Ponsford v Sali: a property partnership's messy divorce shows why documentation wins partnership disputes

Property partnerships built on handshake deals and informal cash arrangements tend to look fine right up until they do not. Ponsford & Anor v Sali & Anor [2026] EWHC 1360 (Ch) is a study in what happens when one of those arrangements collapses, and it offers a useful template for how the Chancery Division approaches the unglamorous but consequential business of taking partnership accounts when one party simply has no paperwork to back up his claims.

Douglas Ponsford and Mesud Sali ran a residential property trading partnership from around 2010, using a structure built around what the judgement, echoing Master Marsh's earlier ruling, describes as Assisted Sales Agreements. Under these arrangements a seller received a guaranteed price while the partnership took over the mortgage via a power of attorney, with restrictions registered against the title to protect the partnership's interest. Master McQuail noted drily that the legal efficacy and lawfulness of this system "must be in doubt", though that was not the issue before her. Ponsford provided the capital; Sali provided the structuring know how. When the relationship broke down in 2021, Sali himself acknowledged in a document sent to Ponsford that he had misappropriated some £625,000 across three properties.

What followed was nearly five years of litigation, including a freezing order, a court appointed receivership, a preliminary issue trial on whether one property was a partnership asset (resolved against Ponsford, then reversed on appeal), and ultimately a three day account hearing built around the evidence of an independent forensic accountant, Thomas Wacher. The judgement's real value lies in how it resolves disputed line items where one party has documentary support and the other has none.

Time and again, Sali's evidence followed the same pattern: assertions made for the first time in the witness box, never put to Ponsford in cross-examination, and unsupported by any documents. His claim that he split cash rents fifty-fifty with Ponsford, his claim that records proving he spent his own money on one property had been destroyed, his claim that £43,000 in transfers to his account were for partnership building works rather than personal loans, all met the same fate. The judge found his account improbable, unsupported, and procedurally unfair in the way it was raised, and resolved each disputed figure in favour of the accountant's analysis, which was itself built from contemporaneous bank records and bookkeeping evidence that nobody seriously challenged.

There is a wider point here about how courts handle expert accounting evidence in partnership disputes. Wacher's instructions were explicitly tied to the statutory waterfall in section 44 of the Partnership Act 1890, and his methodology, deducting third party debts and making realisation adjustments to arrive at net values, survived a "double counting" challenge that was, tellingly, never put to him in cross-examination and surfaced only in written closing submissions. The judgement is a reminder that methodological challenges to expert evidence need to be tested live, not saved for skeleton arguments.

On costs, the judgement applies the traditional Lindley principles cleanly: costs of hostile inter-partner litigation (here, the dispute over one property's ownership) follow the event, with the loser, Sali, paying a provisional 85% of those costs, while the general costs of winding up and taking the account are recoverable from partnership assets, with Ponsford's litigation costs to be assessed on the indemnity basis given his position as court appointed receiver.

Perhaps the most quietly instructive passage concerns Ponsford's own claim for remuneration as receiver and manager. He proposed a 15% rate, having consulted a government website, only for it to emerge under cross-examination that he had looked up the Official Receiver's rate in insolvency proceedings, an entirely different role. The court awarded 5% of net realisations instead, citing the absence of any time recording or evidence meeting the requirements of PD69. Even claimants who are otherwise believed in full can come unstuck on remuneration claims that are not properly evidenced from the outset.