Habberfield v. Habberfield Proprietary Estoppel

This recent case is a further illustration of the willingness of the Court to step in to give effect to promises of future conduct which are intended to be relied upon. 

Lucy Habberfield worked on her family’s farm for 30 years and successfully argued that her late father had promised her a stake in the farm in return for her help with the business. Over the 30 year period Lucy received lower pay than she could have expected for her work, worked long hours and took few holidays.  The Court rejected the argument that what Lucy had done was not unusual for a family dairy farm and accepted that, when taken as a whole and seen in context, the representations were intended to convey the message that, in future, the farm would pass to Lucy.  An interesting point in the case is that Lucy’s parents held the farm as joint tenants. For Lucy’s mother to be bound by an estoppel, any representation had either to have been made by her or made with her authority.  The Court found that Lucy’s mother knew that her husband was making representations, what they meant and that Lucy was taking them seriously.  The Court also accepted that to the extent that representations were made when the mother was not present, they were made with her authority.

Ultimately the Court accepted that an employee would not have put in the same hours nor accepted the wage and holiday terms and that without the representations Lucy would probably have sought a farming tenancy elsewhere.

Having established that there was an estoppel the Court had to decide how to give effect to the promises that had been made. Lucy’s expectation was to receive a viable dairy farm. There are two approaches to relief in these circumstances. The first is to give effect to the expectation or promise. The second is to compensate for the detriment suffered in reliance on the promise.  On the first analysis the farm was worth about £2.5m.  At the other end of the spectrum, Lucy’s reliance loss was no more than £250,000.  The Court applied a sliding scale under which the clearer the expectation the greater the detriment and the longer the passage of time during which the expectation was reasonably held, the greater is the weight that should be given to the expectation. On the facts of this case it was clear that over a long period of time Lucy fulfilled what she had been told she had to do in order to secure what she had been promised. She had kept her side of the bargain and was entitled to receive compensation based on what she was promised that being a viable dairy farm.  The Court decided that Lucy should receive the farmhouse, farm land and buildings or the equivalent in money terms.  In circumstances where the farmhouse was occupied by Lucy’s mother the Court decided it would not be fair to force her to leave her home and ordered a cash payment rather than a transfer of property.

The case should serve as a reminder that succession planning is never easy and that all family members be involved in succession planning. It is also a reminder that if parties make assurances that a son or daughter will receive something in the future on the basis of what he or she is currently being asked to do that promise may be enforced if the family later seeks to resile from that position.


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