Kingsley v Kingsley
The Court of Appeal has upheld the decision of the High Court on the scope and extent of the court’s powers under ss 14 and 15 of TOLATA 1996: Kingsley v Kingsley  EWCA Civ 297 (Ch). At first instance (Kingsley v Kingsley  EWHC 1073), Sally Kingsley, the sole surviving partner of a farming partnership formerly conducted with her late brother, agreed to an application to the court brought by her brother’s widow as executor of his will for the sale of jointly owned farmland (which was not a partnership asset); but sought an order giving her a pre-emptive right to acquire the land before its sale on the open market, at a price to be determined by the Court. At first instance the Court heard valuation evidence from the parties’ experts, whose valuations were approximately 10% apart. The Court determined the value of the farmland at about £3.25m, some 4% below the value contended for on behalf of the widow. The Court applied the principles set out by the Court of Appeal in Bagum v Hafiz  EWCA Civ 801 in holding that it had jurisdiction under s. 14 of the 1996 Act to make the order sought by Sally. The Court then exercised its discretion to make the order sought, ordering the sale of the farmland to Sally at half of its value (she owned a 50% share in the farmland).
The executors of the brother’s will appealed on the grounds inter alia that (1) a finding by the Court that the risk of undervaluation was low was a threshold requirement, failure to satisfy which meant that the discretion under s.14 did not arise. It was argued that the Judge had made no finding that this risk was low, or if he did he was wrong to have done so, and so he was not entitled to exercise the discretion; (2) the exercise of the discretion was incompatible with Article 1 of Protocol 1 of the Human Rights Convention, in that it wrongly deprived or risked wrongly depriving the landowners of the value of their property without adequate compensation; and/or that the amount determined in this case was inadequate compensation; (3) the Judge had in any event wrongly exercised his discretion in ordering the sale of the farmland to Sally, failing to take into account relevant matters, and wrongly taking into account irrelevant matters. The executors also appealed the Court’s finding that it was the partnership, and not Sally herself, who had remained in occupation of the farmland, and that since the partnership had previously paid no rent for its occupation of the farmland, no rent was payable for the intervening period of occupation, on the basis that the Judge had wrongly applied the principle in Lie v Mohile  EWHC 3709.
The Court of Appeal comprehensively rejected the appeal on the TOLATA grounds. (1) The threshold argument was rejected. The risk of an undervaluation being low was not a threshold that had to be satisfied before the discretion arose under TOLATA section 14. To the contrary, Bagum decided that such a risk was simply a factor to be taken into account in the exercise of the discretion. (2) The human rights argument was rejected. The exercise of the discretion was not incompatible with A1P1. Where as in this case the applicant had herself come to the Court for an order for sale, she could hardly be described as being deprived of her property within the meaning of A1P1. In any event the Court had heard the valuation evidence and determined the value of the farmland, and the widow would receive compensation for her share of its value accordingly. Further, even if the Court’s determination of value of the farmland was not properly regarded as the true market value, nonetheless A1P1 required only that compensation reasonably related to the value of the relevant property be made: James v United Kingdom (1986) 8 EHRR 123 applied. (3) The challenge to the exercise of the discretion was rejected. The Judge had exercised the discretion entirely appropriately, taking into account only relevant matters, including the low risk of an undervaluation of the farmland, and not taking into account irrelevant matters, or failing to apply his own approach to assessing the experts’ evidence (which was, unless there were sound reasons not to, to prefer the evidence of the expert acting for the widow).
On the issue of occupation rent it was held that, on the basis of interim witness evidence and correspondence by Sally, and an open offer based on payment by her for her continuing occupation, she must be taken to have accepted that she occupied in her own right, and must pay for occupation accordingly. The rule in Lie v Mohile had therefore no application.
Catherine Taskis appeared for Sally at first instance. Caroline Shea QC and Catherine Taskis appeared for Sally on the appeal. They are very grateful for the instruction from Norman Hunter-Goulder of Pellys Solicitors, who represented Sally and the Second Respondent throughout.
The full judgment can be read here.
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