In Davies and another v Davies  EWCA Civ 463, the Court of Appeal has allowed an appeal against an award of £1.3 million in satisfaction of a claim for equitable relief based on proprietary estoppel and has reduced the award to £500,000.
The ruling follows a long running and bitter dispute between Eirian Davies and her parents. Eirian Davies worked on her parents’ large dairy farm in Wales over many years, for little or no pay, upon assurances that the farm would one day be hers. At one time a partnership agreement was drawn up but it was never signed.
Despite the assurances given to Eirian over the years, her parents prepared Wills leaving the farm equally to Eirian and her two sisters. The relationship between Eirian and her parents reached breaking point, leading to a physical altercation.
In 2012, Eirian's parents brought Court proceedings to evict her and her family from the farmhouse. Eirian counterclaimed an interest in the farm, land and business. At the time, the farming business was growing and had an estimated value of £3.15 million.
The Court of Appeal upheld the High Court decision that Eirian had a valid claim for equitable relief based on proprietary estoppel and as such was entitled to an interest in the farm. The extent of the award and the way in which is should be satisfied (i.e. by cash payment or a right to stay in the farm house) was left to be determined at a later hearing.
In January 2015, the High Court then ruled on the value of the claim and held that £1.3 million was an appropriate award.
Mr and Mrs Davies appealed and the Court of Appeal has now reduced this award to £500,000. The Court found that the judge had applied ‘too broad a brush’ and failed to analyse the facts with sufficient rigour or explain why he had reached the significant award.
This case illustrates the complexities of calculating a monetary award in satisfaction of an equity based on estoppel, particularly when faced with a pattern of changing and uncertain expectations.
Kirsten Edberg, Private Client lawyer at Warner Goodman states “This is a perfect example of the significant risk involved in relying on verbal agreements or assurances. It is extremely important that parties to a business arrangement, even if that is a family run business, are clear about the terms of their agreement and it is legally documented. Failure to do so can lead to confusion, an irreparable breakdown of the family relationship and costly litigation. This case also illustrates the difficulties and complexity of analysing the facts to calculate an appropriate award in a successful estoppel claim”