Businessman’s ‘Hopeless Disorganisation’ Triggers Bitter Inheritance Dispute


Business owners who carelessly intermingle corporate funds with their own money positively invite confusion – and dispute between their loved ones – after they are gone. In a case on point, a property investor’s hopeless disorganisation when it came to paperwork had precisely that malign effect.

When the man died, he bequeathed the controlling interest in his company to the two children of his first marriage. Acting via the company, the children later took action against his widow. They contended that she held the legal title to a number of properties on trust for the company in that they had been purchased with corporate funds. For her part, the widow asserted that she was the sole legal and beneficial owner of all the properties.

Ruling on the matter, the High Court noted that the man had funded the property purchases from two bank accounts. Although the company was referred to in the title of one of those accounts, he used it however he wanted to fund his day-to-day outgoings. The other account was held solely in his name, with no reference to the company, but he again used it freely for both company and personal purposes.

Although the evidence was not all one way, the Court rejected the company’s claim. It was satisfied on the evidence that the contents of both accounts represented the man’s personal funds. A claim in respect of £130,000 that the widow withdrew from another of the man’s accounts shortly before his death was also dismissed.

The Court noted that its ruling was bound to come as a great disappointment to the children, who might feel that it was not the outcome their father would have wished for. If that were the case, however, it was a consequence of his hopeless failure, over many years, to organise and document his business finances and transactions with greater rigour.

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