Promises, promises – proprietary estoppel and the Davies’ families

There have been two recent cases which both confirm that promising something (such as the family farm) to someone can be sufficient to give rise to those promises being enforceable in court if the person has relied on those promises to their detriment. This is known as the concept of proprietary estoppel.

Essentially, for proprietary estoppel to arise three main elements must be present:

1. A representation or assurance must have been made to the claimant by the defendant. 
2. The claimant must have relied on that representation. 
3. The claimant must have suffered some detriment because of their reasonable reliance on that representation.

In relation to the above, the court will look at the matter “in the round” and not restrict its consideration to only the three elements above. Two recent cases (confusingly both concerning a Davies family) provide guidance as to how this concept works in practice.

In the first Davies & Another v Davies, Mr & Mrs Davies’ daughter was told a number of times from a young age that the family farm would “one day be hers”. In addition, her parents presented her with a partnership agreement (which she signed but unbeknown to her they never did), and had a further meeting many years later to discuss appointing Ms Davies as a director and issuing 49 per cent of the partnership shares to her.

Throughout this time, Ms Davies had periods of working on the farm and having other jobs off the farm. The court concluded that Ms Davies had clearly relied on the representations made by her parents, and had suffered detriment by leaving a well-paid job to come back and work on the family farm on the promise that it would one day be hers. Ms Davies’ claim was successful and she was awarded an equity over the farm and the farming business, the extent of which is still to be determined.

In the second Davies v Davies & Others case, the claimant’s father had died in 1999 and the contents of the father’s will were such that the claimant (who was one of the deceased’s sons) could only farm the land until he was 60 years old. However, the claimant only found out about the contents of the will in 2012, and during the period from 1999 to then, he had farmed the land and made significant improvements to the land and buildings which cost him a considerable amount of money.

The claimant’s case was that his father had repeatedly told him since 1974 that the farm would be his if he ever came to farm it. In this case, the court again concluded that the son had clearly relied on the representations made, and had suffered detriment; he had made significant and costly improvements to the land since his father’s death, and if the provision in the will was enforced, he would have had to have retired very shortly after 2012 with the farm being sold and divided into five shares, at a significantly higher value than at the date of his father’s death. Once again, the court enforced the promises made to the claimant and he was awarded the farm, this time in its entirety.

Both cases confirm that the court will look at the matter as a whole, and that written representations are not required to prove that representations were made. A verbal promise can be sufficient to demonstrate to the court that the representation was made and relied on. The cases also serve as a warning that the courts will permit what they regard as a “just” outcome – so be careful what you promise!