Drake v Harvey & Ors [2010] EWHC 1446 (Ch) (16 June 2010)

Drake v Harvey & Ors [2010] EWHC 1446 (Ch) (16 June 2010)

The partnership deed is silent as to the basis of valuation for outgoing partners. There is no binding agreement or consistent usage requiring historic values. Therefore, the accounts to which outgoing partners or their estates are entitled must reflect a fair value, which is the current market value of the land. Historic valuations would be unfair and are not contractually required. The sums payable to the outgoing partners or their estates must be calculated on the basis of current market value of the partnership assets, not historic book values.

Citation
[2010] EWHC 1446 (Ch)
Parties
Claimant: Francesca Drake; Defendant: Jack Harvey; Defendant: Mary Elizabeth May Harvey; Defendant: Clare Harvey; Defendant: Richard Jenkins
Jurisdiction
England and Wales
Judgment Date
16 June 2010
Procedural Posture
Chancery Division Partnership Dispute / Judgment After Trial of Preliminary Issues
Outcome
For the defendants (outgoing partners and their estates)
Legal Topics
Partnership Dissolution, Valuation of Partnership Assets, Interpretation of Partnership Agreements, Capital Accounts, Family Farming Partnerships
Partnership Law Equity Property Law Partnership Dissolution Valuation of Partnership Assets Interpretation of Partnership Agreements Capital Accounts Family Farming Partnerships

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Parties

Francesca Drake

Claimant

Jack Harvey

Defendant

Mary Elizabeth May Harvey

Defendant

Clare Harvey

Defendant

Richard Jenkins

Defendant

Procedural Posture

Chancery Division Partnership Dispute / Judgment After Trial of Preliminary Issues

Legal Issues

  1. 1 Whether outgoing partners or their estates are entitled to payment based on historic or current (market) value of partnership land under the partnership deed
  2. 2 Proper construction of clause 19 of the partnership deed regarding valuation on retirement, death, or incapacity of a partner

Ratio Decidendi

The partnership deed is silent as to the basis of valuation for outgoing partners. There is no binding agreement or consistent usage requiring historic values. Therefore, the accounts to which outgoing partners or their estates are entitled must reflect a fair value, which is the current market value of the land. Historic valuations would be unfair and are not contractually required. The sums payable to the outgoing partners or their estates must be calculated on the basis of current market value of the partnership assets, not historic book values.

Court Disposition

For the defendants (outgoing partners and their estates)

Orders

  • The sums payable to the outgoing partners or their estates under clause 19 of the partnership deed must be calculated on the basis of current market value of the partnership assets, including the land, as at the relevant date.