The Court of Appeal has upheld a High Court decision against one solicitor in favour of her former partner, after expressing surprise that the pair had no more than a verbal agreement made in the pub over a drink.
In John Bottrill v Julia Harding  EWCA Civ 564 – a case in which a partner claimed an agreement existed to have the capital in his capital account paid to him on retirement – Lord Justice Longmore said that given the case involved two solicitors, it was “surprising” that no agreement had been documented and “even more surprising that they choose to litigate the matter as far as this court rather than resolve their difference by mediation or even arbitration”.
The facts were that John Bottrill and Julia Harling, the appellant, became partners in 2001 but no written agreement as to their relationship was ever drawn up. Discussions took place “mainly in the local public house over a bottle of red wine”.
The parties agreed that £25,000 was to be paid by Ms Harling for becoming a partner, which would become payable at a later date, and that she would be entitled to draw £3,500 a month from the office account regardless of the firm’s profits.
Mr Bottrill also had a potential liability to a former partner, a Mr Freer, of £150,408 but no claim was ever made on that sum, which had become statute-barred. It did not become clear for some time that this debt would not be pursued, but when it did, around 2005, it meant nearly £100,000 was owed to Mr Bottrill in his capital account.
Mr Bottrill retired in 2006 and he claimed that it was agreed, again orally and in the local pub, that Ms Harling and her new partner, Nicola Thompson, would pay him such credit balance as was due on his capital account. Ms Harling’s recollection of the meeting was that Mr Bottrill only sought a payment of £25,000 for his share in the partnership.
Sitting in the London Mercantile Court, HH Judge Mackie QC found that “the oral evidence of Mr Bottrill on the points at issue to be credible and correct and that given by Ms Harling to be unreliable” and that while “Mr Bottrill bears the greater responsibility for the failure of the parties to document their agreement and he may to a degree have taken advantage of Ms Harling’s comparative lack of experience… those are not matters susceptible to legal redress”.
In the Court of Appeal, Longmore LJ said: “The judge concluded that an agreement was made in the course of a number of discussions that took place in circumstances of which it was not surprising that the parties had no detailed recollection.
“Once the judge had accepted [the] evidence that it was Mr Bottrill alone who had responsibility for any repayment being made to Mr Freer and that it was therefore he who had the benefit of the loan becoming statute-barred and that the parties knew that the loan was not enforceable, it was self-evident that Mr Bottrill’s capital contributions to the partnership would have to be dealt with.
“The judge rejected Ms Harling’s case that they were subsumed into the £25,000 to be paid by Ms Thompson. He accepted Mr Bottrill’s case that there was an agreement to pay him his capital contributions and he was entitled to say that the documents ‘strongly’ supported that finding.”
Dismissing the appeal, he said this was the kind of case where there should be appellate caution about reversing the judge’s findings of fact.