“348. I find that there was a conversation (the 2005/2006 Conversation, as alleged) during which Daniel did say to Matthew that one day he would have to buy Daniel out of the Partnership. I accept Matthew’s evidence that this took place at around the time they bought out Willy’s interest in the Farm. Willy’s exit from the business explains why they had the conversation directed to Daniel also leaving at some point. The fact that they had just had to raise the money to buy out Willy explains why they recognised it might not be for some time. That same fact explains why Matthew referred in his evidence to the need to ‘tread softly’ with Daniel. Matthew did not want to upset Daniel in a way that might lead to Daniel’s departure at a time when Matthew did not have the financial resources for a further buyout. 349. I also find that the 2005/2006 Conversation took place just after Daniel had told Hayley that Georgina did not want to live at Witcombe and that he would have to move. I accept Hayley’s evidence on this point and her evidence that she had a number of conversations with Georgina in which Georgina said she wanted to live in Taunton. They included the conversation, at the time when The Old Dairy was being converted to a home, that Georgina would not want to pay for anything that she could not pick up and take with her. 350. The 2005/2006 Conversation provides the basis for Matthew’s expectation that, at the end of the Partnership between the two brothers, he would be entitled to buy out Daniel at a fair price.”
“351. I accept Matthew’s evidence that Daniel gave further encouragement for that expectation [i.e. that ‘at the end of the Partnership between the two brothers, he would be entitled to buy out at Daniel at a fair price’] by reacting positively to Matthew asking him in October 2021 whether he would like to be bought out. Allowing for the inconsistencies in Daniel’s account of this conversation … , I believe that Daniel’s own evidence provides some recognition of this encouragement. Matthew acted on the conversation by working with Mr Bray on the figures for a buyout proposal, approaching HSBC for an indication that they would lend him the money, and then making his offer to Daniel on6 April 2022 . 352. Matthew’s expectation that he would be able to buy out Daniel, if they could agree upon a price, was only undermined after Daniel and Georgina met Mr Butler [a chartered accountant and adviser to Georgina’s family] on11 April 2022 . Therefore, until that meeting, followed later by Daniel’s offer to buy out Matthew in August 2022, the expectation throughout almost the entire life of the Partnership was that Matthew would at some point become the sole successor to the Farm on the (implicit) understanding that he would pay Daniel a fair price to become so.”
“413. My acceptance of Mr Townsend’s evidence meant that, adopting (a) the median of£175,000 for his estimated range of increase in land values between August 2023 and trial and (b) Matthew’s concession that Daniel should be given the benefit of Mr Townsend’s 5% margin of tolerance, the land and buildings are to be valued for the purpose of the order at£8,037,750 . In his counsel’s closing submissions Matthew offered to round this up to£8,040,000 and I will therefore act on that higher figure. … 416. In relation to Mr Mellor’s crop valuation, Matthew’s counsel also recognised that the completion date under the Syers order was likely to take place at a time when the crops currently growing have matured. Matthew therefore proposed that the higher August 2023 figure of£1,122,306 for fodder and standing crops should be used in place of the May 2024 figure of£646,944 . Otherwise, the figures to be adopted from the May 2024 reports by Ms Mitchell and Mr Mellor are£660,319 (livestock),£707,300 (tractors and vehicles) and£509,820 (machinery and equipment). These valuations come to a total of£2,999,745 which (given that the August 2023 total was over£3.093m ) I propose to round up to£3m .”
“On the dissolution of a partnership every partner is entitled, as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after such payment applied in payment of what may be due to the partners respectively after deducting what may be due from them as partners to the firm; and for that purpose any partner or his representatives may on the termination of the partnership apply to the Court to wind up the business and affairs of the firm.”
“The rationale which underlies the normal practice is that a sale on the open market will usually be the best means by which to achieve a full and fair value for the partnership assets. The partners can test the market with competing bidders in just the same way as they would if they were selling their own property. If one of the partners has a particular interest in acquiring any of the partnership property, an open market sale will ensure that he pays a fair price for it.”
“My Lords, it is very true, as was said at the Bar, that on dissolving a partnership of this kind the ordinary course would be for the Court to direct a sale of the assets, and, if necessary, a sale of the concern as a going concern, and to give liberty for proposals to be made by either party to purchase it before the Judge in Chambers. My Lords, those provisions are moulded in every case by the Court to meet the circumstances of the particular case; and it appears to me that, looking at the nature of this business, and looking at the very small interest which was taken in it by the Respondent, it would certainly not be desirable in this case to have a sale, or to bring these premises to the hammer for the purpose of ascertaining what sum ought to be given for them.”
“I think, my Lords, that the valuation proposed is all that under the circumstances of this case the Plaintiff is entitled to ask. I do not think he is entitled, under the engagement he has entered into, to ask for a sale of the concern, regard being had to the amount of his interest in it and to the nature and character of that concern, which of course the Court of Chancery is always bound to look to, and the injury that might result from having a sale of a business of such a description as this is.”
“44. Drawing all those threads together, it seems to me that the types of case in which ‘exceptional circumstances’ have been found to exist, or where it has been envisaged there might be justification for departing from the general practice of ordering a sale, are: (i) where one partner has a very small stake in the partnership, and selling the partnership business as a going concern would create disproportionate injury to the majority partner(s) and/or to third parties such as customers of the business; (ii) where, as in Hammond v Brearley, a sale in the open market is obviously not going to maximise the value of anyone’s share in the partnership, because the assets are worth little or nothing if sold separately from the goodwill, and selling both together would be disproportionate; (iii) where, even if its terms were breached, the partnership agreement makes provision for a buy-out on termination of the partnership, or it can properly be inferred that this is what the contracting parties intended, and (iv) (possibly) where it is established that one partner intends to use the auction process to drive up the price artificially, to the detriment of the other partner who wants to buy the property. 45. All those are examples of situations in which a sale by auction would not serve the interests of justice. It would not maximise the value of the assets or, even if it would, it would unduly favour one of the parties or unduly disadvantage the other(s). 46. On the other hand, there is no reported authority in which the discretion recognised in Syers v Syers has been exercised, or even recognised as arising, in the normal situation where the assets can be sold in the open market without creating any unfairness, and the partners are unable to agree on an alternative.”
“It is self-evident that in a case such as this, where the property can be readily sold at auction, the amount that an arm’s length purchaser is willing to bid for it will be a better measure of the value of the property in the open market than a virtually unchallengeable expert opinion as to what it might have fetched had it been put up for sale.”
“iv) The nature of the discretion and the purpose to be served by its exercise – that of achieving justice between the partners on the facts of the particular case – means that the categories of case suitable for Syers relief cannot be exhaustively identified. Examples of some were given in Bahia v Sidhu, at [44]. However, the ‘exceptional’ nature of the relief does not mean that a certain jurisdictional bar has to be met or that some strange or unusual (or already judicially recognised) circumstances must be established. Instead, the test is whether, as an exception to the normal rule, a Syers order can by justified on the basis it would serve the interests of justice on the facts of the particular case: compare Bahia v Sidhu at [45]. v) One other type of case where a Syers order may be justified is where, unlike an order for the sale of the partnership assets, it accords with the spirit of the parties’ agreement or, it was put in Bahia v Sidhu, at [40], is consistent with their contractual intentions even if it is not justified by the rigid analysis of the contractual position between them. The court might be persuaded that the particular circumstances surrounding the dissolution mean that a full-scale winding-up through a sale would be unjust because it is contrary to their manifest intention or understanding reached not at the beginning of the partnership but instead near the end of its life: compare Hammond v Bearley. vi) Likewise, in my judgment, a Syers order may be justified by reference to wider equitable considerations – akin to those which arise under the doctrine of proprietary estoppel – if it concludes that one partner has established an ‘equity’ that operates to qualify what would otherwise be the means of achieving the result ordained by section 39. In my judgment this must follow from the nature of the discretion (directed as it is to a decision upon the manner in which the partnership assets are to be ‘applied’), the terms in which it has been described by the appellate courts, and the express recognition by section 46 of the 1890 Act of a place for the rules of equity. If the court is able to look beyond the strict terms of any partnership contract or deed in its exercise of the discretion, then it is clearly justified in approaching the exercise of its discretion by reference to such equitable considerations in a case where there is no express contract between the parties and the dissolution of their partnership is governed by a provision (section 39) which does not dictate a particular method for achieving that result.”
“In many cases, once the equity is established, then the fulfilment of the promise is likely to be the starting point, although considerations of practicality, justice between the parties and fairness to third parties may call for a reduced or different award. And justice between the parties may be affected if the proposed remedy is out of all proportion to the reliant detriment, if that can easily be identified without recourse to minute mathematical calculation, and proper regard is had to non-monetary harm.”
“Mr Townsend said that a sale of a farm typically takes 6 to 9 months. As a matter of [common] sense (and for judicial notice) it is likely that a sale of the farm might well lead to staff retention issues if workers on the Farm consider their longer-term employment is likely to be somewhere else. Staff departures would present a real problem and might well mean the end of the business before the sale was completed. If there is no-one (or not enough persons) to look after the herd it would have to be sold. If the business were to cease there would be no income to service the HSBC loan or for Matthew and Daniel.”
“The exigencies of daily court room life are such that reasons for judgment will always be capable of having been better expressed .… [R]easons should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account.”
“in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified.”
“It is difficult to describe that by reference to a particular conversation. It simply reflected the way in which matters were dealt with at all times, particularly as the development of the new Dairy was planned and then implemented.”
“I am satisfied that the valuation evidence in this case does provide a reliable indication of market value of the Partnership’s assets and that the making a Syers order in reliance upon it does not involve an unwarranted gamble with Daniel’s prospects under the usual form of winding up. Recognition of (a) Matthew’s willingness to add the 5% margin of tolerance to the valuation figure (b) the significant saving in the costs of sale provides further reassurance in this respect.”
“On the other hand, there is no reported authority in which the discretion recognised in Syers v Syers has been exercised, or even recognised as arising, in the normal situation where the assets can be sold in the open market without creating any unfairness, and the partners are unable to agree on an alternative.” (Emphasis added)
“We therefore espouse ‘the view that a single purpose underlies all forms of [reliance-based] estoppel on the basis that all aspects of the rules developed are examples of general principle applied so as to prevent [B] from refusing to recognise, or seeking unjustly to deny or avoid, an assumption or belief which he has induced, permitted or encouraged in [A] and on the basis of which [A] has acted or regulated his affairs’, submitting that these doctrines are applications of a rule of law which operates if B is responsible for A so acting on the basis of a proposition that A will suffer if B denies it.”
“The true purpose [of proprietary estoppel], as recognised by the Court of Appeal in the present case, is dealing with the unconscionability constituted by the promisor repudiating his promise … In this context justice means remedying the unconscionability identified in the promisor’s repudiation of his promise.”
“For over a century, starting in the 1860s, the courts of equity developed an equitable estoppel-based remedy, the aim of which was to prevent the unconscionable repudiation of promises or assurances about property (usually land) upon which the promisee had relied to his detriment. The normal and natural remedy was to hold the promisor to his promise, because that was the simplest way to prevent the unconscionability inherent in repudiating it, but it was always discretionary, and liable to be tempered by circumstances which might make strict enforcement of the promise unjust, either between the parties or because of its effect on third parties. While reliant detriment was a necessary condition for the equity to arise, the court’s focus on holding the promisor to his promise was not aimed at ‘protecting’ the promisee from the detriment, still less compensating for it. It was aimed at preventing or remedying the unconscionability of the actual or threatened conduct of the promisor, with the effect, but not the aim, that it tended to satisfy the expectations of the promise.”
“There were shortcomings in the judgment in this case. On a number of occasions we have had to consider the underlying material to which the judge referred in order to understand his reasoning. …At the end of the exercise, however, we have been able to identify reasons for the judge’s conclusions which cogently justify his decision. While he did not express all of these with clarity in his judgment, he made sufficient reference to the evidence that had weighed with him to enable us, after considering that evidence, to follow that reasoning with confidence.”