Suzanne Elaine Procter v Philip John Procter & Ors

The judgment determines competing claims about title, the effect of inter-family transactions concerning a golf-course conversion of family farmland (the "WOFL Transactions"), the legal status and consequences of a periodic agricultural tenancy found to have arisen in 1994 under the Agricultural Holdings Act 1986, the legal consequences of a partner's retirement from the family farming partnership in 2010 and the validity and consequences of a notice to quit served by the claimant, Suzie. Key statutory provisions considered include s40 Trustee Act 1925 (vesting of trust property in new or continuing trustees), provisions of the Agricultural Holdings Act 1986 (including ss10, 12, 64–65 and Schedules), and the rules on construction of documents.

The court held (inter alia):

• The 1973 and 1986 trustee appointment deeds operated by virtue of s40 Trustee Act 1925 so that legal title passed to the continuing/new trustees and, by survivorship, Philip holds legal title to the relevant freeholds.
• The 1996 Deed acknowledged the partners' entitlement to the full value of works (the golf-course works) but did not itself transfer legal freehold strata of land.
• The 2003 deeds (assignments and leasebacks), read with the contemporaneous leases, were properly construed as transferring legal title to a surface stratum (the "Golf Course Strata") and as creating leases of those strata; estoppel operated to prevent parties from denying WOFL's title/possession so far as the parties to those deeds were concerned.
• The 1994 agricultural tenancy (declared by the Court of Appeal to have arisen by conduct) remains a periodic tenancy held on trust for the partnership; the 2003 transactions produced a split of the reversion between the surface strata and the sub-surface/underlying land without merger.
• On retirement in 2010 Suzie became entitled to be bought out of the partnership: her one-quarter share is to be valued (market value) and certain valuation issues (assignability, treatment of tenant's improvements/fixtures) were identified for expert determination.
• Service by Suzie of a notice to quit was effective as a formal matter, but she owed fiduciary duties as a trustee of the tenancy and acted in breach of those duties in serving the notice for a collateral/self-interested purpose; the appropriate equitable remedy is rescission and the court ordered relief to address the breach.

Background and parties: The proceedings arise from a bitter family dispute about entitlement to a substantial family land inheritance including farmland and a golf course. The claimant is Suzanne ("Suzie"); the principal defendants are her brothers Philip and James. Legal title to much of the land remained in trustees under Grandfather's will; a family company, Wide Open Finance Limited ("WOFL"), and various family trusts are implicated. This judgment follows and refers to an earlier judgment of the same trial judge and to an intervening Court of Appeal decision ([2021] EWCA Civ 167; [2021] Ch. 395) which confirmed that an agricultural tenancy from 1994 had come into existence by conduct.

Nature of the applications and procedural posture: The court was asked to determine (a) title to land originally vested in Grandfather's will trustees and the operation of Trustee Act 1925 vesting provisions; (b) the legal effect of the 1996 deed and the 2003 WOFL assignments and leasebacks in relation to the golf-course works and land; (c) the consequences of Suzie's retirement from the family partnership in 2010 (whether she is entitled to payment for a partnership share and how to value it, including whether the 1994 Tenancy is part of partnership assets); and (d) the validity and consequences of a notice to quit served by Suzie after the Court of Appeal decision.

Issues for determination: The court distilled the main issues as:

• Whether the 1973/1986 trustee deeds effectively vested legal title in continuing trustees under s40 Trustee Act 1925.
• Construction and legal effect of the 1996 Deed and the 2003 WOFL Assignments/Leases; whether estoppel by deed or estoppel by grant operated so as to vest or preserve WOFL's title/tenancy rights.
• The legal nature and incident of the 1994 Tenancy under the Agricultural Holdings Act 1986 including treatment of tenant's fixtures/improvements and rent-review valuation matters.
• The consequences of Suzie's retirement from the partnership and the correct basis on which her outgoing share should be bought out.
• Whether a single joint legal tenant may validly serve a notice to quit; whether Suzie owed fiduciary duties in serving the notice; whether that service was a breach; and what remedies should follow.

Court’s reasoning and findings (concise):

• On trustee appointment deeds: the court applied s40 Trustee Act 1925 and held the 1973 recital did not manifest a contrary intention to implied vesting; the 1986 deed fell within s40(1) and legal title passed by operation of that section. By survivorship Philip became sole legal titleholder.
• On the 1996 Deed: the deed recorded an acknowledgement that the partners were entitled to the full value of the golf-course works but did not amount to a clear transfer of a freehold stratum; the court accepted the 1996 Deed created an entitlement to value rather than an express transfer of legal strata.
• On the 2003 deeds: construed with the contemporaneous leases and tax/VAT context, the 2003 Assignments and Leases were held to be conveying/reciting ownership of the surface strata ("workings in land") and creating leases; estoppel (both by deed and by grant) operated between the parties to prevent denial of WOFL's title/tenancy; the leases were treated as leases of the reversion for the purposes of the 1994 tenancy but merger did not occur.
• On the partnership retirement: absent express agreement to the contrary, the law (Sobell v Boston and authorities) gives a retiring partner a right to be bought out on valuation rather than an automatic share of balance-sheet/book values; the court held Suzie entitled to a buy-out of a one-quarter share to be assessed by market valuation, with directions on valuation issues (assignability and treatment of fixtures and improvements).
• On the notice to quit: as a matter of property law one joint legal tenant can validly serve a notice to quit of a periodic tenancy; however, a trustee holding the tenancy on trust for the partnership owes fiduciary duties (including to preserve the trust asset and avoid conflicts) and service of the notice by Suzie was a breach of duty because she acted for collateral/self-interested reasons. The court held rescission of the effect of that notice is available and appropriate; consequential issues (including valuation/compensation) were adjourned for consequential orders and expert valuation where required.

Procedural note: The judgment makes further directions for consequential relief, valuation expert evidence and costs; the Trust Corporation's application for a vesting order was adjourned pending this judgment.

At first instance the court (HH Judge Davis‑White QC) made a series of declarations and interlocutory decisions. Key dispositions: a declaration will be made that legal title previously vested in the relevant continuing trustees under s40 Trustee Act 1925 and that, by survivorship, Philip holds legal title; the 1996 Deed acknowledged entitlement to the value of the golf‑course works but did not itself transfer legal strata; the 2003 Assignments and the contemporaneous leases, properly construed, operate as transfers/recitals of ownership of the surface strata and as leases of those strata and estoppel prevented the parties from denying WOFL's title/tenancy (so far as they were parties); the 1994 Tenancy is a periodic tenancy held on trust for the partnership; on retirement in 2010 Suzie was entitled to be bought out of the partnership (valuation to follow); service of Suzie’s notice to quit, though formally effective, breached fiduciary duties she owed as trustee and equitable rescission is the appropriate remedy. The court therefore ordered relief to address those breaches and remitted outstanding valuation and consequential matters for further directions or expert evidence.

The First Judgment in these proceedings was the subject of an appeal to the Court of Appeal ([2021] EWCA Civ 167; [2021] Ch. 395). The Court of Appeal varied the first-instance order by declaring that an agricultural tenancy from 1994 (the "1994 Tenancy") had been created by conduct and was protected under the Agricultural Holdings Act 1986. The present judgment proceeds from that appellate decision and determines related outstanding issues (title, construction of the WOFL documents, partnership retirement and the notice to quit).