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I shall dedicate this new post to Ku Amir, a professional colleague of mine whose endeavours, jokes and lessons teaches me a lot.

Title

Holder v Holder [1968] Ch 353. Court of Appeal.

Judge

Harman LJ

Facts of the case

The defendant (third defendant), Victor Holder, was appointed one of the executors of his father’s will. He was also tenant of two farms which were part of the estate. After the death of his father, Victor purported to renounce his office as executor, but the renunciation was technically ineffective. Nevertheless, probate was granted to two of the other executors named in the will. They put the two farms of which he was tenant up for sale by auction, where Victor, through an agent, bid successfully for them. The plaintiff, another member of the family, started an action to set aside the conveyance to Victor.

Ratio

1) A man may not both be vendor and purchaser; but Victor was never in that position here. He took no part in instructing the valuer who fixed the reserves or in the preparations for the auction.

2) Everyone in the family knew that he was not a seller but a buyer. Victor never assumed the duties of an executor. It is true that he concurred in signing a few cheques for trivial sums and endorsing a few insurance policies, but he never interfered in any way with the administration of the estate. It is true he managed the farms, but he did that as tenant and not as executor. He acquired no special knowledge as executor. What he knew he knew as tenant of the farms.

3) There was never be a conflict of duty and interest since Victor made no secret throughout that he intended to buy. The beneficiaries never looked to Victor as to protect their interests. They all knew he was in the market as purchaser. The price paid was a good one and probably higher than anyone not a sitting tenant would give.

Held

The sale would not be set aside.

Note (Suggested hints)

[First ratio] A trustee may not purchase trust property. If a trustee purchases trust property, he can abuse his position and buy at less than the best price obtainable. If he sells to the trust, he may be able to demand too high a price. The rule is very strict where trustees are concerned, so that there must be no possibility of the trustee taking advantage of his position.

[Third ratio] With regard to the proper disclosure of trustee interest to buy.