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2nd July 2019

Who really owns the family farm?

Agriculture partner Russell Reeves comments on the Court of Appeal’s recent decision in Habberfield v Habberfield* to dismiss a High Court appeal which awarded a daughter £1.17m for her share in the family farm.

Lucy Habberfield claimed she was entitled to a share in her family farm her late father, Frank, failed to make provisions for her in his will.

Lucy had worked on Woodrow Farm in Somerset after leaving school and continued to work there for more than 30 years. During this time, Frank had made various promises that she would inherit the entire farm when he passed away. In reliance on these promises, Lucy worked loyally for relatively low pay and took very few holidays.

When Frank died, however, he left his entire £2.5m estate to his wife, Jane. Lucy subsequently brought a claim for the breached promises (known as proprietary estoppel) against her mother (Jane).

In the first instance, the High Court decided Lucy was entitled to around a 45% share in Woodrow Farm, as opposed to the entire farm. Instead of splitting the farm up, the judge ordered Jane to pay Lucy a cash sum of £1.17m. Lucy’s claim was successful and supported by a surveyor’s report from 2008 which revealed Jane and Frank’s intention to pass the farm to Lucy and her siblings after their death.

The appeal

Jane appealed the decision on the following bases:

  1. Lucy’s refusal to accept an offer made to her in 2008, which would have resulted in her receiving a viable dairy farm.
  2. In light of the refusal, the judge was wrong in principle as treating Lucy’s work on the farm as ‘detrimental reliance’.
  3. The judge’s award was disproportionate to the detriment that Lucy suffered.
  4. The judge was wrong to order the cash sum be paid during Jane’s lifetime.

The appeal was refused by the Lord Justices for a number of reasons.

It was held that Lucy’s refusal to accept the offer in 2008 did not prevent her from receiving ‘an equity’ at a later date. It was noted that ‘underpinning the whole doctrine of proprietary estoppel is the idea that promises should be kept’.

In relation to the judge’s award of £1.17m, the Court of Appeal reaffirmed the position in a previous case (Jennings v Rice) which gives the courts ‘a wide judgmental discretion’ when they wish to decide how an equity should be fulfilled.

Lord Justice Lewison also noted that ‘the relevant comparison for the purposes of proportionality is a comparison between detriment and remedy. Nevertheless, proportionality is not a question of mathematical precision’. It was held that this amount was proportionate in the circumstances as it would be the amount required for Lucy to start a new dairy farm.

Jane’s arguments that it was unfair to make her sell the farmhouse in order to raise the monies were rejected. It was decided to be fair in the circumstances given that Jane had sufficient means to rehouse herself and it was beneficial for both parties to have a clean break.

For further commentary on Habberfield v Habberfield, or for more information in relation to proprietary estoppel claims, please contact Russell Reeves or another member of Thrings’ Agriculture and Food Litigation team.

 

*Habberfield v Habberfield [2019] EWCA Civ 980

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