High Court Steps In to Unwind Former Friends' Joint Property Venture
Friends who go into business together sadly often forget that personal relationships do not always stand the test of time. Trust alone does not provide a firm foundation for such ventures and, as a High Court ruling showed, legal formality at the outset should never be dispensed with.
The case concerned two married couples who entered into a joint buy-to-let property venture. When they fell out, a dispute developed as to how the venture was to be wound up. The disagreement focused on four properties. After they entered into mediation, a settlement agreement was reached.
The settlement resolved issues concerning each couple's respective shares in the properties. It also provided for the appointment of a chartered surveyor to conduct independent valuations. With the objective of achieving a clean break, it sought to create mechanisms by which various properties would be sold or interests in them transferred between the couples.
One couple, however, asserted that the surveyor's valuations were flawed. Further obstacles remained in the path of winding up the venture in that the couples could not agree on the correct interpretation of the settlement agreement. Proceedings were eventually launched with a view to achieving a final resolution.
Ruling on the case, the Court rejected arguments that the jointly instructed surveyor had departed from his brief. His valuations were binding on both couples. On a true interpretation of the settlement agreement, one couple was bound to assign to the other a beneficial interest in one of the properties. They were also obliged to cooperate in the open market sale of the other three properties.
In making orders of specific performance to give effect to its interpretation of the settlement agreement, the Court noted that a firm response was needed to bring about some degree of finality to a hard-fought dispute between former friends.