The Ham family farming partnership dispute has resulted in two important decisions. At the start of the latest Judgment, it is rightly described as a tragic dispute.
In short, there was a falling out between parents and their only son. The son, John, decided to retire from the Partnership amidst acrimony. At the time, John was in his early thirties.
The starting point was that parents had brought John into their partnership as a 19 year old. Initially he was given a 25% profit share which was subsequently increased to 40%, before he was 30. Readers will recognise that such early accession to partnership is very rare. When John joined the partnership, parents consulted their local solicitor. Putting it politely, the Partnership Agreement which was then drafted was a limited document.
The first row was because it was far from clear from the face of the Partnership Agreement as to whether John’s share on retirement should be valued by reference to the historic values contained in the accounts or on an open market basis. In a substantial dairy business, where a herd basis is maintained in accounts, the difference between historic accounting and open market values has a significant impact.
The point was taken as a Preliminary Issue in the proceedings. The High Court Judge decided the issue of construction in favour of parents. John appealed. The appeal was successful. The fact that it was not an easy point was reflected in the fact that no lesser Judge than Lewison LJ said in his Judgment that he had changed his mind between the Hearing and the point at which the decision was delivered.