Jaswinder Singh Bahia v Inderdeep Singh Sidhu & Anor

In partnership dissolution proceedings, proprietary estoppel requires a sufficiently clear assurance, reasonable reliance and consequential detriment, assessed through unconscionability and proportionality. A clear express declaration of trust normally governs beneficial ownership and cannot be displaced by a pre-existing inconsistent equity, although later representations may create a new equity. Where the estoppel claim fails, occupation rent under the Partnership Act 1890 is recoverable after clear withdrawal of consent and reasonable notice. Serious non-disclosure may justify adverse inferences, but the court must have a reasonable evidential basis. Equitable relief may be refused for dishonest conduct closely connected with the relief sought.

The proceedings concerned the dissolution and accounting of two family partnerships and a related company. The court determined 11 outstanding inquiries concerning beneficial ownership of partnership property, proprietary estoppel, occupation rent, undisclosed rental income, company profits, personal expenditure, tax payments, disclosure and settled accounts.

Earlier summary judgment had declared that both partnerships were partnerships at will and had been dissolved by notice. The principal questions at trial were whether the Sidhus had a beneficial interest in the residential part of 8 King Street, whether partnership and company income had been misappropriated, and what sums were payable on the taking of accounts.

1. The proprietary-estoppel claim concerning the residential part of 8 King Street failed. The court found that no promise of permanent occupation had been made, that the Partners had contributed equally to the purchase, and that Mrs Sidhu had not proved detrimental reliance. The court applied the principles in Thorner v Major [2009] UKHL 18 and Davies v Davies [2016] 2 P&CR 10.
2. The memorandum of severance dated 20 October 2005 was a clear express declaration that the whole of 8 King Street was held in equal shares. Applying Goodman v Gallant [1986] Fam 106 and Pink v Lawrence (1978) 36 P&CR 98, it was conclusive between the parties absent rectification or rescission. The estate could not rely on a pre-existing inconsistent equity.
3. The whole property was therefore partnership property. Under section 29 of the Partnership Act 1890, occupation rent and occupation costs were payable from 3 August 2017, following a clear demand to vacate on 3 February 2017 and a reasonable six-month notice period.
4. The Sidhus’ inadequate disclosure, altered documents and unreliable evidence justified adverse inferences. The court applied MacKenzie v Alcoa Manufacturing (GB) Ltd [2019] EWCA Civ 2110, Petrodel Resources Limited v Prest [2013] UKSC 34 and Malhotra v Dhawan [1997] 8 Med LR 319.
5. The Sidhus were ordered to account for £506,487 in undisclosed rents under Inquiry 4, £79,047 under Inquiry 6, £291,916.46 in respect of ASL under Inquiry 7, £125,113.65 under Inquiry 8, £122,206.37 under Inquiry 9 and £237,208 under Inquiry 10. Inquiry 12 was refused because the accounts had been knowingly accepted and the dishonest alteration of the Diary disentitled the Sidhus to equitable relief.
6. Several Part 20 claims were dismissed. The court declared that 136 High Road was held on trust for ASL, limited the future Inquiry 16 to specified expenses, and ordered Mr Bahia to account for £6,266.97 in stock under Inquiry 17. The remaining claims were dismissed or resolved by concession.