephen in return for a payment of £500,000, even though Geoffrey had children of his own. Roger then gradually fell ill with dementia and Stephen took management control. Stephen had never had a good relationship with his mother Pamela, who told him that Roger’s half share in the farm was going to be left to Stephen’s sister Julie. Stephen claimed that Roger’s share was bound to come to him as an estoppel had been created. He said he had always been told by Roger that he would inherit. He had relied on those assurances, to his detriment, in staying on the farm. The fact of Geoffrey’s gift to Stephen demonstrated the family’s wish that the farm should be kept together, and should pass to him as the agreed successor. The judge found that Stephen’s case was proven. There had indeed been an ‘overarching plan’ that Stephen would inherit the farm and the business. In this case the gift by Geoffrey to Stephen made no difference to the estoppel attaching to Roger’s half share.
What order did the court make in this case, given that Roger and Pamela were still alive? The general rule is that the award should be “the minimum equity needed to do justice”. Here Stephen’s parents were to remain in the farmhouse (maintained by Stephen) for as long as they wished, also receiving an income from the business, and with all reasonable health and care costs paid by Stephen out of the business. But otherwise, the farm and business were to belong to Stephen outright.
What lessons should be drawn from such cases?
Probably the first is ‘be careful what you promise’. Cases of this sort are still fairly rare, but they are increasing, and they show that the courts are willing to interfere in the control of farms by the owners, including the operation of Wills, if it would be unfair to allow the owner to renege on promises made and relied upon.
Second, they show how important it is for families to address the issue of succession in their businesses, and to try to agree a plan which is fair to everyone, while preserving the business, if that is intended.
Third, if you are the hard working youngster, don’t assume that your expectations will be fulfilled. Try to encourage an agreed plan. Making a proprietary estoppel claim will be expensive, and may not succeed. A family dispute is never desirable.