Investors in restaurant entitled to get their money back
A court has ruled that investors in a failed restaurant venture were entitled to get their money back because their names had not been placed on the lease as agreed.
The case involved a businessman who identified an opportunity to lease and run a restaurant business. He secured an investment of £255,000 from five individual investors. None of the dealings between the parties was documented.
The business failed and the investors asked for their money back.
As there was no written documentation between the two sides, the judge had to assess the terms of the agreement from the evidence given by the various parties. He concluded that it was a term of the agreement that if the investors didn’t have the lease in their names, or in the name of a company in which they were shareholders, then they would be entitled to their money back.
The lease, however, was in the name of the businessman only. The judge concluded that the businessman had misapplied the investors’ money and breached the agreement to make a repayment.
The investors were therefore entitled to get their money back. However, the judge didn’t order that they should receive interest because there was no express agreement that interest should be paid.
The case went to the Court of Appeal, which upheld the decision that the investors should get their money back. It also ruled that they should be paid interest at 2% above base rate. It held that if the businessman did not have to pay interest, it meant he would be allowed to profit from his own wrongdoing.
Please contact Neil O'Callaghan about the issues raised in this article or any matter relating to litigation and mediation.