Suzanne Elaine Procter v Philip John Procter & Ors
[2024] EWCA Civ 324
David James Digwood & Ors v Andrew John Digwood
24 October 2024
[2024] EWHC 2729 (Ch)
High Court
A family farm business broke up. There were arguments about splitting the remaining money and assets fairly. The judge decided that the person who kept running the farm after the split should get paid for their extra work, but some of their calculations weren't right, so those were corrected. The final share for one partner was 29.2% of the remaining profits, not the 40% they initially claimed.
Key Facts
- •Dissolution of Digwood family farming partnership on 5 May 2021.
- •Partnership agreement apportioned profits/losses 60% to claimants, 40% to defendant.
- •Dispute over winding-up method (sale vs. claimants' purchase of defendant's share).
- •Significant disagreement on valuation of Telegraph Lane due to potential mineral development.
- •Court ordered sale of Telegraph Lane (later Morville) to allow claimants to purchase defendant's share.
- •Claimants purchased defendant's share on 20 December 2023.
- •Dispute over treatment of post-dissolution profits, including depreciation, claimant's labour, and rent accrual.
- •Claimant C1 died during proceedings; C2 appointed to represent his estate.
Legal Principles
Continuing authority of partners for winding up.
Partnership Act 1890, s. 38
Outgoing partner's right to share profits made after dissolution.
Partnership Act 1890, s. 42
Post-dissolution profits under s. 42 are revenue profits, not capital gains.
Barclays Bank Trust Co Ltd v Bluff [1982] Ch 172; Emerson v Emerson [2004] EWCA Civ 170
Continuing partners entitled to notional credit for post-dissolution labour, if unmatched contribution.
Manley v Sartori [1927] 1 Ch 157; Popat v Shonchhatra [1997] 3 All ER 800; Sandhu v Gill [2005] 1 WLR 1979
Share of post-dissolution profits based on share of net partnership assets, deducting indebtedness.
Sandhu v Gill [2005] EWCA Civ 1297
Outcomes
Depreciation should not be included in calculating defendant's share of post-dissolution profits.
Section 42 of the 1890 Act applies; post-dissolution profits are revenue, not capital gains.
Notional credit of £60,000 for claimant C3's post-dissolution labour.
C3's contribution was unmatched; considering his work from November 2022 to December 2023.
Deduction of £7,063 from post-dissolution profits to reflect unpaid rent.
Daily accrual calculation of rent up to 20 December 2023.
25% discount applied to stocks in store; not 100% as argued by defendant.
Standard accounting practice and consistent with previous Partnership approach.
No deduction for oat shortfall penalty; loss crystallised after 20 December 2023.
Invoice date (18 March 2024) shows loss crystallisation after the relevant period.
Defendant's share of post-dissolution profits is 29.2%.
Based on share of net partnership assets after deducting his indebtedness, as per Sandhu v Gill.