England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(His Honour Judge Weeks QC)
Sitting as a judge of the High Court

		Royal Courts of Justice Strand, London, WC2A 2LL
		6th November 1998

LORD JUSTICE WALLER:

Introduction

"The Smiths" were a very successful pop group formed towards the end of 1982. The group was a partnership comprising 4 members: the plaintiff (Mr Joyce), the 1st defendant (Mr Morrissey), the 2nd defendant (Mr Marr), and Andy Rourke (Mr Rourke). Mr Rourke was initially a party to the litigation but settled his claim very shortly after the writ was issued. The group disbanded in 1987.

Mr Joyce was the drummer for the group. In March 1989 he issued proceedings claiming a declaration that he was a partner in "The Smiths", entitled to ¼ share of all nett profits arising out of the activities (other than songwriting or publishing) of "The Smiths". He sought an account on that basis. By order of Deputy Master Price made on 8 July 1993 it was directed that Mr Joyce's entitlement to the relief set out in paragraphs 1 - 4 of the prayer to his statement of claim be tried as preliminary issues. The trial of those preliminary issues took place between 2 - 11 December 1996 before His Honour Judge Weeks QC sitting as a judge of the Chancery Division. By the time the issues came to be tried it was not in dispute that Mr Joyce was a partner; it was accepted that the partnership was dissolved as from 31 May 1987 and it was further accepted that the affairs of the partnership should be wound up. The only contentious issue was whether Mr Joyce was an equal partner entitled to ¼ of the profits arising out of the activities (other than songwriting or publishing) of "The Smiths".

It was that issue which the judge, after a 7 day trial, decided in favour of Mr Joyce. At the trial Mr Morrissey and Mr Marr were separately represented. It is only Mr Morrissey who has pursued an appeal against the judge's decision being now represented by Mr Murray Rosen QC and Mr Tim Penny.

It was common ground both before the judge and before us that the starting point was s. 24 of the Partnership Act 1890 which provides as follows:-

"The interests of partners in the partnership property and their rights and duties in relation to the partnership shall be determined, subject to any agreement express or implied between the partners, by the following rules: (a) all the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses whether of capital or otherwise sustained by the firm ..... "

It was Mr Joyce's case that apart from the agreement that he should not be entitled to share in the profits resulting from songwriting and publishing there was no other agreement which disentitled him from sharing equally in the capital and profits of the business.

It was the defendants' case that it was a term of the partnership that profits would be shared in the proportions Mr Morrissey 40%, Mr Marr 40%, Mr Joyce 10% and Mr Rourke 10%. They did not assert or seek to establish an express agreement to that effect but alleged that the same was to be inferred from conduct, relying on various matters including certain alleged discussions between the parties. They in the alternative alleged that the same conduct and/or discussions gave rise to an estoppel by convention by which it was alleged that Mr Joyce was estopped from asserting a partnership other than one which shared the profits 40%, 40%, 10% and 10%.

The facts relied on by the defendants to support the agreement and the estoppel were in substance the same and the judge held that the estoppel argument added nothing because if, on the facts, there was no agreement, then there could be no common shared assumption on which to found an estoppel (pp 40-41 of the judgment). That part of the judgment is not appealed against, and although Mr Rosen referred in his submissions to estoppel, he ultimately accepted that if he did not succeed in establishing an agreement he could not succeed on estoppel. That was a concession in my view he was bound to make.

In his skeleton argument Mr Rosen summarised conveniently in paragraph 9 the matters relied upon by Mr Morrissey and Mr Marr in order to rebut the presumption in s. 24 of the 1890 Act.

First, they relied upon a wide range of matters showing that Mr Morrissey and Mr Marr alone controlled the management and organisation of the band and had a far greater contribution and commitment thereto.

Second, Mr Marr alleged that during a recording session at Pluto Studio in or around October 1983, he threatened to leave the band because Mr Morrissey was insisting on a 40/40/10/10 split. Mr Marr alleged that Mr Joyce persuaded him to stay and in the process accepted the stated division.

Third, Mr Marr alleged that on the evening of "The Smiths" appearance on Top of the Pops on 26 January 1984, he watched television at Mr Joyce's flat and Mr Joyce asked for an increase in his 10%. Mr Marr said that he spoke to Mr Morrissey, and that the idea was rejected.

Fourth, Mr Morrissey claimed that in or around early 1986 Mr Marr telephoned him to say that Mr Joyce and Mr Rourke were angry that they were only receiving 10% that Mr Marr had informed them that the 10% share would not be increased.

Fifth, Mr Morrissey claimed that in or around Spring of 1986 during a car journey from Manchester to London, Mr Joyce asked Mr Morrissey how he could earn a 25% share and offered to act as a manager for the band, but this suggestion was rejected.

Sixth, Mr Morrissey claimed that shortly thereafter he and Mr Marr informed Mr Joyce that if he was not happy with his share he should leave the band, but Mr Joyce decided to remain.

Seventh, Mr Morrissey and Mr Marr relied upon the receipt by Mr Joyce and Mr Rourke of sums equivalent to 10% of the profits from the activities of the band.

Eighth, Mr Marr and Mr Morrissey relied upon the receipt by Mr Joyce of a set of 1983/84 accounts on or around 4 July 1986 and the fact that Mr Joyce did not mention the fact that the accounts showed the profits of the band being split 40/40/10/10.

Ninth, Mr Marr and Mr Morrissey each relied upon a conversation between an accountant Mr Patrick Savage of O.J. Kilkenny & Co recently appointed by Mr Marr and Mr Morrissey to act for "The Smiths", which Mr Savage said he had with Mr Joyce and Mr Rourke, in the kitchen of the Woolhall Studio in or around May 1987. Mr Savage said that he asked on that occasion Messrs Rourke and Joyce as to their understanding of the percentage split, in response to which Mr Rourke said in the presence of Mr Joyce, "We get ten percent". Mr Savage said that Mr Joyce made no comment or protest when Mr Rourke so stated.

It will be seen that the matters relied on involved almost exclusively questions of fact for the judge. In relation to the background facts, the management and organisation of the band, the judge accepted the position as described by Mr Morrissey and Mr Marr but found that they did not give rise to any inference rebutting the presumption in s.24. Mr Rosen accepts that those facts do not give rise to any inference that the presumption is rebutted, but he criticises the judge for failing to take the background matters into account in considering the probabilities as to whether the four members of the band agreed a split of profits on an unequal basis.

Mr Rosen further criticises the judge for taking each of the above matters separately instead of looking at the matter overall. In taking the matters separately the judge found that there was no reference to specific percentages at the Pluto Studio in October 1983 albeit there may have been some conversation during which Mr Marr threatened to leave the band. It should be said in relation to this Pluto Studio incident: (1) that Mr Marr had not even in a re-amended defence originally made any reference to discussions at the Pluto Studio; (2) that in Mr Marr's witness statement some reference was made to Mr Marr threatening to leave the band whilst recording at the Pluto Studio in October 1983 and to him "understanding" that as part of the persuasion to get Mr Marr to stay, Mr Joyce and Mr Rourke accepted that they were junior members of the group; (3) that Mr Morrissey has never pleaded or relied on any incident or conversation at the Pluto Studio in October 1983 having any relevance to anything, even following Mr Marr's evidence, to which I refer next; (4) after Mr Morrissey had completed his evidence at the trial, Mr Marr commenced his and in answer to questions from Mr Morrissey's counsel suggested for the first time that what had happened in October 1983 was that Mr Morrissey had threatened not to continue with the band unless Mr Joyce and Mr Rourke agreed that the split should be 40/40/10/10, and that although Mr Marr did not think that very fair and wished to leave, Mr Joyce and Mr Rourke agreed the split so that the band could continue. If that is what had happened that would have been the clearest express agreement, but, (5) (and this may be the reason why Mr Morrissey has never sought to rely on anything said at the Pluto Studio) Mr Marr accepted in cross-examination by Mr Joyce's counsel that in truth he could not remember whether he mentioned percentages and further accepted that the indications were that Mr Bowen (to whose letters I shall turn in a moment) and Arthur Young (to whose draft accounts I will turn in a moment) were never told of any agreed split and indeed were informed to the contrary.

In relation to the 26 January 1984 incident, the judge preferred the evidence of Mr Joyce that Mr Marr was not at his flat on that evening. In relation to the claims by Mr Morrissey in relation to conversations in early 1986 and Spring of 1986, if they took place at all they would have to have taken place in 1985, but the judge rejected Mr Morrissey's evidence. Indeed in cross-examination Mr Morrissey was driven to accept that although in his own mind he wanted a split of 40/40/10/10:-

(1) the position of the group must still have been "up in the air" at the time of the meeting with the solicitor Edward Bowen on 25 January 1984 (see D3-56), and that there was certainly no agreement formal or oral reflecting anything other than equality at that time (D3-84);

(2) the position was the same at the meeting held with Arthur Young in the Spring of 1984. All four members of the band were there at that meeting. Mr Joyce and Mr Rourke were suggesting equality and neither Mr Morrissey nor Mr Marr suggested there was already an agreement for a 40/40/10/10 split, and indeed nothing was said by either to suggest that that should be the split.

As regards the allegation that Mr Joyce and Mr Rourke throughout received sums equivalent to 10% of the profits from the activities of the band, the judge found that this was factually incorrect. He held that in one year the drawings of Mr Rourke and Mr Joyce amounted to ¼ of those of Mr Marr, but that no clear pattern emerged. Mr Rosen has not sought to challenge that matter on appeal.

The truth is that the evidence was overwhelming that, in any event, up to July 1985 there was no agreement rebutting the presumption of equality contained in s.24 of the Partnership Act. That that is correct can be most easily established by reference to the two letters from Mr Bowen and the letter and accounts of Arthur Young. Mr Bowen was a solicitor consulted by Mr Morrissey and Mr Marr on 25 January 1984 and he wrote two letters, one dated 6 February 1984 to Mr Scott Piering and another dated 10 February 1984 to Mrs Dwyer Mr Morrissey's mother, both of which letters Mr Morrissey accepted he saw at the time and discussed with Mr Marr (D3-65 & 74). In the letter of 6 February Mr Bowen suggested the setting up of two companies, one relating to publishing income and the other relating to recording income and said in relation to the latter - "with regard to the recording company, Messrs Morrissey and Marr will be its shareholders and directors. The other two band members will become employees of the company. It is proposed that they all draw a salary out of the company at a rate which will have to be agreed, but in principle they will be equally entitled to the net profits of the business."

In the letter of 10 February 1984 to Mrs Dwyer he said amongst other things "Towards the end of last year when it became clear that The Smiths were going to be successful, I discussed with Geoff Travis my concerns about the constitution of the band. He in turn discussed this with Morrissey and Johnny Marr both in England and whilst they were in New York. I was concerned that no agreement appeared to have been reached between the band and Joe Moss either financially or legally. [Joe Moss was the then manager.] I was also concerned that there was no agreement between the individual members of the band. I took the view that as a matter of law the members of The Smiths were all equal partners although I was of course aware that this kind of arrangement was not acceptable to Morrissey or Johnny Marr."

In the Spring of 1984, all four members of the band were at a meeting with Arthur Young, accountants instructed on behalf of the band. Mr Morrissey accepted in evidence that the split was discussed, and he accepted that neither he nor Mr Marr told the accountants that the split should be 40/40/10/10. In the result the accountants produced draft accounts under cover of a letter dated 8 May 1985 which drafts clearly indicated equality as between the partners.

On the appeal Mr Rosen really concentrated on the receipt by Mr Joyce, in July 1986, of the 1983/84 accounts and the alleged conversation between Mr Savage, Mr Rourke and Mr Joyce in May 1987. The judge accepted Mr Joyce's evidence in relation to the accounts that he did not look at the figures and further found that in any event Mr Joyce would not have understood them without some explanation. In relation to the Mr Savage/Mr Rourke/Mr Joyce alleged conversation the judge found simply that Mr Rourke did not say the words attributed to him. Those findings are attacked by Mr Rosen.

It will be noted that Mr Rosen's main attack has had to be on findings of fact by the judge. He appreciated the difficulties he faced in an appellate court, and drew our attention to various authorities including Smith New Court Ltd. v Scrimgeour Vickers [1997] AC 254 and in particular the speech of Lord Steyn at 276 where he approved the approach of the Court of Appeal in that case to reversing a finding of fact by the trial judge. He further drew our attention to the Article by Sir Thomas Bingham (as he then was) published in (1985) C.L.P. 1. "The Judge as Juror: the Judicial Determination of Factual Issues". Mr Rosen's criticisms of the judge were in summary (i) that he appeared to have formed unfairly a general adverse view of Mr Morrissey saying at p.32 "Mr Morrissey is a more complicated character. He did not find giving evidence an easy or happy experience. To me at least he appeared devious, truculent and unreliable where his own interests were at stake."

(ii) that he then went through the individual matters rejecting Mr Morrissey's evidence simply because of the adverse impression he had formed, and

(iii) that he failed to come back and look at the matter overall.

Mr Rosen's approach

Mr Rosen sought to persuade us that the logical approach to the appeal was to emphasise the background matters i.e. the greater contribution of Mr Morrissey and Mr Marr, and then consider what he submitted were the two strongest points in his clients favour .

(1) Accounts sent to Mr Joyce in July 1986

He submitted (a) that in July 1986 there were sent to Mr Joyce by Ross

Bennet-Smith partnership accounts, for the period from the commencement of the partnership up to 5 April 1984, showing, as Mr Rosen would submit, clearly a division in the proportions 40/40/10/10;

(b) that Mr Joyce did not protest at what the accounts showed;

(c) that the evidence of Mr Joyce that he did not read those accounts and understand that they showed a 40/40/10/10 split was incredible;

(d) that in any event the question whether Mr Joyce accepted the split at that time must be looked at objectively;

and thus (e) Mr Joyce's silence must be taken as an acceptance that profits should be distributed from the outset on a 40/40/10/10 basis.

(2) Conversation Joyce/Rourke/Savage at Woolhall Studios May 1987

He submitted that there was simply no basis for the judge to reject as he did, the evidence of Mr Savage that in a conversation in May 1997 Mr Joyce had acquiesced in Mr Rourke's comment that "we (i.e. Mr Rourke and Mr Joyce) receive 10%".

His submission then was that a finding of acceptance of the split 40/40/10/10 by reference to the above two points would colour the approach to other facts and conversations relied upon from the earlier periods, and lead to the conclusion that there was to be inferred an agreement that the Group would conduct their business on the basis of the unequal split 40/40/10/10..

I would start by saying that in my view this approach is quite illogical in the circumstances of this case. It might have been logical if Mr Morrissey could in any way have sustained the case that he was originally making in his pleadings but which he could not sustain at the trial and which his counsel could not begin to sustain on the appeal. That case, putting it shortly, was that because of the extra work and responsibilities undertaken by Mr Morrissey and Mr Marr, right from the outset the partners accepted and acted on the basis that the split should be 40/40/10/10; thus it was alleged that that was the basis on which it was obvious to each they were receiving a split in the profits and that was the basis on which accounts were consistently prepared. That that case could not be sustained is already apparent from what I have already said. But I should add the following. First it is clear as a matter of partnership law that the fact that one or more partners makes a greater contribution than others in no way displaces the presumption of equality: see Lindley & Banks (17th Edition) para 19-22:

"Whether, therefore, partners have contributed money equally or unequally, whether or not they are on a par as regards skill, connection or character, whether they have or have not laboured equally for the benefit of the firm, their shares will be considered equal, unless some agreement to the contrary can be shown to have been entered into."

Second on any view there was no discussion at the commencement of the group's activities and it was Mr Marr's evidence that to start with equality was the understanding and that it was only in late 1983 that Mr Morrissey suggested otherwise to him. Third albeit Mr Marr attempted to give evidence of a variation being agreed at the Pluto Studios in October 1983, the judge was fully justified in rejecting that evidence, and Mr Morrissey actually accepted that matters were still in the air and that no variation had been agreed as confirmed by Mr Bowen's letters and Arthur Young's draft accounts. Fourth critically the distribution to the partners never was consistently on a basis of a 40/40/10/10 split. It was, as the judge found, and as has not been challenged on an ad hoc basis.

Accordingly it was and is simply unsustainable that the partners were conducting their activities from the commencement of the partnership, and in any of the years 1983, 1984, 1985 or 1986 on a basis that the split should be 40/40/10/10. The maximum that could be said is that Mr Morrissey wanted to change the equal sharing to a 40/40/10/10 split, but Mr Joyce and Mr Rourke were not happy to agree that change. Mr Morrissey undoubtedly felt that because of the more major contribution he and Mr Marr were making he ought to be able to dictate the terms on which the partnership continued. But the difficulty for Mr Morrissey is that there are various fundamentals which he may not have appreciated. First unless there is some express agreement or partnership deed between the partners allowing for it, it is not open to one partner by issuing an ultimatum that he is only continuing on the basis of a change in the distribution to achieve that change, if the other partners are equally making it clear that they do not accept that ultimatum. Furthermore, without express power in a partnership agreement it is not open to a majority of partners to simply expel another (see s.25 of the Act). Of course it is open to a partner to actually make clear he will cease being a member unless there is a change, and in that situation it is equally open to the other partners either to agree or accept the termination of the partnership. I make these points because once it is established as it was in this case that the partnership was from its commencement on the basis of equality, for Mr Morrissey to establish that there was a variation from equality, he must show that Mr Joyce accepted in a contractual sense that that was the basis on which the Group were to continue, and for there to be a contractual acceptance the terms must be certain, and there must be consideration. If there is to be a variation of this type of partnership where there is no express partnership deed providing powers to make variations, the consideration will normally be provided by the agreement not to terminate the partnership if the new terms are agreed, but it must be possible to spell out an agreement of that kind before a variation can be established.

At a late stage of his submissions Mr Rosen suggested that even if the partnership commenced on the basis of equality, there was at least some variation agreed which went no further than saying "we now agree that distribution should be on unequal terms" without specifying the unequal proportions. That argument in my view is unsustainable. Its very uncertainty would be against it being a binding agreement, but in any event one would require the clearest evidence that what was agreed was that in consideration for the partners agreeing not to terminate the partnership, it was agreed to continue on the basis of unequal shares and by implication (I suppose) "reasonable" shares. Mr Rosen was quite unable to demonstrate any occasion when such a variation could be said to have taken place other than possibly the conversation at the Pluto Studio in October 1983 of which Mr Marr gave evidence. But the history thereafter demonstrated that in truth there was simply no agreement from Mr Joyce or Mr Rourke that they accepted that they should be unequal, and a fortiori that they were prepared to agree to be unequal without being clear what proportions they were to receive. Once again Mr Bowen's letters and Arthur Young's draft accounts are strong evidence against any such variation.

Once it is accepted, as in my judgment it must be, that up until after the production of the draft accounts by Arthur Young in 1985, the terms of the partnership involved equality, there is nothing to produce a variation on which Mr Morrissey can rely until the production by Ross Bennet-Smith of the accounts for the period 1983/1984, and the sending of those accounts to Mr Joyce and Mr Rourke in July 1986. What Mr Rosen accordingly would have to establish is that by the accountants sending the accounts to Mr Joyce an offer was being made by Mr Morrissey and Mr Marr in terms that they were now making clear that the only basis on which they were prepared to continue the partnership was on the basis that Mr Joyce and Mr Rourke agreed that as from the beginning of the partnership the distribution should be unequal and on a 40/40/10/10 split. He would further have to establish that Mr Joyce accepted that the only basis on which the partnership continued was on that basis.

The judge found as a fact that Mr Joyce "did not study or understand the accounts he did receive .... and was given no help or explanation from the firm". Mr Rosen challenges that finding saying that it is incredible, but in cross-examination Mr Morrissey accepted that his attitude to accounts would be that he would not take much notice of them and would need guidance to understand them (D3 -125). The finding was clearly one open to the judge. But I would go further. It is quite impossible to construe the sending of accounts by the partners' accountant as an offer that Mr Morrissey and Mr Marr were only prepared to continue on a 40/40/10/10 basis, and quite impossible to construe Mr Joyce's silence as an acceptance of that offer. There would at least have had to be a letter or some other communication bringing clearly to Mr Joyce's attention that that was the position. It is in any event of interest that no-one at the time took the view that there had been a variation produced by the sending of the accounts and Mr Joyce's silence. When Mr Savage came on the scene in 1987 his notes of a meeting ( it should be said with Mr Morrissey and Mr Marr alone) in March 1987 record "must organise an agreement" in relation to which Mr Morrissey in evidence accepted that even as at that time "things were still up in the air" (D3-180).

I now turn to the conversation which is alleged to have taken place in May 1987 at Woolhall Studios near Bath. Mr Savage provided a witness statement to the solicitors for Mr Marr which referred to a meeting at the Woolhall studios as the first occasion when he met all members of the Group. He said in that statement that having taken instructions in March from Mr Morrissey and Mr Marr only, and being anxious about the fact that there was no written agreement recording the arrangement he thought he would like to discuss the splits with Mr Joyce and Mr Rourke. He said that at Woolhall, he first met Mr Morrissey and Mr Marr, and then asked them if they would find the other two. He said that the other two were in the kitchen, and he asked them what was their understanding of the way in which recording and touring income was split. According to Mr Savage Mr Rourke said "we get 10%." and Mr Joyce did not disagree. This conversation was then pleaded by Mr Morrissey as a fact from which it should be inferred that it was a term of the partnership that profits should be split 40/40/10/10.

The judge found that Mr Rourke did not say the words attributed to him and found in any event that Mr Joyce did not hear the words said to have been uttered by Mr Rourke.

It seems to me that the judge was entitled to reach the conclusion he did on the facts particularly in the light of the fact that this conversation had clearly not assumed any importance for Mr Savage until he prepared his witness statement. If a conversation as described had taken place in which both Mr Rourke and Mr Joyce had recognised that their entitlement had been agreed as 10%, then as Mr Savage was up to that moment concerned that no actual agreement was in place one would expect it to be recorded there and then; in addition when Mr Savage wrote to Mr Joyce's solicitors in February 1989, in support of the understanding that he had that income should be distributed on a 40/40/10/10 basis he relied simply on the fact that accounts prepared by Ross Bennet-Smith and his firm had shown that split, and had not been disputed by Mr Joyce and Mr Rourke; he made no reference to what at the trial was being relied on as a critical conversation at Woolhall.

Again however in relation to this conversation I would go further. By March 1987 as already indicated nothing relied on by Mr Morrissey could be said to have amounted to an agreed variation. Putting Mr Savage's account of this conversation at its highest, it was not a conversation which was asserted as producing a variation, nor could it have been. It again came nowhere near to being an offer being made on behalf of Mr Morrissey and Mr Marr that they would only continue if Mr Joyce and Mr Rourke accepted their terms, and Mr Joyce's silence could in no way be construed as an acceptance. The conversation could be some confirmation that some agreement had already been reached. But for the reasons already given no previous agreement had been established.

Mr Morrissey I have no doubt will feel aggrieved because he will feel that he and Mr Marr made the major contribution, and took risks as signatories to contracts and defendants to proceedings that Mr Rourke and Mr Joyce did not. He would say that it is unfair that that should not be reflected in the split of the profits. He also feels aggrieved that the judge described Mr Morrissey as devious which it would seem may have been interpreted as meaning that he did not deal in a straightforward manner with Mr Joyce and Mr Rourke. It has given great offence because of the unpleasant connotations that the word devious can have. I think it is important to stress it is perhaps easier for those who have the law of partnership in mind to appreciate that there is a presumption of equality and no presumption of inequality created by a greater contribution being made by one or two partners. It is understandable if a non-lawyer starts from a different position. It may also have been unpalatable to contemplate that partners even factually dominant partners, who wish to vary the terms from equality to some different proportion must face up to making absolutely clear that the only basis on which they will continue is on a different and unequal basis thus putting at risk the joint venture itself, but that is what has to be done if a variation is to be achieved. All in my view the judge intended to convey in his use of the word devious was that Mr Morrissey had not faced up to Mr Joyce and Mr Rourke with an ultimatum, and sought to bring about inequality by indirect means, and conceivably as is quite apparent from reading Mr Morrissey's evidence he was reflecting the fact that Mr Morrissey had serious problems dealing with some of the obvious difficulties in his case when they were put to him by Mr Davis QC for Mr Joyce. Certainly it was not suggested by Mr Davis and was expressly made clear in this court, that there was no assertion that Mr Morrissey was in any way dishonest, and if that is how the judge's comment has in any way been misunderstood the record is now set straight.

Conclusion

In my view Mr Rosen's criticisms of the judge are not made out. The judge both looked at the matter overall and examined the individual matters as he was bound to do. He did not reject the totality of Mr Morrissey's evidence and it is unfair to suggest that the adverse view that he formed of Mr Morrissey in the witness box dictated his findings on the individual matters. The judge was right to conclude that the basis on which The Smiths commenced their partnership both as a fact and as presumed by law was never varied, and I would dismiss the appeal.

LORD JUSTICE THORPE: I agree that this appeal should be dismissed for the reasons given by my lord, Lord Justice Waller.

There is one submission advanced on behalf of the appellant that attracts a response from a family lawyer. Although not highlighted in the skeleton argument Mr Rosen in his oral submissions eloquently expressed his client's sense of injustice at what in effect he labelled a gratuitous and unwarranted character assassination of his client by the trial judge. Since this was a straightforward money dispute between former partners the complaint, if substantiated, would deserve strong support and due remedy in an appellate court. So it is necessary to look carefully at precisely what the judge did say and then to consider whether it is open to the interpretation which Mr Morrissey puts upon it bearing in mind that his understanding as a layman is fully supported by Mr Rosen as an experienced advocate. The passage itself is brief and is introduced by this paragraph:

"Before I consider the facts relied on, I should say a little about the credibility of the four partners because a lot depends of their version of events at which they were present."

Then having held that the plaintiff and Mr Rourke were honest, without distinguishing between them in any way, he turned to the appellant, saying:

"Mr Morrissey is a more complicated character. He did not find giving evidence an easy or happy experience. To me at least he appeared devious, truculent and unreliable where his own interests were at stake."

I do not think that it is being unduly pedantic to emphasise that:

(a) Everything said of Mr Morrissey is said in relation to 'the credibility of the four partners'.

(b) The appearance which he gave to the judge was during the course of 'giving evidence'.

A distinction is to be drawn between an assessment of credibility, an assessment of demeanour and an assessment of personality. In my opinion the judge in the passages under review was stating his assessment of Mr Morrissey's credibility. In arriving at a low assessment he relied in part upon an assessment of his demeanour. This was a seven day trial and during a trial of that duration a judge has abundant opportunity to assess the demeanour of a party not only in the witness box but at all other times when the party is in the presence of the judge. I read the three adjectives selected by the judge as restricted to his demeanour whilst testifying. To label a witness unreliable is one of the more merciful ways to rejecting his testimony. However to describe a witness as unreliable where his own interests were at stake is to judge him partisan to his own cause. But that is a failing shared by many if not most and does not elevate the criticism much higher on the scale. The label of truculence Mr Rosen accepted was not unwarranted given a number of uncooperative exchanges between Mr Morrissey and his cross examiner. So if the judge went further than he needed to go or than he was entitled to go it was in saying that Mr Morrissey had given him the impression of being devious. This has been understood by the appellant to be a general and moralistic judgment not only of his conduct of the litigation but also of his conduct throughout the duration of the partnership.

I have already sought to explain my firm opinion that that was not the judge's meaning. I am quite clear that the judge was expressing no more than an impression of the value of Mr Morrissey's oral evidence. Ordinarily speaking it is an adjective reserved for a witness who has deliberately sought to mislead the court either by untruthful statements or by suppression of the truth. As Mr Davis QC made plain Mr Morrissey was not such a witness. Mr Davis told us that in many instances Mr Morrissey was candid to his own disadvantage. What the transcripts reveal to me is that Mr Morrissey was a litigant who fell into the common trap of understanding the adversarial process as either obliging him or alternatively presenting him with the opportunity to fight a war of words with his cross examiner. As many famous trials have demonstrated however intelligent and gifted the litigant the ground upon which the contest takes place is so uneven that he is inevitably worsted. By misinterpreting his role Mr Morrissey clearly forfeited the judge's sympathy and I suspect that the judge intended to convey no more than that Mr Morrissey's first priority had been to fence with Mr Davis rather than to concentrate on giving answers that were clear, relevant and helpful to the judge in carrying out his difficult task. It is unfortunate that the adjective selected does not clearly convey that meaning and clearly conveys other meanings. It also has the disadvantage of providing the press with an easy headline.

There can be no doubt that any judge is entitled to assess and pass judgment on demeanour insofar as it bears on the primary issue of credibility and insofar as it assists the judge to resolve disputed areas of fact. The circumstances in which a judge is entitled to make a personality assessment in civil litigation must in my opinion be much more limited. In contra distinction to the family judge whose function is quasi-inquisitorial the task of the judge in civil proceedings is to find the facts from such material as the parties choose to put before him and to apply the law to those facts in order to determine the outcome. In family litigation adults who invite the judge in the exercise of his discretion to vest in them the responsibility to care for or protect a child thereby oblige the judge to endeavour an assessment of the applicant's personality. I make that distinction only to ensure that the opinion expressed above as to the restriction on a judicial assessment of personality should not be understood as having any application in family proceedings.

LORD JUSTICE PETER GIBSON: From the criticisms which Mr. Rosen Q.C. sought to make of the judgment of His Honour Judge Weeks Q.C. it became apparent that what may have motivated the appeal, brought as it is only by Mr. Morrissey and not by Mr. Marr, was the Judge's assessment of Mr. Morrissey. That understandably rankled with Mr. Morrissey. The Judge explained why he needed to give his assessment of the witnesses. He had pointed out that no express agreement had been pleaded but that it was possible in law for an agreement rebutting the presumption in s.24 Partnership Act 1890 to be inferred from the conduct of the partners, and this led him to say a little about the credibility of the four partners. As he said, a lot depended on their version of events at which they were present. He had seen Mr. Joyce, Mr. Rourke and Mr. Marr cross-examined for about three-quarters of a day each and Mr. Morrissey cross-examined for over a day. The Judge therefore was in a good position to assess each of them as a witness. He said of Mr. Joyce and Mr. Rourke that they had impressed him as straightforward and honest. He continued:

"Mr. Morrissey is a more complicated character. He did not find giving evidence an easy or happy experience. To me at least he appeared devious, truculent and unreliable where his own interests were at stake."

The Judge was also critical of Mr. Marr as seeming to the Judge to be "willing to embroider his evidence to a point where he became less credible." He concluded that where Mr. Morrissey's evidence differed from that of Mr. Joyce and Mr. Rourke, he preferred that of Mr. Joyce and Mr. Rourke.

Mr. Rosen suggested that the Judge's assessment of Mr. Morrissey was unfair. That criticism appears to have been at least in part based on a misapprehension of the import of the Judge's words. No dishonesty was imputed to Mr. Morrissey by Mr. Davis Q.C. for Mr. Joyce nor do I read the Judge's comments as amounting to a finding of dishonesty. We were taken by Mr. Rosen to parts of the transcript of Mr. Morrissey's cross-examination and we have had the opportunity to read further parts of the transcript, and it has to be said that even without observing Mr. Morrissey's demeanour in the witness-box the objective reader would not be able to find him to have been a good witness. I would add that Mr. Davis' cross-examination is notable both for its thoroughness, which Mr. Morrissey no doubt found uncomfortable, and scrupulous fairness. Mr. Rosen has not been able to persuade me that the Judge was not entitled to form the view which he did. The Judge had to choose between conflicting evidence and it was entirely proper for him to explain in the way that he did why he preferred Mr. Joyce's and Mr. Rourke's evidence to that of Mr. Morrissey and Mr. Marr.

Nor am I persuaded that this experienced Judge, in going through item by item what had been pleaded item by item on behalf of Mr. Morrissey as the facts and matters from which the alleged agreement as to unequal shares of the partnership profits was to be inferred, fell into the trap of "compartmentalisation" and failed to take an overall view when he found that no contrary agreement was proved. In my judgment he properly dealt with every point raised and was entitled to conclude as he did.

This is an appeal on the facts. But it has not been shown that the Judge made an error on any finding of fact whatsoever. The two findings on which Mr. Rosen concentrated his attack were the finding that Mr. Joyce did not study the 1983/84 accounts when sent to him on 4 July 1986 and the finding that Mr. Rourke did not say in the silent presence of Mr. Joyce to Mr. Savage in 1987 at the Woolhall Studios "We get 10%". It is wholly unsurprising that Mr. Joyce, like Mr. Rourke, did not study the accounts, sent as they were under cover of a bland letter from Mr. Bennet-Smith not drawing attention to the profit shares. The Judge found that Mr. Joyce and Mr. Rourke were not financially sophisticated or aware and even Mr. Morrissey and Mr. Marr both accepted that they themselves would not have considered the accounts in any detail, if at all. When one reads the witness statements and transcripts of the evidence of Mr. Savage on the one hand and Mr. Joyce and Mr. Rourke on the other on what was said or not said in the brief meeting between them at the Woolhall Studios, it is obvious that there was evidence which might have enabled the Judge to prefer the evidence of Mr. Savage. But we do not have the advantage, enjoyed by the Judge, of seeing Mr. Savage give his evidence and there are other factors which cast grave doubt on the accuracy of that evidence. They include the delay in making the allegation and the absence of any mention of the allegation in correspondence with Mr. Joyce's solicitor where it might have been expected to have been mentioned. As Mr. Savage himself said in his cross-examination, he had had to remind himself of the discussions at the Woolhall Studios when different law firms became involved in the case (Day 6 p.25). In my judgment it is impossible to say that the Judge erred in his finding against Mr. Savage's version of what occurred.

For these as well as the reasons given by Waller L.J. and in acceptance of the contentions of Mr. Davis and Mr. Cullen in their meticulously prepared and helpful skeleton argument, I am in no doubt but that this appeal must be dismissed.

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Order: Appeal dismissed with costs to be taxed if not agreed; legal aid taxation of plaintiff's costs between 1/11/97 and 10/3/98; application for leave to appeal to the House of Lords refused.