Beaver v Cohen & Ors [2006] EWHC 199 (Ch) (10 February 2006)

Beaver v Cohen & Ors [2006] EWHC 199 (Ch) (10 February 2006)

Goodwill is payable only in respect of clients who, after 29 August 1997 and before a cut-off date (proposed as 29 August 1998), actually transferred their business and incurred a liability to pay fees to the respondents. Work in progress is to be valued by deducting the value of Mr Beaver's time and 60% for profit from the gross book value (after a 30% deduction for bad debts), but not deducting the time of Mr Cohen and Mr Cooper, as they were not principals at the relevant time.

Citation
[2006] EWHC 199 (Ch)
Parties
Claimant/appellant: Michael John Beaver; Defendant/respondent: Harry Cohen; Defendant/respondent: Alan Cooper; Defendant/respondent: Davis Bonley (a firm)
Jurisdiction
England and Wales
Judgment Date
10 February 2006
Procedural Posture
Appeal / Judgment on Appeal From Deputy Master Jefferis' Order Dated 2 November 2004
Outcome
Appeal allowed in part
Legal Topics
Goodwill Valuation, Work in Progress Valuation, Account of Profits, Dissolution of Business Association
Commercial Law Partnership Law Goodwill Valuation Work in Progress Valuation Account of Profits Dissolution of Business Association

Case Brief

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Parties

Michael John Beaver

Claimant/appellant

Harry Cohen

Defendant/respondent

Alan Cooper

Defendant/respondent

Davis Bonley (a firm)

Defendant/respondent

Procedural Posture

Appeal / Judgment on Appeal From Deputy Master Jefferis' Order Dated 2 November 2004

Legal Issues

  1. 1 What is the correct basis for valuing goodwill and work in progress owed by the respondents to the appellant upon dissolution of their business relationship?
  2. 2 Should post-transfer events (such as client death or insolvency) be taken into account in determining liability for goodwill and work in progress?
  3. 3 Should deductions for the time of Mr Cohen and Mr Cooper, and for profits, be made in valuing work in progress?

Ratio Decidendi

Goodwill is payable only in respect of clients who, after 29 August 1997 and before a cut-off date (proposed as 29 August 1998), actually transferred their business and incurred a liability to pay fees to the respondents. Work in progress is to be valued by deducting the value of Mr Beaver's time and 60% for profit from the gross book value (after a 30% deduction for bad debts), but not deducting the time of Mr Cohen and Mr Cooper, as they were not principals at the relevant time.

Court Disposition

Appeal allowed in part

Orders

  • Deputy Master's order to be varied: In valuation of work in progress, deduction for the time of Mr Cohen and Mr Cooper to be deleted; only Mr Beaver's time and profit deduction to apply.
  • Goodwill to be payable only for clients who actually transferred business and incurred liability to pay fees to respondents between 29 August 1997 and 29 August 1998.