Davies & anr v Davies [2013] EWHC 2623 (Ch)

WTLR Issue: November 2016 #164

1. EVAN JOHN TEGWYN DAVIES

2. MARY EILEEN DAVIES

V

ELIZABETH EIRIAN DAVIES

Analysis

Tegwyn and Mary Davies purchased a dairy farm known as Henllan in West Wales in 1972. It comprised a farmhouse, an attached cottage, outbuildings, and 182 acres of land. It was farmed with a nearby farm also owned by them known as Caeremlyn which they had purchased in 1961 (together ‘the farm’). The respondent, Eirian was one of their three daughters. By 1989, she was the only child left at the farm. She had a passionate interest in pedigree milking cows which was the main business of the farm, and it was by this stage clear that she was the only possible candidate to take it over. In the period up to 1989, she was not paid. She was provided with board and lodging and money for clothes and leisure. Her father said to Eirian that the farm and business would be hers one day. The trial judge held that she had received substantial benefits, but less than full recompense for her work on the farm.

In 1989, Eirian fell out with her parents over what they regarded as her unsuitable choice of partners. She left the farm, and stopped working there. She married her husband, Paul, in 1990. She returned to the farm shortly before the wedding, having reconciled her differences with her parents. The judge held that she was not working at the farm for about two years. Later in 1990, Tegwyn and Mary purchased a small farm known as Glascoed. 20 acres were sold to Eirian and her husband Paul. Eirian raised her own livestock on her land at Glascoed but continued to work on the farm, milking and doing other work. She was paid for milking work, but not veterinary work, foot trimming, insemination work or general farming.

In 1998, Eirian signed a partnership agreement following discussions with her parents about joining their farming partnership. Eirian had believed that she became a partner upon signing. She had signed in the expectation that her parents would promptly do so. However they did not, either then or subsequently, because of an investigation involving Elm Diaries.

In the same year, Eirian and Paul sold Glascoed and moved back into Henllan which they occupied rent free with their first daughter. Eirian was still under the impression that her parents had signed the partnership agreement. Improvements were made to the farmhouse. They were reimbursed by Tegwyn and Mary for some of them. Following an argument in 2001, Eirian and her family moved out of Henllan into a house in Ludchurch. The farmhouse was rented out by her parents, but some of the income was paid to Eirian. In 2002, Tegwyn and Mary executed wills leaving their estate to all three daughters in equal shares. At this stage there was no possibility of Eirian returning to work on the farm.

However Eirian did return to work on the farm in 2005 and divorced her husband in 2007. Following a further argument in 2007, she left work and commenced a new job at a company called Genus. However on Boxing Day 2007 she moved to live in the farmhouse. Tegwyn told her that Henllan would be her home, rent free, for life. The judge held that Tegwyn had been aware that some encouragement would be needed to persuade her to come back to Henllan. She gradually did more work on the farm. There was a meeting in 2008 between Eirian and her parents and the family solicitor and accountant to discuss a proposal to issue shares to Eirian in the family company and appoint her director. No documents were signed, though the parties behaved as if they had been. By 2007, she was working full time on the farm. She received a salary of £1,500 per month. It was agreed that her parents would sign wills leaving a portion of the farm to Eirian together with shares in the company. She was shown a draft will, and further representations to that effect were made. She left her paid employment with Genus.

In 2012, there was a fight between Eirian and Tegwyn. Eirian’s employment was terminated, and proceedings were served to evict her and her family from the Henllan farmhouse. The particulars of claim alleged that Eirian had worked for the farming company as a self-employed herdswoman and occupied the farmhouse pursuant to a gratuitous licence which had been terminated. The defence and counterclaim pleaded that an equity had arisen in favour of Eirian out of her detrimental reliance on the representations made by Tegwyn and Mary that she would have (1) an interest in the farm; and (2) an shareholding in Henllan farms Limited. Following trial of a preliminary issue before HHJ Jarman, it was held that Eirian had established an entitlement to a beneficial interest in the farm and/or the business under proprietary estoppel, with the nature and extent of that beneficial interest to be determined at a further hearing.

Tegwyn and Mary appealed the decision on the grounds that there had been no detrimental reliance in the period between 1991-1998 when she signed the partnership agreement and was assured that she had a long-term future on the farm, because the judge had made no positive findings as to whether this was in response to further representations made by them. Although the judge had made findings that Eirian received less than full recompense for working on the farm, these did not themselves amount to detriment to her unless it was shown that she could have done better elsewhere. As the judge’s conclusion was that the detriment to Eirian was exclusively financial, he submitted that it was essential to see whether there was any evidence that, had Eirian pursued an alternative career, her earnings would have been greater. His finding that she could have earned more at Genus was clearly wrong. Underpayment was endemic in the farming industry and farm workers were paid far less than if the value of their work to the business were assessed. He suggests that the judge fell into the error of comparing Eirian’s value to the business with the wages she could have earned at Genus or elsewhere.

Held:

1) Eirian had left the farm in 1989 because her parents disapproved of her boyfriend. Up to that point she was led to understand that if she did not leave home but continued to work on the farm, it would be hers one day. That was a conclusion plainly open to the judge.

2) There had been no positive findings about pleaded representations from 1991 onwards. However the judge had taken account of the fact that between 1991 and 1998, Eirian did work on the farm for no extra pay over and above what she was paid for milking. He would not have done so if he thought that there was merit in the suggestion that during this period there was no operative representation.

3) The judge had held that the detriment incurred by Eirian was not exclusively financial. The estimation of the detriment suffered by Eirian was not an exercise in forensic accounting. The judge had not fallen into error when comparing Eirian’s value to the business with her wages. The submission that he had failed to take account of the benefit to Eirian of the compensating advantages when living on the farm was also to be rejected.

4) The judge had to determine whether there was substantial detriment by contrasting the rewards of the job at Genus with its better lifestyle with those of working on the farm with its greater burdens in terms of working hours and more difficult working relationships. The judge’s conclusion as to where the scales came down in this balancing exercise was not wrong.

5) The judge’s conclusion that there was net detriment to Eirian was one to which he was entitled to come. It was the result of a classic evaluative exercise which he performed with care. The evaluation was not flawed in a way which would justify the court in interfering

JUDGMENT FLOYD LJ: Introduction [1] This appeal arises in connection with a claim by the respondent, Eirian Davies, to be entitled to an interest in her parents’ pedigree dairy farm called Henllan in West Wales, or other equitable relief, based on the doctrine of proprietary estoppel. The parents, Tegwyn and Mary Davies, seek to evict …
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Counsel Details

Timothy Fancourt QC (Falcon Chambers, Falcon Court, London EC4Y 1AA, tel 020 7353 2484, email clerks@falcon-chambers.com) and Elizabeth Fitzgerald (Falcon Chambers, Falcon Court, London EC4Y 1AA, tel 020 7353 2484, email clerks@falcon-chambers.com), instructed by Michelmores LLP (Broad Quay House, Broad Quay, Bristol BS1 4DJ, tel 0117 906 9300, email enquiries@michelmores.com) for the appellants.

Leslie Blohm QC (St John’s Chambers, 101 Victoria Street, Bristol BS1 6PU, tel 0117 923 4700, email clerks@stjohnschambers.co.uk) instructed by Hugh James (Hodge House, 114-116 St Mary Street, Cardiff CF10 1DY, tel 029 2022 4871, email info@hughjames.com) for the respondent.