What Legal Weight Does a Broken Promise Hold?
The Court of Appeal has reduced the award in a proprietary estoppel claim bought in respect of a family business. We previously reported on the successful claim for equitable relief based on proprietary estoppel made by a daughter
In the latest decision in the case of Davies & Another v Davies [2016] EWCA Civ 463 the Court of Appeal has reduced the award in a proprietary estoppel claim bought in respect of a family business.
The Decision of the High Court
We previously reported on the successful claim for equitable relief based on proprietary estoppel made by a daughter, Eirian Davies ('Eirian'), who had been excluded by her parents from the family farming business.
Eirian had worked on her parents’ farm all her adult life, initially for no pay, and then for less pay than the going-rate. Eirian’s parents had promised that she would inherit the £3.8 million farm and become a partner in its successful dairy business after their death. However her parents subsequently amended their Wills to leave everything in trust in equal shares to Eirian and her two siblings.
Eirian was successful in establishing her case at the High Court and an award of £1.3 million was made in January 2015.
Court of Appeal Reduces Daughter's Award
However, in June 2016, the Court of Appeal upheld the appeal by Eirian's parents and ordered for the award to be dramatically reduced to £500,000.
In reaching its decision, the Court considered whether Eirian's reliance on the assurances made by her parents met the threshold for equitable relief on the basis that the loss suffered by a claimant has to be sufficiently linked to the assurances given. In this case there were periods of time when Eirian had moved out of the farm to work elsewhere and it was clear that there had been a complete breakdown in the family relations. Given this change in circumstances, the Court ruled that Eirian could not have reasonably maintained her expectations of inheriting the whole farm.
The Court agreed that Eirian had a valid claim for equitable relief but held that on a proper analysis of the facts, the extent of the equity awarded to her should reflect the fact that the period of loss was not continuous or consistent in its nature.
A Note on Promises
The dramatic reduction in the award in this case demonstrates the difficulty in attaching a monetary value to equity claims based on estoppel. Whilst each case will be decided on its facts, it is clear that the Court will have regard to the effect of changing circumstances on an claimant's ability to rely on a previous assurance.
Proprietary estoppel is a notoriously difficult and complex area of law and the nature of individual promises and the reliance that is placed upon them by claimants will point towards potentially very different outcomes even in cases where the facts appear to be very similar.