Davies & Anor v Davies, Court of Appeal - Civil Division, May 19, 2016, [2016] EWCA Civ 463

Resolution Date:May 19, 2016
Issuing Organization:Civil Division
Actores:Davies & Anor v Davies
 
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Case No: A3/2015/0741

Neutral Citation Number: [2016] EWCA Civ 463

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

CARDIFF DISTRICT REGISTRY

HIS HONOUR JUDGE JARMAN QC

2HV00182

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 19/05/2016

Before:

LORD JUSTICE PATTEN

LORD JUSTICE LEWISON

and

LORD JUSTICE UNDERHILL

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Between:

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Timothy Fancourt QC and Elizabeth Fitzgerald (instructed by Michelmores LLP) for the Appellants

Leslie Blohm QC and Adam Boyle (instructed by Hugh James Solicitors) for the Respondent

Hearing dates: 26 and 27 April 2016

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JudgmentLord Justice Lewison:

  1. The issue on this appeal is how to satisfy the equity raised by Eirian Davies (``Eirian'') against her parents by virtue of the principles of proprietary estoppel. The dispute between them has been a bitter one. Procedurally it was divided into two parts: the first to decide whether Eirian had raised an equity and the second to decide how that equity should be satisfied. Both parts of the dispute were tried by HHJ Jarman QC, sitting as a judge of the Chancery Division. His judgment on the first part of the dispute is at [2013] EWHC 2623 (Ch); and an unsuccessful appeal to this court against that part of his decision is at [2014] EWCA Civ 568, [2014] Fam Law 1252. The Court of Appeal said that they were concerned ``only with the threshold question'' whether Eirian was entitled to ``some equitable relief''; and held that the judge was entitled to conclude that she was. The court made it clear that the second hearing would determine how the equity should be satisfied ``whether by a monetary payment, a licence to stay in the farmhouse, or in some other way.'' The judge's judgment on the second part of the dispute, against which this appeal is brought is at [2015] EWHC 015 (Ch). I refer to the judge's first judgment as ``J1'' and to the second as ``J2''.

  2. Mr and Mrs Davies are now in their seventies. They have been farmers for over fifty years. Their farming began at Caeremlyn in 1961, and they have added land to their holding over the years. In 1972 they bought another farm called Henllan consisting of a farmhouse, some other buildings and 182 acres. The two holdings were farmed together as one farm. It is principally a dairy farm. At the beginning of the story they farmed in partnership but in 2002 they formed a company to take over the farming business. The company does not own any of the land which is the subject of this dispute. That remains owned by Mr and Mrs Davies personally. The extent of the land that they own, and its agreed value at the time of trial, is set out in the table which I have reproduced from the skeleton argument of Mr Gaunt QC and Ms Fitzgerald, then instructed on behalf of Mr and Mrs Davies. Mr Fancourt QC now appears in place of Mr Gaunt. Mr Blohm QC appeared for Eirian together with Mr Adam Boyle.

  3. The judge structured his first judgment by setting out a general narrative, followed by separate consideration of questions of representations or assurances, reliance and detriment. However, I think that it helps more to deal with the whole chronological picture in an integrated way.

  4. Eirian was born in 1968, the second of three sisters; Enfys, herself, and Eleri. She and her elder sister both worked on the farm until her elder sister left to get married in 1988. By then Eirian was 20 years old. A few years earlier in about 1985, when Eirian was 17, it had become clear that she was the only one of the three sisters who was interested in taking over the farm. This would fulfil Mr and Mrs Davies' wish, which was important to them, that the farm would be kept in the family. Although they said nothing to Eirian which they regarded as a clear and binding promise the judge found that Mr Davies said to her that she would have the farming business; and that this was reinforced by Mrs Davies' telling her not to kill the goose that lays the golden eggs: J1 at [35]. It is unlikely that anyone distinguished at that time between the business and the land, although the judge made no finding that the land was explicitly mentioned. The extent of the land at that time did not include Glascoed, Llwynderw or Castell Draenog, the addition of which have subsequently doubled the size of the farm. However, Eirian understood that she would have to work on the farm in return: J1 at [57]. During that time she was paid no wages, but she had board and lodging at home, money for clothes and leisure and a scooter. She also had the use of a car. Those benefits, in aggregate, were substantial, but less than full recompense for the work that she did: J1 at [64].

  5. But Eirian did not remain on the farm. She left four years later in 1989 after an argument with her father which, the judge found, must have appeared to have dashed her parents' hopes: J1 at [7] and [36]. In the following year she married Paul Rogers; and shortly before her wedding she and her parents were reconciled; and she came back to work (but not to live) on the farm ``a couple of years'' after she had left: J1 at [36]. Later in 1990 Mr and Mrs Davies bought another farm, called Glascoed, which consisted of a farmhouse and 89 acres. They sold the farmhouse and 22 acres to Eirian and her husband. Eirian and her husband lived in the farmhouse. Although Eirian claimed that her parents had told her that the remaining 67 acres would be hers one day, the judge rejected her evidence to that effect: J1 at [36].

  6. The work that Eirian carried out on the farm was primarily milking, for which she was paid the going rate: J2 at [10]; J 1 at [8]. The other work she did consisted of veterinary work, foot trimming, insemination and general farming work: J2 at [10]. The judge did not make clear findings about the extent of that additional work at that time. Eirian was not paid for that additional work: J 1 at [65].

  7. In 1997 Mr and Mrs Davies bought another 175 acres of land at Llwynderw which is adjacent to Henllan. In 1998 they had discussions about taking Eirian into the farming partnership which resulted in the drawing up of a draft partnership agreement. Under that agreement they were to transfer Henllan and Llwynderw into the joint names of themselves and Eirian, together with the stock and implements to be held in equal shares as partnership assets. However, this agreement did not contemplate the transfer of either Caeremlyn or the milk quota (J1 at [10]), both of which were assets of the partnership between Mr and Mrs Davies themselves. Although Eirian signed the agreement in the expectation that her parents would sign, in fact they did not. Any expectation of an immediate interest created by the draft partnership agreement could not, of course, have extended either to Caeremlyn or the milk quota because neither were encompassed in the agreement. Nor, on the basis of the judge's findings, could it have included the 67 acres at Glascoed retained by Mr and Mrs Davies; or the land at Castell Draenog which had not then been acquired.

  8. The judge appears to have accepted Eirian's evidence that at the time she signed the draft partnership agreement she thought that she had become a partner and that she was also told that the farm would be left to her: J1 at [37], [41] and [61].

  9. In October or December 1998 Eirian and her husband sold Glascoed and moved into Henllan, which they occupied rent free: J1 at [12]. (October is stated at J1 [39] and December at J1 [42]). They also made improvements to Henllan for which they were partially reimbursed, but their expenditure was about £3,000 more than the reimbursement: J1 at [76]. At the time of her move Eirian was still under the impression that she was a partner; but no further representation was made to her at that time: J1 at [42] and [46]. In addition to the provision of the farmhouse at Henllan, Eirian was paid £3,000 per annum. She also worked in the belief that she would be entitled to an equal share in the profits of the business: J1 at [68].

  10. In 2001 Eirian was pregnant with her second daughter, when she was kicked by a cow. There was another argument with her father during the course of which she discovered that she was not a partner as she had thought: J1 at [42]. She and her husband left Henllan and moved into a house at Ludchurch which they acquired with the aid of a mortgage. She accepted in the course of her cross-examination that at that time she had to an extent ``given up on Henllan''; and she readily accepted that her expectation of the farm and the business was ``dependent on her continuing to work in the business'': J2 at [33]. When she left she had ``no expectations regarding the farm'': J2 at [35]. She loved the herd but she was prepared to give it up because she was pregnant and she had had enough: J2 at [39].

  11. In the autumn of that year, in conversation with their solicitor Mr Bissmire, Mr and Mrs Davies told him that there was no possibility of Eirian coming back to work on the farm: J1 at [13]. They also told Mr Bissmire that although they wanted Eirian to take over the farm in due course, they did not want her to have it outright while she was still married to Paul.

  12. All Eirian's work on the farm ceased until 2006, apart from a few occasions when she attended to a sick cow at her father's request: J2 at [11].

  13. During the period when Eirian thought she was a partner, the actual partnership between Mr and Mrs Davies made a profit of £21,419 (in 1997) and a loss of £9,609 (in 1999). Figures for the other years covered by that period are not available. Those figures would also have taken into account the ability to sell such quantities of milk as were covered by the milk quota (which was not to have been transferred to the intended partnership between all three parties).

  14. During the period when...

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