When cohabitees split up, can one buy the other out?
As we saw in Laura Tanguay’s article Can I buy-out my co-owner’s share in our property, even if they want to sell on the open market?, the question of whether one owner should be given the right to buy-out the other is often controversial. Usually the owner wishing to sell argues that the only way to establish the property’s true value is to sell it on the open market.
Laura Tanguay’s article discussed the High Court case of Kingsley v Kingsley . This case has now gone to the Court of Appeal, and judgment was handed down on 3 March 2020.
Kingsley v Kingsley involves a family farm, formerly owned by a brother and sister (Roger and Sally). Following Roger’s death in 2015, Roger’s widow applied to court for an order that the farm be sold. Sally wanted the opportunity to buy Roger’s share in the farm. The judge sided with Sally, and held that she should be allowed to buy Roger’s share at a court-assessed price within a two month period. If the sale had not completed within those two months, the farm would be put up for sale on the open market, and Sally would be entitled to bid for it alongside others.
Roger’s widow appealed to the Court of Appeal. She wanted the farm to be sold on the open market, and argued that an order for sale at a court-assessed price could only be justified if there was a low risk of an undervaluation. She also expressed fear that Sally intended to redevelop the farm and pocket the profits.
Court of Appeal judgment, March 2020
The Court of Appeal upheld Sally’s right to buy Roger’s share at a court-assessed price. It held that the court has a wide discretion when exercising its powers under the relevant legislation (namely the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA)). The risk that a property may be sold at undervalue is simply one factor among others to be considered.
The Court of Appeal acknowledged that Sally might redevelop part of the farm in order to fund the purchase of Roger’s share. However, there was no evidence that Sally intended to redevelop the entire farm, or that the beneficiaries of Roger’s estate would be harmed financially by Sally’s plans.
When deciding how and whether to make an order for sale, the court has a wide discretion. The case of Kingsley v Kingsley illustrates that there is no single factor that will determine the outcome. Put broadly, the court will aim to achieve justice between the parties in accordance with sections 14 and 15 of TOLATA.
If the facts in Kingsley had been slightly different, Sally may not have been given the opportunity to buy Roger’s share. For instance, if the court had considered the valuation evidence to be untrustworthy, or if they thought that Sally intended to redevelop the whole farm, it is quite possible that the court would have ordered a sale on the open market.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at April 2020.