Oberman v Collins & Anor

The claimant sought declarations that she was beneficially entitled to 50% of a portfolio of properties either by way of a common intention constructive trust or partnership and brought an unfair prejudice petition under sections 994 and 996 of the Companies Act 2006. The judge rejected a partnership at law but found that the parties treated the various properties as a single "Portfolio" and that there was an express common intention between the parties that the Portfolio should be held for their joint and equal benefit. The court held that the claimant had relied to her detriment by contributing money, personal labour and by permitting the respondent to control rents and proceeds.

In relation to the company claims the court found Bluegen to be operated as a quasi‑partnership, that the first defendant had acted unfairly and prejudicially in a number of ways (including diverting assets and creating substantial liabilities to an associated company, Blue Letts), and that the appropriate relief was an order requiring purchase of the claimant's shares. The judge ordered declarations of a 50% beneficial interest in the portfolio (subject to three third‑party properties), ordered detailed accounts and directed adjustments to the valuation of the claimant's shares (including treating certain Elmdene Road leases as Bluegen assets and discounting the Blue Letts indebtedness and specified improper loans).

Background and nature of the proceedings. The claimant, Ms Oberman, issued a Part 7 claim for declarations of beneficial ownership (50%) in respect of a portfolio of 41 properties said to be held either by common intention constructive trust or partnership; she also presented a petition under sections 994 and 996 Companies Act 2006 alleging unfair prejudice as a 49% shareholder and director of Bluegen Limited. The claims were tried together at first instance.

Key factual findings. The judge preferred the claimant's evidence on key points and found the parties treated the properties as one portfolio. Bluegen was held to be a joint/shared business vehicle. The first defendant, Mr Collins, was found to be an unreliable witness; the claimant was found reliable. The judge found that rents and proceeds were treated as reinvested in the Portfolio under a common understanding that assets were for the joint benefit of both parties.

Issues decided. (i) Whether the parties participated in a shared business endeavour with a view to profit and, if so, on what terms; (ii) whether a constructive trust or partnership arose in respect of the Properties; (iii) whether Mr Collins had represented that the Portfolio and individual properties were held jointly and equally; (iv) whether the claimant had detrimentally relied on any such common intention; (v) whether Bluegen was operated as a quasi‑partnership and if conduct by Mr Collins had been unfairly prejudicial; and (vi) appropriate remedies, including declarations, accounts and purchase of the claimant's shares.

Court's reasoning (concise). The judge held (i) there was no formal partnership at law; (ii) there was an express common intention and/or representations by Mr Collins that the Portfolio was for the joint and equal benefit of both parties and the claimant relied to her detriment (financial contributions, unpaid labour and forbearance in respect of income and guarantees); (iii) as a result a common intention constructive trust in favour of the claimant for 50% of the Portfolio was established (or, alternatively, proprietary estoppel supported the same 50% outcome); (iv) Bluegen was a quasi‑partnership and Mr Collins had acted in ways unfairly prejudicial to the claimant (including diverting company assets and causing liabilities to Blue Letts, granting long leases to himself and resisting audits and disclosure); (v) remedies included a declaration of 50% beneficial interest in most Properties, orders for accounts and an order that Mr Collins purchase the claimant's 49 shares in Bluegen at a fair value with specified valuation adjustments (Elmdene leases treated as Bluegen assets; the Blue Letts exposure and certain improper third‑party loans discounted except £60,000 allowed for one creditor); (vi) three properties where third parties asserted interests were left undecided and a three‑month window was provided for resolution or further directions.

Wider context noted by the court. The judgment explains equitable principles: constructive trust, proprietary estoppel, and unfair prejudice in a quasi‑partnership/company context, and emphasises that equitable accounting and remedies depend on the facts and on unconscionability arising from reliance and conduct.

At first instance the court made a range of declarations and orders in favour of the claimant. The Part 7 claim succeeded in part: the court declared that the claimant had a 50% beneficial interest in the Portfolio (the Oberman Property, the Joint Properties and the Collins Properties except three Third Party Properties left undecided), ordered detailed accounts of mortgages, rents and sale proceeds, and ordered an account in respect of payments to Blue Letts. On the unfair prejudice petition the court found that Bluegen was run as a quasi‑partnership and that the defendant's conduct was unfairly prejudicial; the court ordered the defendant to purchase the claimant's 49 shares in Bluegen at a fair value with specified valuation adjustments. The rationale was that there had been an express common intention and/or detrimental reliance giving rise to a constructive trust or, alternatively, proprietary estoppel, and that the director had breached his fiduciary and statutory duties (including diversion of assets to Blue Letts), justifying equitable relief including buy‑out and accounting.