Matthew Halstead Cobden v Daniel Halstead Cobden

The court exercised its equitable jurisdiction on partnership dissolution and made a Syers order permitting the claimant (Matthew) to purchase the defendant's (Daniel's) equal partnership interest, rather than directing a full open-market winding up. The judge held that the claimant had a credible expectation, founded on an understanding between the brothers from around 2005/2006 and reinforced in October 2021, that Matthew would one day buy out Daniel, and that Matthew had relied on that understanding in devoting himself to building the business (notably the Dairy Unit). The court treated that expectation as an equitable factor akin to proprietary estoppel which, together with reliable up-to-date expert valuation evidence, justified departing from the normal sale-on-the-market route because the Syers order would not leave the defendant worse off.

The court relied upon the Partnership Act 1890 framework (sections 39, 44 and 46) and considered the Court of Appeal decision in Bahia v Sidhu [2024] EWCA Civ 605, but found the present facts distinguishable. The judge also assessed expert evidence on land, buildings, livestock and machinery and fixed an asset figure of £11,040,000 for the purposes of the Syers order, allowing the claimant a short period to pay the defendant his share on that basis.

This is a first-instance trial judgment in a dispute between two brothers who ran Witcombe Farm Partnership, a dairy farming partnership, which was dissolved by notice in August 2022. The claimant sought (i) declarations and in particular a Syers order permitting him to buy the defendant's share rather than the partnership assets being sold on the open market; and (ii) alternatively that the court should wind up the partnership.

The salient background facts were:

• the partnership (successor to a family farm) developed a large-scale Dairy Unit from 2013–2015;
• one brother (Matthew) drove the Dairy Unit project and banking negotiations and claimed that, following a conversation circa 2005/2006, the brothers had an understanding that Matthew would buy Daniel out at some future point;
• relations deteriorated after 2021 (failed joint approach to buy neighbouring Bearley Farm was an important flashpoint) and offers to buy each other’s shares were exchanged in April–August 2022;
• the partnership continued trading in dissolution pending the court’s decision.

The claim framed key issues: (1) whether a proprietary estoppel-type equity existed entitling the claimant to be preferred as purchaser under a Syers order; (2) whether the court should make a Syers order in the exercise of its discretion even if proprietary estoppel was not strictly made out; (3) valuation and mechanics if a Syers or open-market sale were ordered.

The court summarised the legal principles governing Syers orders (originating in Syers v Syers (1876) 1 App Cas 174) and considered the statutory framework of the Partnership Act 1890 (notably sections 39 and 44) and recent authorities including Bahia v Sidhu [2024] EWCA Civ 605. The court emphasised that sale on the open market is the normal route but that an exceptional Syers order may be justified where it does justice between the partners. The court accepted that equitable considerations similar to proprietary estoppel can justify a Syers order where one partner has an equity that makes an open sale unjust.

On the facts the judge found:

• the 2005/2006 conversation occurred and was reinforced by a significant October 2021 discussion in which Daniel reacted positively to a buy-out proposal;
• Matthew was the driving force behind the Dairy Unit and the business expansion;
• the defendant’s testimony was less persuasive and his change of position was linked to family in‑law involvement and advice;
• joint expert valuation evidence (land and buildings by Savills; livestock and machinery by Greenslade Taylor Hunt) produced a reliable market valuation, adjusted by the court to reflect recent movements and a tolerance agreed by the claimant;
• weighing the equitable claim, the commercial and tax consequences of an open sale, staff and herd risks and the valuation evidence, the court concluded it would be just to make a Syers order in favour of the claimant.

The court therefore made a Syers order on terms set out in the judgment (including valuation as at 20 May 2024 and an asset total of £11,040,000) giving the claimant a defined period to pay the defendant the amount due under the dissolution accounts; failing which the normal sale route would follow. The judgment addressed procedural directions for completing the dissolution accounts, valuation date and consequential directions.

This first-instance court made a Syers order in favour of the claimant, permitting him to buy the defendant’s partnership interest on the terms set out in the judgment. Rationale: the claimant had established a credible, equity-like expectation (rooted in a 2005/2006 conversation and later reinforced) and had detrimentally relied on it by devoting himself to building the partnership business; up-to-date expert valuation evidence demonstrated the buy-out would not unfairly deprive the defendant of what he could reasonably expect under an open-market winding up. The court therefore exercised its discretion to depart from the normal sale-on-the-market outcome and ordered a buy-out mechanism, with fallback sale provisions if payment was not made within the stipulated period.