England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SLOUGH COUNTY COURT
(HHJ CRITCHLOW)

		Royal Courts of Justice Strand London WC2 Wednesday 13 June 2001

Wednesday 13 June 2001

1. LORD JUSTICE DYSON: Pursuant to a partnership agreement in writing, dated 15 February 1999, the claimant and the defendant carried on business as home care providers in the name of ABM Care. Clause 8 of the agreement is in these terms:

"Either Partner may terminate the Partnership by giving to the other not less than six months' notice in writing, in which case the other Partner shall have the right exercisable by counternotice before the expiry of such notice to purchase the share of the outgoing Partner at the net value of such share. If such counternotice is not served before the expiry of the notice the Partnership shall be dissolved. The net value of the share shall be determined by the Partners and in default of agreement shall be decided by the accountants acting as experts not arbitrators. If any Partner commits a serious breach or consistent breaches of this Agreement or is guilty of any conduct which may have a serious and detrimental effect on the Partnership the other Partner may by notice in writing expel such Partner from the Partnership."

2. On 23 November 1999 the defendant purported to expel the claimant under clause 8 on the grounds of alleged serious breach or consistent breaches of the agreement, failure during the course of the agreement to devote best efforts and/or whole time and attention to the business of the partnership in good faith; and/or and alleged guilty conduct, which might have a serious and detrimental effect on the partnership.
3. The claimant started proceedings, claiming relief which included a declaration that the purported notice of expulsion was of no effect. In her defence the defendant relied on five grounds as justifying the validity of the expulsion notice. These are set out at paragraph 4 of the skeleton argument which has been helpfully submitted on behalf of the appellant. They were:

"(1)[The Claimant's] failure to interview prospective staff members fully and properly, asking only perfunctory questions and failing to check references or to properly assess the suitability of candidates for the work concerned.

(2)[The Claimant] was responsible for the assessment and implementation of care packages, including monitoring visits but allocated those jobs to another member of staff and instead spent long periods away from the office.

(3)During the periods of her absence, [the Claimant] failed to deal with telephone enquiries as expected of her.

(4)[The Claimant] failed to sign cheques for staff salaries and expenses, thereby disrupting the proper running and administration of the business.

(5)[In the week commencing 13 November 1999] [the Claimant] announced her intention to seek immediate employment elsewhere and to stop devoting any time, attention or effort to the partnership."

4. The judge found that none of the grounds relied upon were established as a matter of fact except for part of the first ground, which he found to be a joint failing on the part of both partners and therefore not a ground for expulsion. There is no challenge by the defendant appellant to those findings on the basis of the evidence that was before the judge. The judge also held that the expulsion notice did not amount to a six months' notice under the first limb of clause 8. That part of his decision is challenged.
5. The primary ground which it is sought to advance in support of this appeal is based on new evidence. That new evidence comprises, first, an application form dated 15 November 1999, signed by the claimant, seeking employment with Abbey Homecare, a care agency with which the claimant had previously been employed. The second aspect of the new evidence is a witness statement signed by Caroline Hack which, in summary, corroborates the evidence that the claimant had sought employment outside the partnership by 19 November 1999, and gives certain other evidence which supports the defendant's case on the other grounds relied upon by her in support of her notice of expulsion.
6. Mr Wheeler submits that this new evidence satisfies all three limbs of the Ladd v Marshall test [1954] 1 WLR 1489. I accept that the fresh evidence of the application form would probably have an important influence on the result of the case and that it is apparently credible, although not necessary incontrovertible. I accept, therefore, that the second and third limbs of the test would be sufficiently satisfied to justify giving permission to appeal in this case.
7. The first limb is, however, in my judgment not satisfied in this case; that is, that the evidence could not with reasonable diligence have been obtained prior to trial. There is an explanation in the witness statements, and in particular in the witness statement signed by Caroline Hack herself, as to why she was unwilling to give evidence on behalf of the defendant at the trial. The real problem, as it seems to me, is this. By far and away the most significant element of the fresh evidence is the application form of 15 November 1999 which, on the face of it, if a genuine document, provides conclusive proof that before the notice of expulsion was served, the claimant had applied to seek employment elsewhere. It is accepted that the defendant believed at the time of trial that the claimant had applied to Abbey Home Care for employment. Indeed, on two occasions during cross-examination of the claimant, it was put to her that she had made such an application. She denied it. The application form was not disclosed by the claimant in the course of the proceedings.
8. The difficulty facing the appellant is that, having the belief that the claimant had applied to Abbey Home Care before the notice of expulsion was served, the defendant did not take any steps to seek to obtain evidence of that fact from Abbey Homecare, either by seeking disclosure of the application form from that agency, or by seeking to call a witness from the agency to give evidence at the hearing. No thought appears to have been given to exploring that avenue and to obtaining the evidence in that way.
9. Mr Wheeler tells me, on instructions, that since the date of judgment an approach has been made to Abbey Homecare, who have said that they are not willing to assist. He invites me to infer that Abbey Homecare would have adopted the same approach at the trial. I am not willing to accept that submission. First, there is no material before me from Abbey Homecare indicating what their position would have been at the time; or, indeed, beyond what I am told by Mr Wheeler, what their position is today. The material that has been placed before me is insufficient to enable me with any confidence to be satisfied that, if those advising the defendant had attempted to obtain this evidence with reasonable diligence, they would nevertheless have failed to do so at the hearing before the judge.
10. Since this evidence lies at the heart of the proposed appeal on the principal ground, I do not consider that there are reasonable prospects that, if permission to appeal were given, the full court would conclude that the first limb of the Ladd v Marshall test was made out in this case, for the reasons that I have given.
11. The second and subsidiary argument Mr Wheeler seeks to advance is that, even if the notice that was given was not a valid notice of expulsion, it should nevertheless have been interpreted by the judge as a valid notice under the first limb of clause 8; that is to say, a six months' notice. He submits that the expulsion notice was clear evidence of an intention to bring the partnership to an end. I am prepared to accept that the expulsion notice was indeed clear evidence of an intention to bring the partnership to an end, but the partnership agreement clearly stipulated two different mechanisms whereby the partnership could be brought to an end. I find it impossible to construe the expulsion notice, which (if valid) would take immediate effect, as if in the alternative it were a six months' notice. It seems to me that the clear language of the expulsion notice is entirely inconsistent with that alternative interpretation.
12. If the defendant had wished in the alternative to serve a six months' notice, then she should have done precisely that; that is to say, serve an expulsion notice but go on to say that, without prejudice to the validity of that notice, she was in the alternative serving a six months' notice. This she failed to do. I am afraid to say that I do not think the failure to take that course can be rescued by putting an impossible interpretation on the notice that was served. Accordingly, I see no prospect of that second argument succeeding either.
13. For these reasons I would refuse this application for permission to appeal.
ORDER: Application refused