Mohammed Nadeem v (1) Mohammed Rafiq (2) Zahida Bi
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE NELSON,Mr Justice Nelson |
| Judgment Date | 13 December 2007 |
| Neutral Citation | [2007] EWHC 2959 (Ch) |
| Court | Chancery Division |
| Date | 13 December 2007 |
| Docket Number | Case No: 6BM30248 |
[2007] EWHC 2959 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
Birmingham Civil Justice Centre
33 Bull Street, Birmingham B4 6DS
Mr Justice Nelson
Case No: 6BM30248
Derek Kerr (instructed by The Birmingham Legal Partnership) for the Claimant
David Stockill (instructed by Terry Jones) for the First and Second Defendants
Hearing dates: 27 th and 28 th November 2007
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is a dispute as to whether a partnership existed between the Claimant and the Defendants. On 23 October 2006 the Court ordered that the following preliminary issues be tried:—
i) Whether there existed between the parties to this dispute a partnership business under the name 'M R Bathrooms and Fires' and if so, that there be determined the date of commencement of the partnership and the date of its dissolution and the terms thereof
ii) If there was a partnership that it be determined whether the premises known as 10b Park Street, Madeley, Telford, Shropshire are and were an asset of the partnership.
The facts and areas of dispute.
The Claimant and the First Defendant are cousins and had, prior to this dispute, always enjoyed a friendly relationship. The Claimant is a taxi driver and the First Defendant runs the disputed business, MR Bathrooms and Fires. The First Defendant obtained an HND in Business and Finance from De Montfort University. He then joined Travis Perkins, the plumber's merchants as a management trainee. He remained there for some 12 years before joining BTS, also plumber's merchants, for 3 – 4 years as a manager. He then worked at Plumb Base for 1 1/2 years earning a salary of about £30,000 per annum.
The Defendant decided in about June 2003 to set up his own business. He sought advice from his bank and went on a course run by the local council called 'Start your own Business'.
The Claimant went to Pakistan on 1 July 2003 and returned on 13 July 2003. It is the Claimant's case that in about May/June 2003 the First Defendant came to his home and told him that he was considering opening a business. He discussed the option of them going into business together and opening a shop which would sell bathrooms and other plumbing equipment to the public. Several discussions followed as a result of which it was agreed that they would both be equal partners in the business, that each of them should contribute £25,000 towards the initial set up costs of the business and that the two of them would share the profits and losses equally. This was a verbal agreement with nothing being reduced to writing. The Claimant said that the agreement that they would be equal partners was made before he went to Pakistan as was their agreement that the Claimant should carry on driving taxis for some 15 months as the business would not be able to afford to pay both of them wages in the beginning. They agreed that the Claimant should put in £200 cash per week before he joined, as the First Defendant was the experienced one in the plumbing and heating trade and would be able to use that expertise to build up the business. The Claimant understood that the First Defendant was sufficiently well off financially to be able to live and that his £200 a week was for the development of the business. No wages were to be drawn by the Defendant.
The First Defendant found premises at King Street, Wellington, Telford. He took the lease for these premises in his sole name and opened the business bank account. All the relevant documents whether Inland Revenue, insurance certificates or utility bills show Mohammed Rafiq as a sole trader, trading as MR Bathrooms and Fires.
The business opened on 24 August 2003 with a launch ceremony at which an elder from the mosque said prayers. At or sometime shortly before that ceremony the Claimant paid his contribution of £25,000 by three cheques which were drawn from funds he had borrowed for the purpose.
The First Defendant's account of the agreement made between him and the Claimant is very different. It was only after the Claimant returned from Pakistan that the discussions turned from the general to the more specific. In the last couple of weeks before the opening the Claimant said he was interested in the business and it was agreed that he would make a payment of £25,000 to assist with the development of the business with a view to him becoming a partner in April 2007. He agreed to pay the sum of £200 per week into the business to ensure that the First Defendant had an income and to supplement the First Defendant's income from the business. (Paragraph 10 witness statement.) It was agreed that the Claimant would join the business from 1 April 2005 on a salary of £200 per week for the first two years during which he would be trained. In paragraph 9 of his witness statement Mr Rafiq says that it would be after his initial training period that the Claimant would become a partner and in paragraph 32 that if he worked from April 2005 he may become a partner in April 2007. The payments of £25,000 and £200 a week were made with a view to the Claimant becoming a partner in the business in April 2007.
The First Defendant told me in evidence that the Claimant would become a partner provided he completed his apprenticeship or training period. To do so the Claimant had to make the necessary commitment and, the First Defendant said, they had to be confident that he could be trained. This was agreed with the Claimant before he took the money off him, namely before the opening at the end of July or early August. The discussion had taken place at Ironbridge where they had gone with their families. The First Defendant's evidence as to the families going jointly to Ironbridge and a conversation taking place between the First Defendant and the Claimant alone was confirmed by his wife the Second Defendant who said that after that had taken place the First Defendant had told her that the Claimant had agreed to invest £25,000 into the business, was joining the business in 2005 and would become an equal partner in 2007.
Both the Claimant and the First Defendant are agreed that after the First Defendant had taken the lease on the King Street premises the Claimant assisted in decorating them but the First Defendant said that the Claimant's contribution was negligible, consisting of the equivalent of no more than painting one windowsill. When the Claimant first saw these premises on his return from Pakistan he describes them as being an empty room whereas the First Defendant said that he was the tenant, had a key, the builders were putting the displays up, the business sign was up and there were some bathroom suites, boilers taps etc in situ when the Claimant came.
The Claimant called his brother-in-law Mumtaz Mirza as a witness. Mr Mirza is a 50 year old, recently qualified solicitor working in a criminal practice who said that in May/June 2003 he was at the First Defendant's home in Telford when the Claimant and the First Defendant were discussing some terms of their partnership. They both told him that they would be equal partners in the business with profits and losses shared equally and that the Claimant would be a sleeping partner in the business until the end of a 15 month period when he would join it on a daily basis. Until then the First Defendant would manage the business and the Claimant would contribute £200 a week for its development. Mr Mirza said that both the Claimant and the First Defendant requested that he draft the partnership agreement but he declined to do so as at that stage he had not completed his Legal Practice Course and had no experience in drafting such agreements. He was one of the guests at the inauguration ceremony of the partnership at King Street. Mr Mirza was challenged on behalf of the First Defendant upon the basis that his evidence was not truthful, in particular upon the basis that at the time he alleges that he was asked to draft the partnership agreement, no terms had in fact been agreed between the Claimant and the First Defendant and it was therefore far too early for any such agreement to be even contemplated. He maintained his account was true.
There is also a dispute between the parties as to what happened at the business launch on 24 August 2003. The Claimant said that the priest said a prayer for the First Defendant and him and wished both of them success with the business and in their partnership. This was confirmed in the evidence of Mohammed Amin, Istighar Hussain and Sajid Mahmood, all three of whom are taxi drivers with Mr Hussain also being the nephew of both parties. Mr Amin said that he did not know whether the priest, who in fact turned out to be an elder as the priest could not attend, was referring in his prayers to a present or future partnership.
The business opened and it appears performed reasonably well. The Claimant visited from time to time to see how matters were progressing. He was shown figures by the First Defendant but did not really understand them and did not press for more details. The Defendant gave him a manuscript document dated 22 March 2004 which set out the sales for the first six months. This document showed sales of £34,114 excluding VAT in the first three months and sales of £50,000 excluding VAT in the second three months with a net profit for the whole period of £7,222 based on a gross profit of approximately 20%. It was about this time in March 2004 that the First Defendant told him that paying rent for King Street was a waste of money and that they were in a position to purchase business premises...
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Formation and Expansion
...– other than those applicable to employed partners – applied to him. (As discussed at 2.1.2, true 18 Nadeem v Rafiq and another [2007] EWHC 2959 (Ch), [2007] All ER (D) 303 (Dec). 19 Choudhury and others v Choudhury and others [2006] EWHC 1837 (Ch). 20 Cobbetts LLP and Lee Crowder (a firm) ......
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Table of Cases
...Mullins v Laughton [2002] EWHC 2761 (Ch), [2003] Ch 250, [2003] 2 WLR 1006, [2003] 4 All ER 94 12, 115, 123, 147, 151 Nadeem v Rafiq [2007] EWHC 2959 (Ch), [2007] All ER (D) 303 (Dec) 17, 50 Nationwide Building Society v Lewis [1997] 1 WLR 1181, [1997] 3 All ER 498, ChD 92 Newstead (Inspect......
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Property
...(1875) LR 20 Eq 25. 4 See e.g. Rees v Dartnall [2009] EWHC 3923 (Ch), [2009] All ER (D) 244 (Feb). 5 Nadeem v Rafiq and another [2007] EWHC 2959 (Ch), [2007] All ER (D) 303 (Dec). 6 Longmuir v Moffat and others [2009] CSIH 19, 2009 SC 329. 7 Miles v Clarke [1953] 1 All ER 779 (see below) an......