Patel v Euro Investments (UK) Ltd & Ors

A partnership requires a contract between the alleged partners. A contractual joint enterprise likewise requires a consensual arrangement governing its management and the sharing of rewards or losses. An informal understanding may support equitable relief where the evidence establishes the necessary arrangement, but participation in a project or management role alone does not establish a proprietary interest. A claim in unjust enrichment requires enrichment, enrichment at the claimant’s expense, an unjust factor, and the absence of defences. Where the alleged partnership or other arrangement is not proved, the claimant cannot establish the required unjust factor merely by showing that he assisted the project under a mistaken belief that he would share its profits.

The claimant alleged that he, the first defendant company’s principal shareholder and the third defendant had agreed to acquire and develop property through a partnership or joint enterprise. He claimed a 25 per cent interest in the property or the company’s shares, alternatively equitable relief for unjust enrichment. He also claimed repayment of loans and payment for work done.

The defendants denied that any partnership or other consensual arrangement had been formed. The central factual issue was whether the alleged meeting at which the arrangement was said to have been agreed had occurred and, if so, what had been agreed.

1. Partnership and joint enterprise. Section 1(1) of the Partnership Act 1890 defines partnership as the relation between persons carrying on business in common with a view to profit. The relationship nevertheless requires a contract between the intended partners. A joint enterprise falling short of partnership also requires a contractual relationship governing its management and the allocation of rewards or losses.
2. The court considered Banner Homes Group plc v Luff Developments Ltd [2000] CHD 372, where an arrangement or understanding short of contract had supported equitable relief. It followed that a claimant must still prove the existence of a consensual arrangement or understanding with the defendant.
3. On the evidence, the alleged third meeting did not take place and no partnership, contractual joint enterprise or equivalent arrangement was proved. The contemporaneous dealings with the solicitor, bank and professional advisers, and the structure of the purchasing company, were inconsistent with the claimant’s alleged 25 per cent interest. His management and other assistance to the project did not establish such an interest.
4. Unjust enrichment. The court adopted the four ingredients identified in Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221: enrichment, enrichment at the claimant’s expense, unjustness, and the absence of defences. Because no partnership or other arrangement was proved, the claimant failed to establish the required unjust factor. His claim to an interest in the property or the company’s shares therefore failed.
5. The defendants admitted indebtedness for £64,000 comprising the claimant’s £50,000 payment and two further payments of £7,000. The claim for payment for work done was not disputed in principle, but the amount could not be determined on the evidence and was to be the subject of an inquiry unless agreed.

First-instance judgment. No prior appellate decision is stated in the judgment.