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 THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
CARDIFF DISTRICT REGISTRY
(HIS HONOUR JUDGE WYN WILLIAMS
(sitting as a deputy judge of the High Court))

		Royal Courts of Justice Strand London, WC2
		19th July 2007

1. LORD JUSTICE PILL: Lord Justice Lloyd will give the first judgment.
2. LORD JUSTICE LLOYD: This is an appeal against an order of His Honour Judge Wyn Williams QC (as he then was) on a preliminary issue in a claim in which the claimant alleged a partnership with the defendant and the defendant denied that there had been any partnership. The judge held that there had not been a partnership, but even if, as I consider, for reasons that I shall give, that was the right conclusion, there are rights and obligations as between the parties arising from their dealings together in relation to the subject matter of what the claimant alleged was a business that had been carried on together in partnership.
3. Moreover, it is reasonably clear, first, that the amounts at stake between the parties are not, in the context of the costs of this litigation, all that substantial and, secondly, that the difference between the financial outcome according to whether there was a partnership or whether the relationship between the parties is to be characterised differently (for example, as joint ownership of assets) (a) that financial outcome has not been assessed, even in approximate cash terms so far as we know, and (b) it is not likely to be all that large itself.
4. In those circumstances, although I can understand why, especially when the defendant was subject to a freezing order granted at the beginning of the proceedings, she should have sought an early determination of the rightness or otherwise of the claimant's claim as formulated in the particulars of claim, this seems to me to be another of the many cases in which the preliminary issue has turned out to be a diversion, and an expensive one, on the path to a full resolution of the position as between the parties. If I say that the present position is unfortunate for the parties, that is on the one hand a substantial understatement, but on the other is not intended as any indication of blame on the part of anyone in particular for the position.
5. In these proceedings the claimant alleged that he and the defendant were in partnership together in relation to an equine business, pursuant to an oral agreement made in or about March 2004. The defendant had run such a business under the name of Greenvale Stud at Ty Llwyd Stables in Llanelli, comprising livery stables with I think one stallion at stud since 1998.
6. The claimant and the defendant met for the first time in about March 2003. Soon thereafter they formed a personal relationship, living together at Ty Llwyd. The claimant had his own separate business, but from the start of their relationship he became involved in various ways, including certainly as lender, in relation to the defendant's equine business.
7. The allegation in the particulars of claim at the heart of the case is set out in paragraphs (8) and (9), which I will read:

"(8) In or about March 2004 by an oral agreement (the 'Agreement') between the Claimant and the Defendant it was agreed that they would carry on an equine business together in partnership continuing to use the business name 'Greenvale Stud' with emphasis on the provision of quality stallions at stud and brood mares with the financial investment in the venture to be provided by the Claimant (the 'Business').

(9) It was a condition of the Agreement that the Claimant and the Defendant would have an equal interest in all assets of the Business including stallions at stud, brood mares and their progeny which would be registered in the joint names of the Claimant and Defendant and any proceeds subsequently resulting from stud fees or realised by the sale of any horse or foal would be equally divided between the Claimant and the Defendant."

8. The equine business was conducted from March 2003 for about the following year, until the date when the claimant alleges that the partnership was agreed upon, in a way that involved not so much at that stage stud activity, but rather the purchase and resale of horses. From about March 2004, it was conducted with substantially increased stud activity. The issue is whether the defendant remained the sole proprietor or whether the defendant and the claimant were partners. As I say, if the defendant remained the sole proprietor, the fact that the claimant provided a good deal of financial support and was heavily involved in the business in a practical way would clearly be capable of giving rise to contentions as to other sets of rights and liabilities arising from those dealings. It was the defendant who did the bookkeeping and the administration, and who handled publicity, advertising and so on. In the course of various publications, for which she was, as between the two of them, responsible, both parties were named as proprietors of the business.
9. Late in 2005, the personal relationship between the two parties deteriorated and they parted company. The claimant contends that the partnership had been formed in March 2004, and was dissolved when they parted company in December 2005. The defendant, as I say, denies that any partnership ever existed.
10. Proceedings were commenced in April 2006 with the grant of a freezing order against the defendant, originally without notice, and then continued in modified form following a hearing on notice.
11. On 10th May the court ordered that preliminary issues be determined as to whether there was a partnership as alleged, with consequential issues following if the answer was that there was such a partnership. We were told that the idea of preliminary issues was raised by the judge at an early hearing, possibly the first on-notice hearing in relation to the freezing order. Although it may have taken a little while for the preliminary issues to be agreed upon and formulated, clearly with involvement from the parties, the genesis of the idea lay in the suggestion made by the judge himself at that earlier hearing.
12. As I have read, in paragraph 8 of the particulars of claim the claimant puts his case for saying that there was a partnership explicitly and only on the basis of an oral agreement made in or about March 2004. He pleaded facts in support of that, including the holding out to the world by the defendant of both parties as proprietors of the business. Miss Newman acting for the claimant appellant showed us a printout from a web site and a copy of a business card printed in relation to the business, which expressly stated both names as proprietors of the business.
13. By his particulars of claim the claimant sought, first of all, a declaration that there was a partnership and, alternatively, a declaration that the defendant was estopped from denying the existence of a partnership. The first of the preliminary issues was:

"whether the Claimant and the Defendant carried on a business known as either the Green Vale Stud or Ty Llwyd Stables at Ty Llwyd, Foelgastell, LLanelli, Carmarthenshire SA14 7ES (the 'Business') in partnership."

14. As is immediately apparent, that is not tied to the formulation of the partnership by way of express agreement, as alleged in paragraph 8 of the particulars of claim, or by way of estoppel as is alleged in the alternative.
15. I take it that the judge sought, by the order for the preliminary issue, to have resolved as between the parties for once and for all the question whether there was a partnership or not. According to the answer to that question, either the business, and the resolution of their rights and obligations in relation to it, would be dealt with according to the well-established procedures and principles for the winding-up of a partnership business, or the parties would have to address whatever other legal relationship, rights and obligations arose from and governed their past dealings and the assets used in the business. The preliminary issue may therefore have been deliberately broad and could have accommodated a case advanced of partnership by express agreement, but could also have accommodated a case not at that stage (or indeed at any other stage) advanced on the pleadings by way of implied agreement, or agreement implied from conduct, and indeed could also have accommodated the alternative pleaded case of estoppel as against the defendant. However, as I say, the actual case, and the only case ever made by the claimant, was and remained express oral agreement in or about March 2004, with the fallback of estoppel.
16. In the light of the considerations to which I have referred earlier in my judgment, one may have a number of reservations about the very fact of a preliminary issue being ordered at all and about its formulation. In any event, the case came to trial before the judge on 4th and 5th September 2006, in the course of which evidence was given by a number of witnesses. That was followed by fairly full written submissions in closing, and a brief hearing on 27th September for oral amplification of those submissions. The judge gave judgment (I think I am right in saying) on 6th October 2006, holding that there was no oral agreement such as was alleged. The judge also considered whether the parties had formed any partnership on any other terms after March 2004 and held that they did not. His order declared that they did not carry on business in partnership together. He refused permission to appeal.
17. Waller LJ, dealing with the matter on a paper application, refused permission to appeal against the finding that no oral agreement was reached in March 2004 as alleged. The application for permission to appeal against that finding was not renewed orally. Waller LJ did, however, grant permission to appeal to enable the court to consider, (a) whether the claimant was entitled to argue that there was a partnership to be implied from conduct, and (b) if so, whether the facts supported such a finding. The scope of the appeal is accordingly limited. It is a fair inference that the refusal of permission to appeal against the finding of no oral agreement constituting a partnership was on the basis that it depended on the evidence and amounted to a finding of fact which could not realistically be challenged on appeal.
18. By a respondent's notice, the defendant contends that it was not open to the judge to consider whether there was a partnership on any basis other than the oral agreement alleged. The respondent's notice was served late, but time was extended by this court without opposition from the claimant.
19. The judge dealt with the question of oral agreement in his judgment over a number of passages, starting at paragraph 28. I do not need to deal with his review of the evidence in detail, but I propose to cite certain passages in order to show how he dealt with the principal contention and then what he said about a possible alternative basis for argument in favour of a partnership.
20. At paragraph 28 the judge started by setting out, first of all, what the question was and, secondly, what the claimant's case was:

"28. At the core of this case is a dispute about what or was not orally agreed between the Claimant and Defendant in about March 2004 about how the equine business owned by the Defendant was to be operated and owned from that time onwards. The Claimant's evidence was that in a number of discussions which took place at about that time the Defendant and he agreed that they would operate the business in partnership. Further they expressly agreed that they would be equal partners in all respects by which I mean that all partnership property would be owned equally and all profits and losses shared equally."

21. Then at paragraphs 29 and 30, the judge summarised the defendant's position:

"29. The Defendant does not accept that any such agreement was concluded in or around March 2004. In her Affidavit sworn for the application for the freezing order her evidence was that while discussions took place between Claimant and Defendant about 'how to continue the business' no agreement was concluded and the money provided by the Claimant from March 2004 was always intended as a loan as had been the case prior to that time. In her witness statement she again acknowledged that the Claimant and she had discussions about the business and their own role in it. She said that shortly before the trip to Holland [which I interpolate took place later in 2004] there had been discussions about ownership of the horses to be purchased. She acknowledged that the Claimant had requested that he be a joint owner of any horses purchased but according to her she had refused that request and maintained the stance that any monies provided by the Claimant should be loans.

30. In paragraph 11 of her witness statement the Defendant confirmed that on a number of occasions the Claimant had asked her whether he could become a partner. On each occasion she says that she discussed it with her father (who discussed it with the accountant) and it was decided that it was not appropriate."

22. At paragraph 31 the judge went on to make an important finding:

"31. In my judgment it is clear that a number of discussions took place between the Claimant and Defendant about the business and about the Claimant's status within it. The probability is that such discussions began at or about the time that the trip to Holland was first mooted and continued until the meeting in August 2005. Further, I am quite satisfied, indeed it is not disputed, that at some stage in this process the issue of whether the Claimant should become a partner was raised."

23. After that, the judge went on to consider a number of points on the evidence, bearing in particular on the issue of the credibility of the two principal protagonists. His conclusion at that stage is stated in the first sentence of paragraph 39:

"39. My conclusion is that the Claimant and Defendant did not reach an agreement upon the terms which the Claimant alleges."

24. However, he went on to consider the matter in a wider context:

"It does not follow from that, however, that the Claimant and Defendant did not become partners on some terms. I appreciate that the Claimant's case is pleaded upon the basis of the express agreement set out above. However, it seems to me that I should not conclude the preliminary issues against the Claimant simply upon the basis of his pleaded case if the evidence as a whole justifies the conclusion that a partnership was formed between the Claimant and Defendant albeit not on the terms put forward in the Claimant's evidence and pleading. Therefore, I turn to consider whether or not the Claimant and Defendant were partners at any time after March 2004 on terms other than those alleged by the Claimant."

25. The judge then referred to something of what had happened later, including the holding out to potential customers of the business of both parties as proprietors, and the registration of horses in joint names. Some of these points, he held, were more in favour of partnership than others. The conclusion that he reached is set out at paragraphs 45 and 46, which I read:

"45. The facts set out above, no doubt, provide substantial material in seeking to persuade a court that the Claimant and Defendant must have reached an agreement that they would trade in partnership together. That said, I am not persuaded on the whole of the evidence that the parties actually made an oral agreement that they were to trade as partners. In my judgment, what occurred was as follows. They discussed the possibility; they were both prepared to describe themselves as proprietors of the business to the outside world; they probably discussed ownership of the horses. However, as between themselves they did not commit to trading as partners. I am quite satisfied that there came a point in their relationship where the Claimant wanted to be a partner in the business. In my judgment, however, the Defendant never agreed that he should. In my judgment his evidence that she did [is] after-the-event rationalisation of the facts as I have found them to be.

46. The reasons why I reach the conclusion that no agreement was made can be stated shortly. Firstly, notwithstanding that I do not accept the whole of the Defendant's evidence on the central issue I found her more convincing than the Claimant. Further, I am quite satisfied that the Defendant would have consulted her father before she committed herself to such an agreement. He, no doubt, would have advised her against it as I am satisfied he did in August 2005. She would have accepted his advice. On any view the Defendant had recently been divorced when the discussions about partnership were happening. Whether or not matters relating to ancillary relief were finalised the fact of a recent divorce was bound to make the Defendant cautious about financial matters. While she may have been prepared to share in the ownership of some of the horses purchased I do not think that she would have committed herself to a partnership without the involvement of her father and, through him, the accountant."

26. The judge went on to set out some passages dealing with the law in relation to partnership, starting from the basic proposition in section 1(1) of the Partnership Act 1890. He referred to the House of Lords' case of Khan v Miah [2000] 1 WLR 2123 and quoted from the speech of Lord Millett in that case. Having done so, he said this:

"In my judgment, this passage makes clear that a partnership can subsist only if the alleged parties thereto have agreed that a partnership should exist. Unless the court is able to say that such an agreement has been made it cannot conclude that a partnership exists."

27. In support of a case of partnership implied from conduct, the claimant now seeks not only to appeal but also to amend his particulars of claim. This is not an application that was put to the learned judge.
28. In the course of submissions made immediately after the end of the oral evidence on 5th September 2006, the judge raised with counsel the question of the ownership of the horses and the possibility that, even if there was not a partnership, there might be joint ownership. The position of Mr Clegg, appearing then as now for the defendant, was that he had to meet only the pleaded case, which was only a case of partnership and, of course only a case of partnership based on an oral agreement as alleged.
29. The judge pointed out that he would of course decide the preliminary issue, but that, subject to possible questions of amendment, other issues might and indeed were likely to arise between the parties, and that a decision on the preliminary issue would by no means necessarily dispose of all that was potentially at issue between the parties. Mr Clegg's position remained that the judge could only deal with the issue as it was pleaded and as it was formulated in the preliminary issue. He contended that any other issue to be raised would require amendment and that it might require additional evidence. Mr Harris, who then appeared for the claimant, accepted that the particulars of claim would have to be amended and he did not seek to amend at that stage.
30. In this context, I think it is appropriate to quote two or three passages from the interchange between the judge and counsel. In the course of the judge's exchanges with Mr Clegg, in a passage which is on page 56 of the transcript and page 545 of the appeal bundle, the judge said this to Mr Clegg:

"But if I was, as is inevitable, going to have to think about this for some time at least, and if, and I am not saying Mr Harris is going to do it, but if he thought to himself, 'Well, if he finds that there is no partnership, I can still allege X, Y and Z', and therefore at the end of my judgment says, 'Right, well, that's the preliminary issues but now I seek leave to amend to allege this, that and the other', there is no way on earth that I at least would not listen to that, and I was just, if you like, short-cutting all this, if we have genuinely heard all the evidence that there could reasonably be about things like ownership."

31. The exchange between the judge and Mr Clegg continued for some little while, and on page 57 of the transcript (page 546 in the bundle) the judge said, resuming that same theme:

"But if he [meaning Mr Harris] were, for example, simply to say, 'I assert that I am an owner either wholly or in part of horse X, Y and Z', all I am really asking is: will we ever hear any evidence in the future which is wider than the evidence we have heard about that in these proceedings?"

Mr Clegg said:

"From my perspective the answer to that is Possibly."

To which the judge said:

"Possibly, right. Fine."

32. The judge then turned to Mr Harris and invited him to put his position, which he did at page 58 of the transcript (page 547 in the appeal bundle) in these terms:

"My Lord, our position is as follows. We would invite the court to make findings on the preliminary issues as they are at the moment, we will take stock at that point and if there are applications to amend that need to be made, we will pursue those at that stage."

33. Right at the end of the transcript of that day, page 62, Mr Harris again said something to very much the same effect.
34. For the purposes of the preliminary issue, therefore, he stood his ground on the case as it had been formulated, but in the light of the judge's indication, perhaps more than mere indication, pointing out that if the answer to the preliminary issue was no partnership there would still be issues, including an issue as to joint ownership, it was recognised that that would require an amendment to the pleadings. No amendment was sought to be put forward at that stage, perhaps in the light of Mr Clegg stating that he would at least require the opportunity to consider whether there might have to be further evidence, for which of course no time had been allowed in the timetable at the hearing, and at any rate for whatever reason that was not pursued.
35. In those circumstances, before this court Mr Clegg strongly opposes the suggestion that there should now be an opportunity to amend to raise a different case in support of partnership. Miss Newman QC for the appellant accepts that an amendment would be necessary. She submits that particularly because points do remain outstanding between the parties in any event, such an amendment would be appropriate to be allowed. She submits that it is to be hoped that it would not lead to a need for new evidence and could be dealt with on submissions on the basis of the evidence already given, even though it would have to be in practical terms before a different judge, because of the elevation of the judge (as he was) since the hearing. But that can be no more than a hope, in the light of Mr Clegg's indication at the hearing.
36. On the substantive point, Miss Newman argued that the judge failed to appreciate that a partnership can be implied from conduct as an alternative to being derived from express agreement. That is certainly a possibility if, absent an express agreement, the conduct of the parties is such as to justify the inference of an implied agreement for a partnership. She showed us a paragraph from the judgment of the late Hart J in Phillips v Symes [2002] 1 WLR 853, paragraph 43, at page 868 in the report. The question here arose quite differently as to jurisdiction in an international context, but the judge said this in the course of paragraph 43:

"Subject to the qualifications made by statute and established by the case law, partnership is in English law simply 'the relation which subsists between persons carrying on a business in common with a view of profit': see section 1(1) of the Partnership Act 1890. The existence of that relation is founded on an agreement between the parties which may be express or inferred from that conduct."

The report says "from that conduct", I suspect it means "from their conduct" or perhaps simply "from conduct".

37. Miss Newman submits with some force that the judge approached the case on the basis of express agreement, not contemplating an agreement inferred from conduct. That would not be altogether surprising, since he was not addressed on the basis of implied agreement. What the judge said at paragraph 52 and elsewhere in the passages that I have read is not inconsistent with the possibility in law of there being an agreement implied from conduct. His focus was on the parties' express discussions on the facts of this case, although he was of course well aware of the conduct which, absent express discussions, would have pointed strongly towards partnership, as indeed he said at paragraph 45 (which I have read).
38. The difficulty for the claimant (or one of them) is that such an inference may be legitimate if the parties have not addressed in express terms what the basis of their business cooperation should be. If, however, as here, they have addressed the subject expressly, including discussions about whether there should or should not be a partnership, but these have not reached agreement because one party has declined to agree to the proposal on the part of the other that they should carry on business in partnership together, then the suggested inference would contradict the express dealings and discussions between the parties.
39. In his judgment in Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195, at page 1202, Bingham LJ (as he then was) said this:

"I readily accept that contracts are not to be lightly implied. Having examined what the parties said and did, the court must be able to conclude with confidence both that the parties intended to create contractual relations and that the agreement was to the effect contended for."

40. Here the judge did examine what the parties said and did, and concluded that they did not intend to agree upon a partnership. Miss Newman then says fairly that what the parties say about their business relationship is never conclusive. If they reach an agreement and say "this is not a partnership" but in the true legal analysis it is, their declaration cannot prevail. But this is not that sort of a case. Given the domestic relationship between the parties and the dealings between them before the date when the claimant contends that a partnership was agreed on and when it started, according to him, there could be several different legal analyses and explanations for their dealings in relation to the equine business. In these circumstances, it seems to me that the judge was inevitably brought, and rightly brought, back to the discussions which proceeded inconclusively between the parties. The claimant wanted to be a partner in legal and business terms with the defendant and said so, but the defendant did not agree to that proposal or request, and her position was also made manifest. In those circumstances, it seems to me that a finding of a partnership by implication from conduct, which would involve saying that an agreement is to be implied from conduct, even though the very same conduct has been held, for the reasons that the judge concluded, not to give rise to an express agreement, would fly in the face of those dealings.
41. I have mentioned that the particulars of claim include an alternative allegation of partnership by estoppel. That seems to me a somewhat extraordinary proposition as between the two parties to the alleged partnership. I can understand such an allegation by a third party, to whom two or more people, with one or more of whom he deals, had been held out as partners, but as between the parties to the alleged partnership either there is or is not a partnership agreement, express or implied. Partnership by estoppel is not a true alternative basis for a contention that the claimant and the defendant carried on business in partnership together. In the absence of the actual but inconclusive discussions between the claimant and defendant, the holding out would be strong evidence in support of an implied agreement, as the judge said. Given those discussions, the holding out is irrelevant to the issue of partnership or no. There is no pleaded case of a representation by the defendant to the claimant that there was or would be a partnership between them, relied on by the claimant to his detriment. It is difficult to see how such an allegation could be made, given that the partnership would result from an agreement between them, express or implied, as to which a representation by one party to the other would be beside the point. I see no substance in the estoppel case, and it seems to me in any event it would have been comprised within the preliminary issue. The claimant alleged that there was a partnership. If the defendant were estopped from denying it, the result should be that the claimant's allegation is not resisted and the court should declare that there was a partnership; that is to say, on that premise the court would have answered the first of the preliminary issues accordingly.
42. In dealing with the point of partnership by implied agreement on its merits, I have passed by the preliminary question of whether the claimant should be entitled to contend at all that there was a partnership on any other basis than the oral agreement in March 2004, which he alleged in the particulars of claim. Miss Newman said that all necessary facts from which a partnership could be implied from conduct were already alleged. That is a fair comment by itself, but they are alleged in support of the case for an oral agreement. It would have been thoroughly misleading if they were to be relied on to support in the alternative a distinct fallback case of partnership implied from conduct.
43. For my part, while I consider that the judge's conclusion was right on the facts, I would not regard it as open to the claimant to rely on such an alternative case without having made it clear in the particulars of claim, no later than the start of the trial of the preliminary issue and probably a good deal earlier, that he did put forward this alternative case. Equally, I would not regard it as necessary or appropriate for the judge to consider any other basis on which a partnership might be proved. In particular, having formulated the preliminary issue in general terms so that it would cover any contention which either party might properly advance for saying that there was a partnership, he gave the claimant the opportunity, if it had been taken in time by way of a proper amendment applied for and granted, to advance a fallback case such is now sought to be relied upon. For the claimant, having lost on the facts on the one case actually advanced, to be allowed a second chance now would seem to me to be wholly inconsistent with the basis upon which the matter proceeded.
44. There was some debate before us as to whether the appropriate forum in which an amendment on this point should be considered was here or at first instance. But for the appeal, on which of course permission was refused in relation to the oral agreement, it may be that it could have been raised for the first time at first instance. But since the appeal is on foot and is before us, I regard it as appropriate for us to grasp that nettle. I would treat as before us the application for permission to amend (which exists currently only in draft, and supported by a draft application notice), so that we can consider whether to grant it and, for my part, I would refuse permission to amend as sought on the question of a partnership to be implied as an implied agreement from conduct.
45. As the judge recognised, and as I have mentioned several times, the rejection of the case for partnership does not dispose of the disputes between the parties, although it does dispose of the claimant's case as currently formulated. There was some debate before us as to how the matter should now proceed. The judge expressly refrained from making findings about joint ownership of any of the horses, at any rate on the basis of a conclusive finding, although he gave a number of indications of his view. Plainly he was right to do so in the light of the exchanges after the conclusion of the evidence, from which I have quoted. At paragraph 54 of his judgment, he said this:

"54. I have deliberately made no conclusive finding about the ownership of various horses. I have not done so since that was not essential for the resolution of the preliminary issues and in those circumstances I was asked not to make a finding by Counsel for the Defendant. However, I have no doubt that the parties will give careful consideration to what I have said about that issue before embarking upon further and expensive hearings."

46. The judge's hope that further expensive hearings would be avoided has not been realised. I fear that if we were to say the same our hopes would also be disappointed, given the strength of feeling that appears to exist between the parties. But in the light of the mounting costs of the litigation, and the limited value in financial terms of the issues at stake, it is incumbent on the court and the parties to attempt to resolve the issues without either undue further expense or unnecessary procedural complexity.
47. In my judgment, the appeal against the decision on the preliminary issue should be dismissed and the, as it were, deemed application for permission to amend should be treated as before us and rejected. But that does not dispose of the proceedings altogether. It remains open to the claimant to formulate an amendment to his particulars of claim, so as to put forward his alternative case or cases as to the rights and obligations of the parties, whether it is on the basis of joint ownership or loan, or whatever else other than partnership. He should do so. He should apply for permission to amend at first instance. It will be up to the judge or District Judge before whom such an application comes to decide whether, and if so on what terms, to allow such an amendment to be made. There could, I would wish to make clear, be no question of precluding such points being taken by analogy with the case of Johnson v Gore Wood. Such points have not yet been pleaded in the proceedings. But subject to their proper formulation, the proper exercise of the judicial discretion about amendments, and of course proper consideration of all issues of costs, it is in my judgment open to the claimant to put forward such a point now, and to the court to permit a properly formulated amendment to be made. If in relation to that the defendant wishes not merely to deny the claimant's contentions but to advance her own different contention, that she will do and must do by way of consequential amendment of the defence.
48. Even with due proper and proportionate consideration of such applications and amendments, it is possible to foresee that a good deal of further expense can be incurred in this litigation before the issues between the parties can be brought to judicial resolution. In those circumstances, I do express the hope that sense and proportion may prevail and that the parties can address the real financial issues between them, whether by direct negotiations between solicitors or by mediation, but in any event without taking the matter to a further judicial resolution.
49. So far as the appeal is concerned, as I say, I would treat the application for permission to amend as being before us, I would refuse it and I would dismiss the appeal.
50. LORD JUSTICE THOMAS: I agree. As Lord Justice Lloyd has said, the time to raise the issue as to whether a partnership could be implied from conduct was before the hearing of the preliminary issue. It is now far too late.
51. I would also wish to add a word in relation to the importance of the observations made at the outset of Lord Justice Lloyd's judgment in relation to preliminary issues. In my view this is a case which yet again underlines the necessity for great caution in the ordering of preliminary issues, the care with which the trial of those issues is prepared, and the need for review of the position as it emerges during and at the end of the trial of the issues. We have not explored how the problems that have resulted could have been avoided. I will therefore make no comment, save to say that it is clear that by the end of the hearing, as the passages to which Lord Justice Lloyd has referred made clear, the problems had begun to become evident and the trial judge did try to get the parties to address them sensibly. This case should therefore stand simply as yet a further reminder of the necessity for great caution before preliminary issues are ever embarked on.
52. I share the hope expressed by Lord Justice Lloyd that the parties will see sense. It seems to me there is no good reason why the parties should not, through their legal advisers, immediately work out what the actual financial position is in relation to the differences between them over the horses, where the nature of the financing of their purchase and their ownership remains a live issue for future decision. I would be astonished if the sums in issue are not substantially smaller than the likely costs of resolving those issues by further proceedings in this action, which will inevitably be incurred by the hearing of further evidence and legal argument at a further trial, unless sense immediately prevails.
53. LORD JUSTICE PILL: This case demonstrates once again, as Lord Justice Lloyd and Lord Justice Thomas have pointed out, the dangers involved in preliminary hearings to decide particular points at issue.
54. The pleaded case is at paragraph 8 of the particulars of claim:

"In or about March 2004 by an oral agreement ... between the Claimant and the Defendant it was agreed that they would carry on an equine business together in partnership ..."

55. At paragraph 15 it is stated that:

"In the circumstances described above the Claimant seeks a declaration that the Business was operated as a partnership between the Claimant and the Defendant that was commenced in or about March 2004 ..."

56. There were hearings on 13th and 21st April. A freezing order was obtained by the claimant on 13th April. That was modified on the 21st. The question of preliminary issues then rose at the initiative, it appears, of the judge: the resolution of the dispute between the parties could be resolved or facilitated by the consideration of preliminary issues. The parties were involved in the drafting of those issues, which the judge has set out in paragraph 8 of his judgment. They covered what the claimant was seeking to allege, that there was an oral agreement for a partnership. They also cover what he now seeks to allege, that failing that, a partnership was to be implied by conduct.
57. The unfortunate position arose that the case proceeded to the trial of preliminary issues, which covered both possible ways of putting the partnership case, whereas the pleading only covered one way of putting it. Understandably, at the trial of the preliminary issues, Mr Clegg, for the defendant, required the claimant to keep to his pleaded case. No application was made, either in April when the preliminary issues were drafted or when the hearing was held in September, to amend the pleading. The claimant should not have permitted that situation to occur. If partnership by conduct was to be alleged, permission to amend to assert it should have been made in April or at least before the hearing of the preliminary issues in September. I agree with Lord Justice Lloyd that it is too late to make it now.
58. Other ways of putting a claim against the defendant have been considered, and indeed were anticipated at the trial of the preliminary issues, during closing submissions and in the judgment. It is not realistic to suggest, in my view, that it was for the judge, who no doubt had a busy list, to initiate or permit a wholesale redrafting of the pleadings and of the preliminary issues at that stage to cover all areas of the dispute. Quite apart from time constraints upon the court, it may have worked an injustice on the defendant to allow the nature of the proceedings to be fundamentally changed on the hoof.
59. As Lord Justice Lloyd has stated, the action remains in existence and it will be open to the claimant to seek permission to amend. If the judge sees fit, in the exercise of his discretion, to grant leave, the issues between the parties may be determined. I too express the hope fully, indeed fulsomely, expressed by Lord Justice Lloyd and Lord Justice Thomas that this financial dispute between the parties should be resolved without further recourse to the courts.
60. I agree that the appeal should be dismissed.
(Submissions regarding costs)
61. LORD JUSTICE PILL: Application is made, at the suggestion of the court following the practice direction, that there should be a summary assessment of costs. Schedules have been exchanged. Unfortunately 24 hours' notice was not given, but only in the event 18 hours. However we are satisfied that the appellant's solicitor has had an opportunity to consider the figures and we propose to make a summary assessment.
62. Our deliberations while we retired really centred on the same two points as Miss Newman has now taken. We do consider that there should be some deduction both from the "attendance at hearing" and the "work done on documents". We have in mind fairly modest reductions. We have now been here nearly six hours from the listed time. What we propose to do is to take off the £430, from the claim of £13,430, so that the summary assessment will be in the sum of £13,000 plus VAT, counsel to calculate the appropriate figure. That sum is to be paid within 14 days.
63. The second point raised by Miss Newman is that, because there are outstanding issues between the parties and because the assets which are in issue are in the respondent's possession, the order should not take effect now or there should be a set-off to represent the advantageous position of the respondent. We do not accept that submission. Our judgment has considered the current situation and the merits of the current appeal. What happens in the future is another matter, and we consider it would be inappropriate in any way to adjust the order for costs so as to take account of that.

ORDER: Appeal dismissed with costs, summarily assessed in the sum of £13,000 plus VAT.

(Order not part of approved judgment)