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Recent Habberfield proprietary estoppel claim

View profile for Molly Frankham
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The Court of Appeal has recently upheld a High Court decision to award £1.2 million of lifetime compensation in proprietary estoppel claim.

The doctrine of estoppel essentially exists to protect a party who has been induced to act in a certain way on the basis of assurances given by another person. It stops the latter party from reneging on promises made where it would be unconscionable to allow them to do so.

Proprietary estoppel was discussed in a very recent case of Habberfield v Habberfield [2019] EWCA Civ 890. The facts were in relation to a farm worth circa £2.5 million, which the claimant’s parents had run in partnership. The claimant worked on the farm for around 30 years following assurances from her father that she would take over the dairy unit of the farm once he retired. He also promised that she would inherit the whole of the farm once he and her mother (who was the defendant) died.

The claimant declined a partnership with her siblings in 2008. In 2013, she left the farm following a dispute involving her sister. In 2014, her father died, leaving the farm to her mother, who then closed the dairy unit.

When the case was heard by the High Court, the judge found that she has established equity in the farm on the basis of proprietary estoppel. He found that whilst her 30 years’ work was hard to quantify, there was additional detriment worth £220,000. Also, he found that turning down the offer of partnership only further sought to show how equity had been established. He awarded £1.2 million – he scaled down the award to give her sufficient monies to purchase an alternative dairy unit.

This is an interesting decision, as it means the award has been made whilst the claimant’s mother is still alive.

The defendant appealed on four grounds, these are outlined together with a summary of the Court of Appeal’s findings below:

  1. In declining the partnership offer, it did not render it unconscionable for her father to renege on his assurances.The defendant argued that if she had accepted this would have satisfied any equity that would have arisen. However, this was not a complete defence as the partnership would not have given her control of the dairy unit and this was her expectation.
  2. The judge should not have taken into account any post-2008 reliance. The partnership offer had not been offered on the basis that she would forfeit her inheritance if she did not sign it.
  3. The award was disproportionate to the detriment. The judge was found to be correct not to award more than a claimant’s expectation. He has scaled it down, and this was right.
  4. It was inappropriate to order the payment of a cash sum during the defendant’s lifetime. The farm would need to be sold to raise £1.2million. Given the claimant’s age (51) and need for immediate award, the judge was entitled to make the order he did.

The Court of Appeal, therefore, upheld the decision of the High Court. This case shows the wide discretion to give a clean break in property disputes, even if this means the sale of a family home.

I am a dispute resolution solicitor in our Colchester office. I can be contacted on 01206 217617 or molly.frankham@birkettlong.co.uk.  

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