Business Ownership Dispute after Relationship Breakdown

Business Ownership Dispute after Relationship Breakdown

Business Ownership Dispute after Relationship Breakdown

Posted by Shamsher Pangu, on February 26, 2020. Tags: , ,

Our client, (“AB”), started a relationship with the defendant (“CD”) in or about 1996.  Some time in 2002 the Parties decided to purchase land, (“the Property”), with the express intention to develop the land for the purposes of setting up an equestrian business and that all expenditure be shared equally.

On 25th October, 2002 the Property was transferred in to the joint names of the Parties together with a Declaration on Form TR1 that they hold the Property on trust for themselves as Tenants in Common in equal shares.  Each party paid £60,000 towards the purchase of the land, purchase of a barn, caravan and other initial infrastructure costs of the business.

In or around March 2005 the Parties began living together in the caravan on the property. The relationship broke down in 2008 and AB initially moved out into a motorhome on the property but later left to live elsewhere.  Since 2002, AB had carried out substantial works and improvements in furtherance of the business amounting to £72,400.  In addition, AB had contributed towards the expenditure on the Property the sum of approximately £52,000, whilst CD contributed approximately £27,700.

The Parties were unable to resolve their dispute over the property and AB commenced proceedings by way of a Part 7 Claim.  The primary claim was for a Declaration that the Property is held by AB and CD in proportion to their contribution.

At the adjourned Hearing we argued that CD in her Defence had expressly and specifically pleaded her agreement that the Property had been purchased in equal shares as a business venture and that all expenditure was to be shared equally between the Parties.  In the premises this was a commercial venture and thus distinct from the past case of Clarke v. Harlowe.  In Clarke v. Harlowe His Honour Judge Bahrens suggested that in cohabitation cases a breach of some contractual obligation is required before equitable accounting could come in to play and only in respect of the period following the termination of the relationship. In contrast our client’s claim was for breach of agreement between him and CD and that this reversed the legal status of the tenancy in common in equal shares and that the Parties became tenants in common in proportion to their contributions and that equitable accounting should take effect immediately from the date of the breach.  The District Judge could not determine this and adjourned the Hearing before a Circuit Judge.In the interim the parties were able to arrive at a solution following a full day’s Mediation Hearing.  Our client purchased CD’s interest in the Partnership for the sum of £155,000 with CD transferring all

Sign up for our Newsletter

Subscribe now to receive helpful articles, news and events from Spratt Endicott.

Newsletter Sign Up

  • This field is for validation purposes and should be left unchanged.

Get in touch

Please complete your details and we’ll be in touch. Or, call us on 0330 0580 250.

Get in touch

  • This field is for validation purposes and should be left unchanged.