Shirt v Shirt

This case began life as a misconceived possession claim, by one family member against 2 others. The property which is the subject matter of the principal dispute is known as Syda Farm. It has been in the Shirt family for decades. In around 1974, a partnership was formed between Stanley Shirt, the father of the family (at the time of the trial before me, aged 83) Marie Shirt, his wife (who sadly is now deceased) and Alan Shirt, one of their sons. Geoff Shirt, another son was for approximately 12 months a partner until April 1975. Although he did subsequently return to work in the business, in the 90s, that also did not last that long and he did not return on that occasion as a partner.

It is evident from what I have said that Stanley Shirt had those two sons. There was a third son, Jonathan, who did not work in the business, mainly because of respiratory problems which prevented him from farming; and Lynda, who did for some time work in the business and was very helpful, especially in relation to a farm shop (and then a Co-Op shop) which were at various stages parts of the business. Nonetheless, for the last four decades, the principal working child within the business has been Alan Shirt, as everyone acknowledges.

Following the death of Marie Shirt in 2004 Alan and Stanley Shirt carried on business together as partners in effect as a continuation of the previous partnership, though, as the partnerships were at will, technically the previous one was dissolved on Marie Shirt’s death. Financial problems meant that there were (commencing in 2006 through to the autumn of 2007) sales of partnership assets. This comprised part of the partnership land (as it was recognised to be in the accounts) known as the White House, some accompanying land and all the major items of livestock and much of the dead stock. It is not entirely clear what was to happen thereafter. It was at one stage contemplated (as Mr McNall demonstrated by his cross-examination of Stanley Shirt) that Alan and Stanley Shirt might continue as partners, but in reality the partnership came to an end, which was Alan Shirt’s evidence and pleaded case. There was no continuing business relationship between Alan and Stanley Shirt after September 2006, when a dispersal sale took place. Thereafter, there were two separate businesses carried on by Alan Shirt and Stanley Shirt respectively, though I do not think that Stanley Shirt’s business required him to undertake much in the way of actual farming.

Alan Shirt then lived at a farmhouse at Rufford Farm with Virginia, his wife. I should explain something about the relationship between Rufford Farm and Syda Farm. Rufford Farm was a tenanted property some two miles away from Syda Farm. The landlords were the Chatsworth Estate Trustees. The tenancy had been granted back in the 70s and was a tenancy to which initially the Agricultural Holdings Act 1948 and then the Agricultural Holdings Act 1986 applied. That meant that it had the potential to pass down the generations; in particular down to Alan and then to his son Alistair as well. However, for reasons which I will have to examine in a little more detail later, that tenancy came to an end. It came to an end at around the time of the sale of the White House which completed in the autumn of 2007. Vacant possession was not in fact given up (following possession proceedings) until 2009.

Stanley Shirt lives in a property on Syda Farm called Syda Grange. This was built in the 70s so that there were for a while two houses at Syda Farm. However, following the sale of the White House and the accompanying land, there was only one house. That meant that Alan Shirt, who hitherto lived with his wife Virginia at Rufford Farm House, had nowhere to live once he vacated Rufford Farm House. He therefore brought a mobile caravan, animals and various other items, onto part of Syda Farm, tapped into the water supply and has remained there since. This is what provoked the possession proceedings. At the same time, Alan Shirt was seeking a dissolution account in relation to the partnership. Matters were not agreed and Stanley Shirt’s reaction was to seek possession of the part of Syda Farm used and occupied by Alan and Virginia Shirt.

As it happens, since at the latest 1979 (the accounts before me do not go beyond that date into the earlier 70s) the freehold of Syda Farm (though held in the sole name of Stanley Shirt) was shown in partnership accounts as a partnership asset. This resulted in a substantial sum being credited to Stanley Shirt’s capital account in the partnership between himself, Marie Shirt and Alan Shirt. For these reasons, it ultimately came to be accepted that the possession proceedings, which were brought upon the footing that Alan Shirt was a trespasser, were misconceived, because as a co-owner he had as much right to be on the land as did Stanley Shirt. Strictly speaking, as co-owner it might be said that he had as much right to occupy Syda Grange as Stanley Shirt did, though understandably that contention has not been advanced in this case. However, it is now said on Stanley Shirt’s part that the effect of Alan and Virginia Shirt’s occupation of part of Syda Farm with the mobile caravan, animals and other associated items has been to oust Stanley Shirt. Given his continued occupation of Syda Grange, that is somewhat fanciful, to say the least.

It seems to me that that attempted reformulation of the claim was something of a salvage operation to keep face and maintain something of the original claim, bolstered by complaints of the removal and changing of chains and padlocks. These allegations are all irrelevant to the ultimate legal position. At no time has Stanley Shirt’s enjoyment of Syda Farm been substantially impeded or his right to access any part of the farm for proper purposes prevented. Accordingly, the claim as initially formulated and as now reformulated fails.

I must however turn to the more substantial claims that are raised by way of counterclaim, and counterclaim to counterclaim. These claims arise out of the partnership which, subject to the claims of Alan Shirt which I shall shortly mention, everyone now accepts has (since, as I have said, 1979 at the latest) been the owner of Syda Farm. It is also accepted that the Rufford Farm tenancy, though in fact granted in the name of Stanley Shirt was likewise a partnership asset. It is, however, Alan Shirt’s case - and this is the main point I have to decide - that he is now entitled to Syda Farm by virtue of a proprietary estoppel or constructive trust.

Proprietary estoppel is a well-established doctrine which, despite rumours of its demise, was reaffirmed in Thorner v Major [2009] 1 WLR 776. The key elements are representation and reliance. Representation may be by words or conduct and (at least if by words) must be sufficiently clear. If the words in question are reasonably understood by the representee in one sense and (objectively judged) bear that meaning, the representor cannot set up a different meaning, whatever his actual understanding may have been. Reliance may often be presumed or inferred. Similar considerations may also give rise additionally or alternatively to a constructive trust. I speak now of the conventional constructive trust which comes into being upon the happening of a certain state of affairs, rather than a remedial constructive trust of the kind discussed by Lord Scott in Thorner v Major. The balance of the authorities binding on me is firmly against the existence of a remedial constructive trust as such. Nevertheless, the application of the doctrine of proprietary estoppel, when applied so as to give effect to what is often referred to as a “minimum equity” at the date of trial, has features which seem to many to be indistinguishable from a constructive trust of the remedial kind.

The claims for proprietary estoppel and for a constructive trust are essentially based upon the same facts. The case is pleaded as follows. (the claimant referred to in the pleading is Stanley Shirt; the first defendant is Alan Shirt):

I have read that in full because it is important to appreciate the width of the case and the series of alleged representations underpinning it. It is noteworthy however that whilst a series of representations are pleaded up to 1986, nothing is expressly pleaded as post-dating 1986 by way of representation, although the plea concerning Mr Hague (though undated) probably takes us into 1989.

Alan Shirt gave evidence which was broadly consistent with his pleaded case, though the dates did not precisely tie up in every instance, and he did not in his witness statement relate any representation to his father’s illness (as pleaded in 11.4). I do not regard these minor discrepancies as material. The real issue is as to the substance of what Alan Shirt was told at various times, and what he understood by whatever he was told.

On the evidence I have read and heard, the representations said to have been made in 1986 are the most important. I say that because, when cross-examined, Alan Shirt relied upon what happened in 1986 first and foremost. What had happened before was material background and may have reinforced what occurred in 1986, but critically it is 1986 which in my judgment forms the essential foundation of Alan Shirt’s case.

At that time of course, the farm business was in dire straits (receivers had been appointed). The farm itself was by then partnership property, and had been for many years. Alan Shirt’s evidence was that he had been told by his father when he became a partner that the land would be owned by the partnership. Those involved in bringing the business round through the difficult period which it undoubtedly faced in 1986 had the incentive of doing so as partners and family members.

In his cross-examination, Alan suggested that he considered that he became entitled to a conveyance of Syda Farm in 1986. This is some way ahead of the date pleaded in paragraph 15 (2^nd February 1989) though that pleaded date itself is qualified by the words ‘at the latest’. In 1986, the farm was in fact thought to have no net value, given the amount of indebtedness that still had to be paid off. Whether at that stage Alan Shirt owned one-third of nothing or the whole of nothing, seems to me not to be something which was likely to be at the forefront of anyone’s mind. Nevertheless, I have no doubt that throughout the years, Alan Shirt, as a result of what his parents (especially his father) told him, harboured the very real hope that he would inherit the farm. What I have to consider is whether there was a sufficiently clear promise or commitment on Stanley Shirt’s part (and that of Marie Shirt, who was a partner throughout until her death) to give rise to an enforceable obligation by way of proprietary estoppel or constructive trust, or (put another way) whether the hope became a firm expectation which Alan Shirt acted upon by reason of anything they said.

So far as the early representation of 1968 is concerned, that seems to me to be irrelevant. It concerned Stanley’s stated intention to give away a piece of land to build a house on. It is likely that Stanley did initially state that as his intention (Alan Shirt’s evidence is corroborated in this respect by the evidence of Penny Holmes, his first wife) but he departed from that stated intention without serious objection from Alan Shirt. In addition, Alan Shirt’s evidence was that his concerns on this score were cured by the offer of a one-third partnership, which eventually came about, once Geoff ceased to be a partner in 1975.

Moreover, I do not think that what was said in 1976 was particularly relevant given Alan Shirt’s own evidence that what he was really relying upon was what happened in 1986. Stanley Shirt in his evidence plainly denied that he ever promised Alan Shirt that he would have the whole of the land, and I am unable to accept that he made any such promise, whether in 1976 or subsequently. Both he and, judged by the terms of her will which I shall consider in due course, Marie Shirt, saw him as being a natural successor to the partnership business (apart from the land) but in their minds, they drew, erroneously as it happens, a clear distinction between the land and other partnership assets. Because the land was in Stanley Shirt’s name they regarded it as his.

Although, therefore, the partnership accounts were drawn up upon the basis that Syda Farm was partnership property; that is not how the partners (including, for reasons I will come to, Alan Shirt) for many years perceived it. Given that I have to decide whether a sufficiently clear representation was made, the discussions between the parties must be looked at against the background of what the parties understood the position to be. I must consider the possibility that whenever discussions took place about what might happen to the partnership after the death or retirement of Stanley and Marie; what the parties were talking about were the partnership assets other than Syda Farm itself. It certainly genuinely came as a shock to Stanley Shirt when he was forced to abandon his original position that the land was his personal asset. That position had been stoutly maintained on his side for many years, and is reflected in the last known will of Marie made in December 1996, in which she disposed of the land (which it was assumed she would inherit had she pre-deceased Stanley) and the partnership assets separately.

I did not understand Alan (at least in the early years) to have perceived the matter any differently from his parents. Although he says he had been told by his father in 1974 that the partnership would include the land, I do not think he appreciated until much later that the land had actually been brought within the partnership accounts. He discovered this from the partnership accountant. At one point in his oral evidence, he appeared to say that he discovered this in 2003, though the 1997 correspondence referred to later indicates he knew that the land was treated as partnership property in the accounts then. I am not persuaded that he knew that the land was treated as partnership property in the accounts at the time of the representations upon which he relies. It follows that, whilst I think it is likely that he would have been told that his parents intended to leave him the partnership assets upon their death (or possibly upon their retirement, though Stanley Shirt told me that farmers don’t retire; they just fade away) I do not think he would have understood this as including the land, as at the time of the alleged representations he did not, any more than his parents, consider the land to be a partnership asset, though he was aware that the land had been used as security for the partnership debts. It is perhaps noteworthy that as late as January 2006, a business consultant (Mr Oliphant) drew up a business plan upon the instructions of Stanley and Alan Shirt which appeared (in paragraph 3.1) still to draw a distinction between the freehold property and the capital farming assets.

So far as other alleged representations are concerned, I am not much influenced by what may have been said to the succession of bank managers (Mr Pickover, Mr Caudwell and Mr Hague). I accept that it was likely that they would have been told that the long term plan was for Alan Shirt to remain in the business, including (possibly) after his parents’ death, but do not accept that anything was said about succession to Syda Farm as such. I accept also that 2 of the bank managers suggested a partnership agreement, but cannot accept that they were told that the need for a written agreement was said to be unnecessary because everything (including the land) was going to Alan Shirt. That would, if anything, have highlighted the need to formalise the arrangement. The only other way of achieving this was by Will or lifetime transfer. The latter was not proposed at any time, and a Will could always be changed. The principal concerns of the bank managers would be to ensure that any indebtedness would be appropriately secured, and that the partnership business would be properly run in a structured way. This latter concern would certainly indicate the desirability of a partnership agreement, a point made by Alan Shirt’s solicitors in the 1997 correspondence to which I shall shortly refer. As to the concern for appropriate security, this was achieved by the successive banks taking charges on the land and (in the case of Lloyds) a charge on a 20 year policy on Alan’s life, referred to in paragraph 15 of the pleading. That at least demonstrated that it must have been in the contemplation of the parties that Alan would be around as part of the partnership business until 2009, because otherwise there would be little point in taking out what was in effect key man insurance for the benefit of the bank, if Alan was not perceived to be a key man. It does not follow from this however that what the parties had in mind was that Alan would inevitably inherit the land. Such expectation as it might create would be met by allowing him to remain farming the land until 2009, which is what Marie in her Will endeavoured to do. I need not consider the extent to which the endeavour was successful, but I will come back to the Will later. I cannot infer from that any expectation or right greater than that which Alan has in fact enjoyed. Moreover, from 2006 onwards, he and his father had effectively fallen out and were not operating as partners, but separately. It would be surprising and (at least) unusual for the doctrine of proprietary estoppel or constructive trust to override the rights of partners on the dissolution of a partnership at will. Further, the continuation of the farm business was dependent on the parties remaining in harmony. The parties did not address what should happen if they fell out, as has now occurred

Should I nevertheless accept Alan’s evidence that he was given firm assurances by his parents direct that the farm was his if he worked for it? As I have said, there is in the case of Stanley and Marie Shirt, an inherent ambiguity in references to the farm. It may mean only the farm business, but not necessarily outright ownership of the land. Though it is difficult to separate the two clearly, Stanley, and Marie as well, both made that distinction in their own minds. I have already found that Alan Shirt did not, at the time, perceive the matter differently from his parents, and I do not accept that he understood at the time that when talking about the future of the partnership, his parents were promising him the freehold land. As to the two1986 incidents alleged in 11.7 and 11.8 of the pleading. I have severe doubts over Alan Shirt’s ability to recall these incidents with the clarity with which they are expressed in the pleading, and I do not consider that they significantly influenced his behaviour.

The matter came to be debated in a different context, much later, in 1997, when Alan Shirt, at the Bank’s urging, proposed a partnership agreement. By this stage, Alan must have come to realise that the land and buildings were shown as partnership assets in the accounts. In a letter dated 14^th October 1997, his solicitors sent to Stanley and Marie Shirt’s solicitors a draft partnership agreement. They said this amongst other things.

The accompanying heads of terms for a partnership agreement contained provisions for retirement and termination. It was said in the proposed clause 9 that any partner could retire on giving not less than 6 months notice. It was then provided that on the retirement or death of any partner the remaining partner should have the option to purchase the share of the partner so retiring or dying. Accounts were to be prepared for the period from the date of the last accounts to the date of retirement or death and for the purpose of those accounts, the assets should be valued at their market value, but the goodwill should be ignored. There was then provision for payment of the outstanding balance by 20 equal half yearly instalments without interest.

There is no doubt that if this proposal had been accepted the claim that Alan Shirt now advances would simply not be open to him, but it was not accepted. The reason it was not accepted was because Stanley and Marie Shirt did not accept that the freehold land was a capital asset of the partnership, despite that land appearing in the accounts. In fact it is now accepted that they were wrong; but that is what amongst other things caused negotiations to flounder.

It is difficult to see why it should matter whether the property was held by Stanley Shirt absolutely or as partner, if there was a clear understanding or agreement that either way the property would upon retirement or death go to Alan Shirt without payment. Yet there was no hint in the correspondence that then ensued of any promise to that effect having been made. It is difficult to see why Alan Shirt should be asking for a far less beneficial arrangement in clause 9 of the proposed heads of terms; than that which he now says was promised to him, in 1986 and at other times.

Nevertheless, Alan Shirt was a calm and measured witness who appeared to be doing his best to help me. Despite that, I am mindful of the fact that the events about which he was giving evidence go back decades; and that one’s memory from this distance tends to be impressionistic, distorted by retrospection and not necessarily accurate. He said quite plainly in his pleading and witness statement that he understood that the representations that were made from time to time related to the whole of Syda Farm. However, he did not adhere to that in his oral evidence, because he excepted Syda Grange, which he acknowledged would remain Stanley Shirt’s, to do with as he wished.. That is, incidentally, consistent with Alan Shirt, like his parents, regarding Syda Farm as Stanley Shirt’s absolutely, despite it appearing as a partnership asset in the accounts.

It seems to me likely that the parties did not focus with a sufficient degree of precision or clarity upon what would happen in the long term after the retirement or death of Stanley and Marie Shirt. As I have said, the events of 1986 are the primary foundation of Alan Shirt’s case. 1986 was primarily about survival. People were not talking about or even paying that much attention to what was to emerge in the fullness of time if the survival efforts were successful. This was a set of family partners who were in it together. I have no doubt that a strong hope emerged over the years on Alan Shirt’s part that the farm would come to him, and then in turn to his son, Alistair. Alistair also gave evidence of the long-term aspirations expressed by Stanley Shirt to him. However, he has never been a partner and no longer works in the farm business, so I did not find his evidence particularly helpful on the crucial issues. All of this was also against the background that there was in any event a strong chance of succession being achieved in relation to the Rufford Farm tenancy, but Rufford Farm was not Syda Farm. Although Rufford Farm by itself was unlikely to be especially viable without some extra land, I do not consider that the aspirations of people such as Alan and Alistair Shirt had about the long-term future should lead me to conclude that Stanley or Marie Shirt made a commitment to leave Syda Farm to Alan Shirt.

I doubt very much whether Stanley Shirt ever did commit himself to passing Syda Farm over to Alan Shirt.. I doubt even more whether Marie Shirt did so. Whilst I have heard many critical things said about Stanley Shirt, (a number of them, I have to say, with considerable justification) I have heard nothing but good about Marie Shirt, who was the family peacekeeper. She made a Will which did not meet what Alan Shirt now claims to have been his expectations, though she endeavoured to keep him protected until 2009. Accordingly, if I accept Alan’s evidence I must also find that not only Stanley, but his mother Marie reneged upon a solemn undertaking given repeatedly. I think that is inherently unlikely and had there been such an undertaking or clear promise, I would have expected it to be mentioned in the 1997 correspondence. Not only was it not mentioned then, it was not mentioned in the pre-action correspondence in which Alan Shirt was seeking an account on the footing that Syda Farm was a partnership asset: see, for example, the letter before action of 1^st October 2009 from Nigel Davis Solicitors to Langleys, and the longer letter of the following day.

Alan Shirt’s explanation to me was that he had not heard of proprietary estoppel in 1997. I have no difficulty in accepting that. He also told me he did not realise he had a claim until 2009. It appears that the idea was put into his head at some stage, either directly or indirectly, by Langleys, who formerly acted for Stanley Shirt. It may well be that this was in a meeting following the correspondence I have just mentioned at the beginning of October 2009. However, though he had not heard of proprietary estoppel, or I imagine constructive trusts, I cannot believe that he, in common with the rest of the population, did not understand the significance of a promise or that, when things were uneasy between himself and his father (as they did from time to time become) he would not have mentioned that promise if he really thought it was significant, and instructed his solicitors accordingly.

I have to take a broad view of the evidence, taking into account Stanley’s denial, Alan’s apparently truthful testimony, the inherent probabilities and the fact that the critical events are very distant in time from today. I am not persuaded on the balance of probabilities that the promises upon which Alan now relies were in fact made, or (if made) were made in sufficiently clear terms to give rise either to a proprietary estoppel or a constructive trust in relation to the freehold land. In reaching that conclusion, I take into account that Stanley Shirt has four children and that the result of finding that there was a constructive trust or a proprietary estoppel in relation to the whole of Syda Farm would mean that those other three children have effectively been disinherited. Moreover, at the time of some of the alleged representations, Jonathan, the youngest brother, was (depending on the date in question) either a child or a young man, who might have come into the business, as Alan recognised in his evidence. Alan Shirt also accepted that, even in 1986, by which time he had been a partner for 12 years, what his father is said to have promised him was dependent on Alan proving himself, which appeared to leave it to Stanley’s judgment, and suggested a degree of conditionality falling short of a commitment. Further, Alan Shirt’s experience over the plot of land in 1968, and the difficulties he had in eventually persuading Stanley Shirt to accept him as a one-third partner, indicate that Alan Shirt would be unlikely to regard any expressions of intention as a commitment. His father had a track record of changing his mind.

It is not for me to judge the relative worthiness of the children but it is clear that Stanley Shirt loves them all; and, whilst Geoff Shirt, who also gave evidence before me, came to incur the displeasure of his mother following a fallout, he did not incur Stanley Shirt’s displeasure, and no-one has said anything against Jonathan or Lynda. It is only natural that a father should wish to include one way or another all his children in his Will. It is not always possible in the case of farms, especially small farms, to achieve a result that is sufficiently inclusive. In this case, I have to be persuaded on a balance of probabilities that the discussions that took place in the 1970s and 1980s crossed the line of raising hopes and amounted to a promise, commitment or encouragement upon the basis of which Alan acted to his detriment. I am not so persuaded.

In reaching this conclusion, I also take into account that this is not a case where Alan Shirt over the years was working for nothing. He did in fact make a reasonably good living overall, at least by farmer’s standards, as he acknowledged in his cross-examination. Of course it was difficult in 1986 and for some time thereafter, but it was difficult for the other partners as well. Between them, they had the incentive of saving the family business for the benefit of all three. This is not a case of someone who has had nothing, working for 30 or 40 years in the expectation of getting something eventually. This is someone who has had something throughout, namely his partnership share and who overall was receiving adequate reward. I accept (as did Stanley Shirt) that Alan’s contribution has been outstanding over the years. Stanley Shirt would hear nothing said against Alan as a farmer. I regret to say that he had a less charitable view of Alan’s second wife Virginia, but that does not affect the present point that I am considering. I should however say that I do not consider that any solid reason for the degree of antipathy felt towards Virginia Shirt was made out.

Be that as it may, I am not here to award a proprietary interest for good behaviour or for worthy conduct. I can only do so if the result is unconscionable from Stanley’s perspective. Despite all the critical endeavours undertaken in and following 1986, I do not regard it as unconscionable to deny Alan Shirt the proprietary interest he seeks. The result of the 1986 endeavours was that the partners were eventually able to persuade their then bankers to accept a substantially smaller sum in full and final settlement, saving them over £200,000. That saving was in fact distributed via the partnership capital accounts, thus reflecting a proper reward. It is a reward which would accrue to them ultimately anyway as co-owners in equal shares. It does not seem to me in the circumstances realistic or just, or to be against the dictates of conscience, for Alan Shirt to accept that what he has is the one-third interest in the partnership, which includes the land, and nothing else.

In those circumstances, the claims for constructive trust and proprietary estoppel do not in my judgment succeed.

There are other claims. The most important one relates to the loss of the Rufford Farm tenancy. It is said on Alan Shirt’s part that the reason that was lost, as is undoubtedly the case, was because the rent was not paid and that Stanley Shirt is responsible because he was the tenant liable to pay the rent, but neglected to do so. It is clear that in 2007, at a time when the Chatsworth Estate Trustees were positioning themselves to terminate the tenancy, Alan endeavoured to pay the rent but the Chatsworth Estate Trustees, as they were entitled to do, refused to accept it from anyone other than the tenant, who was Stanley.

A notice to pay was served on the 15^th August 2007. The effect of that notice was that the rent had to be paid within two months from the date of service. If not, that would entitle the Chatsworth Estate Trustees to serve a notice to quit under case (d) of Part I of Schedule 3 to the Agricultural Holdings Act 1986. I am satisfied that although the notice is headed ‘by recorded delivery’, it was in fact handed to Stanley Shirt at a meeting at the estate office on the 15^th August 2007. That was confirmed in oral evidence by Ben Garstang, the representative of the Chatsworth Estate Trustees, whose evidence I accept. No rent having been paid within the time limited, a notice to quit was served on the 8^th November 2007.

The partnership had, I find, by this time come to an end, but Mr McNall correctly says that does not matter because the partners owed duties during the dissolution process to preserve the partnership assets and it was (put at its lowest) an act of folly to allow the tenancy to be lost by the non-payment of rent. Stanley Shirt had the means available to do so from partnership monies which he had paid into his own bank account so as to stop the partnership bankers from using them all up. These were monies which he had specifically set aside for partnership purposes. It was reported at the meeting on the 15^th August that £18,000 had been set aside from the business as a fund to satisfy any dilapidation claims. I am satisfied that that statement, which appears in Mr Garstang’s attendance note, was made at that meeting.

Stanley Shirt, founding himself upon the reference to recorded delivery in the notice to pay, said not only that he never received the notice by recorded delivery, but that he never received it at all. This was disingenuous evidence. Although I grant a certain amount of latitude to Stanley Shirt, having regard to his age and his health, which has not been good over the last few years and particularly at this time, this particular evidence is something which he must have known was wrong and was in any event disproved by Mr Garstang’s evidence and note.

I do not accept that Stanley Shirt had forgotten the meeting with Mr Garstang. I find that he was well aware of the process that was being embarked upon at this time and that he deliberately took the risk of the tenancy being lost. Relationships between himself on the one side, and Alan and Virginia Shirt on the other, were very poor at this stage. This is reflected in the note of the meeting that Mr Garstang took where it was recorded that Stanley had, when removing a tractor and trailer from Rufford House Farm, been handcuffed by the police (though later released) and his son-in-law arrested. This had apparently come about because Virginia Shirt telephoned the police, as the encounter with Stanley Shirt was something she found frightening and intimidating. This episode, as was evident from Stanley Shirt’s evidence, outraged him and I think it coloured his attitude throughout this period. He was hoping, though, to pay the rent out of the proceeds of sale of the White House which was then being sold, but which had not as at the date of the notice to pay been completed. Unfortunately by the time that happened and the monies were remitted, the time limited by the notice to pay had expired and a notice to quit was served on 8^th November 2007; which resulted in the loss of the Rufford Farm tenancy.

The further result was that the succession rights to the tenancy that Alan Shirt enjoyed were also lost. The question I have to consider is: does that give rise to any and if so what cause of action at the suit of Alan?

It is said that Stanley Shirt acted in wilful breach of duty. I doubt whether he intended the tenancy to be lost. I think he rather stubbornly thought that the Chatsworth Estate Trustees would accept late payment from the proceeds of sale of the White House. Nevertheless, he deliberately took the risk of the loss of the tenancy occurring and, if he owed a relevant duty, then in my judgment he breached it.

It is, as I have said, accepted that the tenancy itself was a partnership asset. It therefore seems to me that prima facie Stanley Shirt acted in breach of his duty as a partner. However, the loss that Alan complains of is the loss of his succession rights to the tenancy. Those succession rights were not the partnership’s, they were Alan Shirt’s.

For Alan Shirt to have succeeded to the Rufford Farm tenancy would have required a nomination from the outgoing tenant, Stanley Shirt. Nothing would have come to the partnership as a result. It does not seem to me therefore that the partnership duties extended to ensuring that Alan Shirt would succeed to the tenancy. The claim is not based upon any contractual right to ensure Alan Shirt’s succession. Nor is any duty of care relied upon. What is relied upon is a fiduciary duty as partner. In my judgment, Stanley did not owe any such duty in relation to Alan’s succession rights, which were outside the scope of the partnership.

An alternative case of breach of fiduciary duty as trustee is advanced. Given, however, that the tenancy was held by Stanley Shirt as trustee for the partnership, it seems to me that the duties he owed as trustee were no different from the duties he owed as partner, and did not extend to securing Alan’s succession rights. That was a personal right of Alan under the Agricultural Holdings legislation. It was not a right which Stanley as trustee could exercise, though his co-operation in making the nomination was obviously needed. It seems to me that it is fallacious to regard the succession rights as in some way incidental to trust property, giving rise to a fiduciary duty. It seems to me therefore that the loss that Alan has undoubtedly suffered by reason of Stanley’s regrettable conduct of allowing the tenancy to be lost is not a loss which is justiciable in law.

It may be, although this is not the way that the case is pleaded, that it could have been said that the tenancy had a surrender value and that what the partners should have done was exploit the existence of the tenancy in order to negotiate a surrender payment from the Chatsworth Estate Trustees. As this was not the way the case was put, this aspect was not explored. It seems to me however, fairly clear that the Chatsworth Estate Trustees were looking for any way out of this tenancy. Had the rent been paid, there was also a dilapidations claim which the trustees could have exploited. Stanley Shirt sought to persuade me in evidence that he had debunked the dilapidations claim by making an improvements claim. It is however clear that the improvements claim would have got nowhere under the terms of the tenancy agreement, and I do not think this is a point which was raised at the time of the service of the notice to pay because it was not reflected in the attendance note of the meeting of 15^th August 2007. The point must have been raised at a later meeting, by which time the tenancy was lost anyway.

I am also not satisfied on what I have heard (and I emphasise that the point was not explored as this was not Alan’s claim) that there was any realistic possibility of persuading the Chatsworth Estate Trustees, who are pretty hard-nosed in this area, to pay anything for the surrender of the tenancy, given their own potentially substantial dilapidations claim. In any event, that surrender payment would, if otherwise achievable, be the partnership’s and not for the benefit of Alan directly.

In the circumstances the claim for the loss of the tenancy is not something for which Alan is entitled to relief.

There are also claims for partnership accounts. In that connection, complaints are made of rents being received for licences or short-term tenancies granted to a Mr Gill and a Mr Wainwright; which have come to be paid to Stanley Shirt alone, though early payments were to Alan Shirt. It was accepted before me that the parties are accountable for such payments as were made to each of them respectively, but that the proper place in which to pursue that is in the partnership accounts which I am prepared to order should be taken, if matters cannot be agreed hereafter. I do record my earnest hope that the parties will not carry on spending money on legal fees unnecessarily, as partnership accounts can be very expensive. Any accounting exercise must extend to any other receipts that may have been paid to either of the partners in respect of partnership assets. The recipient is accountable to the partnership. This includes payments made to Alan Shirt in respect of a number of animals which were moved at the time of the 1^st September 2006 dispersal sale. They were taken out of the auction because they were not thought to be readily saleable.

I have no doubt that Stanley Shirt knew what happened to these animals. He knew they were not in the sale. This was made plain in correspondence from Bagshaw, the auctioneer. Stanley Shirt did not object to Alan Shirt taking them. However, no agreement was reached as to the basis upon which they would be taken. As I said earlier, there was some contemplation that the parties might carry on in business as partners after the dispersal sale. It was also contemplated (and more probable) that they would not. Alan purchased, even at the auction sale itself, some animals on his own account. Given that there was no agreement as to what should be paid for the animals which were taken out of the sale, I consider they remained partnership property and that Alan is bound to account for any receipts from their subsequent sale or their value, if not subsequently sold.

A number of wild allegations were made by Stanley Shirt as to the removal of other animals based upon stock movement records, on which Alan Shirt was cross-examined at length. He had an explanation for every real or apparent movement. Those explanations were summarised at pages 11 to 12 of the helpful document prepared on behalf of Stanley Shirt for his closing submissions headed ‘Questions for Alan’ in two tabular forms. It seems to me that the animal movements have all been satisfactorily explained and (leaving aside the animals removed from the sale) do not relate to animals belonging to the partnership. They were the animals of Alan Shirt’s new business, which he now carries on in partnership with Virginia Shirt, his wife.

A large number of other points were raised in evidence. I am not going to deal with them all, because most of them are irrelevant. For example, much was made of the use to which Rufford House Farm was put by Alan and Virginia and that this was in breach of the terms of the tenancy agreement. The activities were said to range from a livery business and riding school to an animal sanctuary. The suggestion seems to have been that this might have triggered the Chatsworth Estate Trustees into further action, though in fact it did not. I did not think that there was ultimately anything in any of those points. I accept Virginia Shirt’s evidence that she had not been carrying on any substantial activities that would have been of likely interest to the Chatsworth Estate Trustees. I need say no more on the point. It seems to me that I should limit my findings to what is truly relevant in this case.

I do however have to consider one point and that is the position under Marie Shirt’s Will, because it is Mr McNall’s case that Alan Shirt is now entitled in any event to at least a half interest in the partnership, if not two-thirds. That involves consideration of the Will which has not yet been proved. As it has not yet been proved, it is possible I suppose that some other Will may emerge, but no-one has identified one.

The position on the face of it is that upon Marie’s death in August 2004, the 1974 partnership was dissolved. She was in that capacity a one-third owner of Syda Farm and her estate therefore remained a one-third owner, subject to due dissolution of the partnership. The fact that thereafter for some two years or so Stanley and Alan Shirt carried on business as equal partners did not affect Marie’s estate even though, for reasons which I will come to, Stanley, under Marie’s last known Will, is wholly beneficially entitled to Marie’s share. By this stage, 2004, it was well known to everyone (including Alan Shirt) that, rightly or wrongly, Stanley Shirt took the view that the land and the partnership were separate. That position, as I have already said, is also reflected in the terms of Marie Shirt’s Will. Alan Shirt cannot thereafter have been under any illusion (as he cannot have been following the correspondence in 1997 about the proposed partnership agreement) as to what his father’s attitude was, whether he agreed with it or not. Both parties understood Stanley Shirt’s position to be that the land was outside the partnership. Therefore, carrying on business as equal partners would not, without more, give Alan an equal share in the land. The land belonged to the 1974 partnership, and continued to do so.

The Will provided in clause 2:

Therefore, it is said, as Alan Shirt succeeds to everything in the partnership which in fact includes the land, then notwithstanding the attempt in clause 3 to treat the land and the other partnership assets separately, he becomes the two-thirds owner of the land, having his existing one-third share and the devise of the partnership assets (necessarily including another one-third interest in the land) by Marie Shirt. Alternatively, if Stanley Shirt became the two-thirds owner because of clause 2, then the equal partnership that carried on thereafter gave rise to a 50/50 share in the land as well. In my judgment, neither of these arguments is correct.

As to the first point, the gifts over in clauses 3 onwards of the Will expressly only came into effect if Stanley did not survive Marie for 28 days, or the gift failed for some other reason, “but not otherwise”. He did survive her and the gift did not fail. Therefore the gifts over did not come into effect and the devise was one to Stanley Shirt absolutely. That was so, despite the words, ‘Subject to … the legacies and bequests made by this my Will’. That was probably a standard form of wording which was not appropriate because there was nothing to which the absolute devise became subject to. It follows that Alan Shirt did not acquire the partnership share of Marie Shirt; Stanley Shirt did so.

As to the second point, the 2004 partnership was separate from the 1974 partnership, and, as already explained, the parties did not, by carrying on business together, alter the existing property ownership. Syda Farm and all the freehold land belonged to the 1974 partnership, and still does.

Alan therefore has a one-third interest in Syda Farm, subject to due dissolution of the 1974 partnership. The other two-third shares belong to Stanley Shirt and the estate of Marie Shirt, whence it is due (on the last known Will) to pass to Stanley Shirt.

I hope that deals with all the points I am asked to deal with at this stage, but I will now hear counsel and Mr Geoff Shirt, assuming he is still speaking for his father, upon the consequences of this judgment.