Twenty years after their acrimonious fallout, Dave Bary was in court claiming unsuccessfully that brother Aron had wrongly taken control of his half share in a Nelson house.
Each put up initial capital of $20,000 to build a ‘spec’ home on Maire Street. The project, started in 1997, was plagued with problems, not getting a code of compliance certificate until 2021.
The High Court was told a local builder agreed to carry out construction on a ‘labour only’ basis. Dave and Aron were expected to assist with construction as part of the deal. This was complicated by the fact Aron spent months away at sea.
Building plans were re-drafted on the hoof as the two brothers later decided to excavate into the hillside section, creating a new bottom storey. Geotech issues and stop-start construction meant the job never got properly finished for years.
In the interim, both Dave and Aron and their respective partners lived at the property for various periods of time, paying rent.
Their partnership was never profitable. Building costs, interest on a bank loan and property outgoings meant their respective rental payments were never enough to cover costs; each was still having to top up the kitty each month.
Evidence was given of matters reaching a head in early 2002, with Dave vacating the house telling his brother their relationship had ‘turned to custard’ and that he was not going to put any more money into their venture.
Fast forward twenty years: Dave learnt Aron had Maire Street on the market. Dave alleged he was still part-owner of Maire Street, looking to claim a half share of its current net value.
Justice Grice ruled their earlier partnership came to an end back in 2002, evidenced by Dave’s conduct in walking away from the partnership. The partnership was insolvent at that point. He left brother Aron with costs of getting the house code compliant and taking sole responsibility for property outgoings and bank interest.
Manner of their partnership dissolution meant Dave was excused from all partnership debts and Aron took full ownership of its one asset: the house.
Dave had no claim to the property.
From the outset of their business partnership, registered title to Maire Street and liability on the bank loan were in the name of Aron only, for reasons not explained in court. The fact that an asset is registered in the name of one partner alone does not, by itself, stop that asset being a partnership asset.
Justice Grice ruled Maire Street was initially a partnership asset held in Aron’s name, but he gained full ownership rights when their partnership ended.
Bary v. Bary – High Court (3.04.24)
24.082