I am sure that almost all the readers of this article will have heard of cowshed Cinderella. This was the case of a farming family in Wales, where one daughter Eirian Davies claimed that she had been promised the farm.
Eirian worked on the farm and was paid very little, with the understanding that the farm would pass to her one day. Unfortunately, Eirian and her parents fell out, and a battle commenced, with Eirian winning the legal case, and substantial compensation.
Since then there appears to have been a number of legal cases where family members say that they have been promised part or all of a business, and for one reason or another they have not received what they believe they were promised.
There was another recently published case called Habberfield versus Habberfield, in relation to a farming business near Yeovil, Somerset.
Lucy Habberfield left school in 1983 and came home to work on the family farm. At about that time the dairy herd was set up on the farm, and Lucy started a full time job of milking and looking after the cows. At around that point, Lucy’s father said to her that “they are your cows, and if you want them you should milk them”.
Lucy worked on the farm for many years, but acrimoniously left the farm in 2013 after a fight with her sister Sarah. Lucy’s father, Frank, died in 2014 and as the property was held as beneficial joint tenants with his wife Jane, the farm passed to Lucy’s mother. Following her father’s death Lucy did not receive the farm or the farming business.
Lucy then claimed the farm, on the basis of the promises she believed were made to her, by her late father. According to the judge in the case, there were various representations made by Frank, using different words, but they fit together and amount to a coherent promise to Lucy that she would inherit a viable dairy farm.
In cases such as these the determining factors are as follows.
- That one party made a promise to the other.
- That the promise was relied upon.
- That the individual acted to their own detriment.
In this case, the judge decided that Frank had made, what amounted to a coherent promise that Lucy would inherit the farm, and that Lucy had relied upon his promise.
With regard to detriment, the judge decided that Lucy was paid lower than she could have reasonably expected to be paid for her work, long hours, few holidays and the continued commitment to the farm.
Therefore the judge found in favour of Lucy. He then decided that suitable recompense was that Lucy be paid a sum of £1.17 million, which was the value of the dairy farm (excluding the farmhouse).
The most important lesson here for farmers and landowners is to beware of making promises that you may not keep.
THE ROLE OF THE ACCOUNTING EXPERT IN HABBERFIELD VERSUS HABBERFIELD
Whilst we are accountants, not lawyers or barristers, we do get involved in legal cases, often as expert witnesses, either for one party, or jointly appointed by both parties to a case.
The role of an expert witness is to provide opinions and technical analysis, which will help the court reach its decision. In the case of Habberfield versus Habberfield, I was appointed a joint expert by both Lucy and her mother Jane, with the aim of providing expert evidence to assist the case.
In this case, part of the method of determining whether Lucy acted to her own detriment was decided by examining the level of drawings that Lucy received from the business, and comparing this to the wages that Lucy would have been paid at open market value.
My role was to calculate the remuneration that Lucy would have received from 1983 until 2013 based upon various assumptions.
This involved assessing the pay for an agricultural worker doing Lucy’s work. This was a long process as it covered a period of 30 years. This included spending time getting acquainted with the old Agricultural Wages Orders, then making judgements with regard to the type of work undertaken and the wages that would be paid for that work.
The results are then summarised in a report for court, with the aim of assisting the court to reach its decision. Whilst the work can be onerous it is also very satisfying. In the case of Habberfield versus Habberfield, my calculations were taken as fact, without me being cross examined in court, and the information used to help the judge in reaching his assessment of the case.