Suzanne Elaine Procter v Philip John Procter & Ors

A periodic agricultural tenancy may be terminated by notice to quit given by one of several joint tenants at law. That does not prevent the notice being a breach of fiduciary duty where the tenant acts as trustee for a partnership and is under a duty to preserve and renew the tenancy.

A notice served in breach of fiduciary duty may be rescinded where the landlord knew of the breach. A retiring partner who is not paid out under an express agreement is generally entitled to the value of the partner’s share at the retirement date, assessed by valuation rather than by reference to book accounts.

Documents concerning improvements to land must be construed objectively. A deed acknowledging entitlement to value does not itself transfer an interest in land, whereas later assignments and leases may, in context, operate as transfers and leases of a surface stratum by estoppel.

The claimant was involved in two related proceedings concerning a family farming partnership, agricultural land, family trusts and golf-course transactions. The first proceedings concerned title to land, the effect of deeds executed in 1996 and 2003, the claimant’s retirement from the partnership, and the value of her partnership share.

The second proceedings concerned a notice to quit served by the claimant, one of several legal tenants of an agricultural tenancy protected by the Agricultural Holdings Act 1986. The central issues were whether the notice was effective, whether serving it breached fiduciary duties owed to the partnership, whether the notice could be rescinded, and what consequences followed.

1. Title and trustee appointments. Under s 40 of the Trustee Act 1925, deeds appointing new trustees vested the relevant freehold title in the continuing and new trustees. The limited recital concerning investments did not amount to an express provision excluding the statutory vesting effect.
2. WOFL transactions. The 1996 deed acknowledged that the partners were entitled to the value of the works, but did not transfer or convey land or improvements. The 2003 assignments, construed with the contemporaneous leases and their commercial and taxation context, conveyed the freehold interest in the surface stratum of the identified golf-course land. The leases operated by estoppel, and the parties were estopped from denying WOFL’s title as landlord. The 1994 tenancy and the 2003 leases did not merge.
3. Retirement from the partnership. The claimant’s retirement caused a technical dissolution, without a full winding up. In the absence of an agreement governing voluntary retirement, the continuing partners were required to buy out her share at its value on the retirement date. The relevant value was a true market valuation, including the claimant’s proportionate share of the 1994 tenancy. Interest was payable under s 42 of the Partnership Act 1890.
4. Notice to quit. One of several joint tenants could validly serve a notice to quit a periodic tenancy. The rule in Hammersmith LBC v Monk applied because continuation depended on the consent of all tenants. However, the claimant held the tenancy as trustee for the partnership, not as an equitable co-owner. She therefore owed fiduciary duties to act in the partnership’s best interests, avoid collateral purposes and conflicts, and preserve the tenancy where renewal was beneficial. Her notice was served for self-interested purposes and breached those duties.
5. Relief. A valid notice to quit could not simply be withdrawn. Nevertheless, rescission was available as an equitable remedy for the fiduciary breach. The notice was ordered to be rescinded. The claimant’s estoppel case concerning the alleged absence of value in the tenancy failed.

The judgment followed an earlier first-instance judgment, [2019] EWHC 1199 (Ch). An appeal concerning the agricultural tenancy was allowed or varied by the Court of Appeal in [2021] EWCA Civ 167; [2021] Ch. 395. The present judgment determined the remaining issues and adjourned consequential matters, costs and permission to appeal.