England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COLCHESTER COUNTY COURT
(Mr Justice Brandt)

		Royal Courts of Justice Strand London WC2 Friday, 25th January 2002

1. SIR MURRAY STUART-SMITH: This is an appeal from the judgment of His Honour Judge Brand given on 1st February 2001 in the Colchester County Court. Originally there were three linked actions against Mr. and Mrs Slay. In each it was alleged that Mr and Mrs Slay were trading in partnership as Autosave Topp Agencies. The court is no longer concerned with the action by Mr Clarke who was the first of three actions. He sought permission to appeal. It was refused and it was not renewed. We are only concerned with the cases of Mr Garner and Mr Hinton.
2. Paragraph 1 of Mr. Garner's particulars of claim in the action allege as follows:

"The claimant is a dealer in classic motor vehicles. The defendants were, until about November 1999, secondhand motor traders trading in partnership as Autosave Topp Agencies from premises at High Road, North Weald, Epping."

3. The gist of the claim was that Mr. Garner had a number of business ventures with Mr. Slay. In August 1999 Mr. Slay became ill. Mr. Garner was asked to manage the business. It is alleged that Mr. Garner made a number of loans to the business, money to buy cars, he re-financed his own car and the capital was put into the business. He paid various sums on the business's behalf, the total claim coming to some £23,000 odd pounds. There is no doubt that the first defendant, Mr Slay, was liable for that. The defence of the second defendant was that she was not a partner in the business.
4. Mr. Hinton's case was that paragraph 1 of the particulars of claim is in substantially the same terms as those I have read. He claimed that he had sold a number of cars to the business between May 1998 and November 1999 pursuant to oral agreements, and that he had not been paid for them. His claim was for £44,000 or thereabouts. The defence of the second defendant was that she was not a partner in the action. It seems to me that the pleading alleged an actual partnership and not an apparent partnership.
5. When the case came for trial Mr. Warner, who then appeared on behalf of all three claimants, made it plain that his case was not that Mrs Slay was in truth a partner but that she was an apparent partner. He relied upon section 14 of the Partnership Act which reads as follows:

"Everyone who by words spoken or written or by conduct represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm, is liable as a partner to anyone who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made."

6. It was therefore a case that was said to be a case of words spoken or written or conduct by which Mrs Slay had represented herself or knowingly suffered herself to be represented as a partner.
7. What appears to have happened is this. The judge considered the case of Mr. Clarke first. He listened to Mr. Clarke's evidence, including his witness statement, and concluded in his case that it was quite clear that the money had been lent to Mr. Slay and that there was no real allegation that it had been lent to the partners. That claim failed.
8. The judge then went on to consider the case of Mr. Garner, and at page 223 of the transcript, it having been by this time made plain that the case was not one of actual partnership but apparent partnership, the judge took the point that it was not pleaded. He said this:

"In the first place, if you are going to pursue this case as far as this claimant is concerned, you need to amend your pleading, do you not? (Mr Warner): I do. (Judge Brandt): Why should I allow that at this stage?(Mr Warner): Well, your Honour, plainly it is very late. (Judge Brandt): Not only very late, but it is a completely different case. (Mr Warner): I am trying to recall - my learned friend will no doubt correct me - but I recall, I think, that the issue was raised in September, but I have to accept it is not pleaded. (Judge Brandt): It has to be. Well, are you making the application to amend? (Mr Warner): I must make an application to amend. (Judge Brandt): Well, that is refused. I would add that I cannot see anything in these statements which demonstrate -- either in the -- there is in the pleading an allegation of a partnership, and that is all that is pleaded, hence there is no allegation in the pleading unless it is amended there is a holding out. I cannot see anything in Mr Garner's witness statement that establishes either a partnership on the part of Mrs Slay or a holding out of such, but I am not prepared to allow the application. It seems to me the whole case would have to be started over again and revamped properly. I am not prepared to do that. It is not what (inaudible) I say: 'Well, you know, it's a pity you didn't say it at the time, but let's all get on with it now.' It is a fundamental amendment, and I am not prepared to allow it. (Mr Warner): In that case I cannot advance any evidence on behalf of -- Mr Garner cannot put forward any evidence of a partnership."

9. The judge then considered Mr. Hinton's case and again the same point was taken. The same situation arose, although it is fair to say that in this case Mr. Warner did not concede that he needed to amend. He sought to argue that he did not need to amend, but since the case was precisely the same as the case of Mr. Garner, so far as the pleadings were concerned, it seems to me that the concession which he made in relation to the Garner case applied equally in the case of Mr. Hinton. Plainly, I think that is what the judge concluded too. Mr. Warner then applied to amend. He said that he wanted to rely on a number of documents. At page 234 Mr. Warner said this:

"If your Honour says I must amend, then, again, I must apply to amend to plead a holding out. It is my submission that there is clear evidence on which your Honour could find that there was a holding out in this case.

I would go on to say, your Honour, that in the light of that evidence it is important that this issue is tried, in which case plainly an adjournment will be necessary in order to allow the matter to be properly aired, as it has been aired in the witness statement."

10. The judge gave a brief judgment on the matter. He referred to some previous correspondence. He said that the matter needed to be pleaded and that, so far as Mr. Garner was concerned, there really was not any evidence at all. In the case of Mr. Hinton there was in the witness statement possibly a vestige of a holding out but he was not prepared to grant leave to amend, involving, as it did, an adjournment of the proceedings.
11. It is now argued on behalf of the two claimants that the judge was wrong in requiring an amendment; secondly, that an amendment should have been granted and the judge should have gone on to consider the case. So far as the question of whether or not the pleadings covered the case of holding out, quite apart from the concession which was made by counsel, in my judgment it plainly was a case which had to be pleaded as a holding out case but not as an assertion of an actual partnership, for this good reason. A holding out case depends on representations made. Representations have to be properly pleaded and reliance upon them has to be pleaded as well. Particularisation of the representations and the facts and matters relied upon have to be pleaded. I entirely agree with the judge that this was a matter which, on the pleadings, was not raised at all. Whether or not the judge should have granted the application to amend, involving, as it did, an adjournment or would have required an adjournment, seems to me to be largely a question of the exercise of the judge's discretion. He took the view, having looked at the witness statements, so far as Mr. Garner was concerned, there was nothing to support holding out at all, and, so far as Mr. Hinton was concerned, there was virtually nothing in support of that either.
12. Mr. Pay in his submissions to us really, first of all, takes the point that the second defendant was not taken by surprise by the change of course, and that it was not really a case which merited an adjournment. The judge should have given leave to amend and the defendant was in a position to deal with the amended case there and then. I find that submission difficult to accept in the light of the concession made by counsel at the time, by the concession that an adjournment would be necessary, and I do not, for my part, think that it lies in the mouth of different counsel to come to this court and say that they knew all along that that was the case that they had to meet. In my judgment, a case of actual partnership, as was pleaded, is different from the case of a holding out and a representation of a partnership, as was the case sought to be made.
13. Moreover, although Mr. Pay has taken us through a considerable number of documents upon which he says he would wish to rely, in my judgment they really do not advance the case at all. Mrs Slay's account of the matter is that she was the wife of Mr. Slay. There is no doubt, in fact, that he was trading as a sole trader as Topp Agencies. She was not actually a partner at all. Most of the documents which Mr. Pay has drawn our attention to are documents involving third parties. They involve bank mandates. Mrs Slay was entitled to sign the cheques, documents to the DVLA, apparently indicating that the ownership of cars had been transferred from them to somebody else, insurance proposals not signed by Mrs Slay, bank direct debit mandates, and matters of that sort. There is no evidence whatever that either of the two appellants saw any of those documents; still less that they were relied upon as representations of partnership. The most that could be said about them was that, if the case was one of actual partnership, they might be of some support for that case. But, in my judgment, they are wholly equivocal, as is the evidence of the work which Mrs Slay did in the business. She undoubtedly did play a part in the running of the business. There is nothing unusual in that. In a one-man business the wife helps in the running of it, keeping the books, signing documents from time to time, and so on. In my judgment, none of those documents assist the appellants' case at all. For the reasons I have indicated, they cannot be relied upon by the claimant as a holding out at all.
14. The only document which seems to go anywhere near supporting the claim is the Certificate of Employers Liability Insurance which is at page 352 of the bundle, which was hanging up in the office where the business was carried on. It describes the name of the policy holder, Andrew G A Slay and Mrs Slay, trading as Autosave and/or Topp Agencies. Mr. Garner makes no reference to that document at all in his witness statement. Mr. Hinton says that he saw it, but, significantly, in his witness statement he does not say that he relied upon that statement or thought, as a result of that, that she was in fact trading as a partner. In my judgment, reliance is an essential ingredient in a successful claim under section 14 of a partnership: see Lindley on Partnership at page 94. There is no such statement of reliance either in the pleading or, perhaps more importantly, in the witness statement. It seems to me that the evidence now sought to be adduced of a holding out is tenuous in the extreme. Most of the evidence about the participation of Mrs Slay and the work of the business is equally consistent with that of a wife doing part time work as an employee, helping out when her husband was in hospital, matters of that sort. Even on the merits of the case, in my judgment they are very, very slim indeed. To my mind, the judge's exercise of his discretion really cannot be faulted here in the light of the way in which the case went and in the light of the observations which I have made. It might have been possible, the judge having indicated that he was not going to allow the amendment, for the claimants to have applied to discontinue the proceedings so that they could start again, because it is clear that, if the judge had granted permission to amend and granted an adjournment, the claimants would have had to pay all the costs down to that amendment as a condition of being given permission to amend. No such application was made to the judge and although we gave counsel an opportunity to discontinue the proceedings in this court, that opportunity has not been taken.
15. The significance of that is this. If the claims had been discontinued, then it probably would be open to the appellants to start fresh proceedings in the county court, alleging and pleading properly a holding out of partnership. In the light of the fact that the judge dismissed the claim, and in the light of the fact that, for the reasons which I have given, I would dismiss this appeal, it may be difficult for the appellants to mount a further action, notwithstanding the fact that the Limitation Act does not apply on the basis that it would be an abuse of process to do so: See Henderson v Henderson.
16. For those brief reasons, in my judgment the judge was right to hold that the claims needed amendment. It was an exercise of his discretion, which cannot be shown to be wholly wrong, to refuse to allow the amendment, and for those reasons I would dismiss the appeal.
17. LORD JUSTICE POTTER: I agree. In deciding as he did, namely that the case should proceed without amendment, the judge was entitled to take into account the likelihood, on the very full statements already provided, that the claimants would or could in fact establish the case for which an amendment and an adjournment were sought. The material was frail indeed. There was no substantial reason to think that the overriding objective would be defeated if the matter was at last brought on for trial then and there.
18. There was something of a history to the action involving unreadiness on the part of the claimants. The overriding objective involves taking into account the situation of the defendants as well as the claimants. No longer are simple questions of costs regarded as sufficient compensation in various circumstances. As Sir Murray Stuart Smith has indicated, it might well be that, if counsel for the claimants had at the time sought to non-suit himself, which would have carried the costs of the entire proceedings in favour of the defendants, a different decision might have been applied. Had the opportunity been taken to make an application to that effect, an opportunity which we offered on the hearing of this appeal, it might better be said that the overriding objective would be satisfied by requiring the claimants to reconsider their whole situation anew, the defendants having been compensated for everything that had gone so far. That would have put the claimants to the sword by testing their faith in the viability of the plea which they sought to raise at the last minute and which the judge refused to allow. In all the circumstances, I agree that this appeal should be dismissed.
Order: Appeal dismissed.