Ayoub Rofail v Mohammed Hassanin

An agreement to share profits may be unenforceable where important matters remain unsettled. A broad understanding that work will be remunerated by a percentage of net profits does not necessarily establish a binding contract.

The court must assess the parties’ objective agreement, including whether the arrangement addresses the treatment of properties that are let or retained, the effect of payments to other participants, the circumstances in which payment is due, and remuneration where no refurbishment or sale occurs. Where those matters remain unresolved, the court cannot determine the sums payable by implication or retrospectively.

The claimant transferred £390,000 to the defendant in April 2014. The claimant alleged that it was an oral loan to assist the defendant’s purchase of a council property. The defendant contended that it was part payment under an oral agreement entitling him to 25% of net profits from property development work.

The defendant also counterclaimed for further sums under the alleged profit-share agreement and for 50% of compensation received following the termination of the garage’s tenancy. The central issues were whether the payment was a loan, whether an enforceable profit-sharing contract existed, and whether any compensation share was proved.

1. Claim and counterclaim dismissed. The £390,000 payment was not a loan. It remunerated the defendant for work supporting the claimant’s property-development business.
2. The parties had reached an agreement in principle that the defendant would work without a fixed salary in return for approximately 25% of net profits from refurbished properties. The arrangement was incomplete and did not amount to an enforceable contract.
3. Important matters had been left unresolved. These included remuneration where a property was let or retained rather than sold, the treatment of another participant’s profit share, payment where a property was sold without refurbishment, and the timing of payment. The pleaded term requiring immediate marketing and sale was not proved.
4. The July 2015 emails materially supported the conclusion that the payment represented a share of profits. The claimant’s inconsistent evidence, the contemporaneous description of the payment as a gesture of goodwill, and the absence of a credible loan acknowledgment were also significant.
5. The defendant’s claim to 50% of the Camden compensation failed. Any agreement related only to compensation for termination of the tenancy and required the defendant to negotiate an increase. The settlement was principally achieved through solicitors and did not establish that the defendant had earned the claimed share. The alleged additional bonus was also unproved.
6. The court applied the principle that agreements in principle are not binding where important matters remain unsettled, as illustrated by Western Broadcasting Services v Seaga [2007] UKPC 19 and Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55.