Kingsley& Ors v Kinglsey & Anor

Under sections 14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996, the court has a broad discretion to order a beneficiary an opportunity to purchase trust property before an open-market sale. An open-market sale is usual, but it is not mandatory. The court must assess the risk that a court-determined price will undervalue the property and may consider the trust’s purposes, the beneficiaries’ interests and the practical consequences of the proposed order.

A partnership’s occupation of land under an implied licence may continue for winding-up purposes. Where the pleaded case based on section 2 of the Agricultural Holdings Act 1986 is abandoned, a party cannot rely on an unpleaded section 1 case. Documentary evidence must establish any claimed agricultural tenancy.

Following Roger Kingsley’s death, the farming partnership he had operated with his sister Sally was automatically dissolved. The claimants sought winding-up orders, accounts and sale of freehold farmland held by Roger and Sally as tenants in common. Sally sought an opportunity to purchase the land before any open-market sale.

Separate possession proceedings concerned two parcels, Peascroft 1 and Peascroft 2. Sally claimed that the partnership occupied them under agricultural tenancies protected by the Agricultural Holdings Act 1986. The court also had to determine the treatment of buildings, solar arrays, depreciation, legal expenses and occupation payments in the partnership accounts.

1. The Farm Land was held on trust for Roger’s estate and Sally and was not partnership property. Under sections 14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996, the court had jurisdiction to direct a sale to Sally at a court-determined price before an open-market sale. The usual order was an open-market sale, but the court was not rigidly required to obtain the highest possible price.
2. The decisive consideration was the risk that the court’s valuation would undervalue the land and prejudice Karim’s financial interest. That risk was sufficiently controlled by adopting a valuation of £3,245,000, including hope value. The purposes of the trust, the continuation of family farming and Sally’s livelihood also supported the order. Sally was therefore given two months to complete the purchase. Failing completion, the land was to be sold on the open market, with both parties entitled to bid.
3. Buildings paid for from partnership income were fixtures belonging to the owners of the land, not partnership assets. The depreciated accounting entry for freehold property and any corresponding improvements entry had to be removed from the cessation accounts. The Estate could not receive payment twice for the value of the solar arrays.
4. The partnership’s occupation of the Farm Land continued under an implied licence for winding-up purposes. Applying Lie v Mohile [2014] EWHC 3709 (Ch), occupation rent was not ordinarily payable under that licence. However, the interim order was construed as requiring the partnership accounts to include equivalent occupation-rent liabilities to both co-owners, subject to accounting for sums already paid to the Estate.
5. Sally had pleaded reliance on section 2 of the Agricultural Holdings Act 1986 and had not pleaded a section 1 tenancy. Her abandonment of the section 2 case meant that she could not advance the unpleaded alternative. In any event, the evidence did not establish section 1 agricultural tenancies over Peascroft 1 or Peascroft 2. Possession was therefore ordered for the respective owners, and the partnership was liable for mesne profits to be assessed.