The recent case of Sargeant et al. v. Reece [2007], concerned the interpretation of the provisions of a contract on which the succession of a deceased person was intended to be based. The deceased and the defendant in this case were brother and sister. The first plaintiff in the case was the decedent’s wife and the second and third plaintiffs were, respectively, his daughter and his lawyer.

The claimants were named as the executors of the decedent’s estate. The case concerned 45,535 acres of agricultural land. The land had substantial long-term development potential and was owned by the decedent and the defendant. The land was valued in March 1974 and was estimated to be worth, for probate reasons, £21,375 or £475 per acre.

Subsequently, in 1990, the decedent and the defendant agreed to sell 39 acres of land for a fixed sum of £3,020,000. Unfortunately, the sale fell through. However, various parties showed considerable interest in taking options over various parts of the land. At the time, the potential value of the land was estimated at between £250,000 and £300,000 per acre.

In 1995, the Decedent and the Respondent entered into a settlement agreement (“the 1995 Agreement”). This meant that the agricultural society between them ceased to exist. Subsequently, the closing accounts were prepared. According to clause 6 of the 1995 agreement:

“… [The defendant] will join and sign any document that may be required to grant all the assets of the company in [the deceased]”.

In the final payment under the 1995 Settlement, the decedent paid the defendant half the probate value of the land in 1974, ie £10,687.50. Then, in the year 2000, the deceased and the defendant executed a deed, regulating the position between them in relation to an option contract granted to a third party.

Following the execution of the deed in relation to the land, the decedent initiated proceedings to enforce the terms of clause 6 of the 1995 Agreement and have the land transferred to his exclusive name. Respondent requested rectification of the 1995 Agreement.

Respondent argued that the essential common intent behind the 1995 Agreement, as evidenced in the documentation, was that the land, after the dissolution of the agricultural partnership, remain vested in her and the decedent as equal tenants.

However, the plaintiffs argued that the defendant had failed to prove that the required common intent had been formed and that the decedent had acquired the land under clause 6 of the 1995 Agreement.

The court held that, in the actual interpretation of the 1995 Agreement, the common intention of the parties was that the land would belong to both of them equally after the dissolution of the partnership. This was due to the fact that this intention was considered to have been externally expressed and continued until the execution of the 1995 Agreement.

The court thought it was difficult to see how the decedent could have believed he was entitled to more than 45 acres of land with an appraisal that was 20 years old. The court would grant an order of rectification on the terms in which the land would be considered to be held in trust, as joint usufructuaries in equity in equal parts, for the defendant and the decedent, and only later the estate of him.

© RT COOPERS, 2007. This Information Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. Its sole purpose is to highlight general issues. Specialized legal advice should always be sought in relation to particular circumstances.