Andrew Butler KC succeeds on appeal in business breakdown dispute

Andrew Butler KC has been successful on an appeal against the judgment of a County Court Judge in a dispute involving a breakdown between two former business partners. The case threw up an interesting and, so far as the parties’ researches could elicit, previously undecided point in the law of trusts.

Ratnasingham -v- Hunt and another [2025] EWHC 202 (Ch) was in some ways a typical dispute between two co-venturers between whom relations had soured – allegations and counter-allegations were made relating to dealings over many years and many different properties, with little reliable contemporaneous documentation to support either parties’ account.

At trial, Andrew was successful in managing to establish that his client, Mr Ratnasingham (R), had an interest in a particular property (Property A) under a resulting trust, having contributed 28% of the purchase price. Legal title, and the other 72% of the beneficial interest, was held by a company (PEL) which in turn was solely owned by R’s former friend and co-venturer, Mr Hunt (H).

Property A had been used by PEL as security for the acquisition of a second property, Property B. The question was whether using trust property as security for the acquisition of further property constituted a breach of trust, and if so whether that gave R a proprietary interest in Property B, or simply a financial remedy. No authority could be found which was directly on point.

The County Court Judge had rejected R’s claim to any relief in relation to Property B. On appeal, however, Thompsell J acceded to Andrew’s submission that the act of using trust property as security for the acquisition of a further property was a breach of trust – and rejected a defence that there had been informed consent on R’s part. While rejecting R’s claim to be entitled to a proprietary interest in Property B, he held that R was entitled to an account of profits arising from its acquisition, remitting this question to the County Court Judge.

R was also successful in relation to a different property, Property C, which had been bequeathed to H and R under the will of a third party, S. H, the executor of S’s estate, had paid R a percentage of what he considered to be the correct valuation and had taken sole ownership of the property. R contended that that constituted a breach of trust, as it amounted to self-dealing, and that the property should have been sold on the open market. This argument was rejected by the County Court Judge, but succeeded on appeal, entitling R to an account of profits in relation to that property too.

A copy of the judgment can be found here.