Nigel Thomas Davey v Trevor Mark Coaker Davey
| Jurisdiction | England & Wales |
| Judge | Master Clark |
| Judgment Date | 04 June 2021 |
| Neutral Citation | [2021] EWHC 1467 (Ch) |
| Docket Number | Case No: BL-2020-000731 |
| Court | Chancery Division |
| Date | 04 June 2021 |
[2021] EWHC 1467 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Master Clark
Case No: BL-2020-000731
Paul Emerson (instructed by McTaggart Solicitors) for the Claimants
Malcom D Warner (instructed by Stephens Scown LLP) for the Defendants
Hearing date: 11 & 12 February 2021
Approved Judgment
I direct that this approved judgment, sent to the parties by email on 4 June 2021, shall deemed to be handed down on that date, and copies of this version as handed down may be treated as authentic.
Application
This is my judgment on the defendants' application dated 20 July 2020 for summary judgment on the issue as to whether the first claimant Nigel Davey (“Nigel”), has been expelled from the partnership between him and the first defendant, Trevor Davey (“Trevor”), known as E.S. Coaker & Company (“the partnership”).
Evidence
The evidence consisted of the following witness statements (parts of which were also directed to an application by Nigel to strike out part of the Counterclaim)
(1) the 1 st witness statement dated 20 July 2020 of Trevor's solicitor, Richard Bagwell – this consisted of argument and commentary on correspondence and events;
(2) Trevor's 1 st witness statement dated 20 July 2020 (“Trevor 1 st”);
(3) Nigel's 1 st witness statement dated 20 August 2020 (“Nigel 1 st”);
(4) Nigel's 2 nd witness statement dated 20 August 2020 (“Nigel 2 nd”)
(5) the 1 st witness statement dated 30 September 2020 of Trevor's solicitor, Richard Slater;
(6) Trevor's 2 nd witness statement dated 2 October 2020 (“Trevor 2 nd”);
(7) Nigel's 3 rd witness statement dated 26 October 2020 (“Nigel 3 rd”)
(8) Nigel's 4 th witness statement dated 1 February 2020 (“Nigel 4 th”)
The evidence included a large amount of material relating to the reasons for breakdown of the relationship between the parties, particularly as to the merits of whether certain land (the Red Rocks land) is a partnership asset. Most, if not all, of this is irrelevant to the issues to be determined.
Parties and the background to the claim
Nigel and Trevor are brothers, and the only two partners in the partnership. The second claimant, Jill Davey and the second defendant, Fiona Davey, are their respective wives. They are not partners; they have very limited interests in the claim, and no direct interest in the matters arising in the application. For present purposes, I refer to Nigel and Trevor as “the parties”.
The business of the partnership consists of farming and operating a caravan site at Wear Farm, Bishopsteignton, Teignmouth, Devon (“Wear Farm”). Various members of the family (including the parties' parents and uncle) have traded at Wear Farm for many years. The most recent formal document in relation to the partnership is a partnership deed dated 9 May 2003 (“the Deed”), between Nigel, Trevor and their mother, Marion Davey (“Mrs Davey”). As will be seen, there is an issue between the parties as to the extent to which the Deed continues to govern the relationship between them.
Mrs Davey died on 22 March 2013. Nigel and Trevor are the executors of her will. The Deed contains (in cl. 17) provisions which give an option to the continuing partners to purchase her share by a notice in writing; and for her share of profits, capital, goodwill assets etc. to be ascertained and paid to her estate within 2 years. The persons entitled to Mrs Davey's share are her other two children, Andrew Davey (“Andrew”) and Priscilla Harris (“Priscilla”). No steps have been taken in accordance with these provisions. The parties have, however, conducted negotiations with their two siblings as to the sum to be paid by them for Mrs Davey's share.
The Deed contains the following relevant provisions:
“ 5 Management
5.1 Except where otherwise provided all matters relating to the management and conduct of the affairs of the Partnership shall be decided by a majority decision of the Partners excepting all matters contained or referred to in Paragraph 12 herein which shall be by the unanimous resolution of the Partners only.
7 Banking
7.1 All monies and securities belonging to the Partnership shall be paid into the Partnership Bank Account or deposited for safe custody with the Partnership Bank [“Partnership Bank” is defined as National Westminster Bank Plc or such other bank as the Partners may choose from time to time]
11 Partners' duties
Each Partner shall
11.1 Be just and faithful to the other Partners and at all times give to the other Partners full information and explanations of all matters relating to the affairs of the Partnership.
…
12 Limits of authority
Except where otherwise provided for below no Partner shall without the consent of the other Partners:
…
12.7 Expend a sum of over Ten Thousand pounds (£10,000) in any one transaction without the consent of all the Partners
12.8 Draw not more than the equal sums paid to the Partners personal Bank Accounts by Direct Debit payments established by the Partners on account of share of profits.
14 Termination
The partnership my be terminated by any Partner giving to the other not less than Six Months written notice expiring on any anniversary of the Financial Year end of the Partnership and at the end of that Notice the Partnership shall terminate.
16 Expulsion
If any Partner:
16.1 Shall commit any grave breach of this Agreement …
Then the other Partners shall forthwith be entitled by notice in writing given to him to expel him from the Partnership.
Trevor's position is set out in para 29 of Trevor 1 st:
“By implication, Nigel and I have agreed by our conduct since 2013 to continue as though nothing had happened to bring the Deed's operation to an end and the terms of the Deed have continued to apply save insofar as was necessary to take account of [Mrs Davey] having ceased to be a partner”
Nigel (in Nigel 1 st, para 32, 34) disagrees that the parties behaved as if the Deed regulated their business relationship. He says that in relation to virtually every positive obligation contained in the Deed, there are numerous examples of situations where the parties acted expressly contrary to its express provisions. Curiously, however, the particulars of claim (at paras 6 to 10) sets out the Deed, and the remainder of the particulars of claim is premised on the Deed governing the parties' relations. However, the Reply and Nigel's evidence make his position clear.
The examples Nigel gives of conduct not in accordance with the Deed fall into 3 categories:
(1) sums over £10,000 being paid by Trevor without reference to Nigel;
(2) personal expenditure of Trevor (and Fiona) being paid from the partnership bank account, and later allocated to Trevor's drawings when accounts were prepared;
(3) personal expenditure of both parties being paid by the partnership – the primary example of this is both parties' vets' fees, though Trevor and Fiona's expenditure on vets was far higher than that of Nigel and Jill.
One of the occupants of the caravan site was a Mrs Brenda Badger, who owned a caravan at 25 Orchard View (“the Caravan”). Mrs Badger died on 3 July 2017. By her will dated 27 January 2017, she appointed Nigel and Jill as her executors, and gave them the Caravan. They sold it on 1 June 2018 for £105,000. Both sides appear to have believed that this entitled the partnership to require Nigel and Jill (as sellers) to pay it 10% of the purchase price by way of commission. As will be seen, this was wrong, and the commission was payable by the buyer. In any event, no commission was paid.
The events directly leading to the claim commence with a letter dated 26 February 2020 from Trevor's solicitors, Stephens Scown (“SS”) to Nigel's solicitors, McTaggarts (“MT”). This sets out that commission was due from Nigel and Jill in respect of the sale of the Caravan and that, since it had not been paid, Nigel was in breach of clause 11 of the Deed. There is an issue as to whether this letter was ever received by McTaggart (it was wrongly addressed), which Trevor accepts cannot be resolved on a summary judgment application.
On 4 April 2020, there was an incident resulting in serious physical fight between Nigel and Trevor.
On 20 April 2020, MT wrote to SS informing them that they had prepared a draft notice of dissolution, and asking whether they had instructions to accept service.
In response to this letter, on the same day, SS served by hand on Nigel a letter giving notice on Trevor's behalf that he was expelling Nigel from the partnership (“the 1 st notice”). The relevant part of the notice set out clause 11.1, and continued:
“2. By our letter dated 26 February 2020 to your solicitors you were required to account for commission in the expected sum of £10,500 arising on the sale of a caravan previously belonging to the late Mrs Badger …
3. You have failed to account for … the commission … in breach of clause 11.1”
In late April 2020, there were a number of transfers and attempted transfers by both sides in and out of the following partnership accounts:
(1) the Santander savings account
(2) the Santander current account
(3) the NatWest Business account (“the NatWest account”)
(4) the Nationwide Investor account (“the Nationwide account”)
On 29 April 2020 Nigel transferred £200,000 from the Santander current account to the NatWest account.
On 30 April 2020, Trevor made a payment of £4,608 from the NatWest account to SS in payment of their fees for acting for him.
On 1 May 2020, MT served a “notice of termination” (“the termination notice”) stated to be under clause 14 of the Deed. The effect of this notice, if valid,...
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