Amin & Anor v Amin & Ors

A partnership asset appearing on a partnership balance sheet is not necessarily beneficially owned by the partnership. The court must determine the parties’ intention from the whole evidence, including title documents, financing, accounts, rent, expenditure and capital accounts. A constructive trust may give a non-registered contributor a right of occupation rather than a percentage share. Under Trusts of Land and Appointment of Trustees Act 1996, compensation for exclusion requires exclusion by the trustees acting as a body; equitable compensation may nevertheless arise outside the Act. A quantum meruit in a family business is assessed in its family and commercial context, not automatically at a full market salary. A minority shareholder has no general right to require the majority to buy the shares. Failure to pay an admitted shareholder debt may be unfairly prejudicial, but ordinarily warrants payment rather than a share purchase order.

The proceedings concerned the separation of two branches of a family involved in partnerships, jointly owned properties and VU Chem Ltd, a family pharmacy company. The claimants sought accounts, declarations and orders enabling them to realise their interests in the partnerships and properties. They also presented an unfair-prejudice petition under sections 459 of the Companies Act 1986 and 994 of the Companies Act 2006, seeking to be bought out of VU Chem.

The disputes included beneficial ownership of properties placed on Cashco’s balance sheet, the Mother’s interest and occupation rights in Kingswood Manor, occupation rent, Harshika’s quantum meruit claim, and the consequences of the claimants’ removal as directors and cessation of work for VU Chem.

1. Partnership property. The inclusion of a property in Cashco’s balance sheet did not, without more, transfer beneficial ownership to the partnership. The court examined the deeds, acquisition funding, rental treatment, expenditure, insurance records, capital accounts and the parties’ intentions. Several properties were held beneficially by Vatsal and Udi in equal shares; 130/132 Weir Road was initially a Cashco asset but was subsequently removed from the partnership by the Father’s direction. Lloyd Avenue was held in the proportions agreed, namely Vatsal and Udi 12.5 per cent each and the three other partners 25 per cent each, displacing the statutory presumption of equality under section 24(1) of the Partnership Act 1890.
2. Kingswood Manor and occupation. Applying Stack v Dowden and the whole-course-of-conduct approach, the court held that the Mother’s contribution and the family purpose supported, at least, a right for her to occupy Kingswood Manor for life without payment. It was unnecessary formally to decide the precise legal basis because Vatsal conceded that right. The balance-sheet entry did not make Kingswood Manor a Cashco asset. The Mother’s continuing occupation and the purpose of the acquisition meant that broad equity did not require Udi to pay Vatsal an occupation rent.
3. Trusts of land. Sections 12 to 14 of Trusts of Land and Appointment of Trustees Act 1996 apply where exclusion is effected by the trustees as a body. A beneficiary may be effectively excluded by threats or unpleasantness, but unilateral exclusion by one trustee is not exclusion under section 13 for the purpose of compensation under section 13(6). Equitable compensation may nevertheless be available outside the Act, applying the broader principles of equitable accounting.
4. Harshika’s claim. The claim to a proprietary share was abandoned as too uncertain. The court applied the restitutionary principles summarised in Rowe v Vale of White Horse DC. Cashco had received a benefit at Harshika’s expense, and it would be unjust to retain it without recompense. Her quantum meruit was, however, to be assessed in the family context, having regard to the business’s profitability and the absence of any expectation of an ordinary commercial salary. The amount was left for agreement, inquiry or further determination.
5. Unfair prejudice. The petition substantially failed. The removal of Vatsal and Anju as directors was justified by their retention of VU Chem’s cash and records, their failure to ensure proper payment of suppliers and compliance with VAT, PAYE and national insurance obligations, and their refusal to restore the ordinary financial administration. The petitioners’ complaints about remuneration, dividends, management exclusion, trust and confidence, and refusal to permit a share realisation did not establish unfair prejudice. A minority shareholder has no general right to require a buy-out.
6. The refusal to pay the balance due on Anju’s director’s loan account was unfairly prejudicial, but the appropriate remedy was payment after proper accounting, not a share purchase order. The claimants’ remaining company claims, including the dilapidations indemnity, were not granted. The court made further directions and invited submissions on outstanding valuation and quantum matters.