Hughes v Busby

• Jurisdiction: Anguilla
• Court: High Court (Saint Christopher, Nevis And Anguilla)
• Judge: Saunders, J.
• Judgment Date: 01 January 2001
• Neutral Citation: AI 2001 HC 1
• Date: 01 January 2001

High Court

Saunders, J.

Hughes

and

Busby

Appearances:

Mr. K. Lake and Ms. C. Hughes for the plaintiff.

Ms. J. Kentish for the defendant

Partnership - Partnership agreement — Plaintiff claimed declaration that a certain business was a partnership in which he had a 50% stake hold — Whether oral discussions and surrounding circumstances evinced a partnership or loan agreement — Finding that plaintiff had discharged the burden of satisfying the Court of the existence of a partnership — Whether action by partner for accounts barred after 6 years — Sec. 4(2) of Limitation Ordinance considered — Judgment for the plaintiff with costs.

Saunders, J.

1 This trial spanned the Christmas vacation. When we broke in mid December, I urged the parties to use their best endeavours to arrive at a compromise to the action. Mr. Hughes, the plaintiff, is the uncle of Mr. Busby, the defendant. Up to about 1997, the two were extremely close. They apparently did hold some discussions but regrettably, the season of peace and goodwill proved insufficient to produce the settlement I had hoped for.

2 The action turns principally on issues of fact surrounding a business transaction. The closeness of the parties at the time of the commencement of the business has not made fact finding an easy process. This is not surprising. In a close and trusting relationship accurate record keeping is often regarded as being unnecessary, irksome, even embarrassing. The boundaries, if they exist at all in the minds of the major players, between business and family relations, become blurred or sometimes overlap. This is usually one of the reasons why such matters end up before the court. A judge then has the unenviable task of unraveling a course of dealing that, at the outset, no one ever dreamt could go sour. But that is why we have courts of law that are independent and impartial. These are responsibilities that courts do not shirk.

3 Undisputed facts and general impressions

4 Mr. Busby is an experienced heavy equipment operator. He has been engaged in that field since 1980 when he was twenty years old. His stepfather conducted a heavy equipment business and for several years Mr. Busby operated his stepfather's machines. He also operated machines owned by Cable and Wireless. Mr. Busby impressed me as a hardworking, thrifty, successful entrepreneur. By the time he got married in 1989 he had already acquired two houses. He thought the time was right for him to have his own business.

5 That year he contacted a cousin in the United Kingdom either about purchasing a backhoe or about going into a partnership with him surrounding the purchase of a backhoe. As his uncle, Mr. Hughes, was going off to England, Mr. Busby asked Mr. Hughes to take a letter to the cousin. They discussed the contents of the letter but nothing ever came of that 1989 initiative.

6 Hubert Hughes is a man of substance and great influence in Anguilla. He was in Government for several years. Up to the early part of 2000 he was Chief Minister of the colony. He impressed me as being a generous, opinionated man with tremendous affection for his nephew.

7 In about June 1991 Mr. Busby approached Mr. Hughes about a business transaction. At this time both Mr. Hughes and Mr. Busby appreciated that the heavy equipment business was a lucrative one to be involved with in Anguilla. Consequent upon Mr. Busby's approach, a friend of Mr. Hughes living in England, one Rupert Hodge, was contacted. The friend did not at the time know Mr. Busby. The friend found a backhoe with a hammer for sale in England at L13,000 sterling. After discovering the cost, uncle and nephew went to the Bank of Nova Scotia. Mr. Hughes put up exactly one half of the cost of the purchase, duty and freight in respect of the machine. He also guaranteed a loan from the bank to Mr. Busby to enable the latter to borrow the other half of those costs. The monies thus secured from the bank were then handed to Mr. Hughes. Mr. Busby said in evidence, “I gave the monies to my uncle to send on to England. It was his friend and he knew Rupert so I turned everything over to him.”

8 This machine was purchased and sent to Anguilla but it did not function very well. Later that year therefore it was decided to purchase another machine. The parties discussed obtaining one from Miami. Mr. Hughes said that he had a cousin in Miami, Charles Carty, and he would ask him to get one there. This machine was acquired. The purchase price for it was put up entirely by Mr. Hughes. The latter also assisted with the payment of freight and duty.

9 Mr. Busby managed these machines. Initially he was the only employee of the business. He was later joined by his brother. In 1992 a dump truck was purchased from Miami. Mr. Busby gave Mr. Hughes the money to send to his cousin in Miami to purchase this dump truck. Two years later, a backhoe with a hammer was purchased from Cable and Wireless. The funds used to purchase this machine were borrowed from the Bank of Nova Scotia with a loan guaranteed by Mr. Hughes.

10 Some time in or about 1992, business cards were printed and distributed for the business that owned these machines. The card described the business as Tracy & Co. Heavy Equipment. There were three contact telephone numbers at the lower right hand corner of the business card. One was Mr. Busby's, another was an office in Mr. Hughes' home and the third was Mr. Busby's mother's.

11 Tracy & Co. Heavy Equipment flourished and grew in size. Mr. Busby executed all the day to day business decisions. He hired, paid and fired staff. He controlled the accounts. He received all the income and deposited the same into an account in his own name. All the heavy pieces of equipment purchased for the business were registered, licensed and insured in his name. He rendered no account to his uncle. However, Mr. Hughes was paid (or repaid, depending upon one's point of view) significant sums of money over a period of time. The evidence suggests that in toto the amounts he received were close to or just about or in excess of the amount of his outlay.

12 The question for decision before this court is what was, or is, Mr. Hughes' stake in this business. Mr. Hughes says that the business is a partnership and that he is a fifty per cent partner. He wants a declaration to that effect. He asks the court to order that proper accounts be taken of the business and that he be paid such sums as are due to him on the taking of these accounts. Mr. Busby says that Mr. Hughes was a mere creditor of the business, a benevolent uncle who loaned him certain monies, interest free. He says that Mr. Hughes has already been handsomely repaid and that this action should therefore be dismissed.

13 In support of his claim Mr. Hughes himself testified. He called several witnesses including his wife, his son, a Secretary in his office and a landscaper who used to work at the Cap Juluca resort. Mr. Busby's sole witness, apart from himself, was his wife. Since so much in this matter turns on my assessment of the facts, I will set out some of the salient aspects of the testimony that was given by each witness.

14 The evidence of the plaintiff

15 Mr. Hughes claimed that in or about June 1991 he and his nephew orally agreed specifically to establish a heavy equipment business. They were to be partners on a 50/50 basis. According to him, when he was approached by his nephew he had the financial resources to purchase the equipment outright but he preferred that his nephew should own a half share. He testified that his wife, Mrs. Norma Hughes, was present when he and his nephew agreed to form the partnership. Mr. Hughes said that the understanding was that

“…. [he] would facilitate the entire financing …..the defendant would ensure proper records of earnings and of expenditure; that we would pay from the business a portion of 50% of the salary of my female office assistant to whom the defendant would provide the information of receipts and expenditure. I made available office space, a store room (which the defendant helped to partition) in my building downstairs, and I made available a parcel of land to the business…”

16 He said that he also committed himself to ensuring the viability of the partnership by soliciting business for it and by supplying extra financing as and when required. Mr. Busby was to be employed in the business on an hourly basis.

17 Mr. Hughes gave detailed evidence of — the way in which the business progressed in its first four or so years, the machines that were acquired and how and from whom those machines were obtained. He stated that he and Mr. Busby agreed that the funds used to acquire the second machine (funds provided solely by Mr. Hughes) were an interest free loan by him to the partnership. I understood Mr. Hughes to be saying that this advance for the second machine was a loan that was to be repaid by the business as a separate and distinct transaction and that his advances to the business were therefore in two forms. Firstly, his initial partnership investment based upon his original advance of one half of the cost of acquiring the first machine. And secondly, an interest free loan in respect of the second machine which loan the business was obliged to repay.

18 From as early as November, 1991 Mr. Hughes began receiving monies from Mr. Busby. Separately, they both did keep a record of some sort but each side acknowledges, expressly or implicitly, that his record is incomplete. Quite apart from the sums of money received by Mr. Hughes, Mr. Busby also provided materials and services to Mr. Hughes and his wife. In particular, when Mr. Hughes was constructing a building in The Valley, Mr. Busby gave him loads of sand and purchased windows for him in Puerto Rico.

19 Mr. Hughes stated that he and Mr. Busby had initially agreed that Mr. Busby would provide proper records of earnings and...