Hameed v Packe & Anor, Court of Appeal - Chancery Division, November 15, 2018, [2018] EWHC 3061 (Ch)

Resolution Date:November 15, 2018
Issuing Organization:Chancery Division
Actores:Hameed v Packe & Anor
 
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Case No: HC-2014-001222

Neutral Citation Number: [2018] EWHC 3061 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

CHANCERY DIVISION

Royal Courts of Justice

Rolls Building

Fetter Lane

London, EC4A 1NL

Date: 15/11/2018

Before:

MRS JUSTICE FALK

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Between:

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Mark Blackett-Ord and Rose Fetherstonhaugh (instructed by Adams & Remers LLP) for the Claimant

Stuart Hornett (instructed by Irwin Mitchell) for the First Defendant

Hearing dates: 30 October to 6 November 2018

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JudgmentMrs Justice Falk:

  1. This case relates to a dispute between the claimant, Islam Hameed, and the first defendant, Charles Packe, in relation to the dissolution of two partnerships, known as the AC Properties and Apsley Road partnerships (``AC Properties'' and ``Apsley Road'' respectively). The second defendant, Ahsan Hameed (``Ahsan''), is the claimant's brother and was formerly a partner in AC Properties. He has taken no part in these proceedings, and I understand that he now unfortunately suffers from dementia.

  2. Despite some efforts to narrow the points in dispute, there are a significant number of issues between Islam Hameed (to whom I shall refer as Mr Hameed) and Mr Packe. In brief summary, the most substantial areas of dispute relate to:

    a) the date of dissolution of AC Properties, with Mr Packe contending that this occurred in 2007 and Mr Hameed saying it only occurred after he gave notice of dissolution in 2014;

    b) whether an undated document which Mr Packe says governed the dissolution of AC Properties and which he says was signed by Ahsan on behalf of Mr Hameed (the ``Disputed Document''), was agreed by Mr Hameed as Mr Packe says it was in 2007, or was signed without Mr Hameed's authority by Ahsan and Mr Packe in 2013 as Mr Hameed contends;

    c) the profit-sharing ratio in relation to Apsley Road, which Mr Hameed says was 50:50 and Mr Packe says should be treated as approximately 70:30 in his favour; and

    d) the treatment of a number of individual properties, of which the most significant in dispute were properties referred to as 279 and 281 Church Road. (I shall refer to properties throughout using the labels adopted by the parties.)

    Background

  3. AC Properties was established at some point between 1995 and 1996. The exact date of formation, and whether Mr Hameed was a partner initially, are not agreed, but it is not disputed that by the period relevant to this dispute the partnership comprised Mr Packe, Mr Hameed and Ahsan in the proportions 50:25:25. The purpose of the partnership was to acquire, develop and then rent out or sell properties. The partnership was successful. Each partner brought a different expertise. Mr Packe was a mortgage broker with financial contacts. Mr Hameed ran a hardware shop named ``Emertons'', which put him in a position not only to be able to arrange repairs and improvements through builders who used the shop (as well as a small amount of building work undertaken by Emertons itself) but, using his local knowledge and contacts, to identify possible properties for purchase. Ahsan had a background in accountancy and was also involved with Emertons as a partner of Mr Hameed. Ahsan did the bookkeeping for both Emertons and AC Properties, including the VAT returns for Emertons. In contrast Mr Hameed's role at Emertons was very much on the shop floor.

  4. The terms of the AC Properties partnership were initially undocumented. On 16 September 2002 all three partners signed a fairly brief written partnership agreement, which provided among other things that the partnership would be deemed to have commenced on 1 January 1996 and that capital and profits would belong to the partners, and the partners would bear losses, in the proportions stated above. It seems that the parties then forgot about the existence of this document until the dispute was relatively advanced.

  5. In 2005 it was agreed that Ahsan would cease to be a partner in AC Properties. There is no dispute that over the following couple of years partnership properties were distributed between the parties under some form of ``Disposal Programme''. Mr Hameed says that no final agreement was ever reached, that the distribution process was never completed, and that the Disputed Document relied on by Mr Packe was in fact produced in 2013 and was not agreed by him, although it did to a large extent reflect actual distributions made. In particular, Mr Hameed says that he did not agree the cash adjustment referred to in that document of £115,800 in favour of Mr Packe, or the allocation to Mr Packe of the property or properties referred to in that document as ``Church Road''. In contrast, Mr Packe says that the partners concluded an agreement which is reflected in the Disputed Document in September or October 2007.

  6. In 2005, at around the time that Ahsan decided to leave AC Properties, Mr Packe and Mr Hameed agreed to start a slightly different business, which they called Apsley Road. This partnership was on a 50:50 basis. Documentation was extremely limited. There was no written partnership agreement and at no stage were proper partnership accounts produced. Although initially disputed by Mr Packe, it is now accepted that the parties agreed that most of the properties distributed to them from AC Properties (the ``Original Properties'') should be made available for use by the new partnership, rather being contributed as partnership capital. The idea was that the Original Properties could be used both as security for borrowings taken on by the partnership and as a source of income for the partnership, with the funds derived from the borrowings and the rental income being available to acquire, repair or improve further properties which would be owned by the partnership (the ``Acquired Properties''). The Original Properties themselves, as opposed to the rental income from them (net of outgoings), were however not contributed as partnership assets.

  7. It is also now common ground that both parties provided initial capital contributions to Apsley Road in cash, obtained from remortgaging properties distributed to them from AC Properties. The amounts were £199,019 in the case of Mr Packe and £126,421 in the case of Mr Hameed.

  8. The focus of the new partnership was on acquiring and improving properties for rental income rather than developing them for sale, and a number of properties were acquired. A separate bank account was set up at NatWest. The Barclays account previously used by AC Properties remained in use to receive income from some of the properties previously held by AC Properties and now made available to Apsley Road. There was no agreement in place between the partners for drawings or profit distributions (the focus instead being on using income to invest in property), but it is part of Mr Hameed's case that Mr Packe used his control of the finances to make unauthorised drawings.

  9. Mr Hameed's elder son Amer Hameed (``Amer'') was involved in providing letting and management services to Apsley Road, including properties distributed to Mr Hameed from AC Properties and some properties distributed to Mr Packe. These activities were conducted by Amer through a business known as First Options, which during the relevant period was conducted initially by Amer as a sole trader and was then incorporated as First Option Estate Agents Limited in 2011. (An earlier iteration of First Options had previously been run by Mr Hameed, Ahsan and Ahsan's son Faisal, but this ceased trading in 2004.)

    These proceedings; appointment of Mr Goldie

  10. On 19 June 2014 Mr Hameed gave notice dissolving, or purporting to dissolve, both partnerships with effect from 1 July 2014. Shortly thereafter he applied to the court for a declaration of dissolution, accounts of assets and liabilities and consequential enquiries. Mr Packe defended the claim and also made a counterclaim. The steps towards trial have been lengthy and somewhat tortuous, involving a total of 10 witness statements by each of Mr Hameed and Mr Packe. Along the way various steps were taken by the court, including orders relating to the distribution of the properties owned by Apsley Road and the appointment of an expert accountant, Julian Goldie, now of Gerald Edelman, to prepare partnership accounts. Mr Goldie's work was however significantly hampered by the absence of full records, by an apparent mixing of partnership income and expenditure with income and expenditure attributable to the other partnership or to the partners individually, and by the outstanding areas of dispute.

  11. The current position is that, pursuant to an order made by Mr Justice Morgan on 4 October 2018, a lengthy list of issues must be resolved by the court, following which those issues will be referred back to Mr Goldie to fit into his own calculations and ultimately to produce final accounts.

    The evidence

  12. The principal witnesses were Mr Hameed and Mr Packe. Evidence was also provided by Mr Goldie, including an expert report. There was no particular dispute over Mr Goldie's evidence and I do not need to refer to it specifically. I should say though that it has however been of significant assistance in shedding some light on the detailed, and confused, financial aspects of the parties' dealings.

  13. In a number of respects Mr Hameed was not a convincing witness. He had a tendency either to say that he did not remember things, or to deny that things happened where there was evidence that they had. His account of certain events changed during the course of the proceedings, and in some instances during the course of his oral evidence. He clearly does not like paperwork and seeks to avoid it. He gave no convincing explanation as to why Amer, whose evidence would have been relevant on some of the material issues, was not giving evidence.

  14. By way of example...

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