Moore v Moore & Anor

This is a case about proprietary estoppel. As so often, it involves a family farm, and a sad breakdown in relations between members of the family. Indeed the dispute has already been ruinous in both human and financial terms. We were told that the total costs so far incurred on both sides are estimated to be in the region of £2.5 million.

The case comes to us on appeal by the original claimant and Part 20 defendant, Mr Roger Moore (“Roger”), from the order made on 19 August 2016 by Mr Simon Monty QC, sitting as a deputy High Court Judge of the Chancery Division, following a nine-day trial in Bristol between 5 and 18 July 2016. Roger was unable to participate in the trial, because he was already suffering from moderately severe Alzheimer’s disease and lacked capacity to conduct legal proceedings. He was represented by his wife and litigation friend, Mrs Pamela Moore (“Pamela”). Sadly, Roger’s condition has continued to deteriorate over the last two years. He now lives in a care home, where he needs permanent care and (as matters stand) will remain for the rest of his life. He is now 76 years old, having been born on 30 March 1942, and Pamela is approximately the same age.

Roger and Pamela married in 1965, when they were both in their early twenties. Roger was the eldest of the three sons of John Moore, who was himself the second generation of the Moore family to own and farm Manor Farm in Stapleford, near Salisbury in Wiltshire. Roger’s two brothers were Geoffrey (who plays an important role in the history of the present case) and Richard. Pamela, however, did not come from a farming background. She was born in London and moved to Salisbury at the age of 18 in 1960 to study at a teacher training college. She soon met Roger, and they started dating. Their relationship flourished, and they married, as I have said, in 1965, by when Pamela had qualified and was teaching music and history at Wilton Secondary Modern School.

In 1966, John Moore gave the farm to Roger and Geoffrey, who began to farm it together in partnership. John also gave some other land to Richard, who was not interested in pursuing a farming career. In 1981, Roger and Geoffrey bought this land back from Richard.

Roger and Pamela have two children, a daughter Julie, who was born in 1965, and a son Stephen, born in 1967. Julie is married to Andrew Lane, and they have two children, Victoria and Sam. Stephen is married to Jackie, and they have two daughters. Stephen is the original defendant and Part 20 claimant. It is Stephen’s claim in relation to his father’s half share of Manor Farm and the partnership business, raised for the first time in a defence and counterclaim to partnership proceedings instituted by Roger, which lies at the heart of the present dispute.

Manor Farm extends to some 650 acres of mainly arable land (although it has in the past supported a dairy herd). As the judge recorded, there are several houses on the farm. Manor Farmhouse itself is a substantial property, where Roger and Pamela have lived since their marriage, and where Stephen and Julie grew up. The Little House is a bungalow occupied by Stephen, Jackie and their children. Ashburton is a smaller thatched house adjoining Manor Farmhouse, “on which” in the judge’s words “substantial sums were expended in anticipation of it becoming Roger and Pamela’s residence in due course.”

It is common ground that the farm was a thriving and profitable business during the period of over 40 years when Roger and Geoffrey were both partners, until Geoffrey’s retirement in April 2008. Over the years, both before and after the death of John Moore in 1980, Roger and Geoffrey bought further parcels of land to expand the farming operations, including the land which they bought back from Richard in 1981. According to the judge:

Stephen has worked on the farm since his childhood, initially at weekends, evenings and in school and then college holidays, and subsequently full time. He became a salaried partner in around 1998, by when he had been earning £200 per week for a 45 to 50-hour week (rising to 100 hours per week at harvest time). As a salaried partner, Stephen earned £590 per fortnight, from which he paid £190 per month as a pension contribution. The judge found those earnings to be “more or less in line with the drawings taken by Roger and Geoffrey”. Then in 2003/4 Stephen became an equity partner, sharing in the profits with his father and uncle.

Geoffrey had two sons of his own, James and William, but neither of them worked on the farm except occasionally at harvest time. When Geoffrey came to retire from the farming business in April 2008, thereby bringing the existing partnership to an end, he decided to give his half share of the partnership to Stephen, his nephew, in return for a payment from the partnership of £500,000 which was satisfied in two instalments. The judge found that Geoffrey’s interest in the partnership was worth approximately £3 million, so this represented a very substantial benefaction by Geoffrey to Stephen, at the apparent expense of his own sons (who, like Richard before them, did not wish to become farmers).

The judge found that Geoffrey’s decision “came as a surprise to Roger, Pamela and Stephen”. It was agreed by Geoffrey, Roger and Stephen that Roger and Stephen would continue to farm in partnership together. This they did, although for tax reasons, and on advice from the partnership’s accountant, Mr Mike Butler, a company, Till Valley Contracting Limited (“the Company”), was established in 2008 and also became a partner. The shares in the Company are held as to 51% by Roger and as to 49% by Stephen. Its main purpose was to provide a receptacle for some of the substantial profits of the business, which would otherwise have been liable to tax at higher marginal rates in the hands of Roger and Stephen. In addition, various farming assets were transferred into the Company in 2010, and were paid for by means of directors’ loans, with the intention that those loans would over time be paid down from the profits from the Company. The directors were Roger and Stephen, and as the judge found the Company “had no function or directing mind independent from” them. Although the Company derived a small amount of income from contracting operations, its main source of revenue was its allocated share of partnership profits, the amount of which would be determined from year to year on advice from Mr Butler.

The judge found that relations between Pamela and Stephen had been difficult since Stephen’s childhood, and that Pamela was “critical both of Stephen’s behaviour and his academic performance”. There is nothing, however, to indicate that this tension caused any practical difficulties before Geoffrey’s retirement. The serious breakdown in relations within the family seems to have begun in 2009, which the judge described as “a key year” which “marked a serious breakdown in relations between Stephen and Jackie on the one hand and Pamela, Roger, Julie and Andrew on the other.”

As the judge explained:

The “over-arching plan” to which the judge referred was central to his analysis of the evidence which he heard and evaluated about the family’s plans for the future of the farming business following Roger’s death or retirement. The judge described this plan as follows, at [63]:

As the judge found, this over-arching plan was consistent with the evidence of Mr Butler, and also with Pamela’s acceptance in cross-examination that Geoffrey’s decision represented “the next stage in Stephen’s succession to taking over the entirety of the business”, and that this was her understanding and the way she saw it in 2008: see the judgment at [62]. Furthermore, this was also what Geoffrey unambiguously intended. As the judge said, at [65]:

It is unnecessary, at this introductory stage, to trace the steps in the breakdown of family relations which began in 2009. It is enough to say that by a notice of dissolution dated 21 December 2012 Roger purported to dissolve the partnership with immediate effect pursuant to section 32(c) of the Partnership Act 1890, on the footing that it was a partnership at will. The validity of the notice was disputed by Stephen, who contended that the partnership was for the joint lives of Roger and Stephen (or, if Roger were to predecease Pamela, until the subsequent death of Pamela). Eventually, the present action was begun by a claim form issued on 7 February 2013, whereby Roger sought a declaration that the partnership had been dissolved by the notice of 21 December 2012 and an order that the partnership be wound up. In March 2013, Stephen served his defence and counterclaim, in which he pleaded that from his childhood, and for as long as he could remember, it had been “envisaged and promised” by Roger that he “would inherit” Roger’s interest in the farm, “subject only to adequate provision being made for Pamela (in the event she should outlive the Claimant) for the remainder of her life”: see paragraph 10 of the defence.

The promises upon which Stephen relied were set out in his Part 20 counterclaim. He said Roger had told him from an early age that the farm and the farming assets of the farming partnership “would be his one day”. The promises were all made orally, and Stephen could not remember the first occasion, nor all of the occasions, on which they were made. Nevertheless, they “were made and repeated on more than a dozen occasions, without warning or fanfare”, and Stephen referred to three specific occasions when he remembered the promises being repeated. The first such occasion was in the early 1990’s, when Stephen went to work on the farm full time after completing three years at agricultural college. The second occasion was in or around 2002, when a large farming contract involving some 800 acres of land was undertaken by the partnership. The third occasion was in 2007/8, around the time Geoffrey’s retirement plans were being formulated.

According to paragraph 25 of the counterclaim:

Stephen went on to plead that, in reliance on these promises, he had acted to his detriment. The particulars of alleged detriment set out in paragraph 26 of the counterclaim include the following:

Stephen committed himself completely to the best interests of the farm and the partnership between Roger and Geoffrey since he was a child, without regard to his own position and that of his wife and two daughters;

he took no steps to explore or create any career opportunities other than farming;

he took no steps to further his career in farming otherwise than at the farm;

he worked for rates of pay below what he could have earned doing similar work on an employed basis, including working for no wages during evenings and weekends and for nominal pocket money during school or college holidays, working on average 65 hours per week from 1991 to about 2001 for £200 per week until he became a salaried partner, and continuing the same level of work after he became a salaried partner for £590 per fortnight, which was well below market rates for someone of Stephen’s skill, qualifications and level of responsibility, and well below what it would have cost to pay a skilled manager running such an operation; and

he took no steps, and was not paid enough to enable him, to secure a house in his own name, or to build up any other assets, savings or security. The Little House remained throughout in the joint ownership of Roger and Geoffrey.

After a full consideration and review of all the evidence which he had heard (including some aspects of it to which I will need to return), the judge made his key findings in relation to the alleged promises at [145] to [147]:

The judge went on to decide the overlapping issues of reliance and detriment in Stephen’s favour too. In relation to reliance, he said this at [148]:

In relation to detriment, the judge summarised Stephen’s oral evidence at [149], and recorded that none of it had been challenged. The judge concluded, at [150], that “Stephen did suffer detriment in reliance on the promises”. He then considered, and rejected, arguments advanced by Mr Thomas for Roger that there was no detriment because (a) Stephen had been very well paid as a partner, and (b) he had inherited Geoffrey’s share in the farm. In relation to the first argument, the judge considered a schedule attached to Mr Thomas’s skeleton argument which set out the monetary benefits which Stephen had allegedly received. Some of the figures in this schedule might have been derived from the partnership accounts, but others were not, and they were not introduced in evidence, nor had the schedule and the supposed benefits been put to Stephen in cross-examination, or explored in any way with Mr Butler, on whose evidence the figures appeared at least in part to be based: see [152]. The judge’s conclusion, at [160], was that he could “take no account of the matters in the schedule.”

In relation to Mr Thomas’s second argument on detriment, the judge’s conclusion was forthright:

For similar reasons, the judge then rejected the argument that it would not be unconscionable if Stephen were not to receive Roger’s share: see the judgment at [162] to [166]. The only further point I need to note is at [166], where the judge said:

Before I come on to the judge’s decision as to how the equity should be satisfied, it is convenient to refer to some of the legal principles which are agreed to apply in proprietary estoppel cases. The judge, at [16], guided himself by reference to the principles set out by Lewison LJ (with whom Underhill and Patten LJJ agreed) in Davies v Davies[2016] EWCA Civ 463, [2016] P. & C. R. 10, at [38]. Both sides confirmed to us that they accepted these propositions, which Lewison LJ stated as follows:

Lewison LJ then referred, at [39], to what he called “a lively controversy about the essential aim of the exercise of this broad judgmental discretion”. As he explained:

Although this controversy was briefly referred to by leading counsel on both sides in their oral submissions, and Mr Pymont QC (appearing for Roger in this court, although he did not appear below) suggested that it might be necessary for us to resolve it, I do not see it as central to the resolution of the present case, and (if it were) much fuller argument on the law than we actually received would have been necessary. I will therefore content myself with saying that, although the second approach is logically attractive, I would be wary of according it primacy in a field where cases are so fact sensitive and proportionality has such a prominent role to play. As Robert Walker LJ said in Jennings v Rice at [44]:

Robert Walker LJ went on in Jennings v Rice to distinguish between some of the broad types of case which tend to arise in this area of the law. In some cases, “the assurances, and the claimant’s reliance on them, have a consensual character falling not far short of an enforceable contract”: see [45]. In cases of that kind, “both the claimant’s expectation and the element of detriment to the claimant will have been defined with reasonable clarity”, for example where an elderly benefactor reaches a clear understanding with the claimant that if the claimant resides with and cares for the benefactor, the claimant will inherit the benefactor’s house or will have a home for life. In such cases, “the consensual element of what has happened suggests that the claimant and the benefactor probably regarded the expected benefit and the accepted detriment as being (in a general, imprecise way) equivalent, or at any rate not obviously disproportionate”, and other things being equal it will often be appropriate to provide the claimant with the specific property which the benefactor has promised (ibid).

On the other hand, there will be cases where the claimant’s expectations are uncertain, or where the high level of the claimant’s expectations is incommensurate with the assurances which have been given. In such cases, the claimant’s expectations may still be taken as a starting point, but no more: see [47]. Such an approach accords with Scarman LJ’s reference to “the minimum equity to do justice to the plaintiff” in Crabb v Arun District Council [1976] Ch. 179, 198, and with nineteenth-century cases such as Plimmer v Wellington Corporation(1884) 9 App. Cas. 699, where Sir Arthur Hobhouse said at 714:

Robert Walker LJ continued, in an important passage on which Mr Pymont QC placed particular reliance and which I need to set out at some length:

Ms Shea QC submitted on behalf of Stephen that the present case is a good example of Robert Walker LJ’s first category, where the circumstances fall not far short of an enforceable contract. She also submitted that the guidance given by Robert Walker LJ at [52] had no application to cases of that type. I am, however, unable to accept either submission, at least in the unqualified form in which it was advanced. As I shall explain, although the present case does have some features of the first category type of case, there are also important differences, not least the fact that Roger’s assurances were only intended to take effect on the death of the survivor of himself and Pamela, whereas the partnership came to an end, and the relationship between the parties broke down, while they were both still alive. Secondly, I would read Robert Walker LJ’s guidance in Jennings v Rice at [52] as intended to be of general application, albeit less likely to have a significant influence in cases which clearly fall into the first category.

After this short excursus into the law, I can now return to the judge’s decision on how the equity should be satisfied.

The judge’s starting point (at [168]) was his finding of fact that Stephen had proved his pleaded case in relation to the promises. Accordingly, Stephen’s equity extended to Roger’s interest in the farm, the partnership, and the farm assets (including the farming assets of the Company): see [169]. The judge then gave his reasons, at [171], for finding that Roger’s interest in the partnership extended to Roger’s current account, his share of the Company’s cash and profits, and his director’s loan account. As I shall explain, these findings are challenged in some of the subsidiary grounds of appeal.

At [174], the judge directed himself that:

The judge then stated his conclusions quite shortly, as follows:

The trial concluded on 18 July 2016, when the judge reserved his judgment. He then produced his written judgment, which runs to 196 paragraphs, with commendable speed, and a further hearing on 19 August 2016 was fixed to deal with consequential matters. One issue which arose was whether three properties, namely the Little House, Ashburton and the Water Meadows, were subject to the equity which Stephen had established. The judge held that they were, for the reasons which he gave in a short ex tempore judgment on 19 August: see [2016] EWHC 2202 (Ch) (“the supplementary judgment”). These findings, too, are challenged in the grounds of appeal.

By his order dated 19 August 2016, but not sealed until 1 September 2016, the judge made the following declarations:

The partnership between Roger, Stephen and the Company was a partnership for the joint lives of Roger and Stephen;

the partnership was liable to be dissolved on 31 August 2016 and its affairs wound up;

the Little House, Ashburton, and the Water Meadows were assets of the partnership; and

Stephen had an equity, by reason of proprietary estoppel, over the entirety of Roger’s interest in the farm, including his interest under the partnership (defined as “the Claimant’s Partnership Interest”) and the Farm Assets, which for the avoidance of doubt were stated to include Roger’s interest in specified freehold properties, his current and capital partnership accounts, and his interest in the Company, comprising cash, assets and director’s loan account (together defined as “the Claimant’s Company Interest”).

The operative part of the order then required Stephen to procure the preparation of dissolution accounts of the partnership by Mr Butler’s firm (Old Mill), and directed Roger and Stephen to “use all reasonable endeavours to cooperate” in procuring those accounts and winding up the partnership, with liberty to apply in the event of any disagreement.

The order then provided as follows:

In summary, therefore, the scheme established by the judge’s order had the following key features:

the entirety of the property subject to Stephen’s equity was to be transferred by Roger to Stephen within 28 days of the date the order was made;

Roger and Pamela were to be granted a licence to live in Manor Farmhouse for so long as they (or the survivor of them) wished or were capable of doing so, free of charge, and with Stephen assuming responsibility for payment of all outgoings (as specified) and for keeping the property in good repair and condition;

Roger and/or Pamela would have the option of moving to Ashburton if and when they chose to do so, in which case a licence of that property would be granted to them on the same terms, and with liberty to apply to the court if there were any difficulty in obtaining the cooperation and agreement of Geoffrey or the other co-owner for the time being of Ashburton;

Stephen should make weekly payments of £200 to his parents (or the survivor of them) during their lifetimes; and

Stephen would also be obliged to pay the reasonable costs of care for his parents, whether at home or in residential accommodation.

Roger was also ordered to pay the costs of the claim and the counterclaim, on the standard basis until 31 December 2015 and on an indemnity basis thereafter, together with interest on the costs at the judgment rate of 8% per annum, and to make a payment of £400,000 on account of those costs within 21 days.

Roger now appeals to this court, with permission granted by me at an oral hearing on 7 December 2017 after permission to appeal had been refused both by the judge and by Patten LJ on the papers: see [2017] EWCA Civ 2345. I granted permission to appeal on all of the comprehensive grounds advanced, while emphasising that the judge’s assessment of the witnesses and his primary findings of fact would be very difficult, if not impossible, to challenge, but the grounds of appeal relating to the way in which the equity was satisfied did in my view clearly cross the threshold for a first appeal. With some hesitation, I did not refuse permission to challenge the judge’s findings of fact, because proprietary estoppel cases are so fact-sensitive, and the interlocking nature of the issues makes it particularly difficult to insulate a judge’s findings of fact from the underlying questions of principle and the judge’s approach to those questions. I therefore said that, if this court were to hear an appeal, it should be able to review the evidence in the round, as well as addressing the questions of principle which arise: see my judgment of 7 December 2017 at [18]. I also said that I would expect “a focused and discriminating approach to be adopted” on Roger’s behalf to the challenges which he wished to pursue to the judge’s findings of fact (ibid).

With those comments in mind, I turn to the numbered grounds of appeal. Ground 1 challenges the judge’s key finding, at [145] of the judgment, that Roger had made the promises pleaded by Stephen. The challenge was made on various grounds, including alleged failure to consider and deal with the precise terms of the alleged promises, failure to give any or due consideration to the fact that this was a case of an alleged promise to leave property by will, an alleged consequential failure to consider whether the promises were properly to be characterised as mere statements of testamentary intention, and a direct challenge to the findings made by the judge in relation to wills made by Roger in 2007 and 2011.

Ground 2 focuses on the position of Pamela, and says (in short) that the judge failed to make proper allowance for Roger’s obligations to her while she was alive, and to her matrimonial and inheritance rights engendered by a marriage of fifty years.

Ground 3 alleges that the judge “failed to give any account or credit” for the fact that Stephen’s expectation was accelerated by the order, because he would now receive Roger’s share of the farm and the partnership assets during the lifetimes of both his parents. Ground 4 says the judge was wrong to find that Stephen regarded the alleged promises as binding on Roger, when the weight of the oral and documentary evidence was that Stephen believed his father to be free to dispose of the farm. In this connection, particular reliance isplaced on certain open correspondence from Stephen’s solicitors, and from Stephen himself, in 2012 and early 2013, apparently accepting that Roger was free to assign his interest in the partnership and/or to seek a sale of the farm. The judge was wrong to construe this correspondence “as being written to avoid inflaming the situation” (ground 5).

Grounds 6 and 7 then challenge the judge’s consequential findings of reliance and detriment, while grounds 8 to 10 raise issues in relation to the Company and its assets.

Ground 11 then attacks the judge’s exercise of his discretion in deciding how to satisfy the equity, assuming it to have arisen. In particular, it is said that the judged erred: (a) in ordering an immediate transfer of the farm and the partnership assets, which went beyond anything Stephen had sought in his pleadings; (b) in granting relief which was “disproportionate and far greater than the minimum necessary to do justice”; (c) in depriving Roger and Pamela of all their assets, and thus of their ability to acquire a residence away from the farm; (d) in failing to give due consideration to Pamela’s evidence in a witness statement dated 22 February 2016 (in connection with an application made to Newey J for a “Nugent” order permitting Roger’s litigation costs to be raised from his partnership share) to the effect that Roger and Pamela had exhausted their non-partnership assets in the costs of the litigation; (e) in failing to give any or sufficient weight to the acceleration by the order of Stephen’s equity; and (f) in leaving out of account Stephen’s pleaded case that Roger’s partnership share was to devolve upon Pamela for her life if she survived him.

Finally, ground 12 challenges the judge’s finding that the partnership was one for joint lives, rather than a partnership at will; while ground 13 challenges the findings made in the supplementary judgment that Ashburton, the Little House and the Water Meadows were partnership property.

I propose to deal with the grounds of appeal in the following order. First, I will consider the challenges to the judge’s findings of fact and to his conclusion that the equity pleaded by Stephen was established. Secondly, I will deal with Roger’s challenge to the way in which the equity was satisfied by the judge’s order. Thirdly, I will consider the subsidiary grounds relating to particular assets, the position of the Company and the duration of the partnership.

Mr Pymont made it clear near the start of his oral submissions that he was maintaining Roger’s challenge to the judge’s conclusions at every level. Nevertheless, he wisely concentrated his submissions relating to the judge’s findings of primary fact on his findings in two key areas: the wills made by Roger in 2007 and 2011, and the open correspondence from Stephen and his solicitors in 2012/13. Mr Pymont had well in mind the principles which govern the review of findings of fact by appellate courts, as laid down in a series of recent decisions of the Supreme Court and this court, beginning with McGraddie v McGraddie[2013] UKSC 58, [2013] 1 WLR 2477, and Henderson v Foxworth Investments Limited[2014] UKSC 41, [2014] 1 WLR 2600. The general rule is that an appellate court can interfere only where it is satisfied that the trial judge has gone “plainly wrong”: see the judgment of Lord Reed JSC in Henderson at [62], where he added this clarification:

Lord Reed then said, at [67]:

Equally pertinent and by now well known, although not cited to us, are the observations of Lewison LJ in the “Greek Yoghurt” case, FAGE UK Limited and Another v Chobani UK Limited and Another[2014] EWCA Civ 5 at [114]:

On 26 January 2007 Roger and Pamela executed mirror wills, drafted for them and with the benefit of advice given by a solicitor, Mr Lush, who had long acted for the Moore family in conveyancing matters, and had also acted for Roger when he made his first will in 1977. Some thirty years later, in January 2007, Mr Lush was approached by Roger and Pamela to update their wills, prior to their departure at the end of the month for an extended holiday. In the context of the present case, this was a significant time for several reasons. In the first place, Geoffrey had let it be known that he was intending to retire from the partnership, but he had not yet decided what to do with his share of the land and the business. Secondly, all of the pleaded representations upon which Stephen relies had by now been made by Roger. Thirdly, Roger and Pamela were by now in their mid-sixties, and so were naturally turning their thoughts to their own retirement in due course, and the destination of their estates when they died. Fourthly, the serious breakdown in family relations which began in 2009 still lay in the future; and, finally, there is no suggestion that Roger’s mental facilities had yet begun to deteriorate to any significant extent.

I will begin by summarising the provisions of Roger’s 2007 Will as executed. By clause 2, he appointed Pamela, Stephen and his son-in-law Andrew to be his executors and trustees. By clause 3, he gave to his trustees free of Inheritance Tax (“IHT”) the “Nil-Rate Sum” (as defined) in order to constitute “the Discretionary Fund” of which trusts of a standard nature were then declared for a period of 21 years from the date of his death, in favour of a class of beneficiaries comprising Pamela, his children and grandchildren. The “Nil-Rate Sum” was defined as meaning:

Clause 5 then set out the dispositions which were to take effect if Pamela failed to survive Roger by thirty days. In that event, Roger gave to Stephen (subject to IHT) all his share and interest in the freehold property comprised in the farm at the date of his death. He gave to Julie, free of IHT, his interest in a property known as Pelican Cottage in Stapleford. Subject to those gifts, the residue of his estate was to be held on trust or sale and held as to one third for Julie, as to one half for Julie’s children, and as to one sixth for Stephen’s children.

Pamela’s 2007 Will was in the same terms, mutatis mutandis, as Roger’s.

The stages by which the 2007 Wills came to be executed in the above form, and the extent to which they truly reflected the intentions of Roger and Pamela at that time, were carefully considered by the judge in a section of his judgment running from [86] to [102]. In performing this exercise, the judge had the benefit of written and oral evidence from Mr Lush, Mr Butler and Pamela. The process began with a meeting on 16 January 2007 between Mr Lush, Roger and Pamela, which lasted for one and a half hours. In his contemporary attendance note, Mr Lush recorded that there had been “a general discussion” about the situation of Roger and Pamela, and their expectations. The note included the following points:

The draft will prepared by Mr Lush after this meeting no longer exists, but it was clearly sent to Roger and Pamela because Pamela telephoned Mr Lush on 22 January 2007 to discuss it. According to Mr Lush’s note of this conversation, Roger and Pamela were happy with the essential form of the will, but Pamela was concerned that she should be able to continue living in the farm house for as long as she wished, even if Roger predeceased her. Mr Lush therefore suggested that the gift of Roger’s share in the land and the farm house to Stephen should take effect on the death of the survivor of Roger and Pamela, and not (as the first draft evidently provided) on Roger’s death. Pamela was content with this suggestion, because there was no need for Stephen to inherit until the death of the survivor of his parents. Mr Lush’s note continued:

The judge did not comment specifically on this part of the attendance note, but it seems to me of some interest because it shows that Mr Lush was well aware that the exempt property would or could be placed in the Discretionary Fund, and that there would then be a period of two years after Roger’s death when his trustees could decide on the destination of property within that fund without any adverse IHT consequences: this was evidently a reference to section 144 of IHTA 1984, which enables such dispositions to be “read back” into the testator’s will for IHT purposes. The note also reinforces the fundamental point that the whole future of the farming land and business remained uncertain until Geoffrey’s intentions had become clear.

Mr Lush frankly accepted that he had no independent recollection of the events of January 2007, but on the strength of his attendance notes, and the provisions of the 2007 Wills themselves, he considered that Roger’s central aim must have been to provide for Pamela. This evidence was rejected, however, by the judge, who said at [95]:

Following his telephone conversation with Pamela on 22 January, Mr Lush prepared final drafts of the wills which were duly signed by Roger and Pamela on 26 January, at a further meeting which lasted for half an hour. According to Mr Lush’s attendance note, Roger and Pamela:

The judge’s final conclusion was expressed in this way:

In my judgment, it is impossible for this court to interfere with the judge’s clear findings about the underlying intentions of Roger and Pamela when the 2007 Wills were executed. The judge heard and reviewed all the evidence, including that of Pamela herself, and there are no grounds for saying that his conclusion was “plainly wrong” in the sense that no reasonable judge could have reached it. On any view, the 2007 wills were something of a rushed job, as Mr Lush himself recognised at the time. There was undoubtedly room for tidying up the definitions of the farm land and assets, and for making express provision in relation to Roger’s partnership share. But nothing in the wills, to my mind, is incompatible with the firmly expressed underlying intention of both Roger and Pamela that Roger’s share of both the farm and the business should devolve in due course on Stephen, whether by operation of the clause 5 gift on the death of the survivor, or by means of an appropriate appointment out of the Discretionary Fund. The picture which Pamela sought to portray at trial of herself having the absolute power of disposal over the farm after Roger’s death, by virtue of the residuary gift in her favour, was in my view rightly rejected by the judge as unrealistic. He might have added that the bulk of Roger’s interest in the land and business was in any event likely to fall into the Discretionary Fund, in which case it would be at the disposal of the trustees, of whom Pamela would be only one (together with Stephen and Andrew).

On the other hand, I think it is important not to overlook or underestimate the provision which Roger and Pamela did make for each other in these wills. Not only was each the other’s residuary legatee, but the survivor was also expressly intended to be the beneficiary “having the greatest claim on the capital and income of the Discretionary Fund”. Subject only to the underlying intention that Stephen should eventually inherit the farm, I can see no reason to doubt that these provisions did represent the true intentions of Roger and Pamela, albeit subject to possible revision when the position could be reviewed at leisure after Geoffrey’s retirement.

Geoffrey’s retirement was an important catalyst, because it removed the uncertainty about the future of his half share in the farm and the partnership. As I have already said, he transferred his share in the land and the farming business to Stephen, in return for a payment of £500,000 from the partnership which then continued between Roger and Stephen. I have also explained how the serious breakdown in family relations between Stephen and Jackie on the one hand, and Pamela, Roger, Julie and Andrew on the other, began in 2009.

The underlying difficulty, according to the judge, was Roger’s reluctance to adjust to his reduced role on the farm, at a time when he was already beginning to have problems with his memory, combined with a growing feeling on Pamela’s part that the over-arching plan for Stephen to inherit the farm was unfair on Julie, and of benefit only to Stephen, with whom she was becoming increasingly disenchanted: see the judgment at [109] to [110]. Pamela decided to address this perceived unfairness by proposing the introduction of Julie and Andrew into the partnership, and on 2 February 2010 a family meeting took place, attended by Roger, Stephen, Pamela, Jackie, Mr Butler and Andrew. According to the minutes taken by Andrew, which were later amended by Mr Butler, a number of matters were discussed and eventually Roger became very agitated and had to leave the meeting early. The judge accepted Jackie’s assessment that the reason for Roger’s agitation was that he was unable to cope, and that although Roger made some critical comments about Stephen, Roger did not get cross with him.

A particular bone of contention, so far as Pamela was concerned, had been Stephen’s purchase of an expensive Nissan sports car, but the judge accepted Stephen’s evidence that he had spoken to Roger about this, and the car had been bought with Roger’s approval: see the judgment at [116]. The truth of the matter, said the judge, was that it was Pamela who deeply resented the purchase, and she could not accept the balance of power had changed since Geoffrey’s retirement (ibid). The judge singled out two further points in the minutes as deserving of mention. First, Mr Butler said that the partnership needed to trust Stephen to take more decisions. Secondly, Jackie was noted as saying that Stephen “desperately needs the support and approval” of Roger, a comment which struck the judge as “particularly poignant”.

More generally, the judge was justly critical of the fact that numerous allegations of misconduct of various kinds had been made against Stephen in the witness statements, which in the event were not pursued in cross-examination and therefore were not relied upon by Mr Thomas at the trial. The judge was also distinctly unimpressed by the few allegations of misconduct which were still pursued, concluding at [117]:

This was the background to the further changes in their testamentary dispositions which Roger and Pamela made in 2010 and 2011. In March 2010, they made codicils to their 2007 wills removing Stephen as an executor. According to Mr Lush’s attendance notes, there had been some issues with Stephen, but Roger and Pamela still wanted “Stephen, and his family, to be able to carry on with the farm as long as they wish but not so that he can realise/receive the cash value as, on any disposal, those proceeds would become equally divisible between all of the Grandchildren”.

On 26 January 2011, Roger and Pamela executed new wills which had been drafted for them by Mr Lush. The main changes from the 2007 wills were as follows:

the executors and trustees were now Pamela or Roger, Julie and Andrew;

there was no longer any nil rate band discretionary trust, but as before there was a gift of residue to the survivor of Roger and Pamela absolutely;

on the second death, there was a specific gift to Stephen (subject to any IHT attributable thereto) of Roger’s share in the farming business and assets of the partnership, but excluding Roger’s interest in any freehold property on or from which the business was conducted;

a flat in Swanage was given free of IHT to Julie and Andrew in equal shares;

there was a specific gift of the testator’s interest in any freehold land on trust or sale, with a life interest for Stephen while it remained unsold; and

the residue (on the second death) was to be held as to five sixths for Julie and her children, and as to one sixth for Stephen’s children.

In view of the absence of a nil rate band discretionary trust, the significance of the absolute residuary gift to the survivor of Roger and Pamela was potentially much greater than before. Unsurprisingly, Pamela sought to rely on this as showing that she would still have control if she survived Roger. The judge, however, rejected this evidence, finding at [120] that it “rang hollow” because the plan still was that Stephen would eventually inherit the business, albeit he would now have only a life interest in the freehold land. The judge’s view was emphatic. He found Pamela’s repeated statements that she would be able to dispose of the residue as she thought fit to be “less than frank”, because in his view, as Pamela well knew, “there was never any question of anything happening other than Stephen, eventually, inheriting the business.” The judge added, at the end of [120]:

I confess to having some difficulty with the way in which the judge dealt with the 2011 wills, because he did not mention and seems not to have appreciated the potential significance of the removal of the nil rate band discretionary trust. Moreover, his view that the absolute gifts of residue to the survivor did not mean what they apparently said may be criticised as begging the question, and as attaching insufficient weight to the clear wishes of a testator expressed in a validly executed will. Nevertheless, any criticism must be tempered by the fact that the judge had the advantage (denied to us) of hearing and seeing all the evidence, and it seems to me on balance that he was entitled to find that the 2011 wills did not betoken any significant change in the underlying intention of Roger and Pamela that Stephen would in due course inherit the farming business, despite Pamela’s increasing disappointment with aspects of his behaviour and her feeling that Julie and her family were being hard done by. Some concrete recognition was given to that feeling by the restriction of Stephen’s interest in the land, on the second death, to a life interest while it remained unsold, and by the gift of five sixths of the residue to Julie and her family.

The judge may also have had in mind, although I do not think Mr Lush mentioned this, that a fuller investigation of all the circumstances might possibly have grounded a tenable argument that there was an enforceable agreement for mutual wills between Roger and Pamela: see generally Snell’s Equity, 33^rd edition, at paragraphs 24-032ff. A further, less speculative, point is that, by the time of the first death, the testator’s estate would in any event be bound by any equity based on proprietary estoppel which Stephen had by then established, so the gift of residue to the survivor would necessarily take effect subject to it.

The 2011 wills marked the end of Mr Lush’s involvement with Roger and Pamela’s affairs. I should also mention, for completeness, that in June 2012 Roger executed a further will, which reintroduced a more sophisticated version of a nil rate band discretionary trust in the event that Pamela survived him, explicitly including in it all of his property which qualified for 100% agricultural or business IHT relief, and which also gave the whole of the residue to Pamela if she survived Roger by thirty days. By the time this will was executed, however, the parties had adopted increasingly entrenched positions, and Roger and Pamela were already represented by their present solicitors, Thrings LLP. As matters now stand, this is the will which will take effect on Roger’s death, but neither side has suggested that it throws much, if any, useful light on the issues which we have to determine.

I now turn to the passages in open correspondence upon which the appellant particularly relies as showing an acceptance by Stephen and his solicitors that Roger was in principle free to do as he chose with his share of the partnership and its assets.

The first passage is contained in a letter dated 20 April 2012 written by Stephen’s solicitor, Mr Peter Williams, who was then with Wilsons Solicitors LLP, to Roger’s solicitor, Mr Reeves of Thrings LLP. After dealing with a number of other matters, Mr Williams said:

In a further letter, dated 15 June 2012, Mr Williams repeated the same point:

Again, on 23 August 2012, Mr Williams, by now a consultant with VealeWasbrough Vizards, referring to his earlier letters, said:

On 12 November 2012, Mr Williams (now with Michelmores LLP) wrote again to Mr Reeves, repeating the same point in materially similar language.

Finally, on 14 January 2013, Stephen himself wrote to his father, offering a partition of the land and saying that, if this was not acceptable, he wished to take his interest out for the sum of £5 million. The letter concluded with this paragraph:

In none of these letters was any suggestion made that Stephen had an equitable claim based on proprietary estoppel, or that his father was not free to sell his share of the land and business to anybody he chose. It is therefore submitted for Roger that Stephen clearly did not believe the alleged promises upon which he now relies to be binding and irrevocable.

There is obvious force in this point, so it is important to see how the judge dealt with it. The relevant passage in the judgment runs from [77] to [83]. After referring to the relevant correspondence, the judge rejected a submission by Mr Thomas which relied on the decision of this court in Shirt v Shirt[2012] EWCA Civ 1029, where one of the reasons for rejecting a proprietary estoppel claim was its inconsistency with the pre-action correspondence. As the judge said, at [79]:

The judge then recorded Stephen’s evidence that, at the relevant time, Mr Williams was intent on trying to get the parties to meet and resolve matters out of court. As to his suggestion of a partition, Stephen said that “this was a final and sensible attempt to avoid a legal battle”. He did not want to say to his father that he had been promised the farm, because of his father’s mental state at the time, which made him “irrational” and “very difficult to deal with”. The judge then said, in [80]:

The judge was also influenced by some (admittedly rather sparse) evidence that Stephen had on one occasion in May 2012 written to his father saying “You have told me many times in the past that you would be leaving the farm to me”, and a letter written by Roger’s solicitors on 25 June 2012 which made it clear that Roger would not be transferring his share of the partnership to Stephen, and said “You may call this disinheritance if you wish”. The judge noted that these exchanges took place at a time when, according to Pamela and to Thrings, Roger had capacity, yet no witness statement had been taken from him dealing with these points. It is true that the alleged promises were denied in the original reply and defence to counterclaim, which was verified by a statement of truth signed by Roger on 25 April 2013; but, in the judge’s view, the force of that point was “somewhat diminished” because that pleading also averred that it was not envisaged or intended by Roger that Stephen would inherit Roger’s interest, whereas that plea was contrary to the evidence which the judge had heard: see the end of [81].

In conclusion, therefore, while acknowledging that the points made by Mr Thomas had some force, the judge accepted the explanation given by Stephen. It would have been better, he said, if the estoppel claim had been mentioned in correspondence from the outset, but its absence was not fatal to Stephen’s claim, especially as Roger could have replied in correspondence to Stephen’s assertions that the promises were made, but did not do so: see [82] and [83].

In my judgment, these were findings that the judge was entitled to make. In the absence of any clear error or material misdirection, assessment of the evidence on this point was a matter for the judge, and it cannot be said that his conclusion was one that no reasonable judge could have come to. It is again necessary to remind oneself that the judge had the benefit of hearing and reading all the evidence over a lengthy trial, and that an appellate court faces all the disadvantages pointed out by Lewison LJ in the FAGE UK case.

Having rejected Roger’s challenge to the judge’s findings of fact in the two key areas which I have examined, I can now deal much more briefly with the issues of the quality of the relevant assurances, reliance and detriment. In short, I consider that the judge directed himself appropriately, he considered the evidence with evident care, and his conclusions are again not open to challenge in this court in light of the principles which I have discussed. Thus, the questions whether the assurances which the judge found Roger to have made to Stephen were objectively intended to be acted upon, or whether Stephen should reasonably have regarded them as no more than non-binding statements of intention, were quintessentially a matter of fact and evaluation for the trial judge. So too were the interlocking questions of reliance and detriment. I have already quoted the key passages in the judgment, and I need not repeat them.

I should, however, say a little about the relevance of Stephen’s succession to Geoffrey’s share in the farm and the business. Mr Pymont made much of this point in his oral submissions, saying that it changed the whole complexion of the case because it gave Stephen everything that he had been promised by his father, namely a half share in the partnership. Accordingly, whatever the position may have been before Geoffrey’s retirement, Stephen was now guaranteed all that his father could ever have given to him, with the consequence that any equity arising from Roger’s promises was satisfied and it would not be unconscionable for Roger to use his share to satisfy the other claims to provision from his estate of Pamela, Julie and her family. The difficulty with this submission, in my judgment, is that it confuses Stephen’s unexpected inheritance from his uncle with the promises made to him by his father, which can only have related to Roger’s own share of the partnership. The submission also fails to have regard to the over-arching plan which was itself (on the judge’s findings) a decisive consideration which led Geoffrey to prefer Stephen over his own sons when he retired. In my view, the equity arising from Roger’s promises to Stephen can only have operated in relation to Roger’s own half share of the partnership, and the judge was right to regard Stephen’s inheritance from Geoffrey as irrelevant to the issues of detriment and unconscionability.

For all these reasons, therefore, and leaving aside for the moment the subsidiary issues relating to particular assets, I would reject the grounds of appeal which seek to challenge the judge’s conclusion that the equity pleaded by Stephen was established on the facts. The next, and in my judgment critical, question is whether the judge was also right in his reasoning and conclusions about how the equity should be satisfied. That is the issue to which I will now turn.

I have already described how the judge decided that Stephen’s equity should be satisfied, and set out the relevant terms of his order of 19 August 2017. The guiding principle which he followed, accepting the submissions of Ms Shea for Stephen, was that he should exercise his discretion “by mirroring as closely as possible the arrangements which would have obtained had the dispute not arisen”: see [34] above.

I am sure that the judge thought long and carefully before adopting this solution, and that he saw it as the minimum that was necessary to satisfy Stephen’s equity. Nevertheless, there are in my opinion a number of serious difficulties with the judge’s approach and with the regime which he put in place to implement it.

In the first place, Stephen’s pleaded case was only that he would inherit his father’s share of the farm and the business on the death of the survivor of his parents, and subject to reasonable provision being made for Pamela during her widowhood if Roger were the first to die. Stephen’s expectation was therefore a future one, and he must objectively have realised that his eventual inheritance would have to be subject to (although it could not be defeated by) such reasonable provision as Roger might choose to make for Pamela, both before and after his death. Consistently with this, the mirror wills which Roger and Pamela made in 2007 and 2011 would have given Pamela a significant degree of control over, and benefit from, Roger’s estate after his death. Not only would she have been one of Roger’s executors and trustees under each will, and the primary beneficiary of the Discretionary Fund under the 2007 will, but she would also have been the sole residuary legatee under each will on surviving her husband. Of course, these testamentary dispositions were in principle revocable and liable to be changed, and on the judge’s findings Pamela shared with Roger (at least until 2011) the overriding intention that Stephen should eventually inherit the farm and the business. Subject to that constraint, however, Roger’s clear intention was that Pamela should have access to both capital and income after his death, and that she should be the sole beneficiary of all the non-farming assets comprised in his residuary estate.

To state the obvious, there is nothing remotely surprising about this. Roger and Pamela have enjoyed a long, close and happy marriage for over fifty years. Pamela has made a home with Roger at the farm house throughout that period, until his deteriorating health meant that he could no longer live there. She has brought up their family, and provided support for Roger. Her own career as a teacher has often had to take second place. Thus the provision for Pamela made by Roger in his 2007 and 2011 wills is no more than one would naturally expect to find.

Secondly, it seems to me that Stephen’s pleaded case, and the assurances upon which he relied, envisaged that the partnership would continue until Roger’s death or retirement, and that relations within the family would remain harmonious. Sadly, however, neither of those expectations has been fulfilled. Roger served notice of dissolution of the partnership in December 2012, and it is now common ground that, whether or not the notice was valid, the partnership must in any event be dissolved because of Roger’s incapacity. As to the breakdown in family relations, the parties have become increasingly entrenched over the last nine years, all attempts to resolve the dispute amicably have failed, and the rift between Pamela and Stephen regrettably seems to be deeper than ever. In those circumstances, the need for a clean break solution is in my view compelling. As Robert Walker LJ said in Jennings v Rice at [52], the court “cannot compel people who have fallen out to live peaceably together”. Although no doubt primarily directed to cases where the warring parties are living under the same roof, the practical wisdom of this recognition applies with the same or scarcely less force in situations where they are living in close proximity to each other and in a relationship of continued financial dependence. That, however, is precisely the position brought about by the judge’s order, whereby Pamela will continue to live in the farm house or Ashburton as a mere licensee, she will be dependent on Stephen for a meagre weekly income for the rest of her life, she will constantly have to ensure that the outgoings specified in the order are duly paid by Stephen and she will have to notify any want of repair or condition to him before it can be rectified. Similarly, there will be endless scope for dispute about the nature and cost of any nursing, health or residential care which either Roger or Pamela may need for the rest of their lives.

Thirdly, the judge’s approach implies that he regarded the case as one of the first type discussed in Jennings v Rice, that is to say one where “the assurances, and the claimant’s reliance on them, have a consensual character falling not far short of an enforceable contract”, and where “the court’s natural response is to fulfil the claimant’s expectations”: see [45] and [50]. I can understand why the judge may have taken that view, because Stephen has spent his adult life working on the farm in reliance on the promises which were made to him, and has suffered a corresponding detriment. But it would in my view be a dangerous over-simplification to regard this case as a paradigm example of the first type. As I have already emphasised, Stephen’s expectation has always been that he would inherit the farm on the death of the survivor of his parents, with proper provision being made for Pamela in the meantime. Thus his claim would only be a clear example of the first type if it were brought after the death of the survivor, in a situation where Stephen had continued to work on the farm until that date and there had been no material change in circumstances meanwhile. By the time of the trial, however, it was already abundantly clear that this was no longer a realistic scenario. Roger’s worsening health meant that the partnership could not continue, relations within the family had irretrievably broken down, and it was clear that fresh arrangements would have to be made in light of the changed circumstances. Again, one of the factors listed in Jennings v Rice at [52] is apposite: “alterations in the benefactor’s assets and circumstances, especially where the benefactor’s assurances have been given, and the claimant’s detriment has been suffered, over a long period of years”.

Fourthly, although it was in principle open to the judge to adopt a solution which accelerated Stephen’s entitlement, by directing an immediate transfer to him of all Roger’s interest in the partnership land and business, it was essential that this acceleration should not be at the expense of the proper provision for Pamela and Roger during the remainder of their lives to which Stephen’s expectation was always subject. The judge clearly had in mind the very significant acceleration which his order entailed, but he then adopted a minimalist approach to the provision that Stephen should make for his parents in return for the acceleration, by seeking to replicate what would have happened on the wholly unrealistic assumption that no dispute had arisen. This was in my view a clear misdirection. The judge’s focus should have been on the minimum provision that was needed to satisfy Stephen’s equity, and if this meant that Roger’s share in the farm and the business should be transferred to Stephen immediately, it was all the more important for the judge to provide full and generous protection for Roger and Pamela during the remainder of their lives, and to reflect as far as possible the provision that Roger would have wished to make for Pamela on his death.

Fifthly, although the judge ordered the immediate transfer by Roger to Stephen of assets probably worth in the region of £5 million, it is notable that he said nothing about the taxation consequences of his order. That is regrettable, not least because another of the relevant factors identified in Jennings v Rice is “the likely effect of taxation”. The impact of IHT, capital gains tax (“CGT”) and income tax all needed careful consideration, with the benefit of expert evidence, or at least submissions from counsel well versed in the relevant areas of tax law. Despite the vast amounts of money spent on this litigation, the judge was unfortunately left with next to no assistance on this important subject. Counsel on both sides had no relevant expertise, there was no expert evidence, and although the partnership accountant, Mr Butler, gave evidence in the form of a lengthy and discursive agreed witness statement, he was called as a witness of fact, his statements about the impact of taxation were of a generalised nature, and neither he nor anybody else was asked to advise on the taxation consequences of the immediate transfer of assets ordered by the judge. In my view, this should be as unacceptable in a substantial proprietary estoppel case as it would be in a big money divorce case. The upshot is that Mr Pymont informed us that the judge’s order, if implemented, would give rise to significant CGT and income tax liabilities, but he was unable to provide chapter and verse in support of the submission, or to explain what the likely financial impact would be. This also reflects a more general point, which is that the court did not have before it any up to date valuations of the partnership land and business, or of the other freehold properties in which Roger had an interest. It seems to have been common ground that the total value of the farm was around £10 million, but this was no more than a rough estimate, and all particularity was lacking.

Finally, the judge does not appear to have considered the impact of the costs orders which he made on the financial arrangements laid down in the order. What, for example, was to happen if Roger was unable to pay the £400,000 on account of costs ordered by the judge to be paid within three weeks? And even if that sum could somehow be paid, despite the immediate transfer of all Roger’s farming assets to Stephen, would Stephen subsequently be entitled to set off the judge’s order for costs in his favour against his financial liabilities under the order, including (most pressingly) his obligation to pay for Roger’s care? In this context, the judge does not appear to have made any findings about the resources available to Roger and Pamela, although the evidence before him included Pamela’s witness statement on the costs application made to Newey J in February 2016 and the schedules of her and Roger’s income, expenditure, assets and liabilities exhibited thereto. Even at that date, Pamela’s evidence was that Roger had insufficient available funds to pay for his legal representation at trial, and he already owed approximately £415,000 plus VAT to his solicitors. As to Pamela’s own assets, her evidence was that she had only modest cash resources, and a half share in the flat at Swanage which was being charged to Thrings LLP in respect of their fees.

Taking all these matters into account, I am satisfied that the judge’s order cannot stand. Although he had “a wide judgmental discretion” in deciding how the equity should be satisfied, his solution was based on the false premise that the position at the date of trial could somehow be equated with the position on the future death of the survivor of Roger and Pamela, despite the fundamentally changed circumstances brought about by the dissolution of the partnership, Roger’s lack of capacity, and the breakdown in relations within the family. Furthermore, the judge’s solution forced the parties to remain financially dependent on each other, when a clean break was clearly called for, and it paid insufficient regard to Pamela’s claims on her husband’s estate as a partner to a long and happy marriage which fortunately still subsists. The effect of the judge’s order was to leave Pamela locked into a continuing financial relationship with her estranged son Stephen, with few significant resources of her own which were not already swallowed up in costs, and with a fixed income derived from the farm of only £200 per week for the rest of her life. On any view, this was in my judgment far too high and disproportionate a price to pay for achieving the objective of enabling the farm in its entirety to remain in a single pair of male Moore hands for a fourth generation.

With the benefit of hindsight, it is in my view also clear that the judge lacked sufficient information to reach a final conclusion on how the equity should be satisfied after the trial in July 2016. As I have pointed out, he was (through no fault of his own) unable to evaluate the tax consequences of his preferred solution, nor did he have any up to date valuations. He was also not helped by the fact that counsel for Roger had not put forward any concrete proposals to set against Ms Shea’s submissions, in the event that Stephen’s alleged equity were found to be established. Instead, in both his written opening and closing submissions, Mr Thomas had contented himself with making a brief reference to the principles which the court should follow, referring to Jennings v Rice, and submitting that in the present case it would not be appropriate to give Stephen any of Roger’s share. Thus the only detailed proposals which the judge had before him were the relatively extreme ones for which Ms Shea was contending.

Despite this handicap, however, the judge ought in my opinion to have realised that, having made his findings on the establishment of the equity, he could not fairly decide how it should be satisfied without a further hearing for which appropriate directions should have been given. There was no intrinsic urgency which required the order to be made in August 2016, and the judge could perfectly well have ordered, if necessary of his own initiative, that the matter should be restored before him in the following term. The need for fuller information and assistance was in my view all the more pronounced if the judge was provisionally minded to accede to Ms Shea’s submissions, precisely because they were of such a relatively extreme (although legitimately arguable) nature. That was, after all, what her duty to her client demanded. But the judge had to reach a conclusion which was proportionate, and fair to Roger and Pamela as well as to Stephen. If justice required an adjournment to enable the judge to perform that task, then that is the course which the judge should have followed, whether or not the parties asked him to do so.

What, then, is to happen now? Regrettable though it is to involve the parties in yet more litigation, I fear I can see no alternative to remitting the case for a further hearing on how the equity found to be established by the judge should be satisfied. This court simply does not have the necessary information, any more than the judge did, to make a final decision at this stage. On the other hand, it is clearly desirable that we should give as much guidance as we reasonably can, with a view to minimising the scope and cost of the further hearing, and encouraging the parties to reach an agreement. The guidance which I consider it appropriate to give, if the other members of the court agree, is contained in the following paragraphs.

In principle, and subject to what I say below about the raising of a lump sum for Pamela and the impact of taxation, I agree with the judge that Roger’s share in the land and the partnership assets should be transferred to Stephen. Given Roger’s incapacity, there is no way in which he can continue to farm during the remainder of his life, and since Stephen already owns the other half share of the farm and the business, and has in practice already been running the farming operations for a number of years, it makes obvious sense to bring forward the implementation of this key aspect of the over-arching plan identified by the judge.

On the other hand, the acceleration that this involves must not be allowed to prejudice the interests of Roger and Pamela, including Pamela’s reasonable expectations as Roger’s wife and probable future widow. Furthermore, so far as Pamela is concerned, a clean break solution is needed. In practice, this means in my judgment that she must be provided with a lump sum which will enable her to rehouse herself comfortably in appropriate accommodation of her choice, to enjoy a reasonable income, and to have sufficient capital (together with her other assets) to enjoy holidays and occasional luxuries, to provide for Roger (over and above the basic costs of his care), to make gifts to her daughter and grandchildren, and to have a cushion for contingencies. This lump sum must be raised by Stephen within a fairly short period, measured in months rather than years. It may require the sale of part of the farm, or Stephen may be able to borrow the necessary amount on the security of the farm. Either way, tax advice will be needed on the most efficient way of raising the lump sum and of transferring Roger’s interest in the relevant assets to Stephen. Any IHT or CGT liabilities which arise as a direct consequence of the transfer of assets and the raising of the lump sum must be borne by Stephen, and he must indemnify Roger and his estate for any such liabilities which fall upon Roger.

The amount of the lump sum is probably the single most important point which the judge will have to decide. Much will depend on evidence of local housing costs, assuming that Pamela does not wish to move far away, and on up to date evidence of any other financial resources available to Roger and Pamela once the impact of costs has been taken into account. At one point in his oral submissions, Mr Pymont indicated that a lump sum of £3 million on a clean break basis might be acceptable to his client. In my view that figure is clearly too high, and I consider that the appropriate figure will probably lie somewhere between £1 million and £2 million. Whatever figure the judge considers to be appropriate, it should in my view bear interest at a reasonable (non-penal) rate from 19 August 2016 until the date of payment.

Until the lump sum has been raised and paid to Pamela, and she has been re-housed, the provisions of the judge’s existing order should remain in force, but with a general liberty to apply (not confined as in paragraph 8 of the existing order) and with an increase in the weekly payment to Roger and Pamela from £200 to £300 back-dated to 19 August 2016. According to Mr Butler, the drawings taken by the partners in this partnership were “very low indeed”, which I can well believe. Furthermore, there appears to have been no increase in the basic figure of £200 per week for decades. On any view, I consider that the judge should have substantially increased it, and £300 is the absolute minimum that I would consider acceptable pending the clean break.

Once Pamela has been rehoused, the provisions in paragraph 5 of the existing order will lapse; and once the lump sum has been paid to her, the weekly payments will also cease. That leaves the question of health and care costs, as provided by paragraph 7 of the judge’s order. Once the clean break has been effected, it seems to me appropriate that Pamela should be responsible for her own future health and care costs as she will now have capital resources of her own. On the other hand, I see no good reason why Stephen should not continue to be responsible for the costs of his father’s care, but for the avoidance of doubt it should be made clear that he must pay the reasonable costs of such care promptly and without any set off. Similarly, Stephen must make the continuing weekly payments to Pamela (including the back-dated increase), and must comply with his other financial obligations under the judge’s order during the transitional period, without any set off, whether in respect of costs or otherwise.

I add a final word on the vexed subject of costs. Clearly, the costs of the proceedings below, and of this appeal, will have to be considered afresh by us in the light of the parties’ written submissions after our judgments have been circulated in draft to counsel. I do not wish in any way to pre-empt what our decision will be, save to make the obvious points that Stephen still had to bring the present action in order to establish his equity, but Roger will have achieved a substantial measure of success on this appeal. As I said at the start of this judgment, the total costs already incurred on both sides are shockingly high. The likelihood must be that, even after allowance is made for Roger’s substantial (but far from complete) success on this appeal, a very large net sum will still end up payable by Roger to Stephen. How, then, is that probable liability to be taken into account in calculating the lump sum which must be raised for Pamela? In my judgment, harsh though it may seem to Stephen, the right course is to direct that the amount of the lump sum must be assessed in the first instance without reference to any unsatisfied costs liabilities in Stephen’s favour. I would then leave it to the judge to decide whether (and, if so, to what extent) there should be any set off against Stephen’s liability to pay the lump sum in respect of any costs liability owed to him by Roger.

A further potential issue is whether the resumed hearing should take place before the same judge. While I would be willing to entertain written submissions on this point, my strong inclination at the moment is to direct that the matter be remitted to the same judge, assuming he is still available. Although I have been critical of some aspects of his approach and reasoning on the question of how the equity should be satisfied, he was left in a difficult position by the failure on Roger’s side to present him with a viable alternative to the extreme position espoused by Ms Shea. The judge dealt admirably, if I may say so, with nearly all the complex issues of fact and law relating to the establishment of Stephen’s equity, and I am confident that with the guidance given in this judgment he will be well placed to deal afresh with the question of how the equity should be satisfied. Unless it is unavoidable, it would be a pity if this question had to be decided by anybody other than the trial judge.

I now come to the subsidiary issues, which concern the position of the Company, the question whether Stephen’s equity extends to the assets of the Company and to Roger’s current account with the partnership, the findings about specific assets made by the judge in the supplementary judgment, and the question whether the partnership between Roger and Stephen was a partnership at will or for joint lives.

Ground 8 complains that the judge was wrong to declare that Stephen had an equity over Roger’s share of the assets of the Company, because he overlooked the facts that no relief was sought against the Company (although it was a defendant), it had paid full value for its assets, and Roger in his personal capacity did not beneficially own any of those assets.

In my view, this complaint has no real substance. It is true, of course, that the Company is a separate legal person, and its assets are beneficially owned by the Company, not its shareholders. Technically, therefore, the judge was wrong to the extent that he seems at times to have treated Roger as beneficially entitled to a share of the Company’s assets, and the definition of “the Claimant’s Company Interest” in the judge’s order is open to the same criticism. But nothing turns on this, because Roger and Stephen were the sole shareholders and directors of the Company and it was under their joint control, as the judge found. Indeed, Roger was the majority shareholder, holding 51% of the shares. Furthermore, the Company was an integral part of the farming business, having been formed in 2008 on Mr Butler’s advice mainly for tax reasons, but also as a vehicle for contracting operations. It follows that the parties must realistically have intended Stephen’s equity to extend to Roger’s shareholding in the Company, and thus indirectly to the assets owned by the Company. The only machinery needed to give effect to this intention, as it seems to me, is an order that Roger transfer his shares in the Company to Stephen, and (if this has not already happened) resign as a director.

The judge found at [171] that Roger’s interest in the partnership clearly included his current account. The judge said “Mr Butler’s unchallenged evidence was that the current account stood both as part of Roger’s interest under the partnership and as assets of the partnership.” The judge also found support for this view in the way that Geoffrey’s current account had been treated on his retirement:

At first sight, the judge’s conclusion may appear rather strange, because the sums credited to Roger’s current account represented partnership profits allocated to him on which he had paid income tax, and even if they were retained in the business, one would normally expect the current account to represent a debt owed by the partnership to the partner concerned. The judge’s only answer to this was the agreement between the partners to retain profits within the business subject to agreed levels of drawings. But this finding, submits Mr Pymont, fails to take account of the status of the sums as profits which had been allocated and divided between the partners, as reflected in the annual partnership accounts which they had signed.

As a matter of accounting and legal principle, this submission seems to me probably correct. But it does not answer the question whether Stephen’s equity should properly be regarded as extending to Roger’s share of historical profits which he had effectively ploughed back into the business. In practice, it seems clear that the partnership arranged its finances on advice from Mr Butler, and the partners reinvested their undrawn profits as further working capital. They did not regard themselves as free to withdraw such reinvested profits without agreement, whatever the strict legal position may have been. As a practical matter, therefore, I think the judge was entitled to find that Roger’s partnership interest included his current account.

The matter does not end there, however. The amount involved is substantial: we were told, without being taken to any documents, that the balance standing to the credit of Roger’s current account exceeds £500,000. The fact that Roger decided to plough back such a large amount of allocated profits on which he had paid tax is in my judgment a material factor for the court to have in mind when fixing the amount of the lump sum to be provided for Pamela. This was in principle money which Roger could have taken out of the business, had the need to do so arisen, and this fact should in my view encourage the court to make generous provision for Pamela and Roger in deciding how to satisfy Stephen’s equity.

The judge decided in the supplementary judgment that Roger’s beneficial half share in these two properties formed part of the partnership assets, although the other half share has since 2008 belonged to a family trust established by Geoffrey. It seems clear to me that there was evidence which entitled the judge to reach this conclusion. For example, Stephen confirmed in cross-examination that the Little House and Ashburton were included in the properties which his father had promised to him, and there was also unchallenged evidence from Geoffrey that both properties were partnership properties. The existence of the separate trust over Geoffrey’s half share no doubt explains why the legal title to these properties remained vested in Roger and Geoffrey, but there is no incompatibility between that and Roger’s half share being a partnership asset.

The position is similar in relation to this property, which had originally belonged to John Moore and was given by him to Richard, from whom Roger and Geoffrey later bought it. Mr Butler’s evidence was that it then became a partnership asset, although when Geoffrey retired his half share in the property was transferred out of the partnership and invested by Geoffrey in a self-invested pension plan. There was no change in relation to Roger’s half share, and the judge was in my view plainly entitled to find that it continued to be partnership property.

The final issue is now of only academic interest, because it is common ground that the partnership must be dissolved on the ground of Roger’s incapacity, even if the judge was right to find that the partnership was one for joint lives and not at will. There has never been a written partnership agreement of any description, so the question was one of fact and inference for the judge to determine. For reasons which I have already rehearsed, this court will be very slow to interfere with such a finding in the absence of any discernible error.

The judge gave his reasons for reaching this conclusion at [183]. He recognised, correctly, that a partnership at will is the default position, in the absence of an express or implied agreement to the contrary. Stephen submitted that an agreement to the contrary was to be implied from the circumstances surrounding his becoming an equal partner in 2008, the common intention of himself and his father being that the partnership should endure for their joint lives. The judge then said:

In my view, it cannot be said that the judge erred in reaching this conclusion. According to the judge’s findings, the “over-arching plan” formed the basis upon which Stephen succeeded to Geoffrey’s share in the partnership, and it must have been the common (if unarticulated) intention of Roger and Stephen that the new partnership between them should continue during their joint lives. At the very least, this was again a conclusion which the judge was entitled to reach.

For the reasons which I have given, I would allow Roger’s appeal on the issue of how Stephen’s equity should be satisfied, but dismiss his appeal on all other grounds.

I agree.

I also agree.