The Court of Appeal (CoA) lowered the barrier to obtaining a Syers order in exceptional cases when one partner can demonstrate a long-term, detrimental reliance on a promise, proving that the normal winding-up process would have led to an unconscionable result.
Facts:
The case concerns a dispute between two brothers, Matthew and Daniel Cobden, who were equal partners in a successful farming business, the Witcombe Farm Partnership, which operated a substantial dairy unit in Somerset. The partnership was a partnership at will, having no formal written agreement, and had existed between the two brothers since 2006, after a third brother, Willy, was bought out.
Matthew was found to be the “driving force” behind the business and was responsible for key developments, including the construction of the large dairy unit between 2013 and 2015, while Daniel’s interests were focused on farm machinery and vehicles.
The core of the dispute arose from an unwritten understanding that Matthew claimed was established during the “2005/2006 conversation”. It was later reinforced that Daniel would eventually leave the partnership and Matthew would buy his share out at a fair price, allowing Matthew to continue the farming business. Matthew acted on this belief by devoting himself to the farm’s expansion and development.
In 2021, relations deteriorated, culminating in Matthew serving a notice of dissolution on Daniel in August 2022. Matthew subsequently brought proceedings seeking a court order—a so-called “Syers order”—to compel Daniel to sell his interest to Matthew at a price determined by expert valuation, based on their longstanding equitable understanding. Daniel opposed this, arguing that the normal course upon dissolution, as provided by the Partnership Act 1890, was an open market sale of all partnership assets, which would allow both brothers to bid.
The High Court Judge, Russen KC, found that Matthew had established an “equity akin to proprietary estoppel,” concluding that an open market sale would be “unfair and unjust” given the historical understanding, Matthew’s detrimental reliance on it, and other factors such as the adverse tax consequences, the impact on a related dairy herd company, and the disruption to farm workers that such a sale would cause. The Judge granted the Syers order, allowing Matthew to buy Daniel out. Daniel appealed.
Decision:
The CoA dismissed the appeal by Daniel Cobden and upheld the High Court Judge’s decision to grant a Syers order. This means the respondent, Matthew Cobden, was permitted to buy out Daniel’s interest in the farming partnership at a price determined by expert valuation, rather than forcing an open market sale of the partnership’s assets.
The Court addressed Daniel’s argument that the case did not fit within the four established examples of “exceptional circumstances” from Bahia v Sidhu. Lord Justice Newey affirmed that Bahia provided examples of when a Syers order is suitable, but did not provide an exhaustive list. The fundamental test remains whether the normal practice of an open market sale would fail to “serve the interests of justice” or would be “unfair”. The most significant piece of reasoning was the confirmation that a “proprietary estoppel-ish” equity is capable of making an open market sale unfair and can, therefore, justify granting a Syers order.
Implications:
The key point of the judgement is the confirmation that a Syers order can be justified by an “equity” akin to proprietary estoppel, even if the facts do not fit neatly into the four established categories from Bahia v Sidhu. The decision clarifies and effectively expands the scope under which a court can order a compulsory buy-out at a valuation rather than the default statutory remedy of selling all assets on the open market under Section 39 of the Partnership Act 1890.
The case establishes a new, substantive category of exceptional circumstances, essentially the existence of a proven “proprietary estoppel-ish” equity. This means that if one partner (Matthew) can demonstrate that they relied on an unwritten, long-term assurance from the other partner (Daniel) to their detriment, and that repudiating this assurance by forcing a sale would be “unfair and unjust” or else unconscionable, the Court can intervene to compel a buy-out. The case elevates the importance of the partners’ historical conduct, conversations, and long-term intentions over the strict terms of operation of the Partnership Act 1890.
The dispute between the Cobden brothers arose because they operated a valuable, decades-old business as a ‘partnership at will’, without a formal agreement defining exit or dispute resolution mechanisms. The case serves as a stark reminder, particularly for family and farming partnerships, that failing to document buy-out provisions in a formal partnership deed leaves the relationship subject to default and often damaging statutory rules.
