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Transfer of Shares to Family Member, Farmer’s Daughter Granted One Third of Farm

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The daughter of parent farmers with a sizeable estate has been awarded £1.3 million by Cardiff's High Court in the case of Davies v Davies, 2014 EWCA Civ 568. Miss Eirian Davies made a proprietary estoppel claim on her parents' farm.

In order to prove an entitlement to an interest in property on the basis of the doctrine of proprietary estoppel there must be a representation, a reliance and detriment.

If these elements are present the usual remedy will be that the property will be transferred to the claimant who in this case was Miss Davies. This highlights the importance of making promises about the transfer of shares to family members.

The facts

Miss Davies worked for her parents for many years on the family farm for little or no payment, on the understanding that the whole business would eventually pass to her.

Mr and Mrs Davies had two other daughters but neither were closely involved in the business. Miss Davies moved out of the farm on a couple of occasions throughout the years but returned each time; including a period where she began her own business.

In 2008, Mr and Mrs Davies had agreed to hand over a 49% share in the business to their daughter and documents were prepared to this effect. However, the documents were never signed and a family rift developed.

In 2009, Mr and Mrs Davies placed the farm into a trust with the residue to be split between the daughters in equal shares. However, the family relationship deteriorated further and Miss Davies' again left the farm in 2012. At this point she sued her parents claiming proprietary estoppel to establish her interest in the business which was valued at £3.8 million.

The Court’s findings

In reliance upon the promises her parents made, Miss Davies had acted to her detriment in working on the farm at an uneconomic rate.

Jarman HHJ initially allowed Miss Davies’ claim in the Cardiff High Court but he left the amount of her beneficial interest to be decided by another court.

Mr and Mrs Davies appealed but the Court of Appeal rejected their appeal. The Court invited the parties to negotiate a settlement as to the amount of Miss Davies' interest without further litigation, however, unfortunately this proved impossible.

Earlier this year the parties returned to the Cardiff High Court and Miss Davies was granted £1.3 million in compensation which equates to one-third of the business. The amount is sufficient for her to start a new farming business of her own.

If this situation sounds familiar or you have any similar concerns and require advice on the best way to transfer shares to family members, please feel free to contact Lynsey Harrison of Clarion’s Disputed Wills, Trust and Probate team on 0113 336 3388.

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