TC09562 - [2025] UKFTT 00762 (TC)

I agree with Mr Brinsmead–Stockham that Don King is not authority for the proposition that, in this case, if the transfer of the Goodwill was ineffective in law because it was not accompanied by a transfer of the Businesses, CPW should be regarded as holding the Goodwill on bare trust for BBUK.

I have reached that conclusion for essentially two reasons.

The first is that, for the reasons which I set out in some detail in relation to Issue Three, when the facts are viewed realistically, it was not intended that BBUK would acquire any interest in the Businesses or carry on the Businesses after the Agreements became effective. Instead, the intention of the parties was that CPW would continue to carry on the Businesses on its own account and that BBUK would simply acquire a right to payments equal to a fixed percentage of the future gross revenues of the Businesses. On that basis, the circumstances here are very different from those which prevailed in Don King, where the clear intention of the parties was that the benefit of the agreements would belong to the partnership and therefore the Court of Appeal was willing to apply equitable principles to achieve that result. Here, there is no need to invoke equitable principles to achieve the purpose of the parties because, when the facts of the transaction are viewed realistically, that purpose was to leave the Businesses and the Goodwill in CPW’s hands.

Moreover, even if that were not the case, I do not understand how an assignment of goodwill which has been held to be invalid in law because it is an assignment “in gross” can somehow nevertheless be effective in equity. As I have outlined in paragraph 52(7)(b) above, the origins of the rule to the effect that an assignment “in gross” is invalid are that a purported assignment of goodwill without an accompanying transfer of the business to which the goodwill relates is inherently deceptive, with the result that public policy dictates that it should not be recognised. That being the case, it is hard to see why equity would assist to give rise to that outcome.

For the above reasons, I am of the view that, if the transfer of the Goodwill in this case was ineffective because it was not accompanied by a transfer of the Businesses, CPW should not be regarded as having held the Goodwill on bare trust for BBUK.