Habberfield v Habberfield [2019] EWCA Civ 890

Lucy Habberfield worked on her family's dairy farm for 30 years on assurances she would inherit it. After rejecting a 2008 partnership offer and leaving in 2013, she successfully claimed proprietary estoppel. The Court of Appeal upheld her £1.17m award.

Facts

Lucy Habberfield worked full-time on her parents’ dairy farm at Woodrow, Somerset from 1983. Her enthusiasm for dairy farming persuaded her father Frank to restart dairy operations, which became the cornerstone of the business. From 1983 onwards, Frank (with Jane’s knowledge and authority) repeatedly assured Lucy that if she continued working on the farm, the farming business would pass to her after he could no longer run it, subject to qualifications: some land for her brother Andrew, provision for her sisters, and that title need not necessarily pass during her parents’ lifetimes.

In reliance, Lucy worked long hours for low pay over three decades, and in 2006 declined to tender for a farm near Taunton because Frank told her Woodrow was her future. In 2008, Frank and Jane offered Lucy a limited liability partnership (with Frank, Jane, and Lucy as partners, and Stuart on a two-year trial). Lucy rejected this offer, principally because of Stuart’s position and because she would not be in control. Family tensions culminated in a physical altercation in October 2013, after which Lucy and Stuart resigned. Dairy production ceased in 2015. Frank died in 2014. Lucy brought proceedings in 2016.

Birss J found the assurances proven, found detrimental reliance, and awarded Lucy £1,170,000 (the value of the Woodrow farmland and buildings, excluding the farmhouse and Mudford land), payable within 14 days with enforcement stayed pending sale of the farm.

Issues

The Court of Appeal had to consider:

• Whether Lucy’s rejection of the 2008 offer meant it was no longer unconscionable for Frank and Jane to resile from their earlier assurances;
• Whether the judge was wrong to treat continued work on the farm after 2008 as relevant detrimental reliance;
• Whether the award was disproportionate to the detriment suffered;
• Whether the judge was wrong to order the cash sum to be paid during Jane’s lifetime (given the consequential sale of the family home);
• On Lucy’s cross-appeal, whether detriment from Stuart’s work should have been taken into account, and whether the award should not have been reduced for the 2008 refusal or the 2015 cessation of milk production.

Arguments

For Jane (Appellant)

Mr Wilson QC argued that once Lucy rejected the 2008 offer, which would have given her a viable dairy farm, it was no longer unconscionable for Frank and Jane to resile. Continued work after 2008 could not amount to reliance on any promises. The award was disproportionate to the quantifiable detriment of £220,000. The judge’s order wrongly forced Jane from her home, contrary to Lucy’s own pleaded case which recognised Jane’s entitlement to remain in the farmhouse. Reliance was placed on Moore v Moore [2018] EWCA Civ 2669.

For Lucy (Respondent)

Mr Blohm QC argued that the 2008 offer did not satisfy Lucy’s equity because it did not give her control of the dairy unit. The offer was not presented as a final ‘take it or leave it’ proposal. The judge should not have reduced the award for the 2008 refusal or the 2015 cessation of dairying. Stuart’s underpaid work should have been treated as detriment to Lucy. A clean break was required.

Judgment

The 2008 offer

Lewison LJ held that the judge was entitled to conclude the 2008 offer did not bar Lucy’s claim entirely. For Lucy to be taken to have waived her rights, she would have had to know of them and communicate that she was giving them up – none of which occurred. The offer was not put on the basis that refusal would forfeit Lucy’s inheritance. Furthermore, the offer would not have satisfied her expectation because it did not give her control of the dairy business. The court emphasised that proprietary estoppel rests on the principle that promises should be kept, and no authority was shown where rejection of an offer meant a claimant who had kept her side of the bargain received nothing.

Detriment

The judge’s finding that Lucy continued to rely on earlier assurances after 2008 was a finding of fact not capable of being undermined on appeal. The quantifiable financial detriment was only part of the picture; the main detriment was that Lucy had ‘positioned her working life’ on the assurances over three decades – this was not susceptible of quantification. The cross-appeal regarding Stuart’s work failed because the judge made no finding of causal relationship between Stuart’s work and the assurances to Lucy, and in any event it could not have materially affected the outcome.

Proportionality

Lewison LJ clarified that the relevant proportionality comparison is between detriment and remedy (not expectation and detriment). He endorsed the approach that where the claimant has substantially performed the ‘quasi-bargain’, the court is likely to vindicate the expectation interest, subject to countervailing factors. Lucy had performed – indeed over-performed – her side of the bargain. The only scaling down accepted was to exclude the cost of reinstating a dairy unit, reflecting Lucy’s refusal of the 2008 offer and her departure in 2013.

Time for payment

This was described as the most troubling aspect of the appeal. Lewison LJ acknowledged the hardship of an 82-year-old being required to leave her home of 40 years, and referred to Moore v Moore. However, he held the order lay within the judge’s wide judgmental discretion because: (i) the main judgment had already contemplated possible sale; (ii) land values suggested the farmhouse might not have to be sold; (iii) capital gains tax concerns were inadequately evidenced; (iv) the solicitor’s evidence indicated Jane would have sufficient funds after sale to house herself; (v) costs liability from an unsuccessful defence could not properly be used to postpone the claimant’s award. Lucy’s pleaded acceptance that Jane could remain was predicated on a harmonious family relationship, not on the aftermath of contested litigation.

Implications

The Court of Appeal dismissed both the appeal and cross-appeal. The judgment offers important clarification of several aspects of proprietary estoppel:

• Rejection of offers: A claimant’s rejection of an offer made by the promisor does not automatically defeat an equity, particularly where the offer falls short of satisfying the expectation and is not presented as a final take-it-or-leave-it proposal. Waiver requires knowledge of rights and a communication of abandonment.
• Proportionality: The correct comparison is between remedy and detriment, not remedy and expectation. The court resolved apparent tension in Suggitt v Suggitt by confirming that the proportionality question is whether the relief is ‘out of all proportion to the detriment’ suffered.
• Quasi-bargain cases: Where a claimant has substantially performed the reciprocal acts requested, there is a stronger case for an award approximating the expectation interest. As Mr Blohm expressed it, ‘if you get what you asked for, you should give what you offered’. This reflects party autonomy in defining proportionate reward.
• Non-quantifiable detriment: Where a claimant has ‘positioned her working life’ on assurances over many years, this detriment cannot be reduced to pounds and pence, and purely financial compensation may be inadequate.
• Consequences for third parties: Although Moore v Moore emphasises the need to make adequate provision for surviving promisors, where evidence shows such provision remains achievable after enforcement, an immediate monetary award ordering sale is within the trial judge’s discretion – particularly where family relationships have broken down and a clean break is desirable.

The decision matters to farming families and practitioners advising on succession planning, emphasising that informal assurances given over decades can have significant consequences. It also demonstrates the limits of appellate intervention: the trial judge’s ‘wide judgmental discretion’ will only be disturbed on established grounds. The decision sits in tension, to some extent, with Moore v Moore, and Lewison LJ expressly noted his reluctance in reaching the outcome regarding Jane’s home, underlining that the result turned on the specific evidential record and the judge’s findings.

Verdict: Both the appeal and cross-appeal were dismissed. The trial judge’s order that Lucy receive a cash payment of £1,170,000, payable within 14 days with enforcement stayed pending sale of the farm, was upheld as lying within his wide judgmental discretion.

Source: Habberfield v Habberfield [2019] EWCA Civ 890