England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CHANI 96/1298 CMS3

Royal Courts of Justice

Strand, London WC2

Wednesday, 1st April 1998

B e f o r e :

LORD JUSTICE NOURSE

LORD JUSTICE MUMMERY and

SIR JOHN VINELOTT

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OXNARD FINANCING SA Plaintiff

-v-

(1) DR CHRISTIAN RAHN

(2) HANS-JAKOB BIEDERMANN

(3) MARTIN HAAB-BIEDERMANN

(4) FRANK BODMER Defendants

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MR C TURNBULL (instructed by Messrs Bircham & Co, London SW1) appeared on behalf of the Appellant Defendants.

MR M BRIGGS QC (instructed by Messrs Peters & Peters, London W1) appeared on behalf of the Respondent Plaintiff.

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J U D G M E N T

(As Approved by the Court)

Crown Copyright

Wednesday, 1st April 1998

LORD JUSTICE NOURSE: Lord Justice Mummery will deliver the first judgment.

LORD JUSTICE MUMMERY: This is an appeal from an order of Mr Justice Robert Walker dated 16th July 1996, following a hearing on 26th March 1996 and the delivery of a reserved judgment on 19th April 1996. The judge granted leave to appeal.

The case concerns a claim for payment of Can$2 million, being the balance of the purchase price alleged to be due under a contract claimed to have been made on 4th August 1998, as evidenced by an exchange of telexes and a contract note. The subject matter of the contract was 3,125,000 shares in a company called Coastline Resources. The sale price was Can$5 million, to be paid on or before 11th November 1988. The price was calculated at Can$1.60 per share. The sellers were a firm of London stockbrokers, T C Coombs & Co, which collapsed in 1991. The plaintiff claims as assignee of T C Coombs & Co in respect of the balance of Can$2 million. The purchasers were a Swiss banking general partnership, Rahn & Bodmer, who have paid Can$3 million, but there is a dispute on liability to pay the balance of Can$2 million.

The main point in contention before Mr Justice Robert Walker, and, as things have turned out, the sole point for decision on this appeal, relates to the joinder as defendants of four named individuals, two of whom were partners in Rahn & Bodmer at the time when the cause of action arose, and all four of whom were partners in the bank at the time when the writ was issued. There was a fifth partner at that time, but no point has been taken on the failure to join him.

The point raised involves a consideration of:

(a) the nature and status of the bank under Swiss law, on which there was uncontroversial expert affidavit evidence from two Swiss lawyers, one on each side; and

(b) the procedure and practice of English courts governing the description of unincorporated bodies as parties to litigation. On that point there were competing submissions from Mr Turnbull, on behalf of the bank, and Mr Briggs QC, on behalf of the plaintiff.

The writ was issued on 2nd August 1994. The plaintiff is named as Oxnard Financing SA. The defendants are described in the following fashion:

"(1) Dr Christian Rahn

(2) Hans-Jakob Biedermann;

(3) Martin Haab-Biedermann;

(4) Frank Bodmer Defendants"

The writ then states, "To the Defendants" and their names are repeated. There follow the words, "of Rahn and Bodmer Banquiers Zurich". The address given is of the firm of Rahn & Bodmer in Zurich. The endorsement reads as follows:

"The Plaintiff's claim is for

(1) payment of the outstanding sum of Can$2 million due under a contract made between T C Coombs & Co Limited and the Defendants on 4 August 1988, the benefit of which has been assigned to the Plaintiff ..."

There is in (2) a claim for interest on that sum and, in (3), costs.

It is clear from the writ that the claim on the contract was made against the four individuals as members of Rahn & Bodmer.

By 14th October 1994 all the defendants had acknowledged service of the proceedings. The statement of claim should have been served by the beginning of November 1994. By 11th November 1994 the limitation period had expired. On 5th June 1995 a statement of claim was purportedly served out of time and without leave.

The statement of claim makes it clear that the claim was for breach of contract against Rahn & Bodmer. Paragraph 1 states:

"The Defendants are and/or were at all material times partners in the banking partnership of Rahn & Bodmer Banquiers, Zurich (´Rahn & Bodmer')."

Paragraph 2 refers to the contract alleged to have been made for the sale of the shares, and concludes:

"TCC [T C Coombs & Co] agreed to sell and Rahn & Bodmer agreed to purchase 3,125,000 shares in Coastline Resources NPV (´the Shares') at a price of Can$1.60 per share, amounting in total to Can$5 million, settlement to be on or before 11th November 1988."

Paragraph 3 refers to the assignment and paragraph 4 to the notice of assignment. Paragraph 9, having referred to various assignments and notices of assignment given, states:

"In the premises, the Defendants are liable to pay the Debt, being the outstanding balance of Can$2 million due under the Contract, to the Plaintiff, but they have failed to do so."

The prayer repeats the claim for payment of the sum alleged to be due with interest.

The response of the defendants to the service of the statement of claim was to issue a summons on 13th June 1995 to set aside service of the writ under RSC Ord.12,r.8, to strike out the writ under RSC Ord.18,r.19, to strike out the writ and statement of claim for non-compliance with the rules under RSC Ord.19,r.1, and to dismiss the action for want of prosecution.

The counter-response of the plaintiff was to take out a summons on 2nd October 1995 for leave to amend the proceedings, if necessary, to describe the defendants as Rahn & Bodmer, for leave to serve the statement of claim out of time under Ord.18,r.1, and, if necessary, for a declaration under Ord.2,r.1 that the writ was to be treated as duly served on the general partnership of Rahn & Bodmer by 14th October 1994 at the latest.

Justice Robert Walker held that, although Rahn & Bodmer had the characteristics of a separate entity under Swiss law, it was not a corporation. Under English law, the lex fori, the plaintiff had correctly sued Rahn & Bodmer in the name of the four individuals in their capacity as partners in Rahn & Bodmer. He held further that, if he was wrong about that, the position was, first, that he had no jurisdiction under Ord.20,r.5(3) to grant leave by substituting Rahn & Bodmer as defendant. He found as a fact that the defendants had been left in reasonable doubt as to the identity of the person intended to be sued.

Secondly, he held that he had jurisdiction, if necessary, under Ord.2,r.1, to grant leave to amend by substituting Rahn & Bodmer as defendants, but that, thirdly, he would have refused to exercise his discretion to grant such leave, as that would defeat the accrued right of limitation of Rahn & Bodmer and the justice of the case would not have demanded the amendment.

Fourthly, he dismissed the defendants' application to strike out the writ and gave leave to serve the statement of claim out of time. He also allowed the plaintiff to clarify the position on the capacity in which the individual defendants were sued by adding, in brackets, after the names of parties, the words "Partners in, and trading as, Rahn & Bodmer". That was not objected to by the defendants. Their primary contention was that this clarification did not enable the plaintiff to overcome the problem created by naming the individual defendants rather than naming Rahn & Bodmer. Alternatively, if it did enable the plaintiff to overcome that problem by making Rahn & Bodmer a party, that was impermissible, as it would in effect be allowing for an amendment as to parties after the expiration of the limitation period.

The defendants appeal against the decision of the judge that the four defendants were correctly sued. By a respondent's notice, the plaintiff challenges the judge's conclusions on jurisdiction and discretion as to amendment. If the appeal fails on the first point, then the amendment points taken in the respondent's notice do not arise for decision. There is no appeal by the defendants against the judge's refusal to strike out the case for want of prosecution or his order granting leave to serve a statement of claim out of time.

An important part of the judgment is in the findings on Swiss law. Expert evidence was given by affidavit by two Swiss lawyers, Dr Paltzer and Dr Gully-Hart. The evidence referred to the provisions of the Swiss Code of Obligations, in English translation, Third Division, Twenty-fourth Title, headed "General Partnership".

The evidence, on which there was no disagreement, was to this effect. Rahn & Bodmer is a general partnership, within the meaning of Article 552, which carries on the business of banking in Zurich. Article 552 states:

"1. A General Partnership is a company composed of two or more natural persons joining together to conduct, under a common company name (Art. 944 et seq.), a trading, manufacturing or other business carried on in a commercial manner, without limitation of their liability towards company obligees.

2. The partners must have the company registered in the Commercial Register."

The evidence of Dr Gully-Hart, which was not disputed by Dr Paltzer, was that a general partnership is not a corporation under Swiss law. The evidence of both of them was that, under Swiss law, a general partnership is in certain respects an entity distinct from the individual partners. It can make contracts in its name; it can sue or be sued in its name; it can own property. Particular reference was made to Article 562, which provides:

"The Company may, under its company name, acquire rights and incur liabilities, sue in court and be sued."

Reference was also made in the evidence to the position of the individual partners in the firm. In Article 568 it is provided that:

"1. The partners are jointly and severally liable (Art. 143 et seq.) with the whole of their property for all debts of the Company.

2. An agreement to the contrary among the partners is of no effect towards third parties.

3. A single partner may, however, also after his withdrawal, only be personally sued for debts of the Company if he goes himself into bankruptcy, or if the Company is dissolved (Art. 574 et seq.), or if debt enforcement proceedings against it have proven to be unsuccessful. The partners' liability under a joint and several guarantee entered into in favour of the Company remains reserved."

It was agreed by the experts that, although the individual partners are liable for the debts of the "company", a partner can only be sued if the partner goes bankrupt, if the partnership is dissolved or if debt enforcement proceedings against the partnership have proved unsuccessful. If an action is brought against the partner in respect of a liability of the partnership and none of those three conditions are fulfilled, the action will be dismissed. That, according to the evidence, was a rule of substantive Swiss law, not a procedural rule.

It thus appears that claims against the general partnership are primarily enforceable against the assets of the partnership and that the liability of the partners is strictly subsidiary or secondary.

The judge summarised the overall effect of the evidence, so far as it was relevant to his decision on the point of the correct description of the parties, in this way. After referring in particular to the evidence that a general partnership is not a corporation, he said (at p.14D-E):

"So the general effect of the expert evidence is that under Swiss law the bank is not a corporation, but is a separate entity with many of the characteristics of a corporation."

The debate before the judge and in this court on the relevant English law of procedure and practice was against this background:

(1) Under English law a partnership does not have a legal personality separate from the partners. This is to be compared with the law of Scotland, where, under civilian influences, a partnership is regarded as a legal person. This is recognised in section 4(2) of the Partnership Act 1890, which provides, in Scotland:

"A firm is a legal person distinct from the partners of whom it is composed".

(2) Under common law procedural rules, an English partnership could be sued by joining the individual partners in the firm as defendants to the proceedings.

(3) Under Rules of Court (now contained in RSC Ord.81) an English partnership may also be sued in English proceedings in the name of the firm. Ord.81(1) is in these terms:

"Subject to the provision of any enactment, any two or more persons claiming to be entitled, or alleged to be liable, as partners in respect of a cause of action and carrying on business within the jurisdiction may sue, or be sued, in the name of the firm (if any) of which they were partners at the time when the cause of action accrued."

That is an optional procedure. A partnership may still be correctly sued in the name of all the individual partners, sued in their capacity as partners.

(4) It is also clear from the wording of Ord.81 and from judicial authority that Ord.81 does not apply to foreign partnerships which do not carry on business within the jurisdiction.

The judicial authority, much debated in the court below and in this court, is the Court of Appeal decision in Von Hellfeld v E Rechnitzer and Mayer Frères & Co [1914] 1 Ch 748. In that case a French partnership, which did not carry on business within the jurisdiction, was sued in its firm name in respect of a contract signed in the name of the firm. The evidence of French law did not establish that the French partnership was a totally separate legal entity from the individual partners in it, although it was a legal person for the purpose of service of legal proceedings upon it. The Court of Appeal upheld the judge's order setting aside the writ which named the firm as the defendant on the ground that the predecessor of RSC Ord.81 (Ord.48A introduced in 1891) did not apply and that the writ was not properly issued naming the firm as a defendant.

Judgments were given by Buckley and Phillimore LJJ. The judgment of Phillimore LJ has given rise to most discussion. He said at p.754, agreeing that the appeal should be dismissed:

"According to our modern practice there are three classes who can sue, or appear to writs, - persons, corporations, and firms. The introduction of partnerships is comparatively modern and since the Judicature Act, but the fact is merely for convenience of nomenclature and of service; the results are in the end the same as if the individuals composing them sued or were sued by their individual names. It is clear from the case of Dobson v Festi, Rasini & Co (1) that some similar procedure now obtains in Italy, and it appears from this case that some similar procedure now exists in France. That may well be, but our law, being very careful how it interferes with the rights of foreigners, has not allowed service to be effected upon individuals who are engaged in a foreign partnership by serving the partnership as in England. The foreign partners cannot be sued by their firm name, and there is nothing to enable service upon some manager carrying on business for the partners or service on one as service on the rest."

He referred to the evidence of French law, and said:

"They are not enough for this purpose; they are not enough to shew - which is necessary for this purpose - that a société en nom collectif is like a corporation in this respect, not merely that it has a separate persona, but that it has a separate ownership of property and separate liability from the ownership or liability by or of the persons composing the aggregation. I can conceive certain cases of bodies of which one might be doubtful whether they were corporations or not; and upon a writ properly framed alleging that the body sued was a separate entity, and making it clear that no relief was sought against any individual opposing that entity any more than it would be against shareholders in a corporation, I can conceive it being possible to suggest that such a body might be treated as a corporation and might be sued and served as a corporation. But this is on the face of it apparently a partnership, and the affidavit of service of the writ plainly and boldly describes it as a partnership. The rules of English law provide that our ancient process in respect of English people should remain in respect of foreigners."

Mr Turnbull, on behalf of the appellants, made these outline submissions:

(1) Rahn & Bodmer was named as the party to the contract on which the claim is based.

(2) Rahn & Bodmer, as a general partnership established under Swiss law, is, on the evidence, a legal entity separate and distinct from the individual natural persons who compose it and conduct its affairs.

(3) As such entity, Rahn & Bodmer had the capacity to enter into contracts and incur liabilities in its own name and to sue and be sued in respect of them.

(4) As such entity, Rahn & Bodmer had a recognised existence under English law. It could and should have been sued in its own name as that entity in the proceedings in the English courts. The only correct method of suing Rahn & Bodmer was to join it as a defendant and describe it by that name in the proceedings. It could not now be joined as a defendant in this action or otherwise be sued because of the expiration of the limitation period.

(5) The four individual partners named as defendants in the proceedings were not parties to the contract on which the claim was based. They are distinct legal persons from the legal entity of Rahn & Bodmer. It is not a permissible alternative to describe the legal entity of Rahn & Bodmer by reference to those individual partners, even if sued in their capacity as partners.

(6) The individuals are not personally liable to be sued on the contract made by Rahn & Bodmer. They are therefore incorrectly named as defendants. The judge ought therefore to have set aside the proceedings on that ground.

In support of those submissions Mr Turnbull cited two cases, which were not cited to Mr Justice Robert Walker, in support of the proposition that the English courts will recognise, and will therefore treat as capable of suing and being sued in England, entities which have a separate legal personality under the law of the country where created.

The two cases are, first, Bumper Development Corp Ltd v Commissioner of Police of the Metropolis [1991] 4 All ER 638. The Court of Appeal held that a Hindu temple, which had legal personality under the law of the state where it was created, was entitled to sue in proceedings in England.

He relied on a passage in the judgment of the court given by Purchas LJ. Starting at p.646J, Purchas LJ said:

"The question whether a foreigner can be a party to proceedings in the English courts is one to be determined by English law (as the lex fori). In the case of an individual no difficulty usually arises. And the same can be said of foreign legal persons which would be recognised as such by our own law, the most obvious example being a foreign trading company. It could not be seriously suggested that such a company could not sue in English courts to recover property of which it was the owner by the law of the country of its incorporation.

The novel question which arises is whether a foreign legal person which would not be recognised as a legal person by our own law can sue in the English courts. The particular difficulty arises out of English law's restriction of legal personality to corporations or the like, that is to say the personified groups or series of individuals. This insistence on an essentially animate content in a legal person leads to a formidable conceptual difficulty in recognising as a party entitled to sue in our courts something which on one view is little more than a pile of stones."

After citing a passage from Salmond on Jurisprudence, Purchas LJ continued:

"Thus Salmond recognises the possibilities, which may not be far-fetched, of (say) a foreign Roman Catholic cathedral having legal personality under the law of the country where it is situated; and, in order to make the concept more comprehensible, let it be assumed that it is given that personality by legislation specifically empowering it to sue by its proper officer for the protection and recovery of its contents. It would, we think, be a strong thing for the English court to refuse the cathedral access simply on the ground that our own law would not recognise a similarly constituted entity as a legal person. The touchstone for determining whether access should be given or refused is the comity of nations ..."

He reached the conclusion at p.648G that the temple was acceptable as a party to the proceedings and was entitled to sue for the recovery of property in the English courts.

Mr Turnbull also relied on the decision of the Australian High Court in The Chaff and Hay Acquisition Committee v J A Hemphill & Sons (Propriety) Ltd (1947) 74 CLR 375. That case was cited with approval by Lord Templeman in the House of Lords in Arab Monetary Fund v. Hashim [1991] 2 AC 114 at pp.161-2. The Australian High Court held that a statutory committee, though assumed not to be a corporation in the strict sense, did have an existence as a legal entity in South Australia distinct from that of the natural persons who constituted it and it was therefore entitled to sue as such entity in the courts of New South Wales. Particular reference was made to the judgment of Latham CJ at pp.385-6 and to the judgment of Starke LJ at pp.387 and 390.

Mr Turnbull contended that these two cases showed that substantive law had, in his words, "moved on", and so had, or should, the procedure and practice of the court. These cases demonstrate that it is possible for a foreign entity or body to be recognised in the English courts for the purposes of suing or being sued, even though neither a natural person nor a corporation in what Mr Turnbull describes as "the technical sense". These cases do not establish, however, that even where such a legal entity is recognised for the purposes of being a party to legal proceedings in England, it can only be correctly described by its name as such entity. In my judgment, it does not follow from the fact that a legal entity can sue or be sued in the English courts that it cannot be correctly described in English proceedings in more than one way, provided that it is clear that it is the liability of the entity which is intended to be enforced in those proceedings.

Mr Turnbull, however, contends that the two categories are mutually exclusive and that a legal entity created under another legal system must be sued in England in its name and cannot be sued in the name of individuals who compose it. It was on the basis of this contention that he criticised the reasoning of Mr Justice Robert Walker. He submitted that the judge had, first, held that Rahn & Bodmer cannot be sued in England because it is not a corporation, even though it is a separate legal entity for certain purposes; and, secondly, that even if Rahn & Bodmer could have been sued here, it was permissible to sue in the name of the individual defendants.

On the first point, Mr Turnbull submitted that the judge was wrong to attach any significance to the evidence of Mr Gully-Hart, which was not contradicted by Dr Paltzer, that Rahn & Bodmer was not a corporation. He said that the judge had given "corporation" a "narrow English technical sense". The important point was that under Swiss law Rahn & Bodmer had a distinct legal status. The fact that it was not incorporated in the English sense should not prevent it from being recognised by the English courts as a legal entity capable of being sued in its own name. Further, Rahn & Bodmer, and not the individuals who composed it, was the party to the contract, which it had a legal capacity to make. Therefore it, and not the individuals, was the correct party to be sued.

On the second point, Mr Turnbull submitted that there was no authority to support the judge's conclusion that it was possible to sue Rahn & Bodmer in the names of the individual partners. He said that in the Von Hellfeld case the question of choice, whether to sue in the name of the firm or the individuals, did not arise because the evidence of French law in that case did not establish that the French firm was a separate legal entity. The position was different here, where there was clear evidence of Swiss law. There was a separate legal entity.

Mr Turnbull submitted that Phillimore LJ, in the passage already quoted, contemplated such a case being treated like a corporation. That meant that the entity must be named as a corporation. It could not be named by listing those individuals who were members of the entity. Indeed, Mr Turnbull contended, there was no principle of English law which enabled a person to sue a foreign entity in any name other than the name of that entity. To do what the judge had done in this case offended principles of comity by ignoring the separate personality of the foreign entity and by acting in a manner highly prejudicial to the foreign individuals concerned.

In addition, he said, if this action proceeded to trial and judgment were obtained - or, worse still, if a default judgment were obtained - against the four named individuals, there would be a risk of confusion arising in the enforcement of the judgment in Switzerland. In dealing with the amendment question the judge had in fact found evidence of confusion. He had found as a fact that the individual defendants were puzzled about the writ and thought that the plaintiff may have been intending to proceed against them as individuals, rather than against the entity. The judge had found that the defendants were in a state of reasonable doubt as to whether the bank or they were intended to be sued in the proceedings.

Mr Turnbull contended that a judgment entered against the four named individuals would give rise to a danger that execution would be levied against the wrong party in breach of Swiss substantive law, under which the liability of the partners was strictly subsidiary to the primary liability of the general partnership. This undesirable risk could be avoided if the court adopted a clear, firm rule that there was no option to name individuals as parties to proceedings in England when the evidence of foreign law established that the foreign body was a distinct legal entity which should accordingly be recognised under English law, both substantively and procedurally. Accordingly the defendant entity should be described by its true name in the proceedings. Rahn & Bodmer was the true defendant. It should be described in the writ by its true and correct name. To describe that legal entity in the way allowed by the judge was to sanction a misnomer. That was contrary to proper procedure and practice and it was now too late to correct the position.

By the process of adversarial argument below and on appeal the precise question for decision has been refined. The question, in my judgment, is not whether it is possible to sue Rahn & Bodmer in England in its own name as a legal entity established under Swiss law and substantively recognised by English law; the question for decision on this appeal is whether it is permissible under the procedure and practice of English courts to sue Rahn & Bodmer in England by naming as defendants the individual natural persons who are partners in it, who trade under that name and who are sued in their capacity as partners.

As is often the case, once the question is precisely formulated, it is not difficult to supply the answer. Mr Justice Robert Walker did accurately identify and correctly answer the relevant question. He did not decide, as Mr Turnbull contended, that because it was not a corporation it was not possible to sue Rahn & Bodmer as a Swiss legal entity in English proceedings. What Mr Justice Robert Walker held, correctly in my view, on page 17 of his judgment, was that:

"... the plaintiff has at all times intended to sue the bank as a Swiss general partnership. In my judgment it has done so by issuing and serving a writ in a manner which is an appropriate (and on the face of it the most appropriate) manner under the rules of English procedure."

As already mentioned, Mr Justice Robert Walker allowed clarification (if that was necessary, which it was not) of the capacity in which the defendants were sued by adding the descriptive words specified.

That conclusion is consistent with the decision of this court in Von Hellfeld and the earlier decision of the Court of Queen's Bench in Bullock v. Caird (1875) LR 10 QB 276. Those cases, like the present case, were concerned with foreign bodies which were not corporations. In Bullock the firm was a Scottish partnership which, though a separate and distinct person under Scots law, was not incorporated. In Von Hellfeld the firm was a French société which had some of the characteristics of a separate entity, though not as many as a general partnership under Swiss law. In both cases the court regarded it as permissible and proper for the foreign body, which was not incorporated, to be sued in England in the name of its individual members, even though the foreign body had some of the characteristics of a separate legal entity.

This procedure does not offend the comity of nations. English law is the lex fori. It governs procedure. Procedure includes how parties sued should be identified and described in the proceedings.

It is clear from the writ and the statement of claim that this contract claim is made against the bank, Rahn & Bodmer, and that the individuals are only being sued in their capacity as partners in that foreign entity. It is the foreign general partnership which is being sued by joining the individual partners and suing them in their partnership capacity on the contract made by the general partnership.

This ought not to lead to any real risk of confusion in execution of a judgment in Switzerland. Judgment might be obtained in England in the present proceedings. The order of the English court could, and should, make it clear that the judgment is obtained against the defendants in their capacity as partners. The Swiss substantive law on primary and secondary liability is clear according to the evidence before the court.

In brief, the legal position on this narrow point of procedure is clear. There are three questions to be answered:

(1) Who is the proper defendant? Answer: Rahn & Bodmer, the party to the alleged contract on which the claim is based.

(2) What is Rahn & Bodmer? That is a question for Swiss law. Agreed answer: a general partnership enjoying a degree of legal personality which enables it to enter into a contract in its own name, but which is not a corporation.

(3) How should Rahn & Bodmer be described in proceedings against it in England? This is a question for English law as the lex fori. The plaintiffs have always intended to pursue the bank, Rahn & Bodmer. Answer: there is a choice; it may be described and sued either by reference to the individual partners in their capacity as partners in the firm, or, on the basis of the evidence given in this case, by reference to the entity Rahn & Bodmer - a situation envisaged by Phillimore LJ in the Von Hellfeld case. As there is a choice, a failure to follow the latter course does not invalidate the adoption of the former course.

For all those reasons, I would dismiss this appeal on the point of correct description of parties. In those circumstances, it is unnecessary to express any view on the other points concerning jurisdiction to grant leave to amend and how a discretion to grant leave to amend should be exercised.

I would dismiss this appeal.

SIR JOHN VINELOTT: I agree with the judgment that has just been given by Lord Justice Mummery.

In my judgment, the answer to this appeal is to be found in the passage in the judgment of Phillimore LJ in the Von Hellfeld case which he has cited, but which I will cite again. Having referred to the evidence of French law, the Lord Justice continued:

"They are not enough for this purpose; they are not enough to shew - which is necessary for this purpose - that a société en nom collectif is like a corporation in this respect, not merely that it has a separate persona, but that it has a separate ownership of property and a separate liability from the ownership or liability by or of the persons composing the aggregation."

In this case it cannot be said that the ownership of the property vested in the general partnership is something separate from the ownership of the partners.

Article 558, which provides for the preparation of profit and loss accounts, says that the profit or loss, as well as the share of each partner, shall be calculated on the basis of the profit and loss statement and the balance sheet. It goes on to provide that interest on his share of the capital may be credited to each partner. In Article 559 it is provided that each partner has the right to withdraw from the company's cash any profit, interest and fees of the partners for the past business year.

Thus it is clear that the partners are entitled to share in the property held by the corporation. It is not analogous to the situation where, as in an English company, the members have no interest as such in the property held by the company. So, equally, the liabilities of the company are not liabilities separate from the partners. On the contrary, Article 568 provides specifically that the partners are jointly and severally liable with the whole of their property for any debts of the company. What the third paragraph of Article 568 does is to impose a restriction on the extent to which proceedings can, under Swiss law, be brought to enforce that liability directly against the partner. Unless the partnership has been dissolved, the proceedings can only be brought against a partner who has become bankrupt, or if debt enforcement proceedings against the general partnership prove unsuccessful. But it seems to me clear that, in the context of the Articles, the assets and liabilities are assets and liabilities of the partners collectively or, as Phillimore LJ expressed it, of the persons composing the aggregation.

It is said that the more recent cases show that the courts take a more liberal approach when distinguishing entities which can be a party to proceedings. That may be so, but these cases do not provide any authority for the proposition that an entity of the kind in question can only be sued in the proper name of the corporation.

I would dismiss this appeal.

LORD JUSTICE NOURSE: I also agree.

The arguments of counsel have made it very clear that the disposal of this appeal rests on a common-sense extension of the reasoning of Phillimore LJ in Von Hellfeld v E Rechnitzer and Mayer Frères & Co [1914] 1 Ch 748, where the members of the second defendant, a French société en nom collectif, successfully objected to being sued in the name of the société.

At p.754, Phillimore LJ said:

"According to our modern practice there are three classes who can sue, or appear to writs, - persons, corporations, and firms."

It is clear that the word "corporations" was there used in its correct sense as meaning legal persons wholly distinct from their individual members. The lord justice then dealt specifically with firms, pointing out that the then equivalent of RSC Ord.81,r.1 applied only to partners carrying on business within the jurisdiction, so that foreign partners had to be sued as individuals. Later, having referred to passages in the affidavit of a French lawyer, Phillimore LJ expressed himself in the terms of the second passage which Lord Justice Mummery has read from his judgment. I need not read that passage again.

It thus appears that Phillimore LJ was of the opinion, first, that the evidence of French law there before the court did not establish that a société en nom collectif was a corporation; secondly, and on the other hand, that in a case where it was doubtful whether a foreign body was a corporation or not it might be possible for it to be sued as a corporation, provided that the writ made it clear that it was sued as a separate entity and that no relief was sought against its members. What is important to the present case is that he did not say that such a body must be sued as a separate entity. It is implicit in his reasoning that it could equally be sued in the names of its members. In other words, just as in a case falling under Ord.81,r.1 and its predecessors, the plaintiff has a choice: he can either sue the foreign body in its own name or in the names of its members; in the latter case the writ must make it clear that it is sued as a separate entity and that no relief is sought against its members.

If, as I think it is, that is the principle which ought to apply to a case where it is doubtful whether a foreign body is a corporation or not, all the more ought it to apply where, as here, it is established by the evidence of foreign law that the body is not a corporation. Moreover, as Lord Justice Mummery has explained, the writ does make it clear that Rahn & Bodmer is sued as a separate entity and that no relief is sought against its members.

For these reasons, as well as for those stated by Lord Justice Mummery and Sir John Vinelott, I think that the decision of Mr Justice Robert Walker was correct. The appeal is dismissed.

Order: appeal dismissed with costs; leave to appeal to the House of Lords refused.