Robin Steve Harry Holden v David Andrew Holden
| Jurisdiction | England & Wales |
| Judge | Mr Nicholas Thompsell |
| Judgment Date | 20 December 2023 |
| Neutral Citation | [2023] EWHC 3292 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No: BL-2021-002290 |
[2023] EWHC 3292 (Ch)
Mr Nicholas Thompsell
sitting as a Deputy Judge of the High Court
Claim No: BL-2021-002290
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES BUSINESS LIST (ChD)
Rolls Building
Fetter Lane
London, EC4A 1NL
Ms Tiffany Scott KC (instructed by Howes Percival LLP) appeared for the Claimant
Mr Andrew Marsden (instructed by Greene & Greene Solicitors) appeared for the First Defendant
Hearing dates: 23rd – 27th October 2023
HTML VERSION OF JUDGMENT
INTRODUCTION
This case concerns the dissolution of a farming partnership (the “ Partnership”) that subsisted among three brothers. The partners were the Claimant, Mr Robin Holden; the First Defendant, Mr David Holden; and the Second Defendant, Mr Nicholas Holden. For convenience, and intending no disrespect, I will refer to the three brothers by the names they use amongst themselves: “Robin”, “David” and “Nick”. Nick was not represented at the trial. He had served a limited Defence and otherwise had taken no active part in these proceedings. It is understood that he wishes to remain neutral.
Following the Order of Deputy Master Collaço Moraes (the “ CCMC Order”) made on 6 October 2022 following a Costs and Case Management Conference held on 28 September 2022, the matters before me at this trial include the following preliminary issues as to liability:
i) Robin's claims for a declaration that the Partnership was a partnership at will and David's counterclaim that the terms governing the Partnership are those set out in a written draft partnership deed (the “ 1990 Draft Deed”) (as later amended in manuscript); and
ii) Robin's claim that he is entitled to an amendment of the revenue accounts of the partnership and David's counterclaim that Robin is bound by those accounts.
The CCMC Order also ordered for this trial to deal with a number of subsidiary matters that were or may have been relevant principally to the issue of reopening accounts. On the first day of the trial, counsel on each side raised arguments as to the extent that such matters should be dealt with at this stage. I gave a short judgment on this at the commencement of the second day of the trial and this is summarised in section 2 below.
At the trial the Claimant was ably represented by Tiffany Scott KC of counsel, and the First Defendant was no less ably represented by Mr Andrew Marsden. The court is obliged to both counsel for their learned and helpful submissions both orally and in writing.
FIRST DEFENDANT'S INFORMAL APPLICATION
Before commencing with evidence in this trial, I was required to rule on matters arising from an informal application made on behalf of the First Defendant in Mr Marsden's Supplementary Skeleton Argument. This was the subject of substantial representations from both sides on the first day of trial.
The First Defendant had complained of two problems which he had said arose from the Claimant's Skeleton Argument. These were as follows:
i) it did not deal with any of the so-called subsidiary issues to be tried – only the main ones; and
ii) it made submissions on issues that had not been pleaded and it included allegations of fraud and dishonourable concealment.
In a considered judgment that I delivered orally at the beginning of the second day of the hearing, I dealt with these two points, in summary, as follows.
The subsidiary issues
As regards the so-called subsidiary issues, I considered these items individually as I explain further below. Overall, I accepted the Claimant's submission that, notwithstanding the terms of the CCMC Order, which provided that the issues arising from those paragraphs should be dealt with at this trial, these matters ought to be considered only insofar as they are relevant to liability in respect of what I described as the two “ principal issues”.
The first of the principal issues is the question whether the Partnership was a partnership at will, governed by the Partnership Act 1890 and the terms agreed at a meeting on 10 October 1989, rather than under the terms of the 1990 Draft Deed that had been produced but was not signed. I will call this the “ governing terms issue”.
The second principal issue was the relief sought by the Claimant for the accounts to be reopened and drawn up on the basis of the correct governing terms. I will call this the “ reopening accounts issue”.
I dealt with the individual subsidiary issues as follows:
The improvements issue
Robin had complained that the Partnership had paid for improvements to David's land including a borehole. The nub of the complaint seemed to be that David had agreed to grant a perpetual easement attaching to the partnership land in return for these payments. This was a point that Robin had not pleaded. I agreed with Ms Scott, that this issue was not relevant to the governing terms issue. If it is relevant at all, it goes to quantum rather than liability in relation to the reopening accounts issue. Therefore, it was not directly relevant to the liability issues that I was to decide at this stage.
The sugar beet issue
A second issue related to whether the final accounts dealt with the correct acreage of sugar beet being farmed. This issue was not relevant to the governing terms issue. On examination, it seemed it was not even relevant to the reopening accounts issue since the accounts where this may be relevant to have not yet been settled. The Claimant may wish to pursue this issue in relation to the settling of the final accounts for the Partnership, but there was no need for me to deal with this at this hearing.
The holding of funds issue
Robin had complained that David had placed partnership money in accounts in his own name. David (with some corroboration from the partnership accountant, Mr Boreham) argued that these amounts and any interest on them had been fully accounted for to the Partnership.
There was no evidence before the court that the Partnership had suffered from this issue or that this issue had caused the accounts to be misstated.
David also had made the point that Robin had had all the bank statements, accounts and accountant's working papers and has had several years to check whether all the monies placed in a sole account had been properly accounted for.
This issue potentially had two points of relevance to the dispute.
First, it potentially went to liability in relation to the reopening accounts issue through the possibility that the Claimant could use these issues to demonstrate a multiplicity of errors in the previous partnership accounts, and that this might have bolstered the case for those accounts to be reopened.
Secondly, it went to quantum in relation to the effect they might have on the previous accounts if they are to be reopened.
I ruled that, if Robin was intending to use the holding of funds issue at this trial to bolster his case at this hearing on the reopening of accounts issue, the arguments and evidence relied upon to establish this point should have been dealt with properly in the Claimant's Skeleton Argument or otherwise put clearly in evidence. The Claimant should have been much clearer in explaining the evidence that this issue has led to the accounts being based on an error. Whilst I did not accept the First Defendant's invitation to strike out the references in the Particulars of Claim to this matter, I considered that it should not be dealt with substantively during this stage of the proceedings.
I explained, however, that if the result of the liability trial were to be that I were to order the partnership accounts to be reopened, then there was no reason why the Claimant may not make arguments based on this issue at that stage.
The invoices issue
The final subsidiary issue was the invoices issue. This was the Claimant's allegation that invoices paid by the Partnership to the First Defendant's company were improperly issued as they did not reflect any practice agreed among the partners and therefore caused the profits to be misstated and misallocated.
In relation to this issue, I considered that the Claimant had advanced a clear enough case that the First Defendant would understand so that he would be able to prepare properly to defend himself against the allegation. As with the holding of funds issue, this point was potentially relevant both to liability in relation to the reopening of accounts issue and in relation to quantum if the accounts are to be reopened. I ruled that the point could be argued at this stage of the trial as a liability issue in relation to the second of the principal issues. If the Claimant demonstrated that the account should be reopened, then the quantum of this issue would fall to be determined at the next stage of the proceedings when quantum matters were to be determined.
Generally
I clarified that, where I had stated that I would not expect an issue to be dealt with substantively during this stage of the proceedings, that did not prevent the issue being discussed at all at this stage. It could still be discussed, where appropriate, for the purposes of testing the credibility and consistency of witnesses, but just not for the purpose of establishing these points as part of the case relating to liability.
The unpleaded points
There were three points in the Claimant's skeleton argument that the First Defendant claimed were new unpleaded points. On examination, I did not see that there was anything new in two of these points: they were natural developments of the Claimant's pleaded case and there was no need for me to make any finding in relation to them.
The third point was that there seemed to be a suggestion in the Claimant's...
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