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Failed Business Sale/Small claims action

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  • Failed Business Sale/Small claims action

    Hello,
    I have recently received a Solicitors letter from regarding a civil litigation case being prepared against me over the failed sale of my business.
    In November last year I agreed to sell my business to the claimant, the business being a tenancy agreement for a public house, we agreed that the claimant would pay £20,000 for the remaining 8 years of the lease. This was agreed verbally and no formal contracts were exchanged, the claimant took over the running of the business on the 24th November 2015 and paid an initial £5000 of the agreed £20,000 however the business remained in my name for the moment until the transfer of the lease could be completed by owners (Punch Taverns).

    As part of my tenancy agreement with Punch I am responsible for the upkeep of the building and fixtures and fittings, Punch completed a dilapidations report on 15/10/2015 which was seen by the claimant and detailed that there was £92,000 worth of dilapidations work that needed to be carried out on the premises before they would release me from my lease and allow transfer into the claimants name, the claimant being a builder by trade agreed that he would run the business for me and carry out the necessary dilapidations work as without this being done he would not be able to proceed with the purchase of the business (He stated that £92,000 was a very inflated amount and he could carry out the work for much less). Again no contract was written up or quotes provided, the understanding was he would run the business and do the work off his own back as he went along until such time as we could complete the transfer of the lease agreement.

    The claimant moved into the premises on the 24th November and paid the initial agreed £5000. Although the business remained in my name as did the bills the claimant took over all running of the business including paying the rent, ordering stock etc and kept all of the take as though business was his own and all I asked was the money to pay bills that had to remain in my name, such as the Gas/Electricity bill and business rates which to begin with worked fine we had no issues.

    Unfortunately a few weeks after the claimant moving into the business he stated that he had no intention of paying the remaining £15,000 owed for the business due to the dilapidations work being too much and also started to become difficult with regards to paying the above mentioned bills, however he remained in charge of the business and rather than walking away because of the work that needed doing he continued to trade keeping all profits from the business for himself (Including over the busy Christmas period. It also became clear that he was carrying work on the premises that were not detailed in the dilapidations report and therefore the transfer of the business could not be completed, all of the work was being done off his own back and without any agreement from myself.
    This continued until the 6th of March.

    On the 6th of March 2015 the claimant decided that he would no longer wish to proceed with the purchase of the business and left and I returned to the running of the business.
    I now have a letter from the claimants Solicitor demanding that I return the £5000 paid as well as stating that that he intends to pursue a claim in small claims court for the work carried out on the dilapidations and also that as he was running the business on my behalf that he should receive an income from 24/11/2014 until 06/03/2015 even though he never had any contract stating such and that I had allowed him to run the business as his own i.e. keep the take.
    Does he have any rights to make these claims?

    The take from the business amounted to £53,000 in the time that he was there of which apart from some payments initially for utilities and business rates he kept himself, if he states he's an employee and wants paying then how can he have any right to keep the take from the till, perhaps this then constitutes theft if he wishes to proceed?
    Much of the work he carried out on the premises was off his own back and not authorised by myself so is it right that he can now attempt to invoice me for this work? Without any contracts or agreements being drawn up or signed?
    The initial £5000 it was greed would pay for the contents of the fully furnished flat above the premises, much of which has been thrown away and some was left behind when he decided to vacate but can he really demand that money back?, it was his choice to walk away.

    I truly regret that I allowed this situation to occur on a 'Trust' only basis and never drew up any contracts prior to allowing the claimant to move into and run my business, this was somebody I had known for many years and believed things would go through as planned. I just now need to know my legal position regarding these claims being made against me, my business has suffered due to lies and rumours being spread about this deal by the claimant, as well as having my personal mail opened and paraded for all to see which I believe in itself an offence

    I appreciate this is a rather long winded question and will be very grateful for any advice.
    Tags: None

  • #2
    Re: Failed Business Sale/Small claims action

    Yes there are defences available to some, if not all, of the claim.
    You have mentioned them in your post.
    However could you post up the letter (suitably redacted) you have received from the solicitors?

    Comment


    • #3
      Re: Failed Business Sale/Small claims action

      Hi,

      Have Punch Taverns taken a view on the " sub letting " of the pub and the "deal " made
      regarding the dilapidations?

      nem

      Comment


      • #4
        Re: Failed Business Sale/Small claims action

        Originally posted by des8 View Post
        Yes there are defences available to some, if not all, of the claim.
        You have mentioned them in your post.
        However could you post up the letter (suitably redacted) you have received from the solicitors?
        Hi Des,

        Thanks for your reply, I've typed in the full letter below, i've made some notes at the bottom as there are a few 'untruths' contained in the letter which I will argue in court.

        Dear Sirs,

        Following an incident which our client alleges took place on the evening 3rd of March 2015 when your client attended <BLANK> aggressively demanding monies from our client(2) our client has taken the decision not to proceed with the assignment of the lease.

        Our client informed us that the agreement for the assignment of the lease was conditional upon your client contributing to half of the necessary works under the schedule of delapidations(3). Our client has advised us that he has carried out more than half of the delapidations(4) but your client is refusing to aknowledge and complete her part of the agreement.

        As you may be aware our client has left <BLANK> and requests that your client returns the £5000 paid to your client in anticipation of the assignment(5) within 14 days of receipt of this latter failing which our client has instructed us to prepare an application to the small claims court seeking the return of the £5000. Our client paid this as a gesture of goodwill towards the agreed price for the assignment of £20,000 with your client leaving in her security deposit with punch taverns which understand to be £6,000 (6).

        Our client has informed us that the schedule of delapidations which you provided to us are an out of date schedule and that the most recent schedule is substantially longer than that provided to us (7).

        Our client also whishes to put your client on notice that he intends to provide an invoice for the work carried ot at <BLANK> on a quantum meruit basis. If the monies remain outstanding after a reasonable time period then our client informed us that he intends to issue court proceedings to recover such monies(8).

        Your client has also stated to our cient that our client and his partner are employees of your client(9), and if indeed this is the position we have been requested to advise your client that <BLANK> have not been paid any wages which your client would be obliged to do at not less than the statutory minimum wage (10).

        With reference to your letter dated 4th March 2015 our client has advised us that he has not paid the gas/electricity as stated because despite our client requesting copies of the gas and electrcity bills for the premises so that he could ascertain precisely what he was paying for, your client failed to provide such information(11). Our clients beleived that your client was attempting to charge our client for monies which were in excess of the current gas/electricity usuage(12) and that they would effectively be contributing to settlement of arrears accumilated prior to 24th November 2014.

        As regards point (c) of your letter the monies from the period 24th Nov 2014 to 28th Feb 2015 and beyond will be required by our client for his own VAT returns (13).

        We look forward to receiving the £5000 payment withing 14 days of this letter and we shall contact you as soon as our client has had the opportunity to prepare his invoice for the work carried out under the schedule of delapidations.

        Regards

        (2) I was in no way aggressive and have witnesses that can confirm this, I simply asked him for the gas/electric bill money to which he refused, I stated I would have no choice but to cut it off as I could not allow them to continue to amass a bill which I had no income to pay.

        (3) This is completely untrue, I had nothing to contribute, he was told at the time that if it was too much work he could walk away from the deal but insisted he wished to continue because as a builder he would be able to complete the work no problem and the SOD from the surveyor was greatly over inflated.

        (4) He has done no where near half of the work, and what has been done has not been completed. Much of the owrk done was not on the list schedule of delapidations report, i'm sure a repat survey would confirm this.

        (5) It was agreed that the intial £5000 would be for the furniture etc in the fully furnished flat above the business which they would live in.

        (6) Again completley untrue, the security deposit was never discussed, why would I leave my security deposit? (For rent and order bill) in fact he knew nothing about it until he opened my mail from Punch.

        (7) When we initially discussd him buying the business I did show him the delapidations report from when I re-purchased the lease 2 years prior as this was all I had. However the latest report was infact provided prior to him moving in on the 24th November 2015, once again I confirm he was offered the chance to pull out but instead remained in the business until 6th March 2015 and carrying out work.

        (8) He took on the work off his own back, I had no input on what work he was carrying out, infact Punch noticed that much of the work was not even on the a schedule of delapidations report, he knew the only way he could atain the assignment of the lease was to do the work and chose to do it himself, however i believe he soon realised that it was too much, however rather then pulling out of the deal he continued again off his own back.

        (9) They were employees in the eyes of Punch Taverns because the lease remained in my name, so for business purposes they were managing the business on my behalf, however as I agreed with them when they took over they could run the business as thier own keeping all take and profit and must only pay me the gas/electric and business rates, everything else was theirs, the pub accounts show £53,000 take during the period which they were there of which I recieved roughly £1500 to pay the bills.

        (10) As above.

        (11) I could not find the bill, I pay a monthly direct debit amount and only recive a statement I think 6 monthly, I showed them my bank statements showing the monthly DD leaving my account.

        (12) This is quite laughable, the DD amount was £328 a month total for both gas and electric, for a premises this size during winter they would be using treble this, really I needed to up this amount to match usuage but as I was having trouble recieving the money I could not, they were accumulating arrears not paying them.

        (13) I'm not sure what he intends to do here as he is not VAT registered for the business, unfortunatley I will be liable for the VAT bill for the period they were running business as it is in my name, even though they kept all monies from the business myself, not sure where I stand here.

        Thankyou for taking the taime to read.

        - - - Updated - - -

        Originally posted by nemesis45 View Post
        Hi,

        Have Punch Taverns taken a view on the " sub letting " of the pub and the "deal " made
        regarding the dilapidations?

        nem
        Hi thanks for replying,

        I never sub let the business, I let them run the business and keep all monies recieved and live on the premises but never charged them anything for this. Punch Taverns view is that they were managing the business on my behalf

        Thnaks again

        - - - Updated - - -

        Originally posted by nemesis45 View Post
        Hi,

        Have Punch Taverns taken a view on the " sub letting " of the pub and the "deal " made
        regarding the dilapidations?

        nem

        Hi thanks for replying,

        I never sub let the business, I let them run the business and keep all monies recieved and live on the premises but never charged them anything for this. Punch Taverns view is that they were managing the business on my behalf

        Thnaks again

        Comment


        • #5
          Re: Failed Business Sale/Small claims action

          It seems that you have already instructed a solicitor. What are they advising you?

          Was the £5,000 part payment of the proposed purchase price of the remaining lease ( post 2 "paid an initial £5000 of the agreed £20,000")
          or for the contents of the flat (post 2 "
          The initial £5000 it was greed would pay for the contents of the fully furnished flat ")

          This sounds like a typical bullying letter from a solicitor who is following his clients instructions.
          If it was me at this point I would be inclined to tell them politely to put up or shut up, i.e. deny you owe them any thing (but I am a tad concerned about that £5000)

          I suspect the invoice for the works he carried out will come in at less than £5000. this will mean any claim will be allocated in the small claims track.
          The solicitor will draft the Particulars of claim, and possibly the reply to the defence you put up. He will then drop out of the equation, because for him to represent his client in court will cost, and those costs cannot be claimed in the small claims.
          In fact if your defence is sufficiently robust the claimant could well discontinue the claim before it gets to court.

          This letter is full of veiled threats (eg
          Our client also whishes to put your client on notice that he intends to provide an invoice for the work carried ot at <BLANK> on a quantum meruit basis. If the monies remain outstanding after a reasonable time period then our client informed us that he intends to issue court proceedings to recover such monies(8).)
          Why hasn't he produced the invoice already?

          Remember they have to prove their claim.

          Comment


          • #6
            Re: Failed Business Sale/Small claims action

            Hi Des,

            Once again thankyou for your reply.

            RE: The Solicitor, I hired a solicitor at the beginning to oversee the transfer of the business but now this has become a 'contentious matter' she informed me that she it is out of her remit and recommends another solicitor, the leter was passed on to me through my solicitor. She has advised I disput the claims and has been good throughout but from this point forward cannot continue to represent me as small claims is not her area.

            I agreed to sell him the lease for £15,000 and that I would leave the contents of the flat for an additional £5000 which he paid immediately owing to him moving in to the premises immediately and the £15,000 should be paid at such time we could re-assign the lease (when the delap work was complete), however as we were friends and all on good terms all of this was agreed verbally and I have nothing in writing, I also never provided a receipt for the money stating its purpose much to my regret, hindsight is such a wonderful thing.

            I have heard that he intends to pursue a claim for £35,000 for works carried out which is to be frank quite rediculous, some decorating and plastering was carried out but that's about it, and this is only half complete.

            Sorry he did carry out some work that was not specified on the schedule of delapidations and which I did not authorise but he intedns to invoice me for anyway

            Cheers

            Comment


            • #7
              Re: Failed Business Sale/Small claims action

              Your solicitor says she won't represent you in small claims. This is normal, as their costs outweigh the benefits, and sometimes judges look askance at solicitors acting in small claims cases.

              IF, IF he pushes for £35,000 in court, this will not be small claims.
              You say nothing was in writing, so this makes it difficult for him to prove his claim.
              With a new report to show what works still need to be implemented and completed, it should not be difficult by comparison with the old schedule to shoot down his costs.

              Regarding that £5000, the other side are intimating it was paid as part of £20000 which was to be the purchase price of the lease. This is what you suggested at e start of this thread, although you also said (as you now confirm) the purchase price was £15000 plus £5000 for the contents. Did you have the contents valued, or even an inventory prepared. I still see this as being the main stumbling block. Did your solicitor write to the other side about the lease purchase, and perhaps mention the price?

              Comment

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