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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Kingsley & Ors v Kingsley [2020] EWCA Civ 297 (03 March 2020) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2020/297.html Cite as: [2020] WLR(D) 130, [2020] 1 WLR 1909, [2020] EWCA Civ 297, [2020] WTLR 593, [2020] 2 P & CR DG3, [2020] 2 FLR 888, 23 ITELR 167 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE JUDGMENT OF
LANCE ASHWORTH QC
(SITTING AS A DEPUTY HIGH COURT JUDGE)
IN THE ESTATE OF ROGER JOHN KINGSLEY
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE MOYLAN
and
MR JUSTICE MANN
____________________
(1) Karim Sophie Kingsley (2) Aaron Richard Playle (As Executors of the Estate of Roger John Kingsley) |
Appellants |
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- and - |
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Sally Margaret Kingsley |
Respondent |
____________________
Caroline Shea QC and Catherine Taskis (instructed by Pellys) for the Respondent
Hearing date: Tuesday, 11th February 2020
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Crown Copyright ©
Mr Justice Mann:
Introduction
What the judge decided
"50. In my judgment, in deciding what order to make under section 14 TOLATA in this case, one of the key matters to take into account is the degree of certainty I can have as to the price I might set for the Farm Land to be bought by Sally being the "true" value of the land. That is to say I must consider how great the risk is that any price I set might turn out to be too low with the result that Karim will receive less than she would do on an open market sale. If I set the price too high, there is no risk to Karim: either Sally will purchase at that price and Karim will have received more than she would on an open market sale or Sally will decline to purchase and the open market sale price will be achieved. As I say this is a key matter, however, I accept the submission of Ms Taskis that it is not a threshold matter that is to say I do not have to be satisfied that there is no risk to Karim that she will not receive full value before I could make an order permitting Sally to purchase at a particular price. That would be to impose on myself an obligation to make an order to obtain the best price for the beneficiaries as a whole, which is a constraint that I am not under in contrast to the position of the trustees.
51. One way to reduce the risk would be simply to adopt the higher of the 2 valuations for the Farm Land, being that given by Mr Gooderham on behalf of Karim, and provide that Sally could purchase at that price. However, in my judgment that is not appropriate. It is necessary to consider the reason for the differences in valuation between Mr Gooderham and Mr Alexander. If, as is the case in respect of some items, the experts each hold entirely justifiable but different views on certain elements of the valuation, in particular those items which are a matter of professional judgment but which are not clearly capable of mathematical or scientific support, in my judgment I should err on the side which results in higher figures for the value as that reduces the risks involved."
"100. In exercising my discretion as to what order should be made, I therefore take into account the following:
(a) I am being asked to make an "unusual" order;
(b) only a sale on the open market will provide the definitive test as to what the Farm Land is actually worth;
(c) however, in my judgment, the correct price for the Farm Land to be purchased by Sally if she is to have the opportunity to purchase first before the Farm Land is put on the open market can be determined with sufficient accuracy to reduce the risks of Karim not receiving proper value for her interest in the Farm Land;
(d) that price is £3,245,000;
(e) neither expert expressed the opinion that selling the Farm Land on the basis of a hope value rather than on the basis of no hope value but overage would be an incorrect way to go about the sale, indeed both were instructed to value without it being suggested that they should go down the hope value route. Mr Gooderham elected to do so and Mr Alexander followed;
(f) the purpose of the trust was so that the Farm Land could be farmed by members of the Kingsley family;
(g) a sale to Sally will allow the Farm Land to continue to be farmed by a member of the Kingsley family and will allow her to preserve her livelihood;
(h) Karim's interest is now purely financial;
(i) Roger's 2 apparent concerns as to the continuation of the farming business by members of the family and financial security for his wife and daughter would be met by a sale to Sally;
(j) I do not think that Sally's alleged bad conduct in the early days following Roger's death is a factor which I ought to take into account, even if (which I have not) I had determined that she had been guilty of the same;
(k) I do take into account that Sally made an offer very close to the "right" price in September 2018 which was backed by proof of funding from Barclays;
(l) I cannot be certain that if Sally purchased the Farm Land she would definitely farm it as it is and would not seek to develop it or sell part of it for development, but there is no evidence of her having any actual deal in mind for the Farm Land or that there is a deal which will result in her benefitting at the expense of the other beneficiary, effectively Karim;
(m) I am left uncertain about how the funding of Sally's proposed purchase is actually going to work and cannot be certain that she will not have to enter into some arrangement (if she has not already) with some third party to complete the purchase which arrangement might include a sub-sale of some part of the Farm Land or some deal to develop some part of it."
101 in the exercise of my discretion, I am prepared to make an order permitting Sally a period of 2 months to complete the purchase of the Farm Land based on the price of £3,245,000. I limit it to this period on the basis that this will allow sufficient time for such a purchase to complete given that, in order to raise the funding which will be necessary, Sally is going to have to undertake the usual searches even though she personally knows all about the Farm Land.
102. If at the end of that 2-month period, the sale has not completed, the Farm Land will have to be put up for sale on the open market. Both Sally and Karim will be entitled to bid for the Farm Land or any part of it, as it appears that it might well be appropriate to sell it in lots if it is going to be sold on the open market. Given the level of distrust that there is between Karim and Sally, it would seem appropriate that the sale on the open market should be conducted under the supervision of a court appointed receiver, but I will hear further submissions on this before making any direction to that effect."
Ground 1
"IT IS ORDERED THAT:
Order for sale
1. The Trustees [defined as the executors and Sally] shall sell the Properties to the First Defendant on the terms set out below.
1.1 The value of the Properties for this purpose is £3,245,000. The value of the Claimants' beneficial interests in the Properties is accordingly £1,622,500.
1.2 The sum which the First Defendant is to pay over to the Trustees from which the Trustees will discharge the interests of the Claimants in the Properties ("the Price") is the value of their interests, above, net of [certain immaterial payments].
1.3 [Completion date to be 31 August 2019]
1.4 Upon receipt of payment by the First Defendant in accordance with paragraph 1.3 above the Trustees will execute all those documents and take all such steps as the First Defendant may reasonably require for the purpose of transferring those interests to herself.
1.5 If the Claimants failed to execute the necessary documents, the court will execute those documents on their behalf."
"20. I acknowledge that, save perhaps for certain tax consequences, a sale by trustees of the trust property to beneficiaries A and B has much the same economic effect as a compulsory transfer of beneficiary C's interest to beneficiaries A and B, in exchange for money. But it does not follow from the fact that one type of transaction lies outside the functions of a trustee that another type of transaction must do so as well, merely because it has broadly the same economic effect. A sale of the trust property to particular beneficiaries is merely one example of the trustees' undoubted power of sale. It occurs, for example, wherever trustees sell in the open market, and a beneficiary is the successful bidder."
Ground 2
"14. (1) Any person who is a trustee of land or has an interest in property subject to a trust of land may make an application to the court for an order under this section."
(2) On an application for an order under this section the court may make any such order (a) relating to the exercise by the trustees of any of their functions (including an order relieving them of any obligation to obtain the consent of, or to consult, any person in connection with the exercise of any of their functions), or (b) declaring the nature or extent of a person's interest in property subject to the trust, as the court thinks fit.
15. (1) The matters to which the court is to have regard in determining an application for an order under section 14 include (a) the intentions of the person or persons (if any) who created the trust, (b) the purposes for which the property subject to the trust is held, (c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and (d) the interests of any secured creditor of any beneficiary."
"(3) the matters to which the court is to have regard also include the circumstances and wishes of any beneficiaries of full age and entitled to an interest in possession in property subject to the trust (or in the case of a dispute) of the majority (according to the value of their combined interests)."
"(6) The powers conferred by this section shall not be exercised in contravention of, or of any order made in pursuance of, any other enactment or any rule of law or equity."
"21. As for the second and third submissions, I shall assume for the purposes of argument rather than by way of decision that the two principles relied upon by Mr. Woodhouse may constitute what are referred to in section 6(6) as rules of equity although, with respect to the parliamentary draftsman, I would regard equity as laying down principles rather than rigid rules. But the purpose of section 6(6) is not to define the extent of the trustees' powers or even functions, but rather to prohibit the trustees from exercising them in certain ways. It is in marked contrast with the effect of section 14(2), by which the court is given the widest discretion to make orders relating to the exercise by the trustees of any of their functions, having regard in particular to the non-exclusive list of the matters to which the court is to have regard, set out in section 15(1) and (3). If, for example, it was intended that the court should be constrained by an overriding requirement that the trustees obtain the best price for the land, it might be thought surprising that this requirement was not included in section 15(1) or (3), even as a relevant rather than decisive matter."
He dealt with the width of the discretion in paragraphs 23 and 24:
"23. More generally, I consider that the clear object and effect of sections 14 and 15 is to confer upon the court a substantially wider discretion, exercised upon the basis of wider considerations, than might be enjoyed by the trustees themselves, acting without either the consent of their beneficiaries or an order of the court. For example, section 15(1)(c) requires the court to consider the welfare of a minor in occupation of the trust property as his home, whether or not that minor is a beneficiary of the trust. Section 15(1)(d) requires the court to have regard to the interests of secured creditors (rather than merely to respect their strict legal rights). As I have illustrated, section 15(1)(a) may bring into play the intention of the person who created the trust that benefits be conferred upon particular beneficiaries. All this departs from the general rule of equity which requires the trustees single-mindedly to advance the interests of the beneficiaries as a class, without preferring some of them over others.
.
24. None of this means, of course, that the court will act unfairly, unjustly or capriciously as between beneficiaries in giving directions to trustees under section 14(2). It simply demonstrates that, in exercising its powers in circumstances where, necessarily, the beneficiaries will be in dispute with each other about what should be done with the trust property, the court is not rigidly constrained by those rules of equity which may, pursuant to section 6(6), constrain the trustees themselves."
"32. It is plain that the Judge recognised that Mr. Hai did not wish to be bought out by his mother and his brother, and she took into account his concern about the risk that a sale to Mr. Hafiz at a valuation by the court might not achieve the highest price. Nonetheless, she was entitled to conclude that the fact that the Property was one of a number of similar properties in Copenhagen Street, Islington, meant that the risk of an undervaluation by an expert was low, due to the large number of available comparables: see paragraph 24."
That reference does not connote some sort of threshold. It reflects the fact that the existence of a "low risk" of undervalue was significant in considering the discretionary factors that have to be borne in mind.
A1P1 reads:
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law."
Mr Darton said this Article was engaged where there was a prospect of taking away a beneficial interest in property, and was contravened where there was a perceptible risk of an undervalue.
"54 The Court further accepts the Commission's conclusion as to the standard of compensation: the taking of property without payment of an amount reasonably related to its value would normally constitute a disproportionate interference which could not be considered justifiable under Article 1 (P1-1). Article 1 (P1-1) does not, however, guarantee a right to full compensation in all circumstances. Legitimate objectives of "public interest", such as pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value. Furthermore, the Court's power of review is limited to ascertaining whether the choice of compensation terms falls outside the State's wide margin of appreciation in this domain."
Ground 3
"62. In my judgment, in light of the evidence that I have heard, it is an entirely appropriate approach to take to value this land on the basis of it having hope value. The alternative approach that overage should be sought would not be inappropriate, but that was not advanced by either expert as the correct or only way forward."
"I agree that there is at least some doubt raised as to whether Sally really intends to carry on farming the Farm Land as it currently is." (my emphasis)
Ground 4 occupation rent
"130. In my judgment, Mr Darton is wrong to view this as a case of an occupation rent being ordered to be paid by one co-owner in possession of a property to the other co-owner on the basis of Sally having excluded the Estate from occupation of the Farm Land. Rather, in accordance with the principle set out in Lie v. Mohile (supra), the occupation was by the Partnership for the purposes of the Partnership and it was a right to occupy as against both of the co-owners of the Farm Land."
"131. In my judgment, the difficulty that arises in this case stems from the order of Deputy Master Kaye. I have not seen any judgment setting out the basis on which she made this order. I make no criticism of the Deputy Master as it appears that matters were presented to her by both sides on the basis that the Estate was entitled to an occupation rent. She does not appear to have had the decision in Lie v. Mohile (supra) drawn to her attention. Had she done so, it seems likely to me that she would have concluded that until a receiver was appointed or the Partnership was finally wound up, the Partnership was entitled to continue to occupy the Farm Land on the terms of the previous implied licence. Those terms did not include the payment of any rent or licence fee (the rent figure appearing in the accounts relating to land which was not owned by the partners). She would therefore have been likely to have declined to make an order requiring payment of an "interim occupation rent" by Sally.
132. However, there has been no appeal against Deputy Master Kaye's order, rather its terms have been complied with. In my judgment on the true interpretation of that order, construed against the background facts, the order being made for Sally to pay the interim occupation for her "use and occupation of the Properties" was for her occupation as carrying on the Partnership. It was not for her personal occupation as one co-owner as against another co-owner. The Deputy Master was, in effect, setting a rent that ought to be paid by the Partnership, one half of which was to be physically paid across to the Estate. The rent that she was setting was £2,990 per month."
"137. If this interpretation of Deputy Master Kaye's order was open to me (and I make no finding on this in light of the lack of any submissions), given the decision of David Richards J in Lie v. Mohile (supra), I would have found that the Partnership was under no liability for rent for the Farm Land, as the terms of the implied licence would continue until the winding up of the Partnership and those terms did not include the payment of any rent or licence fee for occupation of the Farm Land. The net effect of this would be that there would be no adjustment to the post dissolution accounts in respect of rent, but that the Estate would be required to give credit for the sums received (both the lump sum and the ongoing monthly sums) under the terms of Deputy Master Kaye's order."
"33. Since 27 June 2015 the First Defendant has occupied the Farm to the exclusion of the Claimants and is thereby liable to pay mesne profits or an occupation rent in respect of this use."
That paragraph was admitted in paragraph 29 of the Defence, with a qualification as to the claimed allowability of certain immaterial deductions.
"Furthermore, I accept the principle that Karim is also entitled to receive interest on [Roger's partnership share] at the rate of 5% per annum by virtue of Section 42(1) Partnership Act 1890 and an occupation rent in respect of my use and occupation of the Farm Land to the extent of her beneficial interest." (my emphasis)
"Paragraph 5 contains an error in that the use and occupation of the Properties is that of the First, not the Second Defendant." (Sally's emphasis)
"(8) On the basis of Sally having traded at a loss since the date of Roger's death, Karim is entitled to exercise her option under section 42(1) Partnership Act 1890 to receive interest at the rate of 5% per annum on the payment of the net amount."
The first element of the offer was:
"Re: the Farm Land
Occupation rent - £55,000/2x3.25 years "
That seems to me to be yet another acknowledgment that she was occupying personally and liable to pay an occupation rent.
Disposition
Moylan LJ. I agree
Patten LJ. I also agree