Nathan v Smilovitch

Where property was initially included in an informal joint venture, the party asserting that it later ceased to be included bears the relevant burden of establishing that change. The venture’s terms may permit property to be acquired through a company associated with one participant, and do not necessarily require equal financial contributions. Loans, charges, guarantees or the absence of direct finance from one participant are not, without more, inconsistent with continuing joint-venture ownership. On an appeal concerning factual findings, the appellate court should respect the trial judge’s assessment of witnesses, documents and probabilities. It should intervene only where the conclusion is shown to be wrong.

The appellant and respondent operated an informal property-development joint venture. Several properties were acquired through companies associated with either participant, with the appellant principally undertaking the practical work and the respondent providing finance where necessary.

Following a judgment of Ferris J dated 31 July 2001, three properties were declared to fall within the joint venture: 126/127 Shoreditch High Street, 135/139 Curtain Road and the headleases of 1–5 Chapel Place. The appellant contended that each had later ceased to be part of the venture, relying on changes in financing, the identity of the purchasing companies and alleged withdrawals of interest. The central issue was whether the trial judge had erred in finding that the appellant had not established such changes.

Lord Justice Mance delivered the judgment of the court. Lady Justice Hale and Lord Justice Peter Gibson agreed.

1. Disposition and burden. The appeal was dismissed. The appellant bore the legal burden in relation to the first two properties and, as accepted at the hearing, at least a factual burden in relation to the third, to show that properties originally within the joint venture had ceased to be so.
2. Nature of the venture. The judge was entitled to reject the proposed parity principle. The agreed arrangement was instead one in which the appellant principally handled the property arrangements and management, while the respondent provided finance when necessary. That arrangement did not prevent the appellant acquiring a property in his own name or through a nominated company while the property remained within the joint venture.
3. 126/127 Shoreditch High Street. The documents and surrounding circumstances were capable of showing arrangements concerning finance rather than exclusion from the venture. The use of Hopshire and later Facet, and the willingness of the respondent’s sons to lend money, were not inconsistent with continued joint-venture inclusion. The appellant had not shown any withdrawal by the respondent.
4. 135/139 Curtain Road. The appellant’s explanations were unreliable and there was no credible evidence establishing when or how the property left the venture. The fact that Murex was associated with another person did not prevent it being used to hold the property under an arrangement preserving the venture’s interest.
5. 1–5 Chapel Place and appellate restraint. The introduction of Timbercroft did not necessarily change the beneficial interests. The appellant’s evidence concerning alleged withdrawals was properly rejected, and the respondent’s advances supported the trial judge’s conclusion. The judge had evaluated the witnesses, documentary material and probabilities in the best position available to do so. The cumulative criticisms did not demonstrate error. The appellant was ordered to pay the respondent’s appeal costs on the standard basis, subject to detailed assessment if not agreed.

• Court of Appeal (Civil Division): The appeal from the relevant part of Ferris J’s judgment dated 31 July 2001 was dismissed. The appellant was ordered to pay the respondent’s costs on the standard basis, subject to detailed assessment if not agreed.