“…as a going concern that part of the business comprising: The Goodwill (including the right to receive any Remuneration [broadly commissions and fees paid by clients and/or in respect of their investments/products] payable after the Transfer of Remuneration Date); the Client List and the right to deal with Clients in respect of any period after the Completion Date; the work in progress; the Intellectual Property and the Business Records; and The Fixtures and Fittings and the Stock”
“…the goodwill of the Seller in connection with the part of the business to be sold, together with the right of the Buyer to represent itself as carrying on that part of the Business in succession to the Seller (but excluding the right to use the Name).”
“… the profession trade or business of designing, constructing and installing scenery and sets at nominated locations for clients conducting marketing initiatives;”
“Firstly, to separate the goodwill from the company in order to gain asset protection in the event of company failure. Secondly, because it was considered likely, and still is, that separate sections of goodwill will be disposed of at different points in time, and it was considered easier to do this from a separate vehicle. Indeed, Mr Walters may well wish to sell his Ltd Company but continue with a small loyal group of clients through the LLP. Again, this was considered safer if the goodwill was separated, particularly given the potentially complicated rules that St James’ Place tie their advisors into.”
“What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates.”
“Goodwill regarded as property has no meaning except in connection with some trade, business, or calling. In that connection I understand the word to include whatever adds value to a business by reason of situation, name and reputation, connection, introduction to old customers, and agreed absence from competition, or any of these things, and there may be others which do not occur to me. In this wide sense, goodwill is inseparable from the business to which it adds value…”
“161. Whether goodwill exists is a question of fact 162. Goodwill is a type of property. 163. Goodwill should be looked at as a whole and includes whatever adds value to a business by reason of situation, name and reputation, connection, introduction to old customers and absence from competition. The precise composition of goodwill will vary in different trades and in different businesses in the same trade. 164. Goodwill realises profits for the business. 165. Goodwill cannot subsist by itself but must be attached to a business. 166. Goodwill distinguishes an established business from a new business and is built up by years of honest work and investment in the business. Goodwill is created by trading activities. 167. The value of goodwill will be enhanced if the business and the premises in which the business is carried on are sold together as a going concern. 168. Goodwill can be sold separately from the premises in which the business is carried on. 169. The authorities caution against an over analytical approach to goodwill (see Muller & Co’s Margarine Ltd and Whiteman Smith Motor Co ). … 170. A covenant restricting the trade of the trader selling the goodwill is a means by which all the advantages that the purchaser was intended to have by taking over the goodwill of the business are secured to him. The existence of such a covenant is indicative that goodwill was sold by the vendor.”
“…HMRC would seek us to conclude therefore that goodwill can only ever belong to the entity which carried on the business to which the goodwill (the reputation and propensity to generate future income) relates. 33. However, we consider that the position is more complex than HMRC contend. Plainly, goodwill is associated with the operation of a business but that is not the same as concluding that the goodwill so associated can only vest or be owned by the company.”
“…on the facts we consider that the asset (however is it labelled) of the reputation and relationships of the Appellants [the individual directors] with individuals belonged to them and not to SIFA [their employing company].”
“There is no written evidence as to the terms of Mr Smith’s employment at the time he commenced employment, but we accept the evidence of both Mr Smith and Mr Corbett that his clients “belonged” to him. Whilst employed it was expected that Mr Smith would cultivate and nurture professional relationships with the clients with whom he had historically worked and develop new relationships, usually by word of mouth from existing relationships. The propensity for (initially Mr Corbett and subsequently SIFA) to be able to derive income from those clients was founded in the relationship between the client and Mr Smith and his personal reputation with them and not as a consequence of the reputation of his employer. As such, we find that despite there being no formal written terms of employment for the period from 1995 - 1999 it was accepted and agreed between Mr Corbett and Mr Smith that should Mr Smith cease employment with Mr Corbett his clients would follow him together with the ability to obtain an income from advice provided to them.”
“At the time of the share purchase we find that no value for goodwill was attributed to Mr Corbett’s client relationships and the price paid for the shares represented approximately one third of the net book value of fixtures and fittings.”
“…the relationships themselves represent a valuable asset. Whilst in employment those relationships provided SIFA the opportunity to generate income but the underlying relationship was one which vested with each of the Appellants and which could (subject to the decision of a client to transfer that relationship to another advisor within SIFA) be taken from SIFA without restriction. … on the facts we consider that the asset (however is it labelled) of the reputation and relationships of the Appellants with individuals belonged to them and not to SIFA.”
“…Since the Team did not own the client connections, it could not have sold them. Thus my answer to the question is “No”
“…the Team did not own or have any legal interest in the business being carried on by Butterfield. They did not own or have any interest in the goodwill of that business. They had no right to take, and did not take, any confidential information of Butterfield with them. All that they had were personal relationships with Butterfield’s clients which they had built up over the years of their employment with Butterfield and previous employers. It was open to them, so far as was consistent with their contractual obligations to Butterfield (which is not suggested were breached), to introduce to SWIM the Butterfield clients with whom they dealt and to agree to assist in or procure the transfer of those clients and their funds to SWIM.”
“164. In my judgment, the evidence establishes that the Payment was a reward to the Team for introducing the Butterfield clients to SWIM and procuring, or assisting in procuring, the transfer of those clients to SWIM. In other words, as Ms Wilson puts it, the Team provided a service. I do not consider that it is right to describe what the Team did as “the transfer of rights to exploit client connections”. 165. Further, such power as the Team had to turn their relationships with clients to account is not, I consider, to be equated with goodwill. The decisions in Asprey and Kirby v Thorn EMI give a succinct description of the perhaps elusive concept of goodwill, contrasting it with personal connection built up over the years (as in Asprey) or the right to trade (as in Kirby v Thorn EMI). The right to exploit which the Judge seems to have identified is not the right to sell the customer portfolio, a right which belonged to Butterfield; it is not the right of ownership of the assets or of the right to manage the assets. It is not of itself goodwill, which belonged to Butterfield. Further, it makes no sense to speak of Mr Smiley as having the “right” to “exploit” his clients’ personal loyalty – although he is free to take advantage of the relationships – any more than it is correct to speak of a person as having the right to trade. Further, as I have already pointed out, the client relationships enjoyed by the Team cannot be transferred; they are personal relationships between individuals. What the Team can do is introduce their clients to SWIM and attempt to procure their transfer to SWIM. But SWIM does not thereby acquire a personal relationship between a Team member and the client. That relationship might continue if the team member continues to service the relevant client, but the relationship remains that between the member of the Team and the client; or a new personal relationship might develop between a new client manager at SWIM but it is not the same relationship.” [Emphasis in original]
“…the Buyer shall buy…as a going concern that part of the Business [the business of giving advice on financial planning] comprising: (a) The Goodwill…;the Client List and the right to deal with Clients in respect of any period after the Completion Date; the Work in Progress; the Intellectual Property and the Business Records; and (b) The Fixtures and Fittings and the Stock” (a) The Goodwill…;the Client List and the right to deal with Clients in respect of any period after the Completion Date; the Work in Progress; the Intellectual Property and the Business Records; and (b) The Fixtures and Fittings and the Stock”