PARTNERSHIPS

BENEFICIAL OWNERSHIP : JOINT TENANCIES : SURVIVORSHIP : DECLARATIONS OF TRUST : PARTNERSHIP PROPERTY : AGREEMENT FOR JOINT TENANCY : BENEFICIAL INTERESTS : PARTNERS AUTONOMY : CONTRARY INTENTION : PARTNERSHIP MONEY : DEEMED OWNERSHIP IN COMMON

Partnership property could be held by partners as joint tenants where there was clear evidence of their intention to vary the normal rule that property bought with partnership money was deemed to have been bought for the partnership.

The defendant (S) appealed against a decision of a county court judge that he had not become beneficial owner of the whole of a partnership property on dissolution of the partnership. S and his friend (B) had been in partnership in the business of selling darts equipment and other goods to pubs and clubs. There was no written partnership agreement and profits were divided equally. S and B had purchased a property using partnership funds as an investment and for storing partnership stock. The transfer stated that they held the property on trust for themselves as joint tenants. After B’s death a dispute arose as to whether the right of survivorship applied to the beneficial interests in the property. S contented that the property had ultimately been purchased outside the partnership for tax reasons and that they had specifically agreed to a right of survivorship in respect of the business as a whole and the property in particular. The judge concluded that there was no express agreement between S and B that they would purchase the property outside the partnership and that consequently there was no right of survivorship.

HELD: (1) The judge’s decision was flawed because he saw the issue solely in terms of whether the property was an asset of the partnership and had not considered whether S and B had agreed to vary the normal rule that property bought with partnership money was deemed to have been bought for the partnership. (2) S bore the burden of proving that a decision had been made to take the property outside the partnership. There was no support for such an argument and all the circumstantial evidence pointed to the property being bought for the partnership. (3) There was no inconsistency between a beneficial joint tenancy and partnership property, the only inconsistency was between the rule of survivorship and the presumption that partnership property was held in common. Ultimately however a contrary agreement would prevail. There was clear evidence that S and B had agreed to take the property, as beneficial joint tenants in full knowledge of what that would mean.

Appeal allowed.

JOHN FREDERICK BATHURST (AS ADMINISTRATOR OF THE ESTATE OF MICHAEL DAVID BATHURST) v PHILIP CHARLES SCARBOROUGH (2004)

CA (Civ Div) (Rix LJ, Jacob LJ) 1/4/2004

“Lawtel” 1st April 2004