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Cite as: [2000] EWHC Ch 167

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Dutton v. Dutton & Brown [2000] EWHC Ch 167 (3rd February, 2000)

IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION

HC 1999 02834

Royal Courts of Justice
Strand
London WC2A 2LL

3 February 2000

	Before
	THE HONOURABLE MRS JUSTICE ARDEN DBE
	Between
	(1) JOHN FREDERICK SOMERS DUTTON
	(2) NICHOLAS MARK SOMERS DUTTON	Claimants
	and
	(1) ANDREW ROBERT PIERS DUTTON
	(2) DAVID BROWN	Defendants

JUDGMENT

 

Mr Jonathan Simpkiss of Counsel (instructed by Bircham & Co, 1 Dean Farrar Street, Westminster, London SW1H 0DY) appeared on behalf of the Petitioners.

Mr Peter Keenan of Counsel (instructed by Cobbetts, Ship Canal House, King Street, Manchester M2 4WB) appeared on behalf of the First Defendant..

Mr Mark Hubbard of Counsel (instructed by Addleshaw Booth & Co, 100 Barbirolli Square, Manchester M2 3AB) appeared on behalf of the Second Defendant.

Hearing: 2, 3 February 2000

Judgment: 3 February 2000

Mrs Justice Arden

1. In this matter I am asked to determine whether the option granted by clause 3 of the will of Mark Frederick Dutton ("the testator") is valid and if so whether the determination dated 21 May 1998 by John Lewis of Wright Manley, chartered surveyors, constituted a valuation in accordance with this option.

2. Clause 3 of the will is as follows:

"3. (1) My trustees shall as soon as conveniently may be after my death by notice in writing give to my son Andrew... the option of purchasing my freehold property known as Bunbury House aforesaid together with its outbuildings and land all of which are comprised and more particularly described in a Conveyance made the 10th day of April 1951..... (hereinafter referred to as Bunbury House) at a price to be determined by a Chartered Surveyor appointed by my Trustees at the date my Trustees shall give the said Notice to my said son Andrew....

(2) The said Andrew ..... shall have 3 years from receipt by him of the Notice in which to give notice in writing to my Trustees exercising the option given to him

(3) My Trustees shall not exercise the trust for sale hereinafter contained in respect of Bunbury House unless the said Andrew .... shall have neglected or refused to accept in writing the option given to him within the time aforesaid but no purchaser from my Trustees shall be affected by the terms of this clause

(4) The costs of obtaining the valuation of the valuer shall be paid out of my residuary estate."

3. The background is as follows. Immediately prior to 1985, the testator owned the freehold of three pieces of land: a dwelling house called Bunbury House and its gardens ("the red land"), the flat attached to the Bunbury House ("the orange land") and some 27 acres of land surrounding the red land ("the green land"). He had lived there with his wife and family since 1951. His wife died in 1967 and he did not remarry. The red land excludes the orange land. The three properties together are known as Bunbury House and I will so refer to them.

4. The testator had three sons, two of whom, John and Nicholas, are claimants in this action and one of whom, Andrew, is one of the defendants. Andrew lived with the testator at Bunbury House from the early 1980s.

5. By a deed of gift dated 9 July 1985, Mr Dutton gave the red land to Andrew. This appears to have been a mistake as by a further deed of gift dated 7 March 1996 Andrew agreed to hold the red land for himself and the testator in equal shares as tenants in common. Six weeks later the testator executed his will, containing clause 3 as set out above. Subject to the option in favour of Andrew, the testator's estate was to be held on trust for his three sons in equal shares.

6. The will as executed appointed John and Andrew as executors. By two codicils to his will the testator first added Nicholas as an executor and then removed both Nicholas and John and appointed David Brown, chartered accountant and a partner in the firm of Hall, Livesey Brown to act as a executor with Andrew.

7. The testator died on 9 June 1996. Probate of his will was granted to Andrew and Mr Brown on 10 February 1997.

8. The executors took advice as to the effect of the option. Counsel advised that the option was valid and that a valuer should be instructed to determine the option price. In a letter drafted by Counsel and to be written by Mr Brown to the valuer, provision was made for the valuer to determine " the open market value of the late Mr Dutton's interest in 'Bunbury House' in an arm's length transaction as between willing vendor and willing purchaser". It is common ground that the value of Bunbury House should be ascertained on an arm's length basis and as between a willing vendor and a willing purchaser. The question is whether "open market value" is the correct basis given that that is a term of art among chartered surveyors having certain consequences which may be adverse to the claimants.

9. On 17 October 1997 the executors gave notice to Andrew in accordance with clause 3(1) of the will. This fixes the date for the valuation and it is common ground that Bunbury House should be valued as at 17 October 1997.

10. By letter dated 17 October 1997 Mr Brown wrote to Mr Lewis and instructed him to determine the price to be paid for the testator's interest in the red, orange and green lands under clause 3 of the will. He enclosed a copy of the will, the original conveyance to the testator and the two deeds of gift. The letter stated:

"Although clause 3(1) does not expressly say so, I have been advised by Counsel that the price to be determined by you is to be the open market value of the late Mr Dutton's interest in 'Bunbury House' in an arm's length transaction between a willing vendor and a willing purchaser. As there is no further reference in clause 3(1) to the manner in which the open market value of the late Mr Dutton's interest is to be determined, Counsel has further advised that it is entirely a matter for you as to how the open market value of the late Mr Dutton's interest is arrived at. You should consider whatever method of valuation you feel appropriate having regard to the property and to the late Mr Dutton's interest therein."

11. On 21 May 1998 Mr Lewis produced his valuation. This stated that Mr Lewis had been instructed to value the testator's interest in Bunbury House on an Open Market Value basis in an arm's length transaction between a willing vendor and willing purchaser. He annexed a plan, which was inaccurate in two minor respects because it included in the red land a plot at the back of Bunbury House and half a field which had not been included in the gift to Andrew. Mr Lewis then stated that in his opinion as at 17 October 1997 the values to be ascribed to the testator's property were £130,000 for the 50% interest in the red land, £50,000 for the interest in the orange land and £90,000 for the 100% interest in the green land. Accordingly the valuer had split the property into three units for the purposes of his valuation. The valuer says that the errors regarding the land which was not included in the gift to Andrew would make no significant difference to the valuation.

12. There was then some correspondence between Mr Lewis and Mr Brown. By letter dated 25 February 1999, Mr Lewis stated that the breakdown of his valuation was as follows:

I valued the interest in the whole of the three above entities as summarised below on the basis that each unit could be sold separately, albeit that such a way of valuing (or selling) such an integrated hereditament as the main House and 3 Acres with a Flat in its midst separately would not be ideal or worth as much as it was all sold as one.

It was my clear understanding that what was required was the value of each if sold separately and that is what I assumed in submitting my valuation."

13. In a further letter dated 19 March 1999, Mr Lewis said that the value as at 17 October 1997 would have been £500,000 if all the property had been placed on the market at that time, and that of this £350,000 was attributed to the red land and that to ascertain the shared interest of the testator:-

"... a deduction of 15% should be made before calculating the percentage share. In regard to this issue of shared interest there is very considerable evidence that District Valuers accept a deduction from the whole of 15% (or even other figures) before calculating the percentage share"..

14. This application has proceeded on the basis that in preparing his valuation Mr Lewis applied the definition of "Open Market Value" to be found in Practice Statement 4.2 of the Royal Institute of Chartered Surveyors' Appraisal and Valuation Manual ("the manual"). This manual contains advice as to the good practice of chartered surveyors carrying out valuations save in situations (none of which apply) in which they are stated not to apply. The relevant provisions of the manual are set out below.

15. Andrew lived with the testator at Bunbury House and was a partner in the testator's farming business which was run from Bunbury House. According to Andrew, the testator gave him a half share in the house because he decided that they each needed some form of protection should anything happen to either of them. The testator was advised that the gift had the effect of reducing the value of his estate by a greater amount than the value of the interest given to Andrew and so, says Andrew, the testator was aware of the depreciatory effect of the gift. The testator clearly wished Andrew to continue to have the opportunity of living at Bunbury House should he want to do so and be willing to pay the price fixed in accordance with clause 3.

16. In the early 1990s Andrew was married and he now lives at Bunbury House with his wife and two small children. He continues to carry on the small building business which he has established and ran from there in the testator's life-time and, I assume, the farming business which he carried on in partnership with the testator.

17. Andrew has not been involved in the valuation of Bunbury House. He is content to accept the valuation of Mr Lewis if it is proper for him to do so. His attitude is that he does not wish to be involved in any argument whether this valuation is right or wrong. Accordingly, Mr Keenan did not argue that if the valuation was not in accordance with the will it was nonetheless still binding.

18. The orange land is occupied and may be subject to a protected tenancy.

19. As a tenant in common, Andrew has the right to occupy the whole of Bunbury House. The executors would need to obtain an order for the sale of the property under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 ("the 1996 Act") if they wished to sell the freehold interest in the property and he was unwilling to sell. However, under section 13 of that Act the executors or (if Bunbury House is sold) the trustees of the property may direct him to pay compensation for his occupation to the estate or a purchaser from it, if excluded from occupation, or they may (with his consent or the approval of the court) restrict his rights of occupation to a reasonable extent.

20. I will now set out the relevant parts of the manual, which appear in Practice Statement 4(3/97):

"PS 4.2 Open Market Value (OMV)

Definition

PS 4.2.1 An opinion of the best price at which the sale of an interest in property would have been completed unconditionally for cash considerations on the date of valuation, assuming:

(a) a willing seller;

(b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of the price and terms and for the completion of the sale;

(c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;

(d) that no account is taken of any additional bid by a prospective purchaser with a special interest; and

(e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion. ..."

PS 4.2.4 Open Market Value is the Valuer's opinion of the best price which would have been obtained in the market on the date of valuation (subject to the exclusion of any additional bid by a prospective purchaser with a special interest); not a 'fair' price, or an average price or the price which the vendor thinks ought to be achieved."

PS 4.2.18

(a) The definition of Open Market value requires the assumption 'that no account is taken of any additional bid by a prospective purchaser with a special interest'.

(b) A purchaser with a 'special interest' (sometimes referred to as a 'special purchaser') may be defined as one to whom the property, or the interest in the property, being valued has a particular attraction which it does not have for the market in general. The special purchaser is, in almost every case, the owner of either:

(i) an interest in land which has or could have a particular relationship with the property concerned, e.g. the owner of an interest in a nearby or adjacent property; or

(ii) another interest in the property being valued, e.g. a superior landlord or an under-tenant.

(c) There is no certainty that the special purchaser will be prepared to make an offer to purchase the property or interest in the property at the date of the valuation, and it is therefore correct to exclude his additional bid from the Open Market Value. However, if the special purchaser is in the market he can usually afford, or be willing, to pay more than any other purchaser, and if he enters the bidding, he may reasonably be expected to succeed in purchasing the property — certainly in theory — by paying 'one bid more' than any other purchaser. In practice, it is often difficult to quantify the special purchaser's additional bid, since he may not need to go to the level he could afford to bid in order to secure the property. On the other hand, in his determination to secure the property, he may overbid by a margin greater than necessary.

(d) A purchaser who is simply prepared to pay a high price is not necessarily a special purchaser. Neither is someone who is a known purchaser of the particular class of property being valued, nor someone who is an active purchaser of property in the locality. A purchaser who is only one of a class of purchasers to whom the property has particular interest, would not be regarded as a special purchaser, e.g. tax immune funds which purchase short leasehold investment property. Generally, for a prospective purchaser to be a special purchaser there will be an element of additional potential value which is unique to him.

(e) A superior landlord or a sitting tenant, may be a special purchaser because the merging of the two interests might liberate 'marriage value' which would justify a higher price than any other purchaser could afford to pay. It must be remembered however, that the price which a non-special purchaser would pay might include some part of that marriage value because of the hope that the non-special purchaser might eventually be able to re-sell to the special purchaser at an inflated price. Thus 'hope value' and 'marriage value' may legitimately be included in Open Market Value to the extent that offers from non-special purchasers in the open market themselves reflect those elements of value, as in practice they often do. It is only the additional bid of the special purchaser which has to be excluded from the Open Market Value.

(f) The definition of Open Market Value does not require the Valuer to ignore the existence of the special purchaser, but to take no account of that special purchaser's additional bid, i.e. the amount by which his offer might exceed offers made by non-special purchasers. In practice, the existence of a special purchaser may affect (usually to a limited degree) the level of offers made by non-special purchasers and, to that extent, may be taken into account in arriving at Open Market Value."

21. The claimants argue that the testator's property should be valued as a whole and that the appropriate deduction should be for Andrew's interest valued on the basis that he is also willing to sell. Andrew argues that this approach is wrong in principle.

22. There is expert evidence from two valuers, Mr A B Adam-Cairns FRICS, and Mr M A King FSVA. I have been taken to the following passages from their joint report dated 20 December 1999:

"(b) Issues Upon Which We Agree

1. We agree that the interests in the Option Land are capable of being valued.

2. We agree that the most appropriate definition for valuing interests is the Open Market Value contained in the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Manual.

...

7. We agree that the valuation prepared by J G Lewis FRICS FAAV dated 21 May 1998 does not state his assumptions with regards to the treatment of a special purchaser, marriage value, or the position of the vendor acting prudently.

23. Andrew would like to stay in Bunbury House (provided that he can raise the option price). It is now the family home of himself, his wife and their two small children.

24. The problem in the present case arises out of the fact that at the date of the will and at the date of his death the testator no longer owned the whole of the interest in the red land. The provision for the "price" did not state on what basis "price" was to be determined. This may have caused no problem if the testator had owned the whole of the interest in Bunbury House but as he did not do so there was doubt as to how the price provision should be applied.

25. It is common knowledge that the value of two properties may be greater if they are in common ownership than if they are owned by different persons. The increase in value is known as the "marriage value". In this case there are two instances of marriage value: the value unlocked if Andrew acquires the testator's interest in the red land, which he will thereby be able to sell with vacant possession. The second is the marriage value in the collection in one ownership of the some or all of the red land, the orange land and the green land. There is likely to be a marriage value in uniting the red land and the orange land and there may also be a marriage value in the green land coming into the ownership of the person who owns the red land. In the circumstances it follows that Andrew is a key prospective purchaser, because it is only through a sale to him, or a sale to third party in which he joins so that the whole of the red land is sold to one person, that the marriage value of the Bunbury House likely to be realised. That makes Andrew a special purchaser of the testator's interest in Bunbury House and it is crucially important what happens to the value of the property when a special purchaser is present. Under the manual, in ascertaining the Open Market Value, the existence of a special purchaser may be taken into account but any additional bid which he may make is ignored (see passages from the manual set out above).

26. I now turn to counsels' submissions. It is common ground that when it comes to construing a will the court will adopt an indulgent attitude to the testator's failure to express himself accurately: thus for example in Day v. Trig (1715) 1 PW 286, where the testator had made a testamentary gift of his freehold houses in Aldersgate Street, when he had only leasehold properties there, the word "freehold" was rejected. The court stated that it would not have done this if there had also been freehold houses there, but in that case it was satisfied that it was the testator's intention to pass some houses there. Mr Keenan also cited Re Fleming's Will Trusts [1974] 3 AER 323. On the other hand, the court will not speculate as to a testator's intentions if they cannot be ascertained (see e.g. Re Hammersley [1965] Ch 481). It is also common ground that extrinsic evidence is admissible in construing wills.

Mr Simpkiss' submissions

27. Mr Simpkiss did not challenge the validity of the option unless the provisions for determining the price were so uncertain that the court could not be satisfied that the testator intended the option to take effect in the circumstances that he did not have the whole of the property to which the option purported to relate. The leading authority is that of Re Mulder [1943] 2 AER 150, C.A. In that case the testator had been in partnership with his stepson. In his will he gave his stepson an option to purchase whole of the business for half its value to be ascertained in accordance with the will, which directed an assets valuation. In fact the stepson already owned half of the business, and since the testator had clearly intended to give a benefit to his stepson, the court (by a majority) held that it could not say that he intended to give an option over his share of the business at the price specified. It was not a case where the testator had incorrectly described what he had to give. The difference was of a qualitative nature. It was not a mere question of the amount of interest which the testator had.

28. Accordingly, Mr Simpkiss submitted that the validity of the option depended on whether the defect was of a qualitative or a quantitative nature. In this case, too, the effect of the difference in the interest owned by the testator on the provision for "price" could not be ignored. There were, he submitted, a number of reasons for this. First it was not clear to what property the price was to relate. Second the word "price" is not of itself sufficiently clear to enable the price to be ascertained. Third "price" has never been construed by the court as "Open Market Value". What the courts have done is imply a provision that the price should be a fair and reasonable price if that provision was not there before.

29. In support of this last submission, Mr Simpkiss referred to Sudbrook Trading Estate v. Eggleston [1983] AC 444, and Re Malpass [1985] Ch 42. The Sudbrook case concerned an option to purchase the reversion conferred on the lessees under certain leases. The price was be not less than £12,000, and it was to be fixed by valuers appointed by each party and default of agreement it was to be fixed by an umpire. The lessors refused to appoint a valuer. The House of Lords held that the price was on the true construction of the lease a fair and reasonable price, as judged by objective criteria, and that the provisions for the appointment of valuers by either party were mere machinery. The court could substitute its own machinery and direct specific performance of the option. That the price should be fair and reasonable followed by necessary implication from the fact that the price was to be fixed by valuers. In that particular case the House ordered an inquiry as to the what was a fair and reasonable price because there was a risk that if the court merely ordered a party to appoint a valuer the order might be disobeyed, leaving only a remedy in contempt. In the present case, it has not been suggested that there is any such risk.

30. In Re Malpass, above, the testator gave an option to his son to purchase his farm "at the agricultural value thereof determined for probate purposes. ..as agreed with the district valuer". The district valuer would not participate in this valuation. Megarry VC held that the provisions for agreement with the district valuer were merely a matter of machinery. The testator's intention as to the basis of valuation was clear. The court would therefore substitute effective and workable machinery, and directed an enquiry. Mr Simpkiss submitted that, applying Re Malpass to the present case, the court has to determine whether the defects in clause 3 were defects in essential terms or matters of machinery. Mr Simpkiss also referred to Talbot v. Talbot [1968] Ch 1, where the testamentary option relating to two farms provided for the price to be the "reasonable valuation" of the farms. It was held that this option was enforceable and the court ordered an enquiry as to what was a reasonable price for the farms. As Mr Keenan pointed out there are parallels to Re Malpass in the field of landlord and tenant: see Thomas Bates Ltd v Wyndhams Ltd [1981] 1 WLR 505 and Beer v. Bowden [1981]1 WLR 523.

31. Mr Simpkiss' position was that this case fell on the wrong side of the line as had Re Mulder. Mr Simpkiss submitted that here the concept of "price" fixed by the valuer of what was actually owned at death had led to arbitrary and unreasonable result. The valuer had made a deduction of 15% without justification and had valued the property in three lots when that would have the effect of depressing the value of the testator's interest in the property. However, in the light of Wight v. CIR [1982] EG 935, a case involving the valuation for inheritance tax purposes of the interest of one of two tenants in common, on which Mr Keenan relied, Mr Simpkiss had to accept that the valuer might have gone about the matter in the right way. But it was not possible to be sure of this because the valuer had been given erroneous instructions.

32. Mr Simpkiss initially submitted on the basis of Edwards v. Edwards (1837) 1 Jur 654 that the court could set aside a valuation if a valuer has used the wrong approach, but later accepted that the valuation would be binding on the parties unless there was a mistake of the kind set out in Jones v. Sherwood Computer Services plc [1992] 1 WLR 277, 287, including for example where the valuer valued the wrong property.

33. Mr Simpkiss submitted that the 1996 Act did not apply to Andrew's interest in the red land because the Act was not in force when the testator died. However, the question of Andrew's occupation rights, or those of the tenant of the flat, were not argued before me.

34. On the problems of valuing the red land given Andrew's interest in it, Mr Simpkiss referred to Clay v IRC [1914] 3 KB 466, Re Nagel's Lease [1974] 1 WLR 1078, Grimes v. Grayshott Motor [1967] 20 EG 586 and Taylor Barnard Ltd v. Tozer [1983] 269 EG 225. Re Nagel's Lease, the Grimes case and the Taylor Barnard case concern the basis of valuation of the reversions of leases and the decisions turned on the terms of the particular leases in question, so those cases do not assist. In Clay, the court held that, in ascertaining market value between a willing buyer and a willing seller where there was as special purchaser, the amount to be added to the value that would otherwise be ascertained was not necessarily limited to a nominal amount. The ruling in this case differs therefore from the practice of valuers as set out in the manual. Under this, while special purchasers may be taken into account in determining market value, the additional bid by a special purchaser is to be ignored.

35. Mr Simpkiss submitted that there were various ways in which the valuer could be instructed so as to produce a fair and reasonable price. In my judgment it is a matter for the valuer to decide what method he will use to determine a fair and reasonable price and that it is not for the court to prescribe this though it may give him directions if issues arise on which the decision of the court is required.

Mr Keenan's submissions

36. Mr Keenan made it clear that Andrew was content to accept the valuation of Mr Lewis if the court considered that it was that it was proper for him to do so and that Andrew did not wish to be involved in any argument as to whether it was right or wrong. If it had to be set aside, so be it. Accordingly, if the valuation was not in accordance with clause 3 of the will, Mr Keenan did not argue that it was nonetheless binding.

37. Mr Keenan submitted that the testator knew that the deed of gift depreciated the value of his half of the red land: the testator was advised at the time of the gift that the loss to his estate was £60,000 while the value of the property gifted was only £50,000. He submitted that as a matter of principle the price as determined by the valuer should not undermine the gift that had been made. The depreciating effect of the gift had had a beneficial effect on the estate for inheritance tax purposes. Mr Keenan made a further submission that if the marriage value was taken into account Andrew would in effect be paying for something that was already his. In my judgment this is not correct. Andrew will only obtain the marriage value if he acquires the rest of the red land and the whole of Bunbury House. The marriage value is neither his nor the testator's but by co-operation the estate and Andrew together can realise the marriage value.

38. Mr Keenan submitted that Open Market Value was fair and reasonable. As to this, the manual shows that the Open Market Value is arrived at in a prescribed way. In my judgment, the exercise to be performed to obtain Open Market Value may produce a different valuation since it does not allow for adaptation in the light of the special features of a particular case.

39. Mr Keenan also submitted that it was for the valuer to reach a valuation applying his professional judgement and it was not for the court to dictate to him what facts he was to take into account. On this Mr Keenan referred to Compton Group Ltd v. Estates Gazette Ltd [1977] 244 EG 799, where the Court of Appeal refused to give very detailed directions to the valuers. The Court of Appeal, however, gave directions on the only live issue that had been before them, namely whether, in determining the fair rack rent of the premises, the valuer should take into account the provisions of the Counter-Inflation (Business Rents) Order 1973. Mr Keenan also referred to Craneheath v. York Montague Ltd [1996] 1 EGLR 130, and in particular the dictum of Balcombe LJ at page 132 that "Valuation is not a science, it is an art, and the instinctive 'feel' for the market of an experienced valuer is not something that can be ignored". Accordingly, Mr Keenan submitted, it was for the valuer to decide what weight to give to the fact that Andrew was a special purchaser.

40. Mr Keenan did not seek to support the instructions that had been given to Mr Lewis in this case. If a new valuation was required, he would not oppose the selection by the executors of a new valuer.

Mr Hubbard's submissions

41. Mr Hubbard made submissions to the effect that there was an issue as to whether the applicable principles of construction were those applicable to contracts or those applicable to wills. This submission was not advanced by other counsel and it is difficult to see that it is of practical importance since Andrew is not seeking to enforce any rights different from those conferred by the will. It is likewise difficult to see what conclusions the executors are seeking to advance. In Re Malpass the court supplied machinery to make the valuation work on the same basis as it would do so in relation to leases. In my judgment, the word "price" would be construed in the same way in this case whether construed as part of a contract or as part of a provision in a will. At the time of deciding whether the option is a valid testamentary provision, contract principles cannot be applicable since the testator's intentions are the only relevant matter. So far as the basis of the price is concerned, in my judgment it is clear that the testator had in mind a fair and reasonable price since he provided for it to be determined by a professional valuer. The reasons for this are obvious. He wanted to give Andrew an opportunity to stay in Bunbury House provided that his other sons were not worse off financially. He did not therefore intend to make a gift of this half. So far as the description of the property is concerned, neither Mr Simpkiss or Mr Keenan submitted that this was too uncertain. Nor do I see how Andrew could by exercising the option claim that he had obtained rights which on its true construction the will did not give. He is of course a party to these proceedings and therefore he is bound by any determination in these proceedings as to the effect of clause 3. As I have said, had it been a question of contract law, the implication of a fair and reasonable price would in any event still have been made (see the Sudbrook case).

42. Mr Hubbard also submitted that the provisions of clause 3 as to fixing the price should be considered as an example of an expressly authorised delegation of a duty or power of the executors to fix the price, which duty or power is discretionary. Accordingly he submitted that the court ought only to interfere on the same basis that it would do so with the exercise of a discretionary power by a trustee, that is if Mr Lewis had acted in bad faith or ignored some limit on his discretion that had he appreciated would have caused him to act in a different way. However, Mr Hubbard was unable to cite any authority in support of this proposition, which was disputed by other counsel. In those circumstances I propose to reject it and apply Jones v. Sherwood Computer Services, above, which establishes the binding nature of a valuation in most circumstances. Although, unlike Edwards v. Edwards, above, the Jones case does not concern a valuation performed pursuant to a testamentary option, I see no reason why it should not apply to such options. If so, Edwards v. Edwards must be taken as overruled by it

Conclusions

43. I have dealt with Mr Hubbard's submissions above. I now set out my conclusions on the other submissions by counsel and the directions that I propose to make.

44. In my judgment it is clear that the testator intended to give an option over the whole of his interest in Bunbury House even though he did not own the whole of it.

45. The price which the valuer is to ascertain is the price of the testator's interest in Bunbury house. Andrew's interest in the red land is excluded.

46. I do not consider that "the price" means Open Market Value as that phrase is understood by chartered surveyors. That phrase is a term of art with a special meaning and if testator had known of it and intended it to apply it seems to likely that he would have specified it expressly. As he did not do so and stipulated that the price should be determined by a valuer, I hold that his intention was that the price should be a fair and reasonable price. It is possible to ascertain such a price even though the testator did not own the whole of the interest in the red land.

47. Accordingly, the provisions of clause 3 of the will are not such that there is a qualitative difference between the option, which the will on its face purports to give, and the option conferred if the fact that the testator did not own the whole of the red land is taken into account. This case is therefore distinguishable from Re Mulder, above.

48. There is thus no difficulty in giving effect to the testator's wishes. Valuations of the interest of a tenant in common are not uncommon, and the fact that Andrew is a special purchaser does not present a problem which prevents a valuation from taking place. Since valuations can take place in these cases, they must also be capable of being fair and reasonable. Nor in my judgment is it any objection that there are several approaches to valuation. The testator must be taken to have appreciated that valuation is an art, requiring the exercise of professional judgement, from the fact that he chose a chartered surveyor to conduct the valuation. It does not seem to me to make the option void for uncertainty that the testator did not prescribe which method of valuation the valuer was to use and that as a result the valuer may chose a particular method which produces a different result from the valuation which would have been made if another approach had been adopted. It is well-known that different valuers can arrive at different valuations.

49. The next question is whether the price arrived at by Mr Lewis was a fair and reasonable price. It is clear that he did not in terms carry out the determination required by the will as I have construed it. (It is relevant to note that the experts in their joint report draw attention to the absence of a statement by Mr Lewis as to assumptions that he used). It may be sufficient for the purposes of clause 3 if he carried out the required determination in substance. However, the court cannot be satisfied that he did indeed address the correct issues because he was instructed to perform his valuation on a different basis. For instance, as the valuer is required to determine a fair and reasonable price, he can in my judgment take into account that Andrew is receiving in effect a right of first refusal and that he is being placed in a preferential position over any other purchaser. In that situation, if the valuer has any doubt as to whether Andrew, who is clearly a special purchaser in this situation, would have paid substantially more than any other purchaser it seems to me that he could give the estate the benefit of the doubt in order to achieve a price that is fair and reasonable. Another factor to be taken into account is the fact that Andrew has only to find two-thirds of the purchase price since he is entitled to a one-third interest in the residue, as is the fact that Andrew clearly has reasons of business and sentiment for staying in the property. Furthermore it is highly unlikely that Andrew would want the other half of the red land to be sold to a third party. This would affect his occupation of the property which (subject to the powers, if any, conferred on the trustees by the 1996 Act) must be enjoyed with the stranger. Moreover, the sale to the third party would depreciate the value of his own half. If Andrew cannot afford to buy the other half of the red land, the likelihood is that he would co-operate with the executors in selling Bunbury House as an entire site since this would maximise his own investment and his interest as a residuary beneficiary.

50. So far as the inaccuracies in the plan are concerned, if these made no difference to Mr Lewis's valuation overall, I would have been prepared to accept his valuation (with the figures adjusted between the components of his valuation) had it not been for the more serious matters just mentioned.

51. There has therefore to be a further valuation. I accept Mr Simpkiss' submission that the valuer should be a person other than Mr Lewis. This is not to be seen as a criticism of the way in which Mr Lewis performed his valuation. However it is important that all parties have confidence in the next valuation and for that purpose in my judgment it is right to chose a valuer about whom there could be no misgiving by any party based on the previous valuation of Mr Lewis.

52. The task of the valuer is to find a price that is fair and reasonable according to objective criteria.

53. The valuer should be free to decide how to "lot" the property. He should divide it into units only if he considers that this will assist in the determination of a fair and reasonable price. Clearly Andrew is a special purchaser of the whole of Bunbury House. Moreover, Andrew can in fact exercise the option only in respect of the whole of Bunbury House.

54. The valuation is to be as at 17 October 1997 but this will not prevent the valuers from taking into account events that have occurred since: see per Harman LJ in Talbot v Talbot, above at 13F.

55. The new valuer should be valuer with local knowledge. Under the terms of clause 3 he must be appointed by the executors, and I propose to make orders reinstituting this procedure which the testator laid down rather than ordering an inquiry. I have no reason to believe that the executors would impede a new valuation: indeed counsel for the executors informed me that he was present in order to assist the court. An inquiry is likely in those circumstances merely to increase the costs of this litigation. Before selecting a new valuer, the executors must consult with the beneficiaries and the identity of the new valuer should if possible be agreed with them. If that is not possible, the executors should seek the directions of the court.

56. The valuer should be instructed to state that which in his opinion represents a fair and reasonable price for the testator's interest in Bunbury House. A fair and reasonable price means a price which draws a fair and reasonable balance between the interests of the estate and Andrew's interests in the light of the circumstances made known to the valuer. Accordingly the valuer should be specifically instructed that he is not bound by the requirements of the manual which must be followed when the valuer is determining the "open market value" for the purposes of the manual. By parity of reasoning he should also be specifically instructed that he does not have to apply the principles of probate valuation or the deductions that would be agreed with the district valuer unless in his professional valuation this would result in the determination of a price that is fair and reasonable on the basis mentioned above.

57. The valuer should give such weight to the fact that Andrew is a special purchaser for Bunbury House as, having regard to the court's directions, he thinks fit.

58. The valuer should be instructed on the basis that he produces his valuation by 4 p.m. on Friday 5 May 2000.

59. The new valuer should receive written instructions requesting him to value the testator's interest in Bunbury House. The instructions should contain sufficient details of Andrew's rights of occupation, and those of the tenant of the orange land. The instructions should also set out that Andrew is able and willing to buy the property and all other relevant matters. These would include that rights that a purchaser other than Andrew would have to occupy the property or to receive rent as compensation for being excluded from the property.

60. The instructions are to be prepared by the executors in consultation with the beneficiaries. Moreover the valuer should be both selected and identified before the end of February because of the time limit on Andrew exercising his rights under the option under clause 3 of the will.

61. Accordingly the beneficiaries shall submit to the executors no later than 4 p.m. on Friday 11 February a list of the matters which they say should be included in the valuation and the executors shall finalise the instructions (in consultation with the beneficiaries) and deliver them to the valuer no later than the end of February 2000. Unless otherwise stated, any time limits in this order may be extended by agreement between the parties or by the court.

62. If the valuer needs further directions from the court he should inform the executors and the executors should place the matter before the court.

63. The valuer must of course act in good faith. The new valuation will be final and binding on the parties unless he valuer makes a mistake of the kind referred to in Jones v. Sherwood Computer Services, above.

64. That completes my conclusions on the valuation. I now turn to matters relating to the application.

65. I have not yet considered whether any case management directions need to be given for the conduct of the remaining parts of the proceedings. I shall direct that the parties make submissions on that matter with their submissions on costs (see below).

66. Mr Simpkiss is to prepare a draft statement (minute) of order and agree it with the other counsel. If the statement is not agreed the matter should be notified to the court by 4 p.m. on 11 February . This time limit may not be extended by the parties.

67. As agreed by counsel the parties are to serve on each other written submissions on costs by in the case of Mr Simpkiss by 12.00 noon on 14 February 2000; in the case of Mr Keenan and Mr Hubbard by 4 p.m. on Friday 18 February 2000, and in the case of any submissions in reply by 4 p.m. on 24 February 2000. The claimants' solicitors will then forward a file of the submissions to my clerk. Unless otherwise directed, I will deal with the submissions on paper. I should make it clear that my provisional view is that this is a case for the summary assessment of costs.

 

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