A 2015 text book proprietary estoppel case; farmers and business owners beware

Proprietary estoppel arises when someone is given a clear assurance that they will acquire a right over property, they reasonably rely on the assurance and they act substantially to their detriment on the strength of the assurance.

Cardiff's High Court has awarded £1.3 million to Eirian Davies to settle her proprietary estoppel claim on her parents' Carmarthenshire farm.

Miss Davies worked for many years for the farming business for little, or no, payment on the understanding that it would eventually be hers.

Miss Davies has two sisters but since 1989 neither has been closely involved in the business and left to pursue other careers. Miss Davies also left for a short time to work in stock breeding but later returned at her parents’ request.

By 2008, Miss Davies' parents agreed to hand over 49% of the business to her. The paperwork was prepared but never signed. Instead, the parents agreed to draft Wills leaving Miss Davies the land and buildings and a share in the business with a gift over to her daughter.

In 2009, the parents decided to settle the farm into a trust with the residue to be divided equally between the three daughters. This lead to significant tension within the family.  This intensified to such a level that Miss Davies left the farm in 2012 and made a claim for proprietary estoppel to establish her interest in the business valued at £3.8 million.

The following year, His Honour Justice Jarman allowed her claim in the Cardiff High Court, though he left the amount of her beneficial interest to be decided by another court.

Miss Davies’ parents appeal was rejected by the Court of Appeal save for one relatively minor point. The Court of Appeal agreed that Miss Davies' claim could be satisfied by either granting her equity in the farm or by a cash payment rather than an immediate beneficial interest.

The Court of Appeal invited the parties to negotiate a settlement as to the value of Miss Davies' interest without further litigation but this proved impossible.

Last month the Cardiff High Court granted her £1.3 million in compensation, one-third of the value of the business; an amount sufficient for her to start a new farming business of her own.