Brown v Brown

Where an executor-beneficiary seeks permission to purchase estate property, the court must be satisfied that the proposal is fair. Where adult beneficiaries cannot agree the price, an independently instructed expert valuation may provide a proper basis for sale without marketing. The court should assess the valuation evidence, market conditions, likely delay and transaction costs, and the interests of the estate as a whole. A marketing exercise is not required where those considerations make it unlikely to produce a better result. The court may also use its broad equitable jurisdiction to require a beneficiary who has occupied estate property rent-free to account for a notional occupation rent, having regard to the parties’ conduct and the point at which the dispute should reasonably have been resolved.

The claimant, Martin Brown, was the executor of his mother’s estate and one of its two equal residuary beneficiaries. The defendant, his brother Alan Brown, was the other beneficiary. The principal estate asset was a bungalow which the claimant occupied and wished to purchase.

The parties initially agreed that the claimant would receive the property and the defendant the cash, subject to an equalising payment. They later disagreed about the property’s value and whether it should be marketed. The claimant sought permission to purchase at £448,000. The defendant sought marketing or, alternatively, a sale to the claimant at £465,000. The court also had to determine whether the claimant should account for occupation rent.

1. Permission to purchase. The claimant was permitted to purchase the property for £448,000. The court was required to determine whether the proposal was fairly made, given the claimant’s conflict between his personal interest as purchaser and his duties as executor.
2. Where adult beneficiaries cannot agree on price, the model applicable where some beneficiaries are children or unborn cannot be applied precisely. An executor-beneficiary acts fairly and properly by obtaining a valuation report from a fully qualified valuer instructed to report on the same basis as an expert witness for the court.
3. The court should begin with the valuation evidence. It should consider the quality of the comparables, the property’s condition, required modernisation, market conditions, likely sale period, marketing and legal costs, and the risk that a sale would produce a lower net return for the estate. On the evidence, marketing at the defendant’s proposed value carried a significant risk of delay and loss and was not justified.
4. The claimant was required to account to the estate for a notional occupation rent of £15,100. The court exercised its broad equitable jurisdiction between equal residuary beneficiaries. Rent was awarded for 1 May 2017 to 30 April 2018, at £1,300 per month for seven months and £1,200 per month for five months. The court considered that the position changed after the defendant received the first professional valuation and continued to hold out for £465,000 without obtaining a proper valuation.
5. Costs and consequential matters were reserved for further argument.