![[2025] EWHC 2275 (Ch)](https://backend.juristeca.com/files/emisores/logo_O3rEzCI.png){kind=logo}
Issue 3 – Sale of Site A on what terms
Issue 3 – Sale of Site A on what terms
It is not in dispute that:
Under s.14 of the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”) the court has a wide discretion to make such order as it thinks fit.
Under s.15 of TOLATA the matters to which the court must have regard in exercising its discretion include –
the intentions of the person or persons (if any) who created the trust;
the purposes for which the property subject to the trust is held;
the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home;
the interests of any secured creditor of any beneficiary.
One of the orders a court can make is an order for sale of trust property. Whilst the court cannot order that a beneficiary sells their interest to another beneficiary, the court can nevertheless order the sale of the whole of Site A to the Claimants whilst also directing that only D1 is paid for his share.
In summary, it is argued on behalf of the Claimants that:
Site A is central to PCo’s business and is its main operating facility. It is common ground that, by at least 2009, PCo was occupying nearly 88% of Site A and that prior to that PCo (and/or the earlier partnership) had occupied parts of Site A since at least the mid-1990s (i.e. now at least 30 years).
The Claimants no longer want to have any continuing business relationship with D1 and therefore wish to separate their interest in Site A from D1 by it being sold to them, PCo or PPL (once the other claim is resolved and D1 has no interest in PPL).
D1’s Open Offer of 23rd July 2025 was that D1 was to sell his interest in Site A for £1.825 million of the agreed SJE valuation of £7.3 million.
The three matters relevant under s.15 of TOLATA are –
The intentions of the persons who created the trust. It was created by the Claimants and D1 (i.e. the Trustees). It is common ground that Site A was purchased to be occupied by others. However, this factor is now of little weight given the time that has passed since its acquisition and the significant changes in circumstances;
The purpose for which the property subject to the trust is held. There is no dispute that for at least the last 30 years it has been used (and as to at least 88% for the last 15 years) as the premises from which PCo has operated. It is required by PCo, and it would incur significant costs and business disruption in moving; and
The wishes of the beneficiaries. The Claimants have a 75% beneficial interest, so wish for Site A to be sold, either to themselves or to PCo. D1’s appears to be content for the Claimants to purchase his interest (by reason of the Open Offer).
D1’s amended Case Summary suggested for the first time that it is D1’s position that Site A be sold on the open market. Two central issues arise -
The status of PCo’s occupation needs to be considered. Their position is irrelevant on the relief sought by Claimants, as they are agreeable to purchase Site A on a deemed assumption that it is sold with vacant possession. However, their status will be central to a sale on the open market basis (including their reasonable time to vacate if such is ultimately required of them). It follows that if the court wants to make such an order, then the next stage is to join in PCo so their position can be established. This is unsatisfactory as it will further delay matters; and
This does not appear to be based on concerns about the agreed valuation (it appears to be vindictive).
However, if Site A is to be subjected to the market, then the Claimants would want a right of pre-emption.
In summary, it is argued on behalf of D1 that:
He does not challenge that the relationship with his brothers has broken down, albeit he denies being the cause. His preference is for Site A to be retained because, on his case, it was always intended as an investment from which each of them would enjoy the capital and income ownership.
However, he (very) reluctantly accepts that Site A can no longer be held by all four brothers and that it needs to be sold. Given that D1 accepts that the brothers must part way in terms of ownership, findings as to the “purpose” of the trust of land, and the brothers’ “intention” likely takes on less meaning than it otherwise would.
In considering what order to make under s.14 of TOLATA, the court has to take into account the factors under s.15, but may also take into account other factors including D1’s views as beneficiary in the minority.
It is accepted that the court is not bound to test the market and/or bound to ensure that the best price is achieved for the sale of Site A, but it can decide to do so where there is a risk that the court-assessed value would not necessarily be the same as the price in an open market sale.
In terms of the prejudice arising in respect of the parties’ competing proposals, the greater prejudice lies with D1. A real concern is the unique character of Site A, and the business opportunity it presents to third parties such that a sale on the open market will serve the brothers’ interests better as a whole. It must be common ground that, as the property was purchased as an investment, then any trustees properly so acting in the interests of the beneficiaries would sell it in a way to achieve the greatest return on that investment. The court will note in particular -
The Boparan Valuation of Site A was £6.755 million, which shows an increase in the SJE valuation of £525,000 over a 19 month period (£131,250 to each of the brothers’ shares) and the fluidity of the market;
The SJE’s valuation, albeit May 2025, is still a couple of months out of date and will be further out-dated by the time of any sale;
The SJE’s valuation records the level of “demand” for land such as Site A.
Markedly less prejudice presents to the Claimants on D1’s proposal than to him on theirs because -
a direction that Site A be placed on the open market for offers in excess of £7.3 million does not preclude the Claimants from bidding. They are not being excluded and provision can be made for them not to have to source the funds equivalent to their ¾ beneficial interest if they were to purchase together. D1 has confirmed that he will not be bidding;
if offers are received from third parties in excess of £7.3 million then it is open to the Claimants to match any such offer;
if no offers are made in excess of £7.3 million by three months then the Claimants can purchase at the SJE’s valuation;
insofar as any argument may be made that harm lies to PCo due to its occupation if Site A was sold to a third party, the Court should give no weight to this factor because:-
the basis of the SJE’s valuation was vacant possession to which no objection has been taken,
PCo is not a party to proceedings and therefore claims no relief as to its rights of occupation; and
D1 invites the court to direct that Site A is sold as a whole on the open market for offers in excess of £7.3 million with the Claimants being given the opportunity to bid and, if not sold by three months, it can be sold to the Claimants in any event for £7.3 million.
On balance, and for the following primary reasons, I direct that Site A be sold to the Claimants (or at their election PCo) for £7.3 million and without first testing the market.
In TUI UK Ltd (Respondent) v Griffiths (Appellant)[2023] UKSC 48, the Supreme Court held that the trial judge had been wrong (i) to allow the defendant to challenge the report of the claimant’s expert, and (ii) to accept those submissions. By doing so the trial judge had denied the claimant a fair trial. Lord Hodge said this:
“[70.] …….
(i) The general rule in civil cases, as stated in Phipson, 20th ed, para 12-12, is that a party is required to challenge by cross-examination the evidence of any witness of the opposing party on a material point which he or she wishes to submit to the court should not be accepted. That rule extends to both witnesses as to fact and expert witnesses.
……..
(vii) The rule should not be applied rigidly. It is not an inflexible rule and there is bound to be some relaxation of the rule, as the current edition of Phipson recognises in para 12.12 in sub-paragraphs which follow those which I have quoted in para 42 above. Its application depends upon the circumstances of the case as the criterion is the overall fairness of the trial…..
………
[71.] In assessing the fairness of the trial in this case it is important to have regard to the approach which TUI’s legal team adopted in response to the claim. TUI in its defence put Mr Griffiths to proof of his claim. TUI chose not to lodge the report of an expert microbiologist, which it obtained. That report might have put forward a case on causation which differed from that of Professor Pennington. TUI failed to lodge the report of their expert gastroenterologist in a timely manner and called no witnesses as to fact. The CPR Pt 35.6 questions, which I have set out in para 14 above, were not clearly focused on the matters which were the objects of criticism in counsel’s submissions and did not put Professor Pennington on notice of those criticisms. TUI chose not to request that Professor Pennington be made available for cross-examination. TUI’s challenge to his evidence was not intimated to Mr Griffiths’ legal team until the submission of its skeleton arguments on the eve of the trial, by which time it would have been too late for them to seek to have him attend to give evidence.
…….
[75.] ……. In the absence of a proper challenge on cross-examination it was not fair for TUI to advance the detailed criticisms of Professor Pennington’s report in its submissions or for the trial judge to accept those submissions.”
I consider that, in the absence of a proper challenge by way of cross-examination, it would not be fair to allow D1 effectively to mount an indirect challenge to the SJE’s valuation by way of market testing particularly when having regard to the approach taken by D1 in response to the claim –
Despite D1’s claimed real concern over the unique character of Site A, he failed to put any questions to the SJE pursuant to the order of DJ Mody.
Indeed, through his solicitors letter dated 23 July 2025, D1 expressly agreed the SJE valuation shortly after it had been served and in the absence of raising any questions. That agreement was perhaps unsurprising bearing in mind that the SJE’s valuation was substantially in excess of the Boparan Valuation previously agreed by D1.
If D1 had reasonable concerns over the safety of the SJE’s valuation then D1 ought to have sought the permission of the court to call the SJE to give oral evidence so that the SJE fairly had the opportunity to address those concerns.
Further, I consider that there are serious practical difficulties in undertaking the open market exercise proposed by D1, since it is difficult to see how an agent could properly market Site A for sale with vacant possession when PCo is in long term occupation of Site A and its rights of continued occupation remain uncertain. In order to secure vacant possession, the trustees would have to be directed to bring a possession claim against PCo, which would inevitably result in further protracted litigation. In the alternative, any attempt to formalise PCo’s occupation would also likely result in significant further delay. In any event, any such formalisation of occupation would not benefit D1, since as acknowledged in his solicitors’ email dated 7 November 2024 any “lease formalising [PCo’s] occupation …..may potentially have a detrimental impact on [Site A’s] value”. Indeed, for that very reason, D1 has been unwilling to agree entering into a lease with Mann & Co Solicitors for office space at Site A.