Court rejects pianists’ ‘partnership’ claim for gay dating app profits

The Court of Session ruled that while the parties had a “common intention” to enter into a business relationship, it did not amount to a “business in common”.

Lord Tyre heard that the pursuers Steven Worbey and Kevin Farrell were seeking certain declarators and other orders which would entitle them to shares of the profits generated by two gay social network applications (apps) called Wapo and Wapa.

A proof before answer was required to determine (a) whether there was a partnership between the parties as averred by the pursuers on record, and (b) if so, certain questions which would follow.

The partnership was averred by Edinburgh-based performers Mr Worbey and Mr Farrell to have subsisted between themselves and the defender Steven Elliott and others, with the objects of “development, promotion, preparation, marketing and exploitation of gay dating apps known as Bender and Brenda, for purposes of profit”, but the defenders denied that any such partnership ever existed.

The court was told that in October 2009, Messrs Worbey and Farrell were working in Vienna when their friend Mr Elliott, a web developer, went to visit them.

One evening during a discussion among the three in a bar, a previously discussed topic of developing a gay dating app re-emerged.

In the course of the conversation Mr Worbey came up with the name Bender and the name Brenda for a version of the app for lesbian users was suggested by Mr Farrell at a later date.

Other matters discussed included a facility to upload photographs, a GPS function to find out which app users were in proximity, and the question whether there should be a membership scheme whereby charges could be made for use of the app.

Mr Elliott expressed a willingness to spend time ascertaining whether he could learn how to create such an app and Mr Worbey and Mr Farrell agreed to fund Mr Elliott’s acquisition of a MacBook laptop computer to work on the project.

After the meeting, in an email dated 17 October 2009 Mr Elliott set out what had been discussed, describing himself as the developer with a controlling interest of 51 per cent in a future company and the role of Messrs Worbey and Farrell as “a mixture of investors/marketing gurus etc” with a 49 per cent stake.

Over the next 18 months Messrs Worbey and Farrell made cash payments as and when they could and submitted the application for registration of a trade mark as Mr Elliot continued to work on the app and created a business plan, which envisaged the registration of a company called Bender Social Networking Limited, with 80 per cent of the shares in the company to be held by Mr Elliott and Messrs Worbey and Farrell investing £200 per month to cover the Mr Elliott’s running costs.

The pursuers made payments of £200 to Mr Elliott in January, February and March 2011 and on 18 March 2011, Mr Elliott emailed Messrs Worbey and Farrell offering two options for the future structure of their business relationship: the first was that they become shareholders in the company; the second was a royalty agreement under which they would receive a share of profits.

Mr Elliott expressed a preference for the second of these options which, he considered, better fitted the pursuers’ position as “initial investors/co-founders”.

However, after the pursuers failed to pay £200 to Mr Elliot in April 2011, he wrote to them by letter the following month enclosing a cheque for £2225 – the total amount paid by them towards the iPhone app project – and stating that the money was being returned “after you were unable to fulfill your obligations as per our agreement, rendering the agreement null and void”.

In support of their argument that a partnership existed between the parties, senior counsel for the pursuers sought to derive support from the 1998 case Medcalf v Mardell & Ors, in which the plaintiff was found to be entitlement to a one-third share of the profits of the television game show “Big Break”, on the ground that the idea for the show had been devised and developed by himself and two of the defendants while carrying on business together in partnership.

It was submitted that there were “similarities” between that case and the present one and that an “informal and unexecuted agreement was sufficient” to show the existence of a partnership, but the judge was said there were a number of “material differences” and that he was “not persuaded that any of the similarities between the two cases should lead me to the conclusion that a partnership came into existence in the present case”.

In a written opinion, Lord Tyre said: “I am satisfied that an agreement of a business nature was envisaged by Messrs Worbey, Farrell and Elliott during the evening in Vienna. The terms of Mr Elliott’s emails and the subsequent actings of the parties make clear, in my view, that all concerned regarded themselves as entering into some kind of business relationship. But not every business relationship entered into by two or more individuals with a view to profit is a partnership.

“I bear in mind the strictures in the authorities against elevating incidents of partnership into spurious prerequisites for the existence of a partnership. The problem for the pursuers in the present case, however, is that beyond the initial proposal of a 51/49 split, there was no evidence that any of the key incidents of a partnership relationship were a matter of express or even implied agreement…Nor, at this stage of the parties’ discussions, does there appear to have been any agreement, express or implied, as to whether the pursuers’ entitlement was to be to a share of gross or of net profits.

“Having regard to all of the relevant features of the parties’ relationship, I hold that it did not amount to the carrying on of a business in common, and that no relation of partnership subsisted among them with regard to the development and exploitation of the Bender app, either immediately after the meeting in Vienna in October 2009 or at any subsequent time.”