Key Facts
- •Family dispute concerning a farming partnership involving Simon, Alison, and the estate of Jennifer Morton (represented by Julie).
- •2012 Partnership Deed included an option for surviving partners to purchase the outgoing partner's interest.
- •Jennifer gave notice to dissolve the partnership in 2015.
- •Simon and Alison exercised the option but failed to complete the purchase due to funding issues and lack of revaluation.
- •Simon and Alison successfully claimed proprietary estoppel, arguing assurances from Geoffrey (father) that Simon would inherit the farm.
- •The judge varied the partnership agreement, extending the option period and adjusting the purchase price based on proprietary estoppel.
- •A dispute arose over Julie's (Jennifer's executrix) entitlement to interest under Section 42 of the Partnership Act 1890.
Legal Principles
Section 42(1) of the Partnership Act 1890 grants an outgoing partner a share of profits or interest if the remaining partners continue the business without final settlement.
Partnership Act 1890, Section 42(1)
Section 42(2) of the Partnership Act 1890 excludes the outgoing partner's entitlement if the partnership contract grants an option to purchase and that option is duly exercised.
Partnership Act 1890, Section 42(2)
Proprietary estoppel can vary the rights of a promisor and promisee under a partnership agreement.
[2022] EWHC 163 (Ch)
The remedy for proprietary estoppel aims to prevent unconscionable repudiation of promises, often satisfying the promisee's expectations.
Guest v Guest [2022] UKSC 27
Outcomes
The appeal was allowed.
The judge's order modifying the option was considered a variation of the partnership agreement, not a separate judicial remedy. Therefore, Section 42(2) of the Partnership Act 1890 applied, precluding Julie's claim for interest.