Douglas Stuart Ponsford & Anor v Mesud Habib Sali & Anor [2026] EWHC 1360 (Ch)

[2026] EWHC 1360 (Ch)Case No PT-2021-001064IN THE HIGH COURT OF JUSTICECHANCERY DIVISIONBUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESVenue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 12/06/2026
Before
MASTER MCQUAIL
Between
(1) DOUGLAS STUART PONSFORDClaimants(2) MOVE ON NOW LIMITEDClaimant(1) MESUD HABIB SALIDefendants(2) GIZEM YOZKANDefendant
Mr Francis Tregear KC (instructed by Ali Legal Limited) for First ClaimantMr Graham Goodwill (Direct Access Counsel) for First DefendantHearing Hearing dates: 10 and 11 February 2026
Approved JudgmentThis judgment was handed down remotely at 2.00pm on 12 June 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................MASTER MCQUAIL

Background

[1]The first claimant, Douglas Ponsford (Mr Ponsford), and the first defendant, Mesud Sali (Mr Sali), conducted a business of the purchase and sale of residential properties commencing in about 2010. The business was an equal partnership between the parties carried on under the name “Move On Now” (MON). The second claimant company, Move On Now Limited, of which Mr Ponsford and Mr Sali were directors and 50% shareholders was a vehicle for the partnership and did not operate separately.[2]The second defendant is the wife or partner of the first defendant; she is the registered proprietor of a partnership property at 109 Albert Carr Gardens (109ACG) which she holds on trust for the partnership. She has played no active part in these proceedings.[3]This litigation commenced in December 2021 when the claimants applied to the court for injunctive relief to restrain Mr Sali from misappropriating partnership assets.[4]On 16 December 2021 the claimants obtained a worldwide freezing order. On the 6 January 2022 return date, Meade J ordered that Mr Ponsford be appointed as receiver and manager “to collect, get in, and receive the debts now due and outstanding and other assets and property belonging to the partnership business of Move On Now (a firm) and out of the moneys to pay the debts due from the said business”.[5]Mr Ponsford says he has endeavoured to carry out that task without any assistance from Mr Sali, who has in fact impeded his efforts by refusing to remove restrictions registered against the titles to partnership properties. The winding up is not complete.[6]On 30 March 2022 Deputy Master Hansen made a consent order (the Hansen Order) which recorded the parties’ agreement that dissolution occurred on 1 December 2021. The order provided for various accounts and inquiries to be taken for the partnership to the date of dissolution, an inquiry to be taken as to Mr Sali’s share of the partnership at that date and for accounts and inquiries to be taken as to what became of the partnership assets and the debts of the partnership, as to the post-dissolution profits and an account of what is due to Mr Ponsford as receiver and manager.[7]The order also provided for the sale of the partnership properties and other partnership assets and for the proceeds to be held by Mr Ponsford in a bank account in the name of the partnership, subject to him being able to use the funds as might be necessary for managing the properties.[8]The first claimant filed the material he relies upon in the taking of the accounts and inquiries in the form of a report by an independent forensic accountant, prepared by Mr Thomas Wacher and dated 29 June 2022 (Wacher 1).[9]On 28 October 2022, Deputy Master Lampert struck out Mr Sali’s defence, which primarily raised issues concerning a property at 2 Walsingham Road (2WR), but otherwise consisted of non-admissions, and extended Mr Sali’s time for filing objections to the accounts and inquiries filed by Mr Ponsford and for Mr Ponsford to respond. The account was directed to be taken at a 2.5 day hearing.[10]The account came on before Master Marsh (sitting in retirement) on 24 and 25 July 2023. Master Marsh adjourned the account hearing and made an order that there should be a separate hearing of a number of preliminary issues including whether 2WR was a partnership asset or was held by Mr Ponsford on trust for Mr Sali. Following a trial of that issue he gave judgment determining that 2WR was held on trust for Mr Sali and made an order on 8 January 2024 pursuant to which the claimants were ordered to give possession and management of 2WR to Mr Sali and to pay him rent received from 1 December 2023. Master Marsh also determined that a property at 13 Mill Lane was not a partnership property, that no contractual interest rate of 20% had been agreed and that the claim for remuneration of Mr Ponsford be determined at a later date.[11]Mr Ponsford obtained permission to appeal on the question of ownership of 2WR. The appeal was successful and the order of Master Marsh concerning 2WR was set aside by order of Trower J dated 31 October 2024. Trower J also directed that the parties were to fix a hearing so that directions could be given for a hearing of the taking of the accounts and inquiries in accordance with the Hansen Order.[12]That directions hearing was fixed to take place before me on 30 June 2025. I directed that Mr Ponsford’s expert should provide an update to his earlier report and gave further directions leading to the taking of the account hearing listed for 3 days in February 2026. Pursuant to my directions Mr Wacher produced an updating addendum report dated 18 August 2025 (Wacher 2).

The Account Hearing

[13]Mr Ponsford was represented at the hearing by Mr Francis Tregear KC instructed by Ali Legal Ltd. Mr Sali was represented by solicitors and counsel in the early stages of the litigation, but acted in person at the appeal hearing before Trower J and thereafter, although he instructed Direct Access Counsel, Mr Graham Goodwill, at short notice to represent him at the directions hearing in June 2025 and at the account hearing.[14]Apart from the Claim Form dated 10 December 2021 and the accompanying Particulars of Claim verified with a statement of truth signed by Mr Ponsford in November 2021, Mr Ponsford has filed and served the following evidence in the proceedings containing material relevant to the account:(i) First affidavit dated 10 December 2021;(ii) First witness statement dated 29 March 2022;(iii) Second witness statement dated 9 September 2022;(iv) Witness statement dated 24 November 2022;(v) Fourth witness statement dated 19 July 2023;(vi) Fourth (sic) witness statement dated 21 July 2023;(vii) Witness statement dated 29 September 2023;(viii) Witness statement dated 25 October 2023;(ix) Witness statement dated 27 October 2023;(x) Witness statement dated 21 August 2025;(xi) Witness statement dated 11 September 2025; and(xii) Witness statement dated 21 October 2025.[15]Mr Ponsford also relied at the hearing upon the evidence of MON’s bookkeeper, Lynda Apps, contained in witness statements dated 16 October 2023 and 1 December 2023.[16]Mr Sali’s evidence in the proceedings was contained in:(i) Witness statement dated 30 March 2022;(ii) Witness statement dated 29 September 2023;(iii) Witness statement dated 8 January 2024;(iv) Comments on Wacher 1 (undated);(v) Witness statement dated 11 November 2022 (including his spreadsheet of property data);(vi) Comments on Wacher 2; and(vii) Witness statement verifying the truth of (vi) dated 8 September 2025.[17]Mr Wacher and the witnesses of fact all gave evidence at the account hearing and were cross-examined. Thereafter I directed that counsel should put in written closing submissions simultaneously, which they did. Mr Ponsford’s solicitors were, unsurprisingly, moved to put in a supplementary letter written with input from Mr Wacher in response to Mr Goodwill’s submissions, which included a submission that Mr Wacher had made an accounting blunder to the tune of c.£1.8m. I have therefore had regard to the content of that supplementary letter.

The Partnership Business

[18]Mr Ponsford and Mr Sali met in about 2010. Mr Sali had then recently graduated whereas Mr Ponsford was in his fifties and had been in business for some years prior to their meeting. They began trading in partnership together investing in properties not long after they met.[19]Mr Ponsford provided the finance that enabled the purchase of partnership properties, the payment of refurbishment costs and of mortgage instalments. Mr Sali provided the “know-how” including creating the necessary documentation which enabled the partnership to invest in properties by way of Assisted Sales Agreements (ASAs). As Master Marsh explained in his judgment following the trial of the preliminary issues:
“The legal efficacy of this system and indeed its lawfulness must be in doubt, but that is not an issue before the Court. An ASA (also described as a JV) works by the registered proprietor agreeing to sell their property for a guaranteed price. The seller receives an immediate cash payment equivalent to the current equity or payment at a later date (if there is any equity). The assisting purchaser is given a Power of Attorney and takes over payment of the mortgage with permission of the lender. Thus the registered proprietor receives the equity and a guaranteed price as well as having the responsibility of paying the mortgage removed. The purchaser is protected by a restriction on the title.”
[20]Properties were purchased for the partnership at Mr Ponsford’s expense and held in Mr Ponsford’s name (or in one case the names of Mr Ponsford and Mr Sali and in another the name of the second defendant) or where an ASA was used held in the name of the third party seller and in each case held by the title-holders for the benefit of MON.[21]Restrictions were entered against the registered title of each property to protect the interests of Mr Sali. Mr Ponsford was the partner liable to third party lenders for servicing and paying the debts secured on the various properties. Mr Sali had no personal liability for the various mortgage debts but the restrictions gave him an effective veto on sales.[22]The second claimant managed the properties and collected the rents. The business used the second claimant’s bank account on which each of Mr Ponsford and Mr Sali were signatories. There was also a partnership bank account in Mr Ponsford’s name to which Mr Sali was a signatory. In each case the mandate required only one signature.[23]It is Mr Ponsford’s case that it was a fundamental term of the partnership that all the money advanced by him for the partnership business would be repaid from the sales proceeds of partnership properties; that proposition does not appear to be in dispute.

Breakdown of Relationship

[24]The partnership business was successful for a number of years but in early 2021 disagreements arose and in April 2021 the partners met with a view to resolving the position. They were not successful in doing that. On 29 April 2021 Mr Sali acknowledged in writing that Mr Ponsford was then owed c.£840,000.[25]By that time Mr Sali had decided that he wanted to settle in Turkey and pursue other business interests on his own. He wanted out of the partnership and, in particular, wanted to receive 2WR, where he had lived with his family, as part of his entitlement on a division of the partnership assets. It was Mr Sali’s position that he had put considerable effort and money into developing 2WR from one house into two. As he said in evidence “I told him (i.e. Mr Ponsford) I would sell [the properties] in my control he should sell his.”[26]On 6 September 2021 Mr Sali sent Mr Ponsford a document (the Port Spreadsheet) in which he acknowledged that:(i) he had misappropriated £625,000 in sales proceeds or remortgage proceeds in respect of 9 Moxon Close (9MC) (£185,000), 109 ACG (£260,000) and 7 Scott Road (7SR) (£180,000);(ii) Mr Ponsford was then owed £494,000 by the partnership; and(iii) he had kept £8,250 in rents and owed Mr Ponsford and his wife £30,000.[27]Mr Ponsford’s affidavit in support of the freezing injunction application raised a number of concerns about Mr Sali’s conduct including misappropriation of partnership money and failure to account to the partnership for sales proceeds and rents he had collected on its behalf.[28]The particulars of claim set out the claims that were made against Mr Sali at that stage (and the amounts of the claims where Mr Ponsford was able to state the amount) and referred to Mr Ponsford’s admitted and acknowledged loan.[29]When the proceedings commenced there were about 21 properties or proceeds of sale of properties sold held by Mr Sali in the partnership portfolio. Since then some of the properties have been sold by Mr Ponsford. There remain nine properties which are yet to be sold.

The Relevant Legal Principles

[30]There was no dispute between the parties as to the relevant legal principles. The relevant sections of the Partnership Act 1890 are as follows:(i) section 38 which provides that the authority of partners to bind the firm continues for the purposes of the winding up;(ii) section 39 which provides that on dissolution each partner is entitled to have the partnership property applied in payment of the firm’s liabilities to others, then to have the surplus applied in payment of what is due to the partners after deducting what is owed by them to the firm;(iii) section 42 which provides that when the business of the firm continues after dissolution without the accounts being settled the outgoing partner is entitled either to a share of the profits attributable to his share or to interest at 5% on the amount of his partnership share;(iv) Section 44 which provides: “In settling accounts between the partners after a dissolution of partnership, the following rules shall, subject to any agreement, be observed: (a) Losses, including losses and deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportion in which they were entitled to share profits: (b) The assets of the firm including the sums, if any, contributed by the partners to make up losses or deficiencies of capital, shall be applied in the following manner and[31]Mr Tregear referred me to the commentary on the application of these principles in chapter 25 of Lindley on Partnership (21st Edition), in particular section 4 at [25-73] to [25-89] which discusses the distribution of assets and adjustment of accounts and the implementation of section 44. Mr Tregear submitted, and I accept, that the exercise of taking the partnership account is an accounting exercise and not the forum for complaints to be made such as the complaints made in the first defendant’s objections to the expert reports that adjustments should be made for(i) properties allegedly sold at an undervalue,(ii) the first claimant’s (alleged lack of) business sense in carrying out transactions or(iii) other such complaints. Such complaints are not justiciable in the context of the accounting process.[32]Mr Tregear referred also to the relevant points in the summary of winding up principles applicable between partners set out at [25-98] and following of Lindley: Principle 1: Each partner is, in general, entitled to have dissolution accounts taken as between him and his co-partners. Principle 2: Each partner is entitled to have the partnership property applied in liquidation of the partnership debts, and to have any surplus assets divided. Principle 3: Each partner is, in general, entitled to force a sale of all partnership assets which are capable of being sold and to have the value of any unsaleable asset brought into account by the partner who retains it. Principle 4: As a corollary of Principle 3, save in special circumstances, no partner can insist on taking the share of any other partner at a valuation or to insist on a division of the partnership assets in specie. Principle 5: No partner can retain the exclusive right to any increase in the value of the partnership assets between dissolution and sale, but more difficult questions may arise in relation to trading profits realised during that period. Principle 6: Both the authority of each partner and the duties which he owes to the other partners continue whilst the partnership affairs are being wound up. As Lord Lindley put it:
“For the purposes of winding up, the partnership is deemed to continue; the good faith and honourable conduct due from every partner to his co-partners during the continuance of the partnership being equally due so long as its affairs remain unsettled; and that which was partnership property before, continuing to be so for the purpose of dissolution, as the rights of the partners require.”
Account must, however, be taken of any agreement between the partners. Principle 7: Each partner can insist that no further business is transacted or acts done, otherwise than with a view to the winding up. Principle 7A: If a right of action exists in favour of the firm as at the date of the dissolution, it can be pursued by a partner if that is necessary for the purposes of winding up the firm’s affairs. Principle 8: In the absence of some contrary agreement, the right to wind up the partnership affairs does not fall on any particular partner to the exclusion of the others. If any dispute arises, the winding up should proceed under the supervision of the court. Principle 11: If, on settling the final account, the partnership assets are insufficient to pay the partnership debts, or to repay the sums due to each partner in respect of advances or capital, the deficiency must, subject to any contrary agreement, be made good by the partners in their profit-sharing ratios. Principle 14: The winding up process should not be unnecessarily prolonged. The Expert Evidence Wacher 1

The Expert Evidence

[33]At the start of Wacher 1 Mr Wacher explained the work that he had been instructed to carry out. His instructions, linked to the waterfall of payments set out in section 44 of the Partnership Act 1890 and the Hansen Order, were to prepare:(i) an account of the credits, property and effects belonging to the partnership;(ii) an account of the partnership debts and liabilities as at 1 December 2021;(iii) an inquiry as to whether any and which of the partnership debts and liabilities have been since paid and by whom and out of what fund;(iv) an inquiry as to what sums have been paid since the dissolution of the partnership by Mr Ponsford;(v) an account of the receipts and payments, dealings and transactions of Mr Ponsford and Mr Sali in respect of the assets and business of the partnership;(vi) an account of profits since December 2021;(vii) an inquiry as to Mr Sali’s share in December 2021; and(viii) an account of what is due to Mr Ponsford in his role as manager and receiver to redeem the various sums due under the mortgages and charges.[34]At the start of Wacher 2 Mr Wacher explained that he had been instructed to provide an update to July 2025.[35]Appendix 3 of Wacher 1 contains analyses in schedule form of the partnership’s books and bank statements to establish figures for various categories of financial information in order to take figures forward to a dissolution balance sheet and profit and loss account. Wacher 2 contains updated Appendix 3 schedules and an updated balance sheet. In Wacher 1 there are two balance sheets the first shows figures as at 30 November 2021 and the second slightly adjusted figures as at 28 February 2022. Wacher 2’s balance sheet shows figures as at July 2025. There is no updated profit and loss account.[36]Annexe 1 to this judgment is a spreadsheet reproducing the Wacher 1 and Wacher 2 balance sheet figures together with a column showing the position contended for by Mr Sali as at date of dissolution within Mr Goodwill’s closing submissions. The primary entries that are not agreed are shown in bold; there are also unagreed secondary entries (which derive from primary entries) these are not in bold.[37]Wacher 1’s appendix 3.2 itemises the partnership properties showing various valuations, debts and adjustments (with explanations) to give Mr Wacher’s estimates of net asset values attributable to MON, to be carried forward to the balance sheet.[38]Annexe 2 to this judgment is a simplified version of Wacher 1’s Appendix 3.2, together with three added explanatory columns – G, H and L. The columns record the following information: A – the property; B – whether the property was owned or subject to an ASA; C – the name of the registered proprietor; D – the value attributed to the property by Mr Sali; E – the value attributed to the property by Mr Ponsford; F – the debt attributable to the property; G – the amount of debt attributable to a third party owner (which would have to be paid out of proceeds on a sale); H – the difference between Mr Ponsford’s value and the amount of third party owner indebtedness; I – the amount of any loan by Mr Ponsford associated with the property; J – the amount of any MON mortgage debt associated with the property; K – the amount of any other debt associated with the property; L – the numerical expression of Mr Wacher’s adjustment to the Ponsford value less any third party debt, as explained by the narrative in his Appendix 3.2, required to arrive at his net estimate of value of the property to MON; M – Mr Wacher’s net estimate of value of the property to MON; N – Mr Wacher’s further adjustment to reflect likely realisation costs; O – Mr Wacher’s net asset value to be carried forward to balance sheet.[39]In the case of properties (ii), (iii), (iv), (vii), (viii), (ix), (xi), (xiv), (xv), (xvi), (xviii), and (xx) Mr Wacher has attributed a value to the partnership as broadly the value attributed by Mr Ponsford minus any third party owner debt secured on the property. If there is relevant indebtedness in the form of a loan by Mr Ponsford or a third party to MON that is ignored in reaching the net value.[40]The position is less straightforward for properties (i), (v), (vi), (x), (xii), (xiii), (xvii) and (xix) and (xxi) which are dealt with in Mr Wacher’s explanations as follows: (i) i.e. 2WR. Mr Wacher has used £1m as his column M estimate of value being Mr Ponsford’s revised £1.1m valuation subject to estimated repair costs of £100k; (v) i.e. 7SR. This property was sold by Mr Sali in 2021. There is a dispute whether the sale proceeds were £320,000 or £220,000. Annexe 2 shows a corresponding outstanding £110,000 mortgage debt. The Wacher 1 balance sheet attributes a value of £0 to 7SR and includes £320,000 as a liability of Mr Sali and includes the £110,000 debt within mortgage debts; (vi) i.e. 9MC. This property was also sold by Mr Sali. There is a dispute with the proprietor. It appears that Mr Sali has received £184,239, shown as his indebtedness later in the balance sheet and that £10,000 is due from the owner. (x) i.e. 20 Bartlett Road. This property has been sold and, after adjustments, £51,909 paid into MON. (xii) i.e. 26 Queens House. There is a dispute with the owner and Mr Wacher has adjusted the value by £25,000 for estimated legal fees. (xiii) i.e. 26 Rhodaus Close. The mortgage over this property is in the name of a third party; (xvii) i.e. 68 Layfield Avenue. This property has been sold and, after adjustments, £42,837 has been paid into MON. (xviii) i.e. 89 Lancelot Avenue. This property has been sold; there is still £18,689 outstanding to Mr Ponsford. (xix) i.e. 109 ACG. The mortgage over this property was taken out by the second defendant with the intention of paying money back to Mr Ponsford. The amount borrowed is therefore shown as another debt.[41]Annexe 2 shows that Mr Wacher has reduced the Ponsford values totalling £6,056,000 by third party owner debts of £1,213,000 and then further reduced by total adjustments of £589,754 to give a total estimated value of the properties of £4,253,246. There are then further realisation adjustments, which are not in dispute, giving a net figure of £4,159,551.00. Net asset values of £1,528,901 for ASA properties, £2,620,650 for other properties and “other” of £10,000 are carried forward to the balance sheet.[42]Mr Sali’s balance sheet property figure of £6,250,380 as included in the version of the balance sheet in Mr Goodwill’s closing submissions uses Mr Sali’s property valuation figures, which he says are to be preferred and fails to take account of Mr Wacher’s adjustment methodology as I have explained it above.[43]The unagreed figures in the balance sheet in the section headed “D1 - loan” are:(i) £43,000 described by Wacher 1 as related party loans, Mr Sali’s figure is £0;(ii) £320,000 recorded in Wacher 1 as relating to 7SR contrasts with Mr Sali’s figure of £211,000;(iii) £125,650 plus a further £17,735.00 to end of February 2022 described by Wacher 1 as diverted rent which is tabulated in Appendix 3.3, Mr Sali’s figure is £0. The properties concerned are 2WR, 7SR, 15 Russett Way, 20 Bartlett Road, 14 Pattinson Walk and 109 ACG;(iv) £87,341 representing interest at 20% on the sums treated as loaned to Mr Sali the calculations for which are set out in appendix 3.7. It is accepted by Mr Ponsford there will need to be substitution of a 5% interest figure; and(v) £103,957 representing interest at 20% on the net sums treated as loaned to Mr Sali because of the second defendant’s borrowing of £260,000 secured over 109ACG with credit for mortgage payments made by her the calculations are set out in appendix 3.7. Mr Ponsford accepts that a figure of 5% should be substituted.[44]In addition the figure for “mortgages from third party lenders” is (£534,500) in Wacher 1, whereas Mr Sali contends it should be (£425,500).[45]The other sum in issue between the parties as at dissolution is the legal expenses figure of £55,236.00, increased to £66,384 as at February 2022. I deal with costs below.[46]The Wacher 1 dissolution balance sheet shows the calculation of net assets of the partnership. The surplus available for notional distribution is calculated as the assets £5,318,544 (property + effects + Mr Sali’s loans) less mortgage liabilities of £1,309,532 (£775,032 + £534,500) less the debt to Mr Ponsford of £554,737, less the bounce back loan (£75,064). That gives a net asset figure of £3,379,210.[47]That net balance is then divided 50/50 to produce 50% shares of £1,689,606. The debts owed to the partnership by Mr Sali of £1,121,448 are deducted to give a balance due to him of £568,158. The debts owed to Mr Ponsford of £554,737 when added to his £1,689,605 share, give him a balance due of £2,244,343.[48]Post-dissolution Mr Wacher has assumed that 100% of the profits belong to Mr Ponsford and that Mr Sali is entitled to 5% interest on his partnership share. In the immediate post-dissolution period to 22 February Mr Wacher’s adjustments as recorded in the second Wacher 1 balance sheet deduct a further £17,735 for diverted rent, give credit for mortgage payments on 109 ACG and give credit for 5% simple interest on Mr Sali’s share. This gives Mr Sali’s share as at February 2022 as £561,169 and Mr Ponsford’s share as £2,263,256.

Wacher 2

[49]Mr Wacher’s workings are followed through in Wacher 2 to bring matters up to date to 31 July 2025.[50]Wacher 2 records at paragraph 2.3 the properties that have been sold, returned or remortgaged since Wacher 1 realising £740,000 net of mortgage payments, other debts and sales costs. Nine properties remain to be sold as appears from updated Appendix 3.3.[51]Wacher 2’s balance sheet at July 2025 attributes a value of £648,231 to Mr Sali’s share, which is calculated as his 1 December 2021 share of £568,158 plus 5% simple interest to 31 July 2025, adjusted for continued alleged diversion of rents and payment of 109ACG mortgage instalments. It attributes profits 100% to Mr Ponsford and calculates his share as £1,529,046.[52]Further drawings by Mr Sali from the partnership unsupported by evidence are identified in 3.13.12 of Wacher 2: (i). Cash withdrawals of £11,643; and (ii). Mr Sali expenses of £69,943.[53]In addition Wacher 2 identifies that the partnership has been put to costs because of Mr Sali’s sub-standard building works:(i) Wacher 2 at 3.13.6 explains that costs of £42,341 arose as a result of planning compliance issues caused by Mr Sali’s renovations at 99 Lamorna Avenue, including mortgage costs over an extended period while it was unlettable and remedial costs; and(ii) Wacher 2 at 3.13.7 explains that costs of £67,064 were incurred on remedial work at 2WR and further costs of £52,979 are estimated.

Mr Wacher’s Oral Evidence

[54]Mr Wacher was challenged about the disputed figures in the Wacher 1 balance sheets. He properly accepted that using different valuation figures for the properties and a different rate of interest would alter his end results. He also acknowledged that where there are factual disputes, the correct figures for use in his calculations would depend on which version of events was preferred by the court. Mr Wacher also accepted that it was not a matter for him to determine how post-dissolution legal costs should be treated. He confirmed that figures for post-dissolution sale proceeds had been provided by Mr Ponsford and his understanding was that these only affected Mr Ponsford. He explained that the destination of post-dissolution property sales of £627,000 would only show up in a full profit and loss account, which he had not been asked to draw, but that the reduction of Mr Ponsford’s loan account and the legal fees might be expected to account for those monies.[55]Mr Wacher was clearly an honest and independent witness who understood what was properly within his remit. Without his reports the task of understanding the complex and untidy affairs of MON would have been impossible.

The Witnesses of Fact

[56]Mr Ponsford has been endeavouring to resolve this partnership dispute since 2021. His evidence was that he has had to sort out problems thrown up by ASAs brokered by Mr Sali, as well as sub-standard building works carried out by Mr Sali which left properties unsaleable or unlettable. It was not surprising that he showed some exasperation with the situation in which he has found himself and with Mr Sali.[57]Mr Ponsford was doing his best to assist the court to find a way to bring the affairs of MON to an orderly conclusion. One aspect of his evidence struck me as surprising. When he was asked at what rate he should be remunerated for his work as receiver and manager he said that he had checked a government website and discovered that the appropriate rate was 15%. When the relevant web pages were produced it became apparent that Mr Ponsford had looked up the current rate charged by the Official Receiver in a bankruptcy or insolvency. Either Mr Ponsford had misunderstood his role as being analogous to that of the Official Receiver or he was deliberately attempting to achieve a premium rate for his remuneration notwithstanding that his evidence, being his witness statement of 27 October 2023, in support of his claim for remuneration is lacking in detail and does not fully comply with PD69 paragraph 9.4.[58]Mr Sali came across as an intelligent man in the witness box but his conduct since 2021 and the manner in which he gave his evidence clearly demonstrates that his aim has been to secure an exit from MON on his own terms and without regard, should they prove inconvenient, to the legal niceties of being in a partnership with Mr Ponsford. Mr Sali has not reconciled himself to having lost his claim to 2WR. He also instructed his counsel to put a question to Mr Ponsford about 13 Mill Lane, notwithstanding Master Marsh’s ruling that it was not a partnership property, which ruling was not appealed.[59]Mr Sali’s demeanour in the witness box was aggressive, argumentative and generally unhelpful. He regularly met a question with his own question back and at one point muttered “Jesus” in answer to one of Mr Tregear’s questions. He was evasive and, when he did answer questions, gave much irrelevant detail. I had to intervene a number of times to remind him to answer the questions put to him.[60]So far as Mr Sali’s position relied on his having spent or used money on partnership business or properties he produced no supportive documentary evidence. His claim that there were relevant documents at 2WR and he was unable to retrieve them after Mr Ponsford took possession of that property was first mentioned in the witness box and was not put to Mr Ponsford. His claim that, of the rent he collected in cash, half was paid to Mr Ponsford was again raised for the first time in the witness box and so was not put to Mr Ponsford.[61]Ms Apps was plainly an honest witness. The accounting information she has produced was not challenged in any way and its content has clearly assisted Mr Wacher in producing his reports. Since the first lockdown, she has not worked in an office with Mr Ponsford on a daily basis, accordingly her evidence about how much time Mr Ponsford was spending working as receiver and manager is of limited value.

Mr Ponsford’s Oral Evidence

[62]Mr Ponsford explained that he became aware of Mr Sali taking partnership money during 2021.[63]Mr Ponsford explained his work as receiver and manager consisted in disposing of properties, giving notice to tenants or receiving notice, trying to sell for the best price available, and where Mr Sali had restrictions in place having to go to court to get the restrictions removed with the resulting delay causing some lost sales and that in the meanwhile he was paying property expenses either from cashflow or his own resources including by realising investments intended for his retirement. He denied that he was exaggerating the amount of that work. He confirmed that dealing with the ASA properties was particularly difficult.[64]Mr Ponsford explained that Mr Sali sold 7SR without his knowledge. He said the purchaser told him the official price was £220,000 but there was a further £100k payment in cash but accepted he did not have actual knowledge of what occurred.[65]So far as 9MC was concerned Mr Ponsford’s evidence was that Mr Sali agreed to lend £200,000 to a Mr Tahir in return for a first charge in the name of the partnership. As far as he was aware, Mr Tahir and Mr Sali agreed to a release of the charge at a reduced price of £185,000 which was pocketed by Mr Sali.[66]When it was put to him that Mr Sali had spent his own money on 2WR and was entitled to credit for it, Mr Ponsford denied that Mr Sali had spent his own money on the property giving, as the reason, that he did not have any.[67]So far as the proceeds of post-dissolution sales are concerned. He explained that these were mostly used to pay legal costs to get the present proceedings to a final hearing. In examination in chief Mr Ponsford said that legal costs were £380,000 but gave the figure of £500,000 in cross-examination. He explained that the proceeds were also used in paying down his loan, in funding the costs of legal proceedings necessary to enable sales, in repairing properties and making payments to owners to cooperate in signing transfers. It was his position the monies were all used for partnership expenses.[68]Mr Ponsford explained that so far as the rent for 2WR is concerned he asked Mr Sali to pay back-dated rent for the first 8 months of 2021 and for 10 months thereafter.[69]Mr Ponsford confirmed that his property valuations were based on many years of experience and in re-examination explained that he used online tools, property searches, Rightmove, Zoopla and discussions with local estate agents to arrive at his valuations.

Ms Apps’ Oral Evidence

[70]Ms Apps explained that she acted as an administrative assistant in MON’s business and that her duties included the bookkeeping. Ms Apps understood that when a sale took place proceeds would be available to fund cashflow for the business. She recorded in separate ledgers costs relating to particular properties arising post dissolution.[71]Ms Apps said that following the first national lockdown she worked from home the majority of the time and although she did not necessarily know exactly what Mr Ponsford was working on she had a general understanding of his activities including the work dealing with sales, including lost sales. She also explained that once she was working from home Mr Sali no longer presented her with paperwork for bookkeeping purposes.[72]Ms Apps said she had recorded legal fees and payments since July 2025 in a total of £122,836 with a further £60,000 estimated for legal fees.

Mr Sali’s Oral Evidence

[73]Mr Sali repeatedly raised matters relating to 2WR and 13 Mill Lane, already determined not to be partnership properties, to deflect counsel’s questions. He also said that the claim he should pay any rent in relation to 2WR was “cheeky”. He failed to answer questions about the condition of 2WR and the £67,000 that has been spent by Mr Ponsford and the £54,000 that Mr Ponsford estimates needs to be spent to remedy the problems.[74]He claimed to have spent about £500,000 on 2WR. He claimed, for the first time in the witness box, that his records had been destroyed by Mr Ponsford when he took possession of 2WR. This claim was unsubstantiated and not put to Mr Ponsford. Mr Sali said that he was unable to obtain records from his bank but provided no evidence of attempts to do so.[75]Mr Sali boasted that he had great experience of valuing properties and was much better at it than Mr Ponsford. On valuations, he said that when he looked at the properties sold, they all achieved higher valuations than his valuations. He eventually accepted that the fact his valuations differed from Mr Ponsford’s did not mean that those valuations were wrong.[76]So far as 7SR was concerned he said that the sale price agreed was £320,000 but the price was recorded as £220,000 with £100,000 to be paid later. Of that £100,000, he said he only received £80,000.[77]So far as 9MC was concerned he accepted that he had not managed to get the balancing payment of £33,000, the £180,000 was all he was able to get in.[78]Mr Sali claimed that he divided rent collected in cash with Mr Ponsford which is a case that was not put to Mr Ponsford.[79]So far as the £43,000 is concerned he said that there would have been no need to agree with Mr Ponsford before taking it out of the partnership and there was nothing he needed to repay because the money must have been for partnership building works, despite the absence of documentation.[80]He agreed that because Mr Ponsford would not agree a division of the partnership assets which involved him keeping 2WR he took matters into his own hands to break up the partnership.[81]He accepted that Mr Ponsford had to go to Court to get restrictions entered for his benefit lifted. Discussion and Conclusions on Wacher 1 Disputes Property Values

Discussion and Conclusions on Wacher 1 Disputes

[82]Mr Sali contends that Mr Ponsford’s valuations, which are the starting point for Mr Wacher’s calculations are undervalues. Mr Ponsford’s values have been arrived at by Mr Ponsford as a matter of his experience in the market. Mr Sali says he is wrong and has undervalued the portfolio. Taken as a whole Mr Sali’s valuation total is £6,156,000. Mr Ponsford’s is £6,056,000. The difference for the whole portfolio is of the order of 2%. The difference would be narrower if Mr Ponsford’s revised net figure for 2WR as actually used by Mr Wacher were taken into account. Mr Sali has not obtained expert evidence himself and has allowed matters to proceed on the footing of Mr Ponsford’s figures.[83]I consider that the valuations are within a margin of error that means it would be wrong to conclude that Mr Ponsford has undervalued the properties. Further it is not open to Mr Sali now to assert that there should be a 5% across the board increase in the base property valuations to reflect an asserted undervalue in the absence of adducing his own reasoned alternative valuations, which is something he could and should have done at a much earlier stage in the litigation, if it were to have been allowed. In any event it will be the proceeds of sale of the properties, less deductions, which will ultimately be distributed between the partners.

Methodology

[84]Mr Sali’s next objection to the dissolution balance sheet concerns the way in which the value of the properties has been carried forward from Appendix 3.2, to the balance sheet. Mr Wacher includes £2,620,650 for properties and £1,528,901 for ASA assets plus £10,000 for other assets, a total of £4,149,551. Mr Sali says the correct total figure should be £6,250,380.[85]Mr Goodwill submitted that Mr Wacher’s figures are arrived at in Appendix 3.2 by deducting from the values attributed by Mr Ponsford, Mr Ponsford’s Loans and mortgage and other debts of MON. He says that this means there has been double counting, because the Ponsford loans and other MON debts appear again lower down the balance sheet. However, that is not right. As Mr Wacher states in relation to the Ponsford/MON properties:
“Properties owned by MON and Mr Ponsford are included at full value and the liability is included separately in the balance sheet.”
The Wacher values are arrived at by deducting third party owner debts (£1,213,000) and adjusting where appropriate (£589,754) and as I have described above by the column L figure to reach a net estimate of value. Further realisation adjustments are then factored in, these are not in dispute.[86]There is no double-counting error. Even if there were it is not a matter which was put to Mr Wacher in cross-examination and should not have been raised for the first time in written closing submissions.[87]The alleged double-counting error apart, Mr Sali has not challenged Mr Wacher’s methodology for making adjustments of value. I accept the methodology adopted by Mr Wacher.

Related Party Loans

[88]Mr Wacher includes £43,000 as a partner loan to Mr Sali. Mr Sali submits that there should be no such figure in the balance sheet. Underlying Mr Wacher’s total in this respect is his Appendix 3.4.6. This contains an analysis of the bank statements showing transfers in this total figure to Mr Sali’s account between November 2019 and January 2022. Mr Wacher explains that he has not seen any evidence that the payments were reimbursed.[89]Mr Sali’s evidence was that these withdrawals were not loans to him personally but were monies used to pay for partnership building works. He has produced no paperwork to justify his position and that he expended money in this way at this time, is inherently improbable in the chronology of the break up of the partnership.[90]I conclude that these are sums that Mr Sali took and used for his personal benefit and they are properly included as a partner loan in the sum of £43,000. 7SR[91]Mr Sali’s evidence about this was that there had been an agreed sale price of £320,000 which he reduced to £300,000 to seal the transaction. Of this he says that he paid £6,000 in estate agent fees, £43,000 to pay off the mortgage and £60,000 for the occupier to vacate. He says therefore that he should only be liable for £320,000 - £109,000 = £211,000. He says that it must be right that the third party loan has been paid off because the sale could not have occurred otherwise.[92]While there is no documentary evidence to support what Mr Sali says, if Mr Sali now accepts he owes £211,000 to MON and the third party debt can be eliminated from the balance sheet there appears to be no further dispute on this point. 9MC[93]Mr Sali’s evidence was to the effect that £184,239 was all he was able to secure and that he wished he had achieved more. In my judgment, just as it is not open to Mr Sali to criticise Mr Ponsford for doing deals or not obtaining the best possible prices Mr Ponsford cannot complain about the deal which Mr Sali did in order to realise the value of 9MC.

Diverted Rent

[94]Wacher 1’s Appendix 3.3 tabulates the rent unaccounted for in respect of 2WR, 9MC, 15 Russett Way, 20 Bartlett Road and 109 ACG to give a total of £143,385 to February 2022. Mr Wacher explains how he has arrived at this figure by comparing Ms Apps’ records and the tenancy agreements to establish anticipated rental entitlements and compared this with actual rental receipts and thus identifies the rents that it is alleged were collected in cash by Mr Sali[95]So far as concerns rent for 2WR, Mr Sali’s explanation for not paying or accounting for it was that it was “cheeky” he should be asked to pay rent. It would only have been “cheeky” if 2WR was held in trust for him, but Trower J held that was never the case. Accordingly £1,000 per month from November 2019 to February 2022 is properly to the account of Mr Sali.[96]Mr Sali’s explanation in cross-examination was that he had collected the rent in cash from other properties for which Mr Wacher records there is rent unaccounted for in cash and paid a one half share to Mr Ponsford. Mr Sali’s explanation only emerged in cross-examination and was not put to Mr Ponsford. I cannot accept it.[97]I conclude that Mr Sali did collect the rent (as he accepts) from the other properties but that there was no accounting to Mr Ponsford. The figure in the February 2022 balance sheet of £143,385 is therefore correctly stated.

Discussion and Conclusions on Wacher 2 Disputes

[98]Mr Sali had no explanations for and produced no documents to evidence the cash withdrawals (£11,643) and expenses (£69,943) identified in Wacher 2.[99]Mr Sali evaded questions about the condition of 99 Lamorna Avenue and 2WR and the remedial costs which Mr Ponsford expended as a result.[100]I conclude that the Wacher 2 cash withdrawals and expenses figures should be added to Mr Sali’s loan. I conclude also that Mr Sali should be responsible for the actual costs expended on 99 Lamorna Avenue and 2 WR. By the time 2WR is sold the actual total cost of remedial will be known and can be included in a final balance sheet.

Interest

[101]It is agreed that the rate of interest for the purposes of the calculations in all the balance sheets should be 5% not 20%.

Mr Ponsford’s Remuneration as Receiver and Manager

[102]Mr Ponsford asks for remuneration for the work he has done as receiver and manager. Mr Tregear submits that but for Mr Ponsford’s work nothing would have happened. Mr Sali’s conduct has not advanced the winding up, but has hindered it.[103]Mr Tregear submitted that remuneration at a rate of 10% of realisations in the form of net sales proceeds would be appropriate.

Conclusion on Receiver and Manager Fees

[104]I accept that Mr Ponsford should be entitled to a fee for his work as receiver and manager. However, I am troubled that Mr Ponsford has provided evidence about his work at a very high level of generality, both in his statement of 27 October 2023 and in his oral evidence, and has not provided the certificate required by PD69 paragraph 9.4(2). Mr Ponsford’s evidence about spending time on partnership affairs has not distinguished between time spent as receiver and manager as opposed to as a litigant or a partner involved in the winding up of the business.[105]In the absence of any form of time recording by Mr Ponsford or any identification of post dissolution profits, the only realistic basis for awarding a fee must be by reference to the net value of assets realised. According to Wacher 2 that net figure to date is £740,000. The figure allowed for remuneration must be reasonable and proportionate and, in view of the sparse evidential basis for any higher fee, I consider that a figure of 5% is appropriate.

Costs of these proceedings

[106]Mr Tregear submits that Mr Ponsford has had to incur legal fees and costs to get to this stage of these proceedings as a direct result of Mr Sali’s conduct. During the course of the proceedings, Mr Ponsford had to incur costs obtaining orders for removal of restrictions which prevented him completing the winding up. In principle, all these costs should be treated as a cost incurred by Mr Ponsford for the benefit of the partnership and should be paid to him as such before any distribution is made of any surplus.[107]Mr Tregear relies on the following extract from Lindley: 23-205 Prior to the advent of the Civil Procedure Rules, it had long been an established rule that all the costs of proceedings consequent on a dissolution should be paid out of the partnership assets, unless there was a good reason for making some other order. Although the court now has a wide discretion on costs, and must have regard to a number of factors in exercising that discretion, the old rule will continue to be applied in most cases, as confirmed at first instance in Sahota v Sohi and Stocking v Montila and by the Court of Appeal in Ma’har v O’Keefe. 23-206 Where, however, proceedings are, in reality, commenced in order to obtain an adjudication on some disputed claim between the partners, the unsuccessful litigant will, as before, normally be ordered to pay the costs unless his conduct justifies some other order. Thus, where an account is sought without a dissolution, the costs are likely to follow the issue, in the usual way. There may, of course, be scope for a party to make an effective Part 36 offer, in relation to the whole claim or one or more issues arising therein, which may automatically affect the incidence of costs, although it will sometimes be necessary to defer consideration of costs until conclusion of the accounting phase of the proceedings. However, the position may not be the same in the case of Calderbank offers. Taking the account 23-207 - In the same way, the costs of taking any accounts, etc. which may be directed are, subject to the court’s overriding discretion, likely to be ordered to be paid out of the partnership assets and, if necessary, by a contribution between the partners. Priority of costs 23-208 Costs payable out of the partnership assets rank after the partnership debts and liabilities, including any sums due to the partners in respect of advances and the like. Moreover, a partner will only be permitted to take his costs out of the partnership assets if he has made good any sums due from him to the firm, either by means of an actual payment or by an appropriate adjustment in the account. Thus, in Ross v White, where the claimant and defendant were equal partners, it appeared that £649 was due to the claimant in respect of an advance to the firm and that the defendant had withdrawn £601 more capital than the claimant. The funds in court being insufficient to defray these two sums as well as the costs of the action, it was held that the rights of the partners ought first to be adjusted by paying to the claimant the sums of £649 and £601 out of such funds, with the balance being applied towards payment of the costs of the action. The remainder of the costs fell to be borne by the partners in equal shares. This approach naturally accords with the requirements of the Partnership Act 1890.[108]Mr Tregear submits that this supports the proposition that the costs expended by Mr Ponsford should be added to the sums to be paid out to him in advance of any payment out to Mr Sali for three reasons:(i) the proceedings were necessitated and their costs have been increased by Mr Sali’s conduct in misappropriating partnership assets;(ii) Mr Sali’s non-co-operation in the winding up process; and(iii) raising and losing after a 6-day trial and an appeal process the issue as to whether 2WR was a partnership asset.[109]Mr Tregear further submits that the costs should be paid on the basis of a full indemnity so that Mr Ponsford achieves full recoverability. Alternatively he says, the court could assess the bills. Mr Tregear submits that what is clear is that costs cannot be left to be dealt with after the account has been taken and monies distributed.[110]Filed with Mr Tregear’s submissions were the following costs schedules:(i) A statement of costs dated 13 December 2023 for the 6 day preliminary issue trial before Deputy Master Marsh totalling £161,483. These costs were reserved pending the appeal;(ii) two statements of costs dated 11 November 2024 in relation to the appeal totalling £128,867. Mr Ponsford was awarded these costs to be assessed and a payment on account of £25,000 was ordered; and(iii) in accordance with my Order dated 2 July 2025: (a) a summary costs budget (incurred by Mr Ponsford in the proceedings to date, including the costs of the appeal) dated 31 July 2025 totalling £692,307.94. (b) a summary costs budget (for taking steps ordered to be taken in the directions, and estimate of costs to conclusion of account hearing) dated 30 September 2025 totalling £250,000.[111]Mr Tregear submits that Mr Sali should be responsible for the costs of his arguments(i) 2WR was not partnership property and(ii) 13 Mill Lane was partnership property. Mr Tregear further submitted that the costs of taking the accounts and inquiries should in accordance with principle 23-205 of Lindley be paid out of the partnership assets.[112]Mr Goodwill did not disagree that the costs of the proceedings must be paid for from the partnership assets or that Mr Sali should pay the costs of the issues on which he was the loser, but submitted that there must be an assessment.

Conclusions on Costs

[113]I do not have the material to reach final conclusions on the quantum of the various elements of legal costs that have been incurred.[114]I conclude that Mr Sali should pay Mr Ponsford his costs of his arguments concerning 2 WR and 13 Mill Lane. Those disputes were hostile litigation between partners and Mr Sali as the loser should pay the costs. They formed the bulk of the trial before Master Marsh and my provisional view is that Mr Sali should pay Mr Ponsford 85% of the costs of that part of the proceedings to be subject of detailed assessment on the standard basis if not agreed. That is in addition to the costs of the appeal already awarded and ordered to be assessed.[115]As to the costs of the winding up proceedings generally and the accounting exercise, I consider that these should, in accordance with the principles described in Lindley, be paid from the partnership assets and so to the extent they have been funded by Mr Ponsford he should be entitled to be reimbursed. As a receiver and manager appointed by the court I conclude that those litigation costs should be assessed on the indemnity basis.[116]As to the costs of proceedings taken to secure the removal of restrictions put in place for Mr Sali’s benefit and which he refused to remove, these too should be paid from the partnership assets. Those legal costs and other property related costs caused by Mr Sali are identified in paragraphs 3.13.8, 3.13.9 and 3.13.12 of Wacher 2 as: 26 Queens House (£37,649), 88 St Marks (£21,635), 2 Buccaneer (£10,470), 7 Culham (£3,050, 14 Pattison (£47,492) and other property and legal costs (£21,740). I accept that that is the best available evidence for their amount.[117]All costs, whether outstanding to third parties or which Mr Ponsford has paid and for which he is entitled to be reimbursed, subject to assessment, must be accounted for before any payment of surplus is made to partners. Determination of Payments to be made to each of the Partners Mr Ponsford’s Position

Determination of Payments to be made to each of the Partners

[118]Mr Wacher’s instructions were to treat Mr Sali as not entitled to any partnership share of profits after dissolution. Wacher 1 and Wacher 2 proceed on that footing. Mr Tregear submits that the result is that Wacher 2 treats Mr Sali as entitled to participate on the basis that he has repaid the debt he owes to the partnership out of his share of the net assets and receives 5% on his capital balance while being insulated from(i) liability for making any capital contribution and(ii) spending time working in the business. He submits that the position is that no profits have been extracted, although Mr Ponsford’s debt has been paid down. In practice Mr Tregear points out that any post dissolution profits will form part of the surplus which may be available for distribution to the partners.[119]Mr Tregear submits that there are good reasons for the Court to adopt the methodology of Wacher 1 and 2 as the means to determine the proper outcome of these accounts and enquiries and not accede to Mr Goodwill’s suggestion that further accounts be drawn at the final conclusion of the winding up process when all the properties are sold:(i) there is no accounting information before the Court from which it would be possible to determine profit and loss accounts at this stage and Mr Sali has made no case as to what profits are attributable to his net share of the partnership assets;(ii) the costs in terms both of time and expert fees would be disproportionate when these proceedings have been made extraordinarily expensive, at least in part, because of Mr Sali’s conduct;(iii) it is not clear that any theoretical profits would be consistent throughout the post-dissolution period and Mr Sali proposes no contribution to losses in parity with the way Mr Ponsford has had to fund the cash-flow and do the work to wind up the partnership;(iv) the quid pro quo for Mr Sali participating in post dissolution profits would necessarily be an acceptance of liability for losses and foregoing the 5% annual interest with which he has been credited;(v) there is no evidence that Mr Ponsford has drawn any profits rather than paying down his loan. Profits, if any, will constitute part of the distributable surplus, once Mr Ponsford’s debt has been paid off.(vi) since the proposed methodology means that the surplus distributable to the partners will take account of all the sales proceeds less all the debts and costs and given that profits have not been distributed to Mr Ponsford, any theoretical profits will constitute part of the surplus distributable to both partners;(vii) the suggestion of Mr Sali that a formal profit and loss account should be drawn up is a last ditch position adopted in the hope that it will be to his advantage, without having done the work or adduced the evidence to support it;(viii) it would be grotesque at this late stage of these very expensive proceedings for the conclusion to be delayed for the sake of a theoretical and probably illusory point raised but never properly pursued or made out by Mr Sali;[120]Mr Tregear also referred to the principle of Henderson v Henderson [1843] 3 Hare 999, 67 ER 313:
“…where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not…permit the same parties to open the same subject of litigation in respect of matter which ought to have been brought forward as part of the subject in contest but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted from their case”
.

Mr Sali’s Position

[121]Mr Goodwill’s submission was that a final and full profit and loss account and balance sheet needs to be drawn up, presumably at the point immediately after the last property is sold (or any agreement is reached that Mr Ponsford may retain partnership properties in specie).

Conclusions on Finalising the Affairs of the Partnership

[122]I accept Mr Tregear’s submissions that the taking of this account must be directed to a conclusion on the basis of the evidence available at the account hearing. There must be finality to the determination of the issues raised in this litigation. Mr Ponsford engaged Mr Wacher to report on the finances of the partnership business and he has done so. Mr Sali has never put forward any positive case on the details of the dissolution process or, in particular, what profits have been incurred (if any) and how they are attributable to his partnership share. The absence of a formal profit and loss account does not prevent profits being included in the eventual surplus, which is the practical effect of Mr Ponsford’s proposed way forward.[123]Mr Tregear submits that the calculation of each partner’s entitlement should proceed by reference to a final balance sheet. He says, using by way of example the Wacher 2 balance sheet, this shows the total attributable to the partners as £2,177,277 with shares attributable to Mr Sali:Mr Ponsford in the ratio of £648,231:£1,529,046 or 29.77:70.23. Accordingly once a final balance sheet is drawn the sharing ratio can be determined. Mr Tregear submits, any other method of distribution (and no alternative has been proposed) would see an imbalance between the proportion of the attributable share being paid down as between the two former partners. Mr Goodwill seems to accept in broad terms this methodology of calculating shares by reference to a final balance sheet.

Way Forward

[124]In due course at the conclusion of the winding up a final balance sheet will need to be drawn up and the following matters, which follow from my conclusions above will need to be taken account of:(i) the loan figure payable to Mr Ponsford as at 1.12.2021 was £494,000;(ii) that figure had been reduced by £73,689 by July 2025. 5% interest was being paid monthly as shown by Appendix 3.7 of Wacher 2. The figure is adjusted as explained in paragraph 3.7.1 of Wacher 2 for legal expenses and loan interest and is shown in the Wacher 2 balance sheet as £585,830. (Subject to adjustments to take account of the necessary assessments of costs) there is no better evidence for the correct figure. In addition 5% interest will be payable from July 2025;(iii) the interest calculated in relation to Mr Sali’s debt and the 109 ACG mortgage needs to be reduced from 20% to 5%(iv) Mr Sali’s debt as at February 2022 is to include: (a) Related Party Loan of £43,000; (b) Diverted rent of £143,385; (c) 7SR liability of £211,000;(v) the mortgages from third party lenders is to be adjusted by £109,000;(vi) in relation to 9MC I do not consider that Mr Sali should be charged with the cost of the deal he did with Mr Tahir and the £184,239 figure should stand;(vii) the figure of £259,955 is agreed for 109ACG;(viii) further sums owed by Mr Sali referred to in paragraph of Wacher 2 should be debited to him: (a) cash of £11,643; (b) expenses of £69,943; (c) costs of £42,341 relating to 99 Lamorna Avenue; and (d) costs of £67,064 incurred on 2WR (plus any further remedial costs expended);(ix) where Mr Sali is personally liable to Mr Ponsford for costs (appeal and 85% of preliminary issue), and save to the extent already paid, and following assessment these must be deducted from Mr Sali’s share;(x) Mr Ponsford’s loan to the partnership must include sums paid by Mr Ponsford in relation to the present proceedings, subject only to there being an assessment on the indemnity basis, before final calculation and any distribution of surplus;[125]Mr Ponsford as receiver and manager is to sell the remaining properties and use the proceeds of any remaining rentals to pay the outgoings on remaining properties until all the properties have been sold or disposed of.[126]In order to complete the winding up of the partnership 26 Rhodaus Close and 109ACG will need to be sold. Since the registered owners are Mr Sali and the second defendant I will make orders to facilitate those sales by Mr Ponsford.[127]If Mr Ponsford has to inject further funds to keep the partnership afloat they will be added to his debt.[128]Mr Ponsford is to be entitled to charge 5% of net realised asset value by way of remuneration;[129]Mr Wacher will then need to draw a final balance sheet at the expense of the partnership in order to produce the figures to be used in determining the attributable share for each partner.[130]Mr Ponsford will then need to apply the net sales proceeds as follows:(a) to pay all outstanding third-party debts;(b) to pay Mr Ponsford his fees as Receiver and Manager;(c) to pay the debt owed to Mr Ponsford; and(d) to divide the surplus between Mr Ponsford and Mr Sali in proportion to each partner’s capital share.[131]I will hear the parties further as to the form of order that should be made. (Two Excel Spreadsheets Annexed)

order

1.In paying the debts and liabilities of the firm to persons who are not partners therein: 2.In paying to each partner rateably what is due from the firm to him for advances as distinguished from capital: 3.In paying to each partner rateably what is due from the firm to him in respect of capital: 4.The ultimate residue, if any, shall be divided among the partners in the proportion in which profits are divisible.”(a) Losses, including losses and deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportion in which they were entitled to share profits:(b) The assets of the firm including the sums, if any, contributed by the partners to make up losses or deficiencies of capital, shall be applied in the following manner and order: 1.In paying the debts and liabilities of the firm to persons who are not partners therein: 2.In paying to each partner rateably what is due from the firm to him for advances as distinguished from capital: 3.In paying to each partner rateably what is due from the firm to him in respect of capital: 4.The ultimate residue, if any, shall be divided among the partners in the proportion in which profits are divisible.”