Tue, 28 May 2019
The recent Court of Appeal decision in Habberfield v Habberfield [2019] EWCA Civ 890 provides an important, and useful, restatement of the principles of proprietary estoppel. The principles of assurance, reliance and detriment are well known to lawyers. However, it is always welcome to see a doctrine as hard to unpick as proprietary estoppel considered by the higher courts.
Habberfield v Habberfield centred around a farm with a value of approximately £2.5 million. In the Court of Appeal, the Defendant – Jane – appealed the decision of the judge below to award her daughter – Lucy - £1.2 million. Lucy had spent 30 years working on the family farm. Lucy did so on the basis of her late father’s assurances that Lucy would take over the dairy business when he retired and, ultimately, when both parents had passed, would inherit the entire farm.
In 2008, Lucy refused an offer to run the farm in partnership with her parents. Some five years later, in 2013, after a family dispute, Lucy left the farm. Lucy’s father died in 2014 and left the farm to Jane who closed the dairy unit. The judge below found that Lucy had established an equity based on proprietary estoppel. The elements of assurance, reliance and detriment were all there.
For the purposes of the appeal, the defendant argued, inter alia, that:
- The claimant's refusal to accept the partnership offer meant that it had not been unconscionable for her father to resile from his assurances;
- The award was disproportionate to the detriment;
- It was inappropriate to order the payment of a cash sum during the defendant's lifetime.
The Lord Justices dismissed the appeal.
Contrary to Jane's assertions, Lucy’s rejection of the partnership offer did not defeat her claim; rather, it was merely a factor to be taken into account in determining how the equity should be satisfied. The award of £1.2 million equated to the cost of reinstating a working dairy unit; the effect of the award was to provide funds so that Lucy could acquire a dairy unit with land.
The Claimant argued that the judge below should not have reduced her award to £1.2 million – as opposed to the whole farm. In an equitable estoppel case, the Court had to consider whether in hindsight it would be unconscionable for a promise not to be kept. In this consideration, a change in the promisor's circumstances was relevant. There was no suggestion that closure of the diary unit was, in any way culpable. Therefore the closure was a change of circumstance which mitigated against an award any greater than £1.2 million.
The case also restated the importance of proportionality. A claimant’s expectation was not determinative of the relief which should be granted. Instead, the relevant question was whether the award was out of all proportion to the detriment. As Lord Justice Lewison wrote in his judgment:
‘The relevant comparison for the purposes of proportionality is a comparison between detriment and remedy. Nevertheless, proportionality is not a question of mathematical precision. Like all cases in which the court decides how to satisfy an equity, it must exercise a judgmental discretion, and may do so in a flexible way.’
The Lord Justices agreed that, to raise the £1.2 million, the farm would have to be sold. This was despite the fact that the sale would deprive the Defendant of her home; it was evidenced, though, that the Defendant had sufficient means to rehouse herself and meet any shortfall in income. The Claimant was 51 years of age. An immediate award was necessary so that she could begin farming on her own account. In addition, the breakdown of the familial relationships made a clean break especially attractive.
Lord Justice Lewison’s leading judgment provides a comprehensive appraisal of the cornerstones of proprietary estoppel and is an insightful refresher for practitioners.
