Wild v Wild & Ors

Property owned by one partner before a partnership begins does not become partnership property merely because it is used for the partnership business or appears in partnership accounts. There must be an express or inferred agreement, or an implied term necessary to give the partnership agreement business efficacy. Accounts are important evidence but are not conclusive.

Proprietary estoppel requires assurance, reliance and detriment, assessed in the round through the underlying question of unconscionability. Pre-assurance conduct may provide context but cannot itself constitute the necessary detriment. Relief must be the minimum necessary to satisfy the equity and must be proportionate to the expectation and detriment.

The claimant sought declarations and accounts following the dissolution of a family farming partnership. The principal dispute concerned whether the Farm and Bungalow, legally held by the claimant’s mother, were partnership assets. The defendants contended that, if the Bungalow was a partnership asset, the First and Third Defendants had acquired an interest through proprietary estoppel or a constructive trust.

A further issue was whether the claimant’s milk round, operated after the partnership stopped supplying him with milk, remained a partnership asset for winding-up purposes.

1. Farm. Section 20(1) of the Partnership Act 1890 addresses the consequences of property becoming partnership property. It does not determine what is required for that to occur. One partner cannot unilaterally convert personally owned property into partnership property. Agreement, acceptance or ratification by the other partners is required.
2. Agreement may be inferred from the parties’ conduct or implied where necessary to give the partnership agreement business efficacy. In a farming partnership, it is ordinarily unnecessary to imply that land used by the business is a partnership asset. Use of the land, payment of expenditure and absence of rent are not conclusive. The Farm could operate effectively while remaining Ben Wild’s property.
3. The Farm’s inclusion in the accounts was powerful evidence but not conclusive. Settled accounts are not conclusive as to ownership and do not prevent correct dissolution accounts being prepared. The evidence as a whole did not establish agreement, acceptance or an implied term. The Farm therefore remained Jean Wild’s property.
4. Proprietary estoppel. The First and Third Defendants incurred substantial expenditure in reliance on assurances that the Bungalow was to be theirs. The requirements of assurance, reliance and detriment were to be assessed in the round, with unconscionability informing each element. The equity would have been satisfied by transfer of the beneficial interest in the Bungalow. This issue was ultimately unnecessary because the Bungalow was not a partnership asset.
5. Milk round. The claimant’s post-July 2016 milk round was a continuation of the previous business. He retained substantial customer goodwill and continued to use a partnership milk float. The goodwill therefore remained a partnership asset. He was required to bring into account income of £53,122, subject to expenditure of £22,796.