[2002] EWHC 1179 (CH)

Case No: HC 20005295
 
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 14th June 2002

Before :

THE HONOURABLE MR JUSTICE FIELD
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Between :

	Mary Ann Robinson	Claimant	
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	Edward Reeve	Defendant	

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Mr. David Phillips Q.C. and Mr. Mark Sefton (instructed by Messrs. Beaumonts) for the      Claimant.
Mr. Thomas Seymour (instructed by Boyes Sutton & Perry) for the Defendant.

Hearing dates : 16, 17, 18, 19 April 2002
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Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

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Mr Justice Field  :

Introduction 
1.	In this Action the Claimant, Mary Ann Robinson ("Mrs. Robinson") seeks a declaration against her brother, Edward Reeve (“Mr. Reeve”) that they hold as partners in half shares a large number of valuable residential properties most of which are tenanted and situated in Pimlico, London SW1. In the alternative, Mrs. Robinson claims that Mr. Reeve holds properties he has acquired in his own name on resulting trust for the two of them in equal shares. Mr. Reeve denies that there was ever a partnership between him and his sister whether in respect of the properties or the rental income derived therefrom. He also denies that he holds the properties purchased in his sole name on trust for his sister.  
2.	Mrs. Robinson and Mr. Reeve were the children of Alfred Reeve and his second wife, Kathleen (“Mrs. K. Reeve”). Alfred Reeve had two older children by his first wife: a son, Alf, and a daughter, Dorothy.  Alfred Reeve owned 97 of the 100 issued shares in Alfred Reeve (Investments) Limited ("ARIL"), a small property company that owned interests in a number of tenanted residential properties in Pimlico ("the Pimlico properties"). On 24 October 1964 Alfred Reeve died. At this time the business of ARIL was being managed day-to-day by Dorothy and her husband, Sidney Monk, but on the death of Alfred Reeve they almost immediately resigned their positions with ARIL and stopped managing its business. This led to the management of the properties being taken over by Mr. Reeve who at this time was a young man of twenty-one who had just graduated in Estate Management from London University and was working for a firm of Chartered Surveyors, Gerald Eve & Co. Mr. Reeve’s mother had no experience in commercial matters; nor did his sister, Mrs. Robinson, who had married a farmer and was wholly occupied in bringing up her two children, helping on the farm and doing part time market research.
3.	 Under his will Alfred Reeve left 40 shares in ARIL to Mrs. K. Reeve (who already held 1 share) and 19 ARIL shares each to Dorothy, Mrs. Robinson and Mr. Reeve. Dorothy already owned 1 ARIL share. She died in May 1966, leaving all her estate to her husband. Relations between Dorothy's husband, Sidney Monk, and Alfred Reeve's second family--Mrs. K. Reeve, Mrs. Robinson and Mr. Reeve-- were strained. Eventually, after tortuous negotiations initiated and watched over by Mr. Reeve, Mr. Monk sold all his interest in Alfred Reeve's estate to Mrs. Reeve, Mrs. Robinson and Mr. Reeve for £14,400. Meanwhile, the remaining share in ARIL had been acquired from Alf Reeve's estate so that between them Mrs. K. Reeve, Mrs. Robinson and Mr. Reeve now owned all of the 100 issued shares in ARIL.
4.	Mr. Reeve was unsure whether ARIL was the best vehicle for carrying on the letting of the Pimlico properties. In some hand written notes he made sometime in 1965 or 1966 for the purpose of seeking advice, he wrote:  “Setting up Company/Trust/ Partnership to run properties and pay least tax with the majority of income to K. Reeve (my mother. We envisage £2,000 pa [£2500] to her £800 to my sister and £800 to me)."
5.	In February 1966, ARIL was placed in members' voluntary liquidation. and the accountant who had acted for the company, Mr. Guy Wilsher, was appointed Liquidator. This appears to have been done with a view to raising money to pay estate duty.  In July 1967 Mr. Reeve sought tax advice from a solicitor, Mr. Edward George, who was to become an acknowledged expert on capital gains tax. By this time, Mr. Reeve had told his sister and his mother that he would like to acquire one of the Pimlico properties, 12 Lupus Street, for himself since he lived there. 
6.	In a letter dated 27th July 1967 Mr. George advised Mr. Reeve against the incorporation of another company to hold the Pimlico properties because there might be double taxation if the properties appreciated in value. Mr. George suggested that the properties be distributed in specie to the shareholders to be held by them under a Declaration of Trust as tenants in common in the same proportions in which they held their shares in ARIL, subject to an adjustment to reflect Mr. Reeve's acquisition of the leasehold interest in 12 Lupus Street. He also advised that a management company be set up to allow for a portion of the rents to be received as earned income in the form of salaries paid to directors. 
7.	Mr. Reeve wrote to Mr. George by letter dated 14th December 1967. The penultimate paragraph of that letter reads as follows:
"Turning to the Trust and Management Company in operation I am concerned that in seven year's (sic) time the income from the properties will be drastically reduced when five leases expire. Will it be possible for the Trust to retain a proportion of the net income it receives from the Management Company and invest this in a sinking fund, or more property, to off-set this? Also would it be possible for the Trust to borrow on mortgage, against the security of the freehold properties, to extend the leases? Further, is income taxed on receipt by the Trust or only when and if distributed to the beneficiaries?"
8.	This letter is important. It shows that Mr. Reeve regarded the trust that Mr. George had advised should be declared as being a business vehicle. It also shows that Mr. Reeve contemplated the possibility of more properties being acquired as well as existing leases being extended.
9.	Mr. George's advice was acted on. A management company, K Reeve Limited ("KRL") was incorporated in May 1968 which opened two client accounts with the Vauxhall Bridge Road branch of Barclays Bank; one to receive the rents from the Pimlico properties and the other to receive the rents from some country properties in which Mrs. K. Reeve had a life interest. On 3rd December 1968 the leasehold interest in 12 Lupus Street was conveyed outright to Mr. Reeve and by transfers executed on 21st November and 3rd December 1968 ARIL's interest in the remaining Pimlico properties was transferred to Mrs. K. Reeve, Mrs. Robinson and Mr. Reeve (“the proprietors”) who, on 22nd January 1969, declared that they held the properties on trust for themselves as beneficial tenants in common in the following shares: 46.3% (Mrs. K. Reeve); 29.5% (Mrs. Robinson); and 24.2% (Mr. Reeve). The freehold properties transferred were: 32, 84, 86, 88 and 90 Alderney Street; 35 Cumberland Street; 16 Sussex Street; 53, 55; and 62 Winchester Street. The leasehold properties transferred were: 99 Alderney Street; 16 Denbigh Place; 23/23a Sussex Street and 29 Winchester Street.
10.	On 24th November 1978, Mr. Reeve and Mrs. Robinson each purchased in their own names two additional houses in Pimlico, 70 and 72 Denbigh Street. Mrs. Robinson contends that these properties are partnership property and are each held for herself and her brother in equal shares. In support of this contention she submits that there was a partnership from the moment that the Pimlico properties became owned by her mother, her brother and herself as beneficial tenants in common under the 29th January 1969 Declaration of Trust. I therefore propose to set out what happened in the period 29th January 1969 to 24th November 1978 (“the first period”); then to consider whether there was indeed a partnership during this period and if so whether it was as to the properties as well as to the income derived from the properties; and then to decide whether 70 and 72 Denbigh Street are each held on behalf of Mrs. Robinson and her brother in equal shares.
11.	During the first period, all the rents from the Pimlico properties were received into KRL's No.1 Client Account held with Barclays Bank. Any money required for repairs or other expenses such as advertising for tenants was drawn out of this account as were the KRL Directors' salaries, any additional drawings by the proprietors and KRL’s management charges. Until 1977 the Revenue allowed the salaries to be treated as earned income but treated the balance of the income from the properties as unearned income. In the late 1970s, however, the distinction for tax purposes between earned and unearned income was abolished and KRL henceforth ceased to be used as a management company. At this point (January 1979) the proprietors opened a joint account in all three of their names with Barclays Bank at the same branch which had operated the KRL No. 1 Client Account, and this new account was used in precisely the same way as the former account had been used. Thus all rents were paid into the new account and all outgoings such as repair expenditure and all drawings by the three proprietors were paid out of the account.
12.	Starting with the year ending 5th April 1969, accounts for the income and expenditure in respect of the Pimlico properties (and later also in respect of  after-acquired properties) were drawn up for each financial year by Mr. Guy Wilsher’s firm, Messrs. Wilshers (later called Bryan Wilsher & Co and then Scott Temple Wilsher & Co.). To begin with the accounts were headed “K. Reeve, M.A. Robinson and E. Reeve” but those for the year ending 5th April 1977 and all subsequent accounts were headed “Reeve Partnership”. No-one instructed the accountants to change the way the accounts were headed: they acted on their own initiative, but none of the proprietors, who signed each year’s accounts, objected.
13.	The accounts included a balance sheet but during the first period none of the properties was shown as an asset. Instead, for the first three years, the assets shown were simply the rents receivable, “agents account” and prepayments and from 1974 there were added to these improvements to the properties. The profit and loss account showed the rents receivable, the expenditure, and the resulting net profit or loss. For the first two years the net profit was shown as having been transferred to “Capital Accounts” in the names of the proprietors in the proportions in which they owned the Pimlico properties, i.e. 46.3% for Mrs. K. Reeve, 29.5% for Mrs. Robinson and 24.2% for Mr. Reeve. Thereafter the net profit or loss was shown as having been transferred to “Partners Current Accounts” in the same proportions. From the outset the balance sheet had a caption “Partners’ Current Accounts” which showed in respect of each proprietor the opening balance, the share of the profit or loss for the year, the drawings for the year and the closing balance. Throughout the first period, any rent received or expenditure incurred in respect of 12, Lupus Street was excluded from the profit and loss account; nor were any improvements included in the balance sheet. However, the rent received was paid into the KRL No 1 Client Account.
14.	It was Mr. Reeve who took principal responsibility for the letting of the properties, although he was working full time as a surveyor. Mrs. K. Reeve and Mrs. Robinson used to assist, however, in the collection of the rents. Mrs. Robinson also handled the advertising for new tenants, showed prospective tenants round, obtained furniture and made curtains.
15.	Mr. Reeve had an abiding concern about the five short leasehold properties, the majority of which were due to expire in 1975: when the leases expired, not only would there be a drop in income, but there would also be a large bill for dilapidations. In 1971 he approached the new owner of the freehold of 16 Denbigh Street, 99 Alderney Street, 29 Winchester Street and 23 Sussex Street, and agreed on behalf of his mother, his sister and himself to surrender their interests in the leasehold of 16 Denbigh Street and to purchase in his and his sister’s names the freehold reversions in 23 Sussex Street, 29 Winchester Street and 99 Alderney Street. To reduce estate duty on Mrs. K. Reeve’s eventual death, she acquired 20 year leases of 23 Sussex Street and 29 Winchester Street at a peppercorn rent so that Mr. Reeve and Mrs. Robinson took the freehold reversions of these properties subject to Mrs. K. Reeve’s 20 year leases.
16.	These transactions (“the 1971 transactions”) were financed by a loan of £25,000 to Mr. Reeve and Mrs. Robinson from The Bristol and West Building Society secured by legal charges over 16 Sussex Street, 32 Alderney Street and 35 Cumberland Street. Mr. Reeve and Mrs. Robinson also each took out 25 year with profits endowment policies for £12,500. The mortgage interest payments were made out of the KRL No 1 Client Account and later out of the Barclays joint account but to obtain the tax relief then available the endowment policy premiums were paid by Mr. Reeve and Mrs. Robinson from their own personal bank accounts.
17.	Notwithstanding that the outcome of these transactions was that Mrs. K. Reeve had only a 4 year lease in 99 Alderney Street and a 20 year lease of 23 Sussex Street and 29 Winchester Street, the income from the properties  continued to be shared in the original proportions of 46.3%, 29.5% and 24.2%.
18.	In January 1972, Mr. Reeve acquired the freehold of 12 Lupus Street for £2,400 under the provisions of the Leasehold Reform Act 1967. He financed this purchase with a loan from The Chelsea Building Society for £5,000 secured on the property. He used the balance of the loan (£2,000) to pay for some repairs on his mother’s investment property in the country. Until 1977 when Mr. Reeve borrowed a further £3,000 from the Chelsea Building Society, the mortgage repayments were made out of his personal bank account, in spite of the fact that the rents received from 12 Lupus Street were all paid into the KRL No 1 Client Account. Mr. Reeve also took out a with profits endowment policy to repay the borrowings after 25 years, the premiums for which he also paid out of his personal bank account.
19.	A further £5,000 was borrowed from The Chelsea Building Society in January 1972, in this instance by the proprietors jointly. The loan was secured by a charge over 55 Winchester Street. The money was used to refurbish the basements of 55 Winchester Street and 84 Alderney Street. The interest payments were made out of the KRL No 1 Client Account. The premiums of the accompanying endowment policy were paid by Mr. Reeve out of his own personal bank account and when the policy matured 25 years later he took the surplus proceeds.
20.	In 1977, Mr. Reeve took a further mortgage advance of £3,000 secured on 12 Lupus Street from The Chelsea Building Society. The money was used for improvements and alterations to the charged property. The interest payments on this loan were paid out of the KRL No 1 Client Account. At this point Mr. Reeve ceased to pay the interest payments on the 1972 loan used to acquire the freehold of 12 Lupus Street out of his personal bank account and caused them to be paid out of the KRL No 1 Client Account. Rent was received from 12 Lupus Street down to 1990 and then again from 1996. It was received into the KRL No 1 Account and after that had been closed into the joint account that was opened by the proprietors with Barclays Bank and after that into the joint account the Royal Bank of Scotland in 1986 (“the RBS account”). 
21.	On 30th May 1977, Mr. Reeve signed a tax return addressed to himself, his sister and his mother on the basis that they were in partnership. The return treated the income as arising from a trade and each of the proprietors was represented to be an active partner entitled to share in the business profits in the same proportions as set out in the accounts. (Prior to 1977, the Revenue had treated the rental income as unearned income, although they had allowed the directors’ salaries paid by KRL [amounting to 15% of the rental income] to be treated as earned income). By letter dated 9th June 1977, Mr. Reeve, in the course of raising a query with Wilshers asked: “Should the company [KRL] sell its furniture to the Partnership for £649 and pay out salaries of this amount plus any other monies in the company?” [Italics supplied].
22.	In cross-examination, Mr. Reeve said that at the material time he understood a “partnership” to be a business where individuals shared the profits in agreed proportions.  When asked about the 1977 tax return he first said that when signing it he must have believed there was a partnership in the legal sense. Later he retracted this statement, saying he signed the return without considering the legal implications of there being a partnership. The following morning he told the court that he accepted that from 1997 onwards he believed there was a partnership with his sister but that this was as to income only. 
23.	It was Mrs. Robinson’s evidence that she thought that people working together were partners and that throughout she had regarded herself as being in partnership with her brother.
Was there a partnership during the first period, and if so, what did it encompass: rental income alone or rental income and the properties? 
24.	Section 1(1) of the Partnership Act 1890 (“the PA”) provides that:  “Partnership is the relation which subsists between persons carrying on a business with a view of profit.” By section 45 of the PA, “business” includes “every trade, occupation, or profession.” As is stated in paragraph 2-02 of Lindley and Banks On Partnership this definition of “business” means that virtually any activity or venture of a commercial nature will be regarded as a business for the purpose of s. 1 (1).
25.	A relationship constituting partnership is a relationship resulting from a contract. It follows that where there is no express partnership agreement (as here), a court must determine whether a partnership existed by considering whether it is to be inferred from the parties’ conduct that they agreed to carry on a business with a view to profit. In making this determination, regard must be had to the rules for determining a partnership contained in section 2 of the PA. The rules relevant to this action are Rules (1) and (2) and the opening words of Rule (3). These rules read as follows:
(1) Joint tenancy, tenancy in common, joint property, common property or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof. 
(2) The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived. 
(3) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but the receipt of such a share, or of a payment contingent on or varying with the profits of the business does not of itself make him a partner;
26.	When applying these rules the correct approach is not to conclude that there is a partnership simply because one of the presumptions arises on the facts and  is not rebutted by something else; instead, all the facts must be considered, not just those giving rise to the presumption, and, without giving undue weight to any of them, an inference must be drawn from the whole; see Davis v Davis [1894] 1 Ch. D. 393. Further, the question is not whether the parties set out with the intention of establishing a relationship which the law calls “partnership” but whether they intended to conduct their affairs in such a way that amounts in law to a partnership. 
27.	Mr. Seymour who appeared for Mr. Reeve submitted that at no time was there a partnership, whether as to income or as to the properties or as to anything else. He advanced a series of general submissions on the overall question of whether there was a partnership at all and also a set of specific submissions arguing that if there was a partnership, it was as to income only. On the question  whether there was a partnership at all, he submitted that the correct inference to be drawn from all the facts was that the parties were simply co-owners under a Declaration of Trust who, pursuant to a loose family arrangement, were pooling the rents from the properties for administrative convenience. He relied in particular on Rule (1). He argued that, given that the parties had obviously turned their minds to how things were to be done following the winding up of ARIL, and given that they had had the benefit of legal advice, if they had truly intended to create a partnership they would have discussed doing so between themselves (which they did not) and would then have executed an express agreement to this effect (which again they did not). He also relied on the fact that the rental income continued to be divided in accordance with the proportionate shares even though 16 Denbigh Place had been disposed of and Mrs. K. Reeve had not  joined in the acquisition of the freehold reversions in 23 Sussex Street, 29 Winchester Street and 99 Alderney Street.
28.	Mr. Seymour also placed some weight on the fact that until 1977 the rental income (save for the directors’ salaries) was treated by the Revenue as unearned income, which indicated (he said) that the parties were not carrying on a business with a view to profit.  He further submitted that: (1) the tax returns between 1977 and 1986 were only one factor and had in any event turned out to be incorrect in light of Griffiths v Jackson; (2) the annual accounts were an inconclusive basis for finding a partnership because they derived from the Declaration of Trust and equitable co-ownership; (3) the words “partner” “current account” and “Reeve Partnership” which appeared in the accounts were used by the accountants on their own initiative and the fact that the parties accepted them is of no significance because they did not know the legal definition of partnership; and (4) the use of the words “partner” and “partnership” by Mr. Reeve in the contemporaneous documents and when cross-examined were also an insecure basis for finding a partnership because he was a layman, not a lawyer.
29.	In my judgement, the letting of the Pimlico properties, involving as it did, the finding of tenants, the collection of rents, the keeping of the properties in repair and the furnishing of the properties (or most of them), plainly constituted a business. Mr. Reeve took the initiative in restructuring the way in which the properties were held after Alfred Reeve’s death, and also in managing the letting business, but he consulted with and informed his mother and sister on all significant matters. In other words he sought and obtained their agreement as to how the business would be structured and managed. Mrs. K. Reeve helped with the collection of the rents and beginning shortly after the properties had been distributed in specie, Mrs. Robinson also helped with the collection of the rents and did the work necessary to find tenants, acquired furniture, made curtains and cleaned and prepared the rooms that were to be let. It follows in my judgment that in the first period the letting business was carried on in common by Mr. Reeve and his mother and sister. There is also no doubt that the business was carried on with a view to the proprietors sharing in its profits and losses and that this was what the three of them intended. They saw no need for an express agreement establishing a partnership as to the income. They trusted each other and understood between themselves that they would run the letting business together and would share in its profits and losses in the same proportions in which they owned the Pimlico properties. The attitude of the Revenue to how the income was to be assessed is irrelevant. What matters is whether there was a business carried on with a view to profit (which there plainly was) and whether (as I find) the parties intended to carry on that business together and to share in its profits or losses. 
30.	Did the partnership encompass not only the rental income, but also the Pimlico properties? On this question, Mr. Seymour relied on the general submissions set out above and on the following arguments: (1) the accounts were for rental income only: they did not purport to show capital assets and did not include partners’ capital accounts; (2) had there been a partnership as to the properties, the profit sharing ratios would have been adjusted after the 1971 transactions; (3) 70 and 72 Denbigh Street were acquired respectively in the sole names of Mrs. Robinson and Mr. Reeve: if the partnership had encompassed the properties one would have expected these two properties to be acquired in the joint names of all three proprietors; (4) all subsequent acquisitions, the income from which was shown in the accounts (“the after-acquired properties”), were in the sole name of Mr. Reeve (save in one instance where the purchaser was Mrs. Robinson); (5) the acquisition costs of these after-acquired properties were debited to the individual owner’s account either on acquisition or on re-sale; and (6) the transfer by Mrs. K. Reeve to Mrs. Robinson and Mr. Reeve between 1978 and 1987 of her interest in the Pimlico properties.
31.	Mr. Seymour also contended that having regard to the many acquisitions after November 1978 which he alleged Mrs. Robinson knew were in Mr. Reeve’s sole name and which were treated as belonging to him in the accounts, Mrs. Robinson was estopped by conduct or by convention from asserting that any of the properties was  partnership property.
32.	 Although I have found this question difficult to answer, I have come to the conclusion that the partnership that existed in the first period encompassed not only the rental income but also the Pimlico properties and the interests acquired in 1971 save for the 20 year leases in the name of Mrs. K. Reeve. I find that the proprietors intended that the Pimlico properties should be part of and belong to the business they were engaged in after the winding up of ARIL. The position is analogous to that in Waterer v Waterer (1873) L.R. 15 Eq. 402 where it was held that land employed in the business of market gardening was partnership property and therefore personal estate. In giving judgement, Sir William James L.J. said: 
“They [the partners] necessarily appropriated the soil itself for gardening purposes which could not be carried on without it. It is, in fact, in nursery gardening, practically impossible to separate the use of the soil for the trees and shrubs, from the trees and shrubs themselves that are part of the freehold, and at the same time constitute the substantial stock-in-trade.”
So too in the case of a business constituted by the letting of properties; it is practically (but not, I accept, legally) impossible to separate the use of the properties let from the rent paid by those who lease them. 
33.	 In my judgement, ARIL was not wound up because the proprietors wanted to obtain separate interests in the properties with which they could then deal   individually and without  regard to the resulting impact on the letting business. ARIL was wound up because of difficulties with estate duty and capital gains tax. In my view, when the Declaration of Trust was executed Mr. Reeve regarded the properties as forming part of the business and contemplated that business continuing in the same manner as it had when ARIL was in existence. To my mind this is clear not only from the fact that the properties were essential for the achievement of the rental income that was the fruit of the business, but also from his hand written note of 1965/66 and his letter of 14th December 1967 to Mr. Edward George. He also accepted in cross-examination that at this time he was contemplating using part of the rental income and mortgaging the Pimlico properties to acquire new property which would not be a personal investment. As I have already said, whilst it was Mr. Reeve who took the lead in dealing with the consequences of ARIL’s winding up, he discussed matters with his mother and sister and they agreed with his plans. Thus all three proprietors must be taken to have agreed that the Pimlico properties should be assets of the business and that the business might acquire other properties in the future. 
34.	It is true that the after-acquired properties were all purchased in the sole name of Mr. Reeve, save for one (which was purchased in Mrs. Robinson’s name) and that upon re-sale the acquisitions were reflected in the current account of the purchaser. However, even assuming that Mrs. Robinson knew that these purchases were in her brother’s sole name, they only began to be made almost nine years after the Declaration of Trust. It follows in my view that the purchase of the after-acquired properties is not inconsistent with there having been an intention several years earlier that the Pimlico properties and the freehold reversions in 23 Sussex Street, 29 Winchester Street and 99 Alderney Street should be partnership assets. It also follows that these purchases cannot found the estoppel for which Mr. Seymour contended. Even if Mrs. Robinson did know about the subsequent purchases in Mr. Reeve’s name, her acquiescence therein does not amount in any way to a rescission or variation of the original agreement that the Pimlico properties and the freehold interests acquired in 1971 should be assets of the business. 
35.	I do not accept the contention that the proprietors cannot have intended the Pimlico properties to be partnership assets because: (a) the freehold acquisitions in 1971 were in the name of only two of them; and/or (b) Mrs. K. Reeve between 1978 and 1987 transferred her interest in the Pimlico properties to her son and daughter; and/or (c) the income continued to be divided in accordance with the shares in the Pimlico properties established under the Declaration of Trust after the 1971 acquisitions and the transfer by Mrs. K. Reeve of her interest in the Pimlico properties. These matters are not inconsistent with the Pimlico properties becoming partnership assets. Mrs. K. Reeve was the largest shareholder in KRIL and contributed the largest share in the properties to the business. In the early years after the Declaration of Trust she assisted with the collection of rents. It was her intention at all material times that her share in the properties should pass to her children and remain in the business. The decision to acquire the freehold interests in 1971 in the names of Mr. Reeve and Mrs. Robinson only and the transfer of Mrs. K. Reeve’s interest in the properties to her children were based purely on estate duty considerations and did not stem from an understanding that the properties were not assets of the business. Likewise the continuation of the original profit shares after Mrs. K. Reeve no longer owned 46.3% of the properties: this did not stem from the property interests created by the Declaration of Trust but from the fact that Mrs. K. Reeve had contributed her interest in the properties in 1969 and had subsequently agreed to transfer that interest to her children for nil consideration, the properties in question remaining assets of the business.
36.	I accordingly conclude that there existed a partnership in the first period which encompassed the Pimlico properties and the freehold reversions acquired in 1971. The business of the partnership was letting out the Pimlico properties for rent. The partners were Mrs. K. Reeve, Mrs. Robinson and Mr. Reeve. The partnership was a partnership at will. The profits were shared in the same proportions as the Pimlico properties were owned under the Declaration of Trust. The partners’ interests in the partnership property constituted by the Pimlico properties corresponded to the interests created under the Declaration of Trust. As for the freehold reversions acquired in 1971, Mrs. Robinson and Mr. Reeve alone had interests in these and those interests were equal shares.
37.	I should add that Mrs. Robinson did not persist in her pleaded claim that the leasehold and freehold interest in 12 Lupus Street constituted partnership property. In my opinion this concession was well made. Mrs. Robinson and her mother plainly agreed that Mr. Reeve should be solely entitled to the leasehold interest at the time of the Declaration of Trust. As for the freehold interest, this was acquired in the first instance with money borrowed by Mr. Reeve personally and it was his money that paid the interest. Further, since he contributed the rent from 12 Lupus Street to the pool (which he was not obliged to do) and the rent exceeded the interest, I think he should be regarded as having continued to pay the interest out of his own money when the interest was paid out of the successive joint accounts in the period 1977 to 1990. The borrowing that financed the purchase of the freehold interest and the  refurbishment of the property (totalling £8,042.54) was repaid by Mr. Reeve on 23rd March 1990 out of the joint account established in 1986. This withdrawal was a drawing against his profit share and did not constitute money belonging to the partnership. 
 The witnesses.
38.	Before I turn to examine the acquisition of 70 and 72 Denbigh Street I give my assessment of the witnesses. Mrs. Robinson gave evidence in her own behalf and called Mr. Colin Campbell (the man she now lives with) and Mrs. Erica Deavin. The Defendant (Mr. Reeve) himself gave evidence and also called Mr Alan Temple (who had drawn up the accounts since 1987) and Mr. Arthur George (a solicitor who had acted on the acquisition of the disputed properties and who was the son of Edward George whom Mr. Reeve had begun to consult in 1967).
39.	Mrs. Robinson struck me as being a very practical woman with abundant common sense. She is not experienced in matters of business. She was somewhat in awe of her brother’s business acumen and experience. She left to him the day-to-day management of the properties and the letting business. Her contribution to the business was, as I have indicated above, the collection of rents, the finding of tenants, the making of curtains and the acquiring of furniture. As her counsel, Mr. Phillips Q.C., put it, as a witness she was “not good on detail”. For example, her recollection that she agreed to her brother increasing his drawings from about 1992 because he was facing heavy outgoings turned out to be quite erroneous: it was her drawings not her brother’s that increased at this time.
40.	Encouraged by Mr. Campbell she began in late 1997 to harbour suspicions that her brother was keeping things from her: she made enquiries but was ill for over a year with cancer. On 27th July 1999 she attended a meeting with her brother and Mr. Temple and was there given a letter which showed that all of the after-acquired property with one exception had been acquired in her brother’s sole name. I accept that she was genuinely shocked and very upset to receive this letter. However, as will appear below, I am quite satisfied that in the vast majority of cases she knew that her brother was acquiring the property in his sole name. It may be that she did not intend to consent to Mr. Reeve becoming the sole legal and beneficial owner of the property and that it is this that explains her reaction in July 1999 and the position she has adopted in this litigation. Alternatively, it may be that she gave her informed consent but later convinced herself that she had not done so. In any event I accept that she honestly believed in July 1999 that she had not given her consent and that she honestly remains of this belief. 
41.	The other witnesses called by Mrs. Robinson, Mr. Campbell and Mrs. Deavin were both unquestionably truthful.  I accept their evidence without reservation.
42.	Mr. Reeve’s evidence was much more detailed than that of Mrs. Robinson because he had been closely involved in all aspects of the business whereas she had not. I find that Mr. Reeve was a truthful, accurate and reliable witness. It is true that in cross-examination he got into some difficulty when questioned about what was in his mind when he signed the 1977 tax return. However, I think that stemmed from the fact that at the time he signed the tax return he did not know what the legal definition of a partnership was or the full legal consequences that flowed from the relationship of partnership.
43.	Mr. Arthur George and Mr. Temple were each careful and measured witnesses. I accept their evidence in its entirety.
70 and 72 Denbigh Street 
44.	The implicit understanding between Mr. Reeve and Mrs. Robinson was that each could buy income-producing property for him or herself if this was done with personal money. Section 21 of the PA provides:
Unless the contrary intention appears, property bought with the money of the firm is deemed to have been bought on account of the firm.
45.	Accordingly, it does not follow from my conclusion that there was a partnership encompassing the Pimlico properties and the freehold reversions acquired in 1971 that all after-acquired property, bought as it was, with one exception, in the sole name of Mr. Reeve, ipso facto became partnership property. Instead, whether the acquired property became partnership property depends on whether it was purchased with “money belonging to the firm” and, even if it was, whether the non-purchasing partner consented to the purchase being in the sole name of the purchasing partner.
46.	The purchase of 70 and 72 Denbigh Street was financed by a mortgage advance of £40,000 from Twentieth Century Banking Limited (“TCBL”) to Mr. Reeve and his mother and sister which was secured by a charge over 62 Winchester Street. Mr. Reeve suggested to his sister that she should own outright number 70 and that he would own number 72. He did this because he contemplated re-housing the tenants in these two properties in premises owned by the two of them in equal shares. Mrs. Robinson agreed with her brother’s proposal and number 70 was conveyed to her in her own name and number 72 was conveyed to Mr. Reeve in his own name. 
47.	In August 1991 Mrs. Robinson sold a flat on the ground floor of number 70 for £110,000, the balance of which was credited to her current account after the apportioned purchase price and cost of improvements had been deducted and thereby repaid to the joint account with Barclays. In connection with this sale she was sent a completion statement by Mr. Arthur George’s firm, George & George, which stated that a balance of £109,282.19 was due to her. This statement was sent to 12, Lupus Street where the office used for running the letting business was situated. Mr. Reeve used to leave letters that were addressed to his sister or which he wanted her to see in a drawer that he knew she would routinely open when dealing with rent collections and the like. Mrs. Robinson said in evidence that she did not recollect receiving this document but I hold that she did indeed receive it.
48.	Mrs. Robinson also said in evidence that her brother suggested that it would be a “bit of fun” for one of the Denbigh Street properties to be registered in his name and the other to be registered in hers and she was happy to go along with this. However, she said that she viewed the properties as being purchased jointly by the business.
49.	In my judgement, there can be no doubt that Mrs. Robinson consented to Mr. Reeve acquiring number 72 in his own name and to she herself acquiring number 70 in her own name. Notwithstanding that the loan was made to all three of the proprietors and was secured on one of the Pimlico properties, and notwithstanding that the rent was paid into the Barclays joint account and was included in the profit and loss and account, I find that Mr. Reeve was reasonably entitled to conclude (as he did) that Mrs. Robinson was accepting that the properties would be separately owned and would not be held jointly for the two of them. I also find that Mrs. Robinson understood from the statement of account sent to her in August 1991 that the solicitors were accounting to her for the proceeds of sale because she was the sole owner of the flat that had been sold. Accordingly, I hold that neither 70 nor 72 Denbigh Street ever became partnership property; instead each is owned exclusively by the party who purchased it as sole owner.
50.	I go on now to consider the acquisitions and other relevant events that occurred between December 1978 and the end of May 1992 (“the second period”) and between June 1992 to the present day  (“the last period”).
The second period – December 1978 to the end of May 1992 
51.	The first acquisition in the second period was the purchase in the sole name of Mr. Reeve of 14 Lupus Street in the summer of 1979. The purchase price was £76,000. Mr. Reeve already owned the property next door, 12 Lupus Street, where he lived and had an office. He was about to get married and wanted to extend his existing home at number 12 into number 14, but not into the whole of the new property; the part not used as part of his home was to be rented out. The purchase was financed by a loan of £25,000 made to each of the three proprietors by TCBL; a loan of £48,000 to each of the proprietors by Barclays Bank; and the withdrawal from the Barclays joint account of £5250. The TCBL loan was secured by a charge over 88 Alderney Street, one of the properties I have held to be partnership property. The security for the Barclays Bank loan was a charge over 14 Lupus Street. Each of the proprietors signed the application for the TCBL loan and the legal charge over 88 Alderney Street Mr. Reeve alone signed the charge over 14 Lupus Street. 
52.	 The total of the purchase price, the cost of the refurbishment and some of the costs were debited to Mr. Reeve’s current account in the accounts. All of the rent from that part of 14 Lupus Street not occupied by Mr. Reeve as part of his home was pooled with the rents from the Pimlico properties and 70 and 72 Denbigh Street. The rent received exceeded the interest paid on the loans out of the Barclays account.
53.	Mr. Reeve discussed his desire to acquire 14 Lupus Street so that he could use part of it to extend his home at number 12 with his mother and his sister. I find that they agreed that it was a good idea and told him so in the knowledge that he was proposing to acquire the property for himself; that they were to be joint borrowers of most of the purchase price; and that 88 Alderney Street, a property in which they each had an interest, would be used as security.  Mrs. Robinson said in evidence that she always viewed 14 Lupus Street as a property that had been purchased by and was owned by the partnership. However, I hold that Mr. Reeve plainly gave her and her mother to understand that he intended to acquire 14 Lupus Street for himself alone and in agreeing to his proposal, Mrs. K. Reeve and Mrs. Robinson must be taken to have consented to Mr. Reeve acquiring the property on this basis. I accordingly find that despite the fact that Mrs. Robinson and her mother were joint borrowers with Mr. Reeve of most of the purchase money and joint owners of the property used to secure the TCBL loan, 14 Lupus Street did not become partnership property but is owned by Mr. Reeve alone.
54.	Mr. Reeve refurbished 14 Lupus Street at a cost of £40,000 which was debited from the Barclays joint account. In my view this was money belonging to the firm and there was no evidence that Mrs. Robinson and her mother consented to this use of the account. However, since this money was not used to acquire the property I can see no basis for holding that its expenditure gives Mrs. Robinson any proprietary interest in 14 Lupus Street. Further, I think that Mr. Reeve has repaid this sum out of the rent which he included in the pool when he was not obliged to do so.
55.	In July 1980 Mr. Reeve purchased in his sole name a warehouse in Gelderd Road, Leeds. To finance the purchase he borrowed £95,000 from Bayswater Finance Limited who required security in addition to a charge over the subject property. Mr. Reeve told his sister that he was buying the property and asked her to let him use her property at 70 Denbigh Street as temporary additional security on the basis that he was going to be the sole borrower and would also be charging the warehouse and 72 Denbigh Street. Mrs. Robinson agreed. A composite charge was executed by Mr. Reeve and Mrs. Robinson of all three properties. However, Mrs. Robinson is described in the charge as “the sister of the Borrower” and the only property she charges under this document is 70 Denbigh Street. 
56.	Shortly after completion on 6 October 1980 the loan from Bayswater Finance Limited was repaid out of a further loan to Mr. Reeve from TCBL secured by a charge over the warehouse alone. Mr. Reeve originally intended to sell the property on to a third party immediately it was acquired. This sale failed to materialise, however, and he secured a tenant under a 25 year lease at a rent of £24,000 pa. The rent was pooled with the other rents and was received into the joint account out of which the interest on the loan was paid. The rent received exceeded the interest paid. The acquisition was treated differently in the accounts from how the acquisition of 14 Lupus Street was treated. This was because Mr. Wilsher took the view that Gelderd Road was exclusively an investment property whereas 14 Lupus Street was not. The purchase price was accordingly not deducted from Mr. Reeve’s current account as part of his drawings for the year on the basis that when the property was eventually sold the profit or loss on the transaction would be credited or debited to Mr. Reeve’s current account. 
57.	Mr. Reeve sold Gelderd Road in March 1988 for £325,000 which was paid into the joint bank account. The profit was credited to Mr. Reeve’s current account and the capital cost was left in the joint account.
58.	In my judgement, no partnership assets or money belonging to the firm were used in the acquisition of Gelderd Road. For this reason alone the property never became partnership property but was always in the sole ownership of Mr. Reeve. Even if I were wrong about this, I find that Mr. Reeve told Mrs. Robinson that he was buying the property for himself and that he was entitled to conclude that she consented to this happening. 
59.	 In August 1983 Mr. Reeve acquired the long leasehold interests in 98 and 102 Tachbrook Street in his sole name for £120,000 and immediately sold on the interest in number 102 for £89,000. The net outcome therefore was that the long leasehold interest in 98 Tachbrook Street was purchased for £31,000, plus costs.  In April 1984 Mr. Reeve purchased in his sole name the freehold interest in 67 Winchester Street for £50,000 and in July 1984 he purchased the freehold interest in 98 Tachbrook Street for £2,000.
60.	Mr. Reeve did not seek his sister’s prior consent to his buying these properties in his sole name. He believed that he was using his own money for the purchases and that therefore he was free to make the acquisitions for his own benefit. 
61.	A year after the acquisition of 98 Tachbrook Street, Mrs. Robinson’s personal accountant, Noel Swan, wrote by letter dated 8th November 1984 to Wilshers asking who owned 98 Tachbrook Street.  This letter was forwarded to Mr. Reeve who replied on 4th December 1984 stating that the property had been bought entirely by himself and was not one of his sister’s assets. I am satisfied that Mr. Swan must have passed this information on to Mrs. Robinson who, until she started making enquiries in 1997, left matters as they were. However, in my view, Mrs. Robinson’s inaction in respect of 98 Tachbrook Street is not such as to deprive her of such rights as she might have acquired in the property when it was purchased. The question in respect of 98 Tachbrook Street and 67 Winchester Street is therefore whether Mr. Reeve’s belief that he was purchasing the properties with his own money was correct. If it was, the properties did not become partnership property; if, however, money belonging to the partnership was used for the purchases, the properties acquired belonged to the partnership.
62.	In the years 1977 to 1985, Mr. Reeve paid into the joint account various sums totalling £108,968.00. These sums were in effect loans to the “business” he and his sister were carrying on. At the time he bought 98 Tachbrook Street, the “business” owed him about £54,000 and at the time he acquired 67 Winchester Street it owed him £77,969.00. The net purchase price for 98 and 102 Tachbrook and the purchase price for 67 Winchester Street were drawn out of the joint account. Both Mrs. Robinson and Mr. Reeve were authorised signatories on this account. There is no evidence to suggest that this account, whether from the bank’s point of view, or from the point of view of the account holders inter se, could not be used to repay advances made to the business. In my view the money drawn out by Mr. Reeve to pay for the leasehold and freehold interests in these properties belonged to him: it represented the repayment of money he had lent to the business. Accordingly, I conclude that no money belonging to the partnership was used in these purchases. It follows that the long leasehold interest in 98 and 102 Tachbrook Street acquired in 1983 and the freehold interests in 98 Tachbrook Street and 67 Winchester Street belong exclusively to Mr. Reeve and were never at any time property belonging to the partnership. 
63.	In July 1984 Mr. Reeve purchased the freehold interest in 98 Tachbrook Street for £2,000. The money for the purchase again came out of the Barclays joint account. However, the “business” owed Mr. Reeve considerably more than the sum withdrawn. It follows in my opinion that the £2,000 stands to be treated as a repayment of money due and was not money belonging to the firm. I therefore conclude that the freehold interest in 98 Tachbrook Street is the sole property of Mr. Reeve; it never became the property of the partnership. 
64.	Towards the end of 1984 the freehold reversions of 70 Denbigh Street and 72 Denbigh Street were acquired in the names of Mrs. Robinson and Mr. Reeve respectively. Mrs. Robinson knew all about this and that the purchase price was to come out of the Barclays joint account. In April 1996 the intermediate 10 day interests in each of these properties were acquired, again in the names of Mrs. Robinson and Mr. Reeve respectively. Mrs. Robinson was aware of and consented to this. It follows that there can be no doubt that these interests belonged separately to the named purchasers and never became partnership property. 
65.	In mid 1985 Mr Reeve and Mrs. Robinson opened a joint account at Lloyds Bank in Warwick Square SW1 and obtained from that bank an overdraft  facility to provide the finance necessary to refurbish 70 and 72 Denbigh Street. The security provided consisted of charges over 70 and 72 Denbigh Street and 67 Winchester Street.
66.	On 12th February 1986 Mr. Reeve bought in his sole name a cottage known as Thorley’s Cottage which was situated in Essex. This was done because Mrs. K. Reeve was anxious that the man she was living with, a Mr. Stokes, should be able to live in this property after she had died; whilst she remained alive the property could be let. Mrs. K. Reeve was not interested in buying the property herself; this would have cut across the estate duty planning that was being implemented to ensure that she left no real property at her death. 
67.	The possible purchase of Thorley’s Cottage having been raised, Mr. Reeve decided to buy it himself. Mr. Stokes was prepared to lend £7,000 towards the purchase but another £40,000 was required. Mr. Reeve therefore suggested to his sister that they should increase the  Lloyds Bank loan facility by £35,000 so that £40,000 could be drawn from the Lloyds joint account to buy the property in his own name. Mrs. Robinson agreed. The facility was therefore written up by £35,000 but since the account was in joint names and the property was going to be bought by Mr. Reeve alone, the bank required that Mrs. Robinson sign a letter confirming her agreement to the money advanced being used for the purchase by her brother. A letter was drafted by Mr. Reeve and signed by his sister. The relevant paragraph reads:
I confirm that I have no objection to the completion monies for the purchase of Thorley’s Cottage by my brother Mr. Edward Reeve being drawn on the current account which we are using to pay for the repairs and improvements to 70 and 72 Denbigh Street. 
68.	Mrs. Robinson’s recollection of the acquisition of Thorley’s Cottage was hazy. She did not recall for instance that the idea of buying the property came from her mother because her mother wanted to make provision for Mr. Stokes. Nor did she recollect signing the letter to the bank but she accepted that she did in fact do so and that she would have read the paragraph set out above. She said that she assumed that her brother “was buying it for our joint properties”. I find that Mr. Reeve told his sister that he was buying the property for himself and she knew that he was financing the purchase by writing up the Lloyds Bank facility on which they were jointly liable. I further find that she  consented to the proposed transaction and in the circumstances I hold that Mr. Reeve was entitled to conclude (as he did) that his sister was agreeing to him becoming the sole owner of the property. I hold therefore that Thorley’s Cottage never became partnership property.
69.	After Thorley’s Cottage had been acquired it was let. The rent, which exceeded the interest charges, was paid into the joint account and was included in the profit and loss account in the accounts. In 1990 Mr. Reeve sold the property. Mrs. K. Reeve and Mr. Stokes agreed that the original purpose for the acquisition no longer applied. The sale proceeds were accounted for by the acquisition cost being returned to the joint account to repay the loan and the profit was credited and the applicable CGT debited to Mr. Reeve’s current account.
70.	In the course of the second period Mrs. Reeve transferred her interest in the Pimlico properties to her son and daughter. She did this by selling 20.5% of her interest to Mrs. Robinson and 25.8% to Mr. Reeve so that each of her two children ended up owing the properties in equal shares. The purchase prices were left outstanding as loans which over time were released. In my view Mrs. K. Reeve remained a partner of the partnership that came into existence after the liquidation of ARIL. She continued to be entitled to a 46.3% share of the rents from the partnership properties but those properties were now owned by Mr. Reeve and Mrs. Robinson in equal shares. 
71.	In March 1986 an account was opened in the name of Mrs. Robinson and Mr Reeve with the Royal Bank of Scotland (“the RBS account”) with an overdraft facility of up to £600,000. This enabled the repayment of all outstanding loans save for the loan from Lloyds Bank secured on 70 and 72 Denbigh Street and 67 Winchester Street and the loan from Mr. Stokes. A letter from the Royal Bank of Scotland (“RBS”) to Mr. Reeve dated 5th March 1986 setting out the bank’s terms states that the purpose of the overdraft was “ property purchase and refurbishment”. The account was secured against 53 and 55 Winchester Street, 23 Sussex Street and 16 Sussex Street all of which were partnership properties in which Mr. Reeve and Mrs. Robinson had equal shares.
72.	 In my view, as between Mr. Reeve and Mrs. Robinson, this account was to be used solely for the purposes of the business they were conducting together. In my opinion the money available through the account was “money belonging to the firm” for the purposes of s. 21 of the PA. Withdrawals for the purpose of the business included withdrawals to meet expenditure incurred in running the business, drawings against individual profit shares and repayment to the partners of loans made to the business. They did not include withdrawals for the purchase of property bought in the sole name of one of the joint account holders. If this were to happen the other partner had to consent, otherwise the money withdrawn would belong to the firm and so too would the property purchased therewith.  
73.	In July 1986 Mrs. Robinson purchased a house, 8 Churchill Close, Hereford, for herself and Mr. Campbell to live in. She paid for the house by withdrawing £33,750 from the RBS account. She maintains that this was her money and that the property was never partnership property. Mr. Reeve, with full knowledge of the relevant facts, consented to this use of the account and does not assert that the property became partnership property; nor could he.
74.	In July 1989 Mr. Reeve learned of an opportunity to purchase 18 Sussex Street. He and his sister already owned 16 Sussex Street which was let under two leases to a firm of chartered quantity surveyors, Murdoch Green & Partners. Mr. Reeve was keen to buy because Murdoch Green had told him that they wanted to rent two of the floors in number 18 and were prepared to enter into a new lease for a longer period than the two leases they had in respect of number 16. As his sister was joint owner of number 16 he thought that they should buy number 18 jointly. He scribbled on a letter from Murdoch Green this note to his sister: “As our joint tenant has introduced this to us do you want a share in it?” The letter was left in the drawer in the office in 12 Lupus Street and I am quite satisfied that Mrs. Robinson saw it and read it. Sometime later Mr. Reeve and Mrs. Robinson met in the office in 12 Lupus Street when they discussed the proposed purchase. Mr. Reeve told his sister that they might have to pay £350,000 and that this would have to be borrowed. Mrs. Robinson thought the price was much too high and that it was too risky to borrow so much money. She was persuaded to go with her brother to view the property. As they looked at it the discussion continued. Although Mr. Reeve explained that the purchase would be simultaneous with a new lease to Murdoch Green at an extremely good rent, Mrs. Robinson continued to say that she thought that it was too expensive, too risky and that she was against borrowing such a large sum of money. I find that Mr. Reeve insisted that he nonetheless wanted to proceed to which Mrs. Robinson said words to the effect: “if you want to buy it, you take the risk; it’s down to you.”
75.	Following this conversation Mr. Reeve decided to buy the property for himself. His offer of £342,600 was accepted on 29th November 1989 and RBS agreed to increase the overdraft on the RBS account to £1,250,000 on condition that they had a charge over 18 Sussex Street. It is Mr. Reeve’s case that his sister consented to him purchasing the property for himself using the overdraft on the RBS account. 
76.	RBS were told that Mr. Reeve was going to be the sole purchaser. Since the purchase was going to be financed by the joint overdraft they sent Mrs. Robinson a letter dated 20th December 1989 addressed to 12 Lupus Street which they required her to countersign. The relevant paragraphs of this letter read as follows:
We refer to the increased overdraft facility of up to £1,250,000 the Bank has agreed to make available to yourself and Mr. Reeve and advise that we have recently been informed by the solicitors acting for yourself, and confirmed by Mr. Reeve, that the property we are taking as security for the increased facility, as noted below, is to be purchased in the sole name of Edward Reeve.
In this connection, we would be obliged if you could sign and return the copy of this letter, thus acknowledging your understanding that although the total borrowings are the joint liabilities of both yourself and Mr. Reeve, the property known as 18 Sussex Street is to be held in the sole name of Mr. Reeve.
77.	In the course of her evidence Mrs. Robinson at first declined to accept that she signed this letter, a copy of which was in the trial bundle. She felt that given its terms she would not have signed it and she thought that the signature on the copy did not look like hers. I accordingly ordered the production of the original from RBS and when she saw it she agreed in the witness box that she had indeed signed it.
78.	Mrs. Robinson maintained that despite the conversations she had with her brother about 18 Sussex Street and despite signing the RBS letter dated 20th December 1989, she did not appreciate that her brother had bought the property in his sole name and she did not agree that he could so using the joint overdraft facility. It was her evidence that she thought that the property was being purchased for the two of them.  I find that Mrs. Robinson was told by Mr. Reeve that he was going to buy the property for himself using money to be borrowed under the RBS joint overdraft. I further find that Mrs. Robinson is to be taken to have consented to this when she said “if you want to buy it, you take the risk; it’s down to you” and when she signed the RBS letter dated 20th December 1989. If the acquisition had gone wrong, Mrs. Robinson would have been liable jointly and severally to RBS for the borrowing, but she would have been entitled to an indemnity from Mr. Reeve, and barring a wholly unforeseen disaster he was good for such a liability, as she must have appreciated. Accordingly, notwithstanding that 18 Sussex Street was purchased with money advanced under the joint overdraft, I find that this property is the sole property of Mr. Reeve.
79.	As with the other income producing properties bought by Mr. Reeve in his sole name, the rent from 18 Sussex Street was pooled with the other rents and amply covered the interest attributable to the increase in the overdraft.
80.	 On 27th February 1992 Mrs. K. Reeve died. Mr. Reeve said in evidence that following his mother’s death there was a meeting between him and his sister in the office at 12 Lupus Street shortly after 19th May 1992. Prior to this meeting he had prepared a hand-written schedule which analysed the estimated rental (“the ERV”) of each of the income producing properties in terms of the ownership of the property. Thus where the property was owned in equal shares by Mr. Reeve and Mrs. Robinson, the ERV was split equally between them, but where it was owned by only one of them the whole of the ERV for that property was attributed to the sole owner. On the whole the ERV was the actual rent receivable under current leases, but where there was a rent void, an estimate of the rent achievable was made. The outcome of this analysis was that Mr. Reeve’s interest in the properties accounted for 64.04% of the total ERV and Mrs. Robinson’s interest for 35.96%. These figures were then rounded up to 65% and 35 %, and then re-stated in Mr. Reeve’s favour at 66.33% and 33.66% or 2/3rds and 1/3rd.
81.	Mr. Reeve testified that he had given a copy of this schedule to Mr. Temple whom he met on 19th May 1992 to demonstrate how the net rents were to be shared henceforth.  (Mr. Temple was now acting as the accountant of the business). Mrs. Robinson had no recollection of a meeting between herself and her brother when a 2/3rds to 1/3rd split of the profits was discussed. What she did recall was a meeting at this time when she agreed that Mr. Reeve could increase his monthly drawings because he did not have enough income for school fees and other expenses. However, it is clear beyond doubt that Mr. Reeve did not increase his drawings until January 1993 when they rose from £2,500 per month to £3,500 per month. On the contrary, it was Mrs. Robinson’s drawings that increased after the meeting, rising from £2,500 pm to £5,000 pm in June 1992. Faced with this evidence she accepted that her recollection of the meeting in May 1992 was wrong.
82.	I accept Mr. Reeve’s evidence about the meeting. At the meeting he proposed that the profits should in future be split 2/3rds for him and 1/3rd for his sister. Mrs. Robinson asked how he had calculated the split and he explained by reference to the schedule that was on the desk although he did not hand it to his sister. She said words to the effect “that’s about right” and agreed to the proposal.
83.	As things have turned out, the proposed split has closely mirrored the proportion of actual rents received. Thus for the years 31st March 1993 to 31st March 2000, the annual percentage of the actual rents received allocable to Mrs. Robinson’s share in the ownership of the properties has been: 34.69%; 33.23%; 33.47%; 33.11%; 31.56%; 31.27% 32.46% and 32.51%. 
84.	The profit and loss account in the accounts for the year ending 31st March 1992 stated that the net profit was “[a]llocated as follows:-
K Reeve                   46.3% x 11/12
M A Robinson          29.5% x 11/12  thereafter 1/3
E Reeve                    24.2% x 11/12   thereafter 2/3  
Mrs. Robinson signed a copy of these accounts and a copy of each year’s subsequent accounts all of which showed the net profit being split 2/3rds for Mr. Reeve and 1/3rd for her. I also find that Mr. Reeve went through the Profit and Loss Account for 1994 and 1996 with his sister. It was her evidence that she never noticed that the profits were being split 2/3rds to 1/3rd. Whilst I accept that Mrs. Robinson had honestly come to believe that this was true, I am afraid I cannot accept her evidence on this matter. I find that she represented to Mr. Reeve at the meeting held shortly after 19th May 1992 that she accepted his proposed profit split. I also find that she knew from the accounts that she signed each year for the following seven years and from the discussions she had with her brother on the Profit and Loss Accounts for 1994 and 1996 that the profits were being split 2/3rds for her brother and 1/3rd for her. 
The final period – June 1992 to the present.
85.	The first transaction in the last period was the purchase by Mr. Reeve in his sole name of 128/130 Lowfield Road, Kent. This property belonged to the builder who over the years had carried out a great deal of refurbishment work on the properties owned by Mr. Reeve and his sister. Mr. Reeve bought the property for £120,000 and leased it back to the builder at a rent of £14, 400 pa. He did this because the builder was in financial difficulty and it was very important that he continue to work on the refurbishment of 84 and 86 Alderney Street (two of the Pimlico properties).  The purchase price was paid out of the RBS account. The rent exceeded the interest payments attributable to the purchase. Although Mrs. Robinson knew that the property had been bought and why, it was not made clear to her that the property had been bought in Mr. Reeve’s sole name; nor was she asked to consent to the property being bought in Mr. Reeve’s sole name. 
86.	As I have held above, the money available under the RBS account was money belonging to the partnership that existed between Mr. Reeve and Mrs. Robinson. The money withdrawn from the RBS account for the purchase of 128/130 Lowfield Street was not used exclusively for the purposes of the partnership since, although the business stood to benefit from the builder remaining in business, the property was to be acquired in Mr. Reeve’s name alone. The money used to purchase the property was therefore money belonging to the firm and since Mrs. Robinson’s consent to the property being bought in Mr. Reeve’s sole name was not obtained, I find that the property became partnership property owned by both partners in equal shares.
87.	The property was sold for £120,000 at the end of August 1994, which resulted in a loss due to costs on the purchase and sale which were capitalised. The proceeds of sale were paid to Mr. Reeve’s wife and £121,035 was debited to his current account representing the purchase price and the loss on the transaction. Since the property was partnership property, and since no complaint can be made of the fact that it was sold, the loss stands to be shared equally between Mr. Reeve and Mrs. Robinson. Given that £121,035 has been debited to Mr. Reeve’s current account, I think the only adjustment to be made between the parties is to credit Mr. Reeve with half the loss (£517.50) and to debit Mrs. Robinson with the other half. 
88.	On 8th January 1993, Mr. Reeve bought in his sole name a long leasehold interest in 80 Warwick Square for £185,000 and in February 1994 he purchased in his sole name 22 Denbigh Street and 74/76 Tachbrook Street for £280,000. The purchase price for all these properties came from the RBS account. The overdraft had been increased on 7th May 1993 and further security given over partnership properties. The facility letter of that date is addressed to both Mr. Reeve and Mrs. Robinson. Paragraph 2  reads:
The facility will be used for the purpose of assisting with property purchases and/or refurbishment, working capital requirements and withdrawal of funds by Mr. Reeve in connection with his purchase of Round Copse House.
89.	Round Copse House was bought by Mr. Reeve on 1st July 1993. Prior to that purchase and afterwards, the money available under the RBS account was money belonging to the partnership between Mr. Reeve and Mrs. Robinson and could not be used by one of them without the consent of the other to purchase property in his or her sole name. 
90.	Mrs. Robinson was aware that the properties had been bought, but she was not told in terms that they were being acquired in Mr. Reeve’s sole name and her consent to this was not sought. As her brother knew, Mrs. Robinson was not sophisticated in business matters; she tended to go along with what her brother was doing without insisting on having everything explained to her. In these circumstances, I do not think that Mrs. Robinson can be taken to have consented to 80 Warwick Square and 74/76 Tachbrook Street and 22 Denbigh Street being acquired by her brother for his sole benefit. Accordingly, I hold that these properties are partnership property in which Mr. Reeve and Mrs. Robinson hold equal shares.
91.	In early 1995 Mrs. Robinson purchased in her own name a property known as The Stables, Hampton Bishop, Hereford. She borrowed £100,000 of the purchase price and with Mr. Reeve’s informed consent withdrew the balance, £20,000, from the RBS account. Accordingly, the Stables are not partnership property but belong to Mrs. Robinson alone.
92.	In October 1995, Mr. Reeve learned that the long leasehold interest in 100 St. George’s Square was for sale for £375,000. The day after he viewed the property he visited his sister in Hereford and suggested that as it was so cheap she should join in the purchase and have a half share. When Mrs. Robinson was next in London Mr. Reeve again suggested that she should come in on the purchase, but she was not keen. Together, they viewed the property from across the road.  She asked where the purchase price would come from. He told her that it would have to be borrowed from RBS. Her reaction was the same as when she was given the chance to acquire a half share in 18 Sussex Street. She thought that £375,000 was too much to pay and too much to borrow. Mr. Reeve said that he was determined to proceed because he thought the purchase was a bargain. He explained that the RBS facility would have to be increased to enable him to buy the property. She agreed that the facility should be increased but the borrowing was to be Mr. Reeve’s liability (i.e. at Mr. Reeve’s risk). Later, along with her brother, she signed a new RBS facility letter dated 2nd January 1996 which increased the limit to £2,050,000.
93.	Mrs. Robinson accepted in cross-examination that she agreed to an increase in the facility to enable her brother to buy the property. She went on to say, “I thought we were purchasing it with the agreed over facility” but conceded that she never said that to her brother. It is plain that Mrs. Robinson did not want a share in the property and that she knew that her brother was proposing to buy the property in his own name. It is equally plain that she knew that the purchase price was to be funded by the overdraft on the RBS account. Indeed she signed the facility letter.  In my judgement Mr. Reeve was entitled to conclude (as he did) that his sister was consenting to him buying the property for himself using funds from the RBS account but at his own risk. Accordingly, I hold that 100 St. George’s Square is not partnership property but is owned by solely by Mr. Reeve. 
94.	In April 1996 Mr. Reeve purchased in his own name the intermediate leasehold interest in 98 Tachbrook Street for £1,500. The purchase monies were drawn from the overdraft facility on the RBS account. He did not seek his sister’s agreement to this purchase but in my view this withdrawal was either the repayment of money lent or a drawing against profits. It was therefore not money belonging to the firm but money belonging to Mr. Reeve. It follows that Mrs. Robinson can have no claim to a share in this interest.
95.	 The last acquisitions that were made in the final period were the purchases by Mr. Reeve in his sole name of 20 Churton Street and 40 Tachbrook Street. One of the reasons he bought these properties was that they allowed him to re-house regulated tenants in 100 St George’s Square. He saw them as the key to unlocking the value of 100 St George’s Square. Since the purchase prices were full prices he did not invite Mrs. Robinson to come in on the purchases but they did view 20 Churton Street together. In order for these properties to be acquired the RBS overdraft facility had to be increased to £2,750,000. RBS agreed to do this but only if further security were provided in the form of charges over 32, 84 and 90 Alderney Street, all of which were Pimlico properties owned by Mr. Reeve and Mrs. Robinson in equal shares. 
96.	On 5th February 1997 there was a meeting attended by Mrs. Robinson, Mr. Reeve and Mr. Arthur George at 12 Lupus Street. The purpose of the meeting was the execution of the charges required by RBS as additional security. Separate legal charges had been prepared by RBS for each separate property. Mrs. Robinson did not mention this meeting in her witness statement. When cross-examined about it, she accepted that she attended a meeting and signed the mortgages but refused to accept what her brother and Mr. Arthur George said in their witness statements about what was discussed. Having heard Mr. Reeve and Mr. George in the witness box I accept their evidence about this meeting. I find that Mr. George explained to Mrs. Robinson that the security being provided by the mortgages would apply to any borrowings by them individually at any time. Mrs. Robinson raised with Mr. George her position in relation to money used in connection with properties belonging to her brother alone. Mr. George explained that RBS could call on either her or her brother to pay the full liability under the joint account at any time and the bank could use the security it held for any indebtedness on the joint account. He also explained that although Mrs. Robinson might be liable for the whole of the indebtedness on the joint account, she could seek repayment from Mr. Reeve. He told Mrs. Robinson that it was the bank’s practice to hold security to the value of not less than twice about double the maximum facility available on the account for the time being. He told her that the reality therefore was that even if as between Mr. Reeve and Mrs. Robinson the whole indebtedness was the responsibility of Mr. Reeve, then it would be likely that the security actually provided by Mr. Reeve would be sufficient to cover the indebtedness to the bank. 
97.	Mr. George knew that Mr. Reeve had charged 18 Sussex Street to RBS and that this had been bought in Mr. Reeve’s sole name. He therefore explained to Mrs. Robinson that Mr. Reeve had provided RBS with significantly more than one-half of the security. He also told her that Mr. Reeve’s liability to her was not limited to the value of the security he had given to the bank. When the discussion was completed, Mr. George asked Mrs. Robinson if she was satisfied and would be willing to sign the mortgages of 32, 84, and 90 Alderney Street. She said she was and she and Mr. Reeve then executed the mortgages in Mr. George’s presence.
98.	Later, on 25th February 1997, Mrs. Robinson (together with Mr. Reeve) signed a new RBS facility letter for a revolving facility of £2,750,000. The borrowers were Mrs. Robinson and Mr. Reeve. The letter stated that the purpose of the facility was: (1) to refinance existing borrowing drawn with the Bank; (2) to assist with further investment property purchases and (3) to accommodate the rolling up of interest during the term. The letter contained a term that the borrowers represented and warranted that the “Firm” was duly constituted and validly existing and “Firm” was defined to mean the borrowers. However, there can be no doubt in my judgement, that Mrs. Robinson appreciated at the time that Mr. Reeve was using money borrowed under this facility to buy 20 Churton Street and 40 Tachbrook Street in his sole name. Although she was not invited to come in on the purchases, I hold that in the knowledge that Mr. Reeve was buying them in his sole name, she consented to him doing so and consented to his using money advanced under the new joint facility to make the purchases. In any event, she represented that she was so consenting and Mr. Reeve was entitled (as he did) to take it that she was consenting, notwithstanding her known lack of business sophistication. Accordingly, I find that 20 Churton Street and 40 Tachbrook Street did not become partnership property but belong to Mr. Reeve alone.
99.	Mr. Reeve pleads in paragraph 29.1A of his Amended Defence that if there was a partnership encompassing any of the properties, the assets are held in shares of one third (Mrs. Robinson) and two thirds (Mr. Reeve) and that Mrs. Robinson is estopped from asserting the contrary.  The alleged estoppel is said to be an estoppel by conduct or alternatively an estoppel by convention. It is based on the agreement made shortly after 19th May 1992 and the acquisitions made subsequently thereto in Mr. Reeve’s sole name. In my opinion, all Mr. Reeve was entitled to conclude from the agreement made at the meeting was that the profits would in future be split 1/3rd to 2/3rds. He was not entitled to assume that his sister was consenting to any alteration in the rights she already had in the properties or to his being allowed to make future purchases in his name using the RBS account without reference to her. As to Mrs. Robinson’s subsequent conduct, where she consented to her brother buying property in his own name, he was entitled to rely thereon in respect of the specific transaction concerned, but he was not in my view justified to assume that his sister was proceeding on the basis that she was entitled only to a third share of each of the claimed properties. I accordingly reject the plea of estoppel raised in paragraph 29.1A. 
The Constructive Trust Claim
100.	This claim is made in the alternative to the partnership claim. However, wherever I have held that property bought in Mr. Reeve’s name belongs to him alone, I have found that Mrs. Robinson must be taken to have consented to him buying the property for himself. The result is that Mrs. Robinson cannot succeed in respect of these purchases in resulting trust because the presumption of a trust in favour of a person who contributes towards the purchase of property cannot arise if that person consented to the purchaser being the sole beneficial owner. 
Conclusion
101.	 Mrs. Robinson brought this claim out of a deep sense of grievance. She worked hard and effectively on all the properties until she was ill in 1997 regardless of whether they were purchased in her brother’s sole name. She did this in the belief that the properties were all family assets. She also feels strongly that the properties purchased by her brother should be jointly owned because they were purchased using a joint banking facility secured by charges over property in which she unquestionably had a half share. Sadly, she has convinced herself that her brother has deceived and cheated her. The fact remains, however, that she has benefited significantly from a share of the rents from the properties purchased by her brother; and in respect of the great majority of those properties she led her brother reasonably to believe that she was consenting to him buying them in his sole name and with money drawn out of the joint bank account. Had she refused to allow him to buy property for himself using the RBS facility, I am quite sure Mr. Reeve would have dissolved the partnership. I also have no hesitation in finding that her brother did not set out to hide things from her or unfairly to take advantage of her.
102.	Mr. Reeve likewise nurses a sense of grievance. He feels that his sister can have no cause to complain when, due in large part to his skill and experience, the total annual rent from the properties they admittedly own jointly has risen from £14,289 in 1970 to £752,214 for the year ended 31st March 2001. However, his insistence that he was never in partnership at any time with his sister was misplaced, an insistence that stands to be contrasted with his many representations to RBS that he and his sister were partners. Further, although he has succeeded in respect of most of the after-acquired properties, he has failed in the case of three acquisitions and he has been shown to have been wrong in thinking that he could use the RBS overdraft facility to finance his purchases without first obtaining his sister’s consent. 
103.	Thus neither party has been wholly vindicated. More is the pity therefore that they did not settle their differences as I think they plainly should have done. In the event, the outcome of this expensive and very regrettable trial is that I find that the following property interests are partnership property held in equal shares as between Mrs. Robinson and Mr. Reeve: 
          (1) the interests in the Pimlico properties that were the subject of the Declaration of Trust and which have not been disposed of in the meantime; 
 (2) the freehold interests acquired in 23 Sussex Street, 29 Winchester Street and 99 Alderney Street in 1971; 
 (3) the long leasehold interest in 80 Warwick Square acquired in November 1992; and 
(4) the interests in 74/76 Tachbrook Street and 22 Denbigh Street acquired in March 1994.