Kingsley & Ors v Kingsley

Under the Trusts of Land and Appointment of Trustees Act 1996, the court’s power to order sale of trust property is not subject to a threshold requiring every risk of undervaluation to be eliminated. Valuation risk is a discretionary factor to be weighed with the statutory matters. A sale of the whole trust property to a beneficiary remains legally a sale of the property, even where its economic effect resembles a transfer of another beneficiary’s interest. Article 1 of Protocol 1 does not require full market testing or full compensation in every case. Partnership-sale principles do not govern the exercise of the TOLATA discretion by analogy. Whether occupation is under an implied partnership licence or in a co-owner’s own right is a question of fact. A pleaded admission of personal occupation may establish liability for occupation rent.

Roger and Sally Kingsley farmed land as partners and held the principal farmland beneficially in equal shares. After Roger’s death, his executors sought dissolution of the partnership and an order for sale under the Trusts of Land and Appointment of Trustees Act 1996. The Deputy High Court judge ordered that Sally should have the first opportunity to purchase the whole property at a court-assessed value, failing which it would be sold on the open market: [2019] EWHC 1073 (Ch). He treated her occupation as occupation by the partnership and accounted for rent accordingly. The executors appealed on the legal form of the sale, the alleged valuation-risk threshold, the exercise of discretion, and occupation rent. The central issues were whether TOLATA permitted a sale to a beneficiary at a court-assessed price and whether Sally was personally liable for occupation rent.

Disposition. Mann J gave the judgment, with Patten LJ and Moylan LJ agreeing. The appeal was dismissed on Grounds 1–3 and allowed on Ground 4.

1. Form of order. Section 14 of the Trusts of Land and Appointment of Trustees Act 1996 permitted an order for sale of the whole legal and beneficial interest in the property to Sally. Her payment of only the executors’ share of the price was a mechanism for discharging the purchase price. It did not convert the order into a prohibited sale of the executors’ beneficial interest. This was consistent with Bagum v Hafiz [2016] Ch 241.
2. Discretion and valuation risk. Sections 14 and 15 confer a wide discretion. The risk that a court valuation may be below an open-market price is a factor in that discretion, not a threshold requiring a low, negligible or absent risk. Bagum’s reference to low risk described a discretionary consideration, not a jurisdictional condition. Where Article 1 of Protocol 1 is engaged, compliance with section 15 will generally satisfy it. The article does not impose an absolute requirement of market testing or full compensation. A proper and fair court valuation was sufficient in this case.
3. Review of discretion. The judge was entitled to rely on the expert valuation evidence, adopt hope value, and conclude that the price could be fixed with sufficient accuracy to reduce the risk of injustice. He was not required to express the risk numerically. The sale principles applicable to partnership property under section 39 of the Partnership Act 1890 could not be imported by analogy into TOLATA, particularly as the land was not partnership property.
4. Occupation rent. Whether Sally occupied under an implied licence while winding up the partnership, or in her own right, was a question of fact. Lie v Mohile [2014] EWHC 3709 did not make the availability of such a licence determinative. The judge had failed to address the factual question and had overemphasised the authority. Sally had pleaded liability for occupation rent and had reinforced that position in evidence, an open offer and the interim-payment proceedings. She was therefore held to that admission for the period since Roger’s death. The occupation-rent determination could not stand, and the accounts were to be redrawn if necessary, with any dispute referred to a Master.

1. Court of Appeal (Civil Division) — In [2020] EWCA Civ 297, dismissed Grounds 1–3 and allowed Ground 4 concerning occupation rent.
2. High Court (Chancery Division) — The Deputy High Court judge ordered a sale to Sally at a court-assessed value, with an open-market sale if she did not complete, and treated occupation rent as a partnership matter: [2019] EWHC 1073 (Ch).