Douglas Stuart Ponsford & Anor v Mesud Habib Sali & Anor
[2023] EWHC 3360 (Ch)
Jaswinder Singh Bahia v Inderdeep Singh Sidhu & Anor
30 November 2023
[2023] EWHC 3028 (Ch)
High Court
A business partnership broke up, and one side owed a lot of money. The judge had to decide whether to sell the partnership's buildings or give them directly to the person owed the money. Usually, they're sold at auction, but the judge decided to give the buildings to the owed person since that was faster and fairer in this case, because the other side didn't have money to pay. The judge also appointed a new manager to oversee the process.
Key Facts
- •Trial in Bahia v Sidhu [2020] EWHC 875 (Ch) resulted in judgment against the Sidhus, ordering payments to the Bahias.
- •Sidhus owe £3,634,359.25 to the partnership and £50,052.49 to Mr. Bahia.
- •Sidhus lack liquid resources to repay and propose auctioning partnership property.
- •Hearing to determine property sale or alternative disposition and receiver replacement.
- •Bahias initially sought property transfer; Sidhus proposed auction sale.
- •Claimant's amended proposal: property transfer at higher of Alexander Lawson valuation or new independent valuation.
- •Defendant's amended proposal: auction sale with both parties allowed to bid, using partnership credit for Bahias.
- •Court considers Partnership Act 1890, s. 39, and relevant case law on partnership dissolution and property distribution.
Legal Principles
On partnership dissolution, property is applied to debts, then to partners' dues. Sale isn't mandated; application of assets suffices.
Partnership Act 1890, s. 39
While sale is usual on dissolution, the court has discretion to order other just dispositions.
Syers v Syers (1876) 1 App Cas 174; Benge v Benge [2017] EWHC 2124; Campbell v Campbell [2017] EWHC 182 (Ch)
Court's discretion is valuable and used when just, but departure from normal sale is exceptional.
Hammond v Brearley [1992] 12 WLUK 185
Court has broad powers in winding up partnerships, including partition, in specie distribution, buyout orders, and mandatory injunctions.
Campbell v Campbell [2017] EWHC 182 (Ch)
Section 14 Trusts of Land and Appointment of Trustees Act 1996 provides additional power for partition.
Trusts of Land and Appointment of Trustees Act 1996, s.14
Outcomes
Claimant's amended proposal accepted: transfer of specified properties to Claimant as in specie distribution.
Offers swifter debt repayment, avoids auction costs, and considers Claimant's preferences as sole surviving partner. While auction is normal, court's discretion allows for exceptional orders in the interests of justice.
Mr. Savvas Socratous of Alexander Lawson Surveyors Ltd appointed as receiver.
His knowledge of the portfolio outweighs concerns about potential lack of impartiality. Concerns about value for money are addressed by allowing reapplication if evidence of better alternatives emerges.