“… [Daniel] having decided to cease being in partnership with [Matthew] (a) it is a term of the Partnership, either express or implied, or (b) [Matthew] has the benefit of an equity whereby [Daniel] is required to sell his interest in the Partnership, together with his interest in both The Old Dairy, Witcombe Farmhouse, Ash, Martock and Cobden Investments Limited to [Matthew] at a fair value.”
“Witcombe Farm Partners will no longer be contract silaging. We need to concentrate on making our own forages. I would have sent this letter last October but Daniel had wanted to be in a position to carry on this work himself. That is now not the position.”
“The Defendant believes that the Savills valuation was too low. Strictly speaking, therefore, the valuation evidence is not agreed. However, no purpose will be served by challenging the valuation at the trial in May when it is no more than out-of-date background information. Accordingly, he does not require either valuation expert to attend the trial in May to give oral evidence, nor does he object to the Claimant seeking to rely upon the valuation evidence at trial. But his position will be that the court should not make a finding as to the value of the assets, whether as at August 2023 or any other date.”
“… 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. It is a case, therefore, in which, if a decree for a dissolution had been made in the first instance, I apprehend that the Court would have thought it right to authorize the owner of seven-eighths of the concern to lay proposals for a purchase before the Judge in Chambers.”
“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.”
“Even though I have taken a dim view of the behaviour of [the majority partners]…, I do not think that it would be right to wind up the partnership. Rather, I think, it would be appropriate to order the defendants to buy out Mr Mullins, provided that such an order produces no worse a result for him than winding up.”
“There is no reason in principle why the order should not relate to the shares of more than one partner, provided that they together they represent a sufficiently small minority. Equally, as their proportionate share of the firm increases, so will the court’s reluctance to make an order. Interestingly, in Anselm v Anselm (29 June 1999 (Ch D.) Hart J appeared to contemplate that the equities might justify that one equal partner should buy out the share of the other in certain partnership properties. In the current editor’s view, cases in which such an order might be warranted, particularly in the case of a two-partner firm, will be extremely rare.”
“Nor can I be at all sure that, even if Ronnie does not succeed in establishing the July Agreement, the court will not conclude that the equities are nevertheless such as to require Ronnie to be given an opportunity of purchasing Yoram’s interest in the disputed properties rather than as to dictate their sale to a third party”
“In my judgment this demonstrates that the search for further principle should give way to an emphasis on the particular facts of the case, given the width of the discretion exercisable by the court. Thus I do not accept Mr Mather’s submission that there is a principle of general application that the court should decline to make an order against an unwilling partner for his share to be bought out unless the court can be satisfied that there is no real risk of his being denied the highest price for his share from making such an order. I am prepared to accept that this would be an important consideration in every case and that in many, perhaps most, cases if the court was unable to be so satisfied that would be a decisive factor against making a buy-out order, but I am unable to accept that there might not be circumstances where the other relevant factors all pointed so strongly in the opposite direction so as to overcome that consideration.”
“1. When a business partnership is dissolved, on the winding up of its affairs, each partner is entitled to receive his or her proportionate share of the realised value of the partnership assets after the partnership liabilities have been discharged. To that end, after the conclusion of any necessary inquiries, an account will be taken of the assets and liabilities, including any liabilities of the partners to and from the partnership. The value of the assets will be realised and the proceeds applied in the first instance to settle the partnership debts. If any of the assets is incapable of being sold, then its value will be brought into account by the partner who retains it. Any surplus will be distributed between the partners pro rata to their respective partnership interests.” “27. 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.” “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. There is nothing in the cases to which we were referred (nor in Lindley & Banks) that suggests that the wishes of one partner to acquire a property or certain of the properties held by the partnership, or their wish to continue running the partnership business, or even their willingness to buy out the other partner at a valuation based on the opinion of an independent expert, would alone suffice to take the case into the exceptional category. On the contrary, the application of the four principles cited above suggests the opposite.” “47. Nor would it be enough in itself for one partner to complain that the other partner had more money or greater liquidity, and therefore would be more likely to outbid them for any property they both wished to acquire. So long as a fair price can be achieved, it should not matter whether the purchaser is a third party or one of the former partners. I can see that things might be different if the partner who was better off had achieved an unfair financial advantage by taking monies from the partnership account and using them for his personal benefit. However, if that unfairness could be overcome in any bidding process by allowing the other partner to bid on credit up to an amount represented by the debt owed to the partnership by the defaulting partner or his representatives (as was proposed in this case) then it would not provide a sufficient justification for departing from the general practice.” “56. Whilst it is true that the right to wind up the partnership is a personal right, that does not mean that when the Court (rather than the partners) is carrying out the winding up, the wishes of a surviving partner as to how the value of the assets should be realised should prevail, nor even that they should be allowed to carry any greater weight than the wishes of the personal representatives of the deceased partner. Such an approach is antithetical to the general principle that one partner cannot insist on a distribution in specie, and that the position in default of agreement, save in exceptional circumstances, is a sale on the open market, irrespective of the wishes of one of the partners or even the wishes of a majority. The objective of the court is to maximise the value of the partnership assets for the benefit of all, not to allow the wishes of one equal partner to prevail because the other is no longer able to express their wishes.”
“39. In Mullins v Laughton[2003] Ch 250 Neuberger J directed a buy-out of the share of the minority partner, instead of a sale of the business, notwithstanding that three of the majority partners had behaved very badly towards the minority partner by removing him peremptorily. If they had gone about removing him in the right way, they would have been entitled to buy him out under the terms of the partnership agreement. Neuberger J considered that forcing them to sell the business would be a disproportionate manifestation of the court’s displeasure at their behaviour. The innocent partner had a relatively small stake in the business (there were 13 other partners) and it appeared that it would be “an uncertain, difficult, and unsatisfactory exercise for a professional insolvency practice to be sold, especially where that practice has different offices in many different cities.”
“In the end the court will have to consider its provisional remedy in the round, against all the relevant circumstances, and ask itself whether it would do justice between the parties, and whether it would cause injustice to third parties.”
“……. the judge in the present case did not remark that the observations in Gestmin[2013] EWHC 3560 (Comm) were expressly addressed to commercial cases. For a paradigm example of such a case, in which a careful examination of the abundant documentation ought to have been at the heart of an inquiry into commercial fraud, see Simetra Global Assets Ltd v Ikon Finance Ltd[2019] EWCA Civ 1413 and the apposite remarks of Males LJ at [48]–[49]. Here, by contrast, the two parties were private individuals living together for much of the relevant time. That fact made it inherently improbable that details of all their interactions over the creation of the screenplay would be fully recorded in documents. Ms Kogan’s case was that they were bouncing ideas off each other at speed, whereas Mr Martin regarded their interactions as his use of Ms Kogan as a sounding board. Which of these was, objectively, a correct description of their interaction was not likely to be resolved by documents alone, but was a fundamental issue which required to be resolved.”
“What I am clear about is as a result of the discussions that Daniel and I had was that Daniel and I were clear that me buying him out was only a matter of time. It would happen. Daniel said one day you will need to buy me out. Basically one day he was going to have to live in Taunton and I would have to buy him out.”
“Daniel told me one day he was going to have to move to Taunton and I would have to buy him out.”
“At the time, my thoughts were, "I hope that does not happen for a little while, because I will not be able to afford it.. Daniel was not looking to put me in difficulties.”
“Because of the tensions that had emerged by October 2021, I had a conversation with Daniel. By this stage I had decided that I was likely to be in a position to buy Daniel out of the business. In October 2021, in the conversation which took place in the Farm office, I asked Daniel if he wanted me to buy him out. Daniel said “Yes”
“Before the trial, we were for sale. The petition was to buy them out, which we could have done, had we got Larry Goodman - [Matthew explained that Mr Goodman was the owner of a company which later acquired the abattoir business from Romford Meats] - to come all the way with us. He did not. We were for sale. We spent a year negotiating the sale of our shares in Langport to Romford before the dispute began.”
“The building should go on for some time. It has a 72-stall rotary. The rotary has a life. I am not sure what that life would be. The rotary is continually maintained. There is a lot of moving parts and milking equipment that needs replacing and we are all the time spending lots of money on it.”
“I was certainly there in the 2005/2006 conversation when Daniel walked round. Daniel spoke to me first and said he would have to move to Taunton. Georgina did not want to live in Witcombe. I told him he had to speak to his brother.” “I knew where I was standing. I knew what we were doing. I am not very good with dates.” “[Daniel] was smoking and looked, possibly not close to tears, but upset and said that Georgina did not want to live at Witcombe.”
“Georgina is a strong personality, in contrast to Daniel, who is not. Without wishing to be unkind to Daniel, he is a follower. In his marriage he follows Georgina and in his business he follows Matthew. The latter has always been the case since I have known the Cobden family.”
“I don’t believe I have ever said anything to Matthew to give him reason to believe that I would definitely be moving to Taunton at some point in the future, or that the only reason I was staying at Witcombe was because he could not afford to buy me out.”
“the normal course of our disagreements was that he would tell me to leave, and I would say something like "you cannot afford to buy me out". I would say so in order to close down the conversation. Matthew would often be ranting and raging and so quite often his words were unclear. During past rows I have said to Matthew ''go away and see how much money you can raise", knowing that he could not raise money to even consider buying out my share.”
“I had no idea at the time, but it now appears that Matthew was already planning my exit in March 2022. I refer to the “Buy out” proposal prepared by Mike Bray and dated23rd March 2022 .”
“You are happy to consider the alternative option of possibly paying out your brother and this may be possible and may be determined by the funding levels which your brother could [sic] – can he afford to pay you out?”
“I know from our past dealings that you are a prolific note maker, therefore I anticipate there will be a comprehensive note of the advice that you gave and the information that was supplied to you. That must be disclosed.”
“My meeting in April 2022 was merely by way of introduction and in fact I confirm that very little happened following that meeting and that no advice was given in connection with any specific steps that may have been anticipated with regard to dispute or potential litigation. I am therefore fearful that I will disappoint you there is no such prolific note on this occasion.”
“I have no knowledge as Daniel has not mentioned any deal or arrangement between him and Matthew as to what would happen to Daniel’s share if he left the farm.”
“The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”
“Valuation is not an exact science and I believe that any value greater or less than my figure by around 5% is effectively the same figure.”
“You might get a lot less, you might get more … and the market is very fickle and occasionally difficult to read.”
“The market still operates... The market still does not reflect it. We have not... I have discussed it with all of our agency teams all across the country and they have yet to see a differentiation in the market establishing itself. The market tends to operate in a very traditional way, the buyers tend to be mostly traditional buyers, you know. As you rightly say, there are these larger operators who will be much more commercially-minded, I would say, who might approach it in a different way, but generally the agricultural market is, the buyers are generally 50% these days existing farmers and 50% are non-farmers and they do tend to look at what sold for what price recently in the area. It tends to go back to comparables, if you follow me. It may happen. It may evolve --- that the market actually starts to reflect the exceptional profits, the enhanced profits that can be generated by this sort of set-up.”
“It was clear to me from the outset, right from my first meeting with Matthew, and then meeting Daniel, that the driving force in the Partnership’s business was Matthew. Over the years I have recognised that Matthew has an excellent business acumen. He is hard working and driven. He is, and has been, obsessed with the performance of the Dairy’s business that now exists.”
“The equal partners in a partnership at will have, since its inception, shared an understanding that one partner would himself carry on the business when the partnership eventually comes to an end, by being permitted to buy out the other partner at a fair price to be determined at that end point, and that partner has devoted himself accordingly to the firm’s business and its development in anticipation of that event. The understanding is sufficiently clear from the dealings between the partners and the subsequent reliance upon it (throughout the life of their partnership) sufficiently identifiable and substantial to support the conclusion that it would be unfair and inequitable for the other, at the partnership’s end, then to insist that both partners’ shares in the partnership assets should be liquidated through their sale. Any consideration of the “detrimental” nature of the first partner’s reliance (“the partner has devoted himself accordingly”) must make allowance for the fact that the relationship between the partners arises out of their shared endeavour in making profits and that he has benefited equally from any profit during the life of the partnership; and also that any unequal injections of capital will be reflected in the partners’ respective capital accounts. Nevertheless, the court is entitled to consider his individual efforts in developing the partnership business and to do so with particular focus upon a comparison with the business as it was at the partnership’s inception and the relative efforts of the other partner in that regard. The understanding and reliance upon it give rise to an ‘equity’ in the first partner which may operate to prevent the liquidation of the partnership’s assets if the court concludes that, in all the circumstances, an order for sale would be unfair and unjust. Other factors, such as the likely adverse impact a sale may have on third parties (including employees of the business and others whose financial interests may be damaged by a sale) or upon the business’s customer base, may feed into the court’s assessment of the equity in deciding what is fair and just. The court is entitled to act upon the equity where expert valuation evidence supports the conclusion that the price payable under the Syers order is equivalent to what the other can reasonably have expected to receive for his own share. The likely costs of a sale and any potential adverse tax consequences resulting from a sale may be factored into the court’s comparison of the two. The court may act upon the equity despite any suggestion by the second partner that he would be willing to pay more for the first partner’s share than is offered in return, as the price of himself carrying on the business, and notwithstanding the prospect that such a sale might have produced a greater financial return for him than that indicated by the valuation evidence accepted by the court.”