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Cite as: [2014] 1 Ch 455, [2014] CH 455, [2014] 2 WLR 1448, [2014] EWCA Civ 10, [2014] 3 All ER 397, [2014] 1 CH 455, [2014] WLR(D) 75

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		Neutral Citation Number: [2014] EWCA Civ 10
		Case No: A3/2013/1784

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT CHANCERY DIVISION
Mr. Nugee QC
HC11C01339

Royal Courts of Justice
Strand, London, WC2A 2LL

5th February 2014

B e f o r e :

LORD JUSTICE MAURICE KAY,
Vice President of the Court of Appeal, Civil Division
LORD JUSTICE SULLIVAN
and
LORD JUSTICE BRIGGS
____________________

Between:

	BISHOP	Appellant
	- and -
	GOLSTEIN	Respondent

____________________

(Transcript of the Handed Down Judgment of
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____________________

AMANDA EILLEDGE for the Appellant
ROBERT SALIS (instructed by SIMONS MUIRHEAD & BURTON) for the Respondent
____________________

HTML VERSION OF JUDGMENT
____________________

Lord Justice Briggs :

Introduction

On 1^st October 2007 the Appellant, Mr. Bishop, and the Respondent, Mr. Golstein entered into a solicitors' partnership together. By the Heads of Agreement which governed that partnership, dated 17^th September 2007, it was to have lasted for a minimum term of four years, following which either partner could retire on giving six months' notice. In fact, it ended by agreement on 30^th June 2010, after a complete falling-out between the partners which had developed during the previous year. The trial judge Mr. Christopher Nugee QC (now Nugee J) decided, as one of a number of preliminary issues in the partnership proceedings which followed, that the cause of the early termination of the partnership was that the cumulative effect of the conduct of Mr. Bishop during the year before its termination had made it intolerable for Mr. Golstein to continue in partnership with him. Since that conduct had been, both in general and in detail, in breach of the partnership agreement, the judge held that Mr. Bishop was, in principle, liable to Mr. Golstein in damages for the adverse consequences to him of the early termination of the partnership. The main adverse consequence for Mr Golstein was that he lost, for the remaining year and a quarter of the agreed minimum term, the benefit of a guaranteed minimum level of drawings from the firm, guaranteed that is by Mr. Bishop, regardless whether the firm's business yielded sufficient profits to support such drawings by reference to Mr. Golstein's 30% share. The quantum of those damages remains to be determined, if it cannot be agreed, and is not an issue on this appeal.

The primary pleaded basis of Mr. Golstein's claim for damages had been that Mr. Bishop had repudiated the partnership agreement, but the judge decided, following dicta of Lord Millett in Hurst v Bryk [2002] 1AC 185, at 193-196, and the decision of Neuberger J in Mullins v Laughton [2003] Ch 250, that the contractual doctrine of repudiation does not apply to the dissolution of a partnership. He decided (and this is not challenged on appeal) that the partnership had come to an end by mutual agreement rather than by Mr. Golstein's acceptance of a repudiation by Mr. Bishop. Nonetheless, this left open the question whether Mr. Golstein's agreement to dissolve the partnership early had been caused by Mr Bishop's breaches of the partnership agreement.

The main reason why Lord Millett had concluded (albeit obiter) that there could be no automatic dissolution of a partnership by repudiation was because it was inconsistent with the court's discretionary power to dissolve a partnership under Section 35(d) of the Partnership Act 1890, which provides that the court may decree a dissolution of a partnership when a partner, other than the partner suing:

"wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable for the other partner or partners to carry on in partnership with him."

It was (realistically as the judge said, and I agree) conceded on behalf of Mr. Bishop at the trial that if the judge were to find that Mr. Golstein could have brought himself within Section 35(d) of the Act, and that that was why the partnership ended, then he would be able to claim damages for breach. The judge went on to find that:

i) if, rather than dissolve by agreement, Mr. Golstein had sought a dissolution under Section 35(d) of the Act by proceedings commenced at the end of June 2010, he would have succeeded;

ii) the conduct of Mr. Bishop which had by then made it not reasonably practicable for Mr. Golstein to carry on business in partnership with him had consisted of breaches of the partnership agreement, and

iii) those breaches had indeed been the cause of the early, consensual, termination of the partnership.

On this appeal Miss Eilledge challenges the first and second, but not the third of those conclusions. In paragraph 4 of her helpful Supplementary Skeleton Argument, she says:

"For the avoidance of doubt Mr. Bishop does not challenge any of the individual adverse findings reached with regard to particular allegations made against A (the Appellant) (the primary facts) nor the judge's overall assessment of A's conduct in the context of the partnership relationship (the evaluation of the facts) and in particular his findings that the underlying cause of the dissolution was A's conduct."

Rather, Mr. Bishop's appeal may be summarised as based on the following grounds:

i) None of the breaches of the partnership agreement identified by the judge were continuing as at the date of termination. Rather, many of them had ended, or been remedied, some months previously, and the latest of them had occurred, or been remedied, by March 2010.

ii) Thereafter Mr. Golstein elected to affirm the partnership agreement, both by asserting the continued existence of the partnership relationship in correspondence, by his solicitors during March and April 2010, by continuing to work in the furtherance of the partnership business and to receive drawings, and by continuing to participate in the management of the firm.

iii) Although all this had been pleaded, the judge had failed to deal with it in his judgment. He had not considered the consequences of these matters during the period March to June 2010, and had in particular identified no further breach during that period capable of amounting to a 'last straw' within a doctrine habitually applied to the repudiation of employment contracts, upon which a case of continuing breach as at the end of June 2010 could be constructed.

Summary

It is fair to say that the judge did not, in an otherwise masterly and painstakingly detailed reserved judgment, devote a specific section of it to Mr. Bishop's pleaded defence of affirmation, even though (out of caution) he addressed the detail of the claim based upon an accepted repudiation notwithstanding his conclusion that it had no place in the partnership context. Furthermore, he did not indeed find some specific further breach during the last three months of the partnership capable of constituting a trigger for the acceptance of a repudiation at the end of June, under the last straw doctrine.

Nonetheless, and although I shall of course deal in more detail with Miss Eilledge's excellent submissions, it is convenient at the outset for me to make clear my view that his appeal fails for three main reasons. The first is that it wrongly assumes that contractual principles of repudiation and, in particular, affirmation, including the last straw doctrine applied in employment cases, are directly applicable to a discretionary dissolution under Section 35(d) of the Act. Secondly, it wrongly equates affirmation (that is, refusing to treat a repudiatory breach as putting an end to the contract) with an outright waiver of all rights, including a right to claim damages, arising from the same breach of contract. Thirdly, its detailed criticism of the findings about Mr Bishop's conduct failed to pay sufficient regard to their effect when considered in the round. It treats the judge's careful findings as confined to a series of specific breaches, and ignores his overall conclusion that they, or most of them, were symptoms of a more fundamental failure by Mr. Bishop to comply with his partnership duties toward Mr. Golstein. This was a course of conduct which, viewed as a whole, represented a continuing breach of his essential obligations, which he had done nothing to remedy during the last three months of the partnership, and which amounted to conduct designed (in the end successfully) to squeeze Mr. Golstein out.

It is at this point worth emphasising what this appeal is not about. It is not about deciding, after conflicting first instance decisions, and a powerful obiter dictum from the House of Lords in the meantime, whether repudiation has any place in the context of dissolution of partnerships. Nor does the appeal raise for decision the interesting question whether there is any exception to Lord Millett's analysis, in the case of a two-partner firm, where some but by no means all his objections to the recognition of dissolution by accepted repudiation fall away. Neither Hurst v Bryk nor Mullins v Laughton were about two-partner firms.

In the present case the judge decided, largely but not entirely out of comity with the earlier first instance decision of Neuberger J, that there cannot be automatic dissolution of any partnership by accepted repudiation, and Mr. Golstein has not challenged that decision by respondent's notice or cross-appeal. That said, I would not wish my note of caution on this point to be taken as indicating any real doubt about the correctness of Lord Millett's analysis, of the decision in Mullins v Laughton, or of the judge's application of the principles recognised in both of those cases to a two-partner firm. My own view that Lord Millett, Neuberger J and the judge were all correct about this adds nothing of substance, since the point was not subjected to any adversarial argument in this court.

Nor should the outcome of this appeal be taken as deciding that breaches of the terms of a partnership agreement by partners in their conduct (or misconduct) of the affairs of the firm give rise in every case automatically to simple claims for damages in contract, as if the relationship of partners was purely contractual, and nothing else, like that between the buyer and seller of goods. Partners owe duties to each other, for example the duty of good faith, which are imposed by law by virtue of the nature of the relationship. In other respects, as Lord Millett noted, the relationship is governed by the Partnership Act. The terms of the partnership agreement no doubt set out important parts of the detailed terms of that relationship, just as do the articles of association of a company as between its shareholders. It may be that some forms of breach of partnership duty would better be treated as giving rise to claims for compensation in equity, or a liability to account, rather than simple claims for contractual damages. This touches upon what the editors of the current edition of Lindley and Banks on Partnership describe, at paragraph 23-208, as one of the most difficult and unresolved areas of partnership law.

Again, none of this has been the subject of any argument on this appeal. Rather, the concession made on Mr. Bishop's behalf to the judge, which I described at the beginning of this judgment, has been repeated and (in terms of causation, extended) in this court.

Again, my reservation about this question implies no doubt as to the good sense of Miss. Eilledge's concessions, even though they are criticised in Lindley and Banks (op. cit.), at para 23-210. If one partner, in breach of his duty to his fellow partner, seeks to squeeze him out or otherwise to conduct himself in a manner which makes it intolerable or impracticable for the other partner to continue to carry on the business with him in partnership, and this causes the innocent partner to dissolve or agree to the dissolution of the firm earlier than would otherwise have occurred, then it is plainly necessary for the law to recognise some means whereby the innocent partner can be compensated for consequential loss. It may in the end be little more than a matter of terminology whether that compensation is described as damages for breach of the partnership agreement (as the parties and, at their invitation, the judge has described it) or, as some would find more appropriate, compensation during a dissolution account for breach of partnership duty. I shall continue to adopt, for convenience but not necessarily by way of agreement, the terminology thus far adopted by the parties and continued during argument in this court. It may be that, since the present claim is ultimately about the loss for a specific period of the benefit of Mr. Bishop's personal guarantee of Mr. Golstein's partnership income, applicable even in the absence of sufficient partnership profits, this is a case peculiarly apt for a contractual rather than partnership duty analysis but, again, it makes no difference to the outcome.

Affirmation

All three of Mr. Bishop's grounds of appeal proceeded on the basis of an implicit assumption that the ordinary contractual rules about discharge of contract by breach were fully applicable to a dissolution under Section 35(d) of the Act. Ground one asserted, in effect, that Mr. Bishop was no longer (if he ever had been) in repudiatory breach of the partnership agreement by the end of June 2010. Ground two relied upon the 'last straw' principle developed in relation to constructive dismissal under a contract of employment, which is a particular form of discharge by breach. Ground three expressly complained of the absence of any analysis or finding of affirmation, as Mr. Bishop had pleaded.

In my judgment, Section 35(d) of the Act establishes in plain language a straightforward and unambiguous threshold test for the exercise of the court's discretionary power to dissolve a partnership. The threshold is not expressed to depend upon repudiation. Nor, where the language of the test fits the facts, is it expressed to be undermined by what, in purely contractual terms, might amount to affirmation. Of course, as Lord Millett said in Hurst v Bryk, there will in practice be a large overlap between cases which could (if the doctrine applied) be described as discharge by accepted repudiation, and dissolution under Section 35(d). But there is no necessary identity between the two. This is primarily because dissolution under Section 35(d) is discretionary, whereas discharge by breach operates automatically, without any intervention by the court, so that the circumstances where it does or does not apply need to be subjected to a workable degree of legal certainty.

A particular example will suffice. Suppose that, by March in a particular year, partner B had so conducted himself as to render it impracticable for partner A to continue in partnership with him. Nonetheless, partner A soldiered on for three months before deciding to throw in the towel and seek a dissolution under Section 35(d). His 'soldiering on' might in contractual terms have amounted to an affirmation, after conduct putting him to an election to determine or to carry on with the contract. But it will not necessarily do so under Section 35(d) if, for example, continuation of the business remained as unreasonably impracticable at the end of June as it had been at the end of March. Of course, if partner B had in the meantime in some way mended his ways, continuation in business together might no longer be impracticable. Or, if B relied to his detriment upon an implied assertion that partner A would not treat B's conduct until the end of March as giving rise to grounds for dissolution, then that might be a reason why, as a matter of discretion, a dissolution could be refused. But that is an altogether more flexible test than the necessarily rigorous analysis which may be applied to an allegation of affirmation, which operates by reference to concepts of election, and requires no detriment to be shown at all.

In my view the judge was entitled in the present case not directly to address the question of affirmation as a distinct issue because the question for him was whether a dissolution would have been ordered if Mr. Golstein had asked for one at the end of June 2010, a question for which affirmation was not, as such, an applicable consideration. As will later appear, I would not have concluded that, on those facts found by the judge which Mr. Bishop does not challenge, there could have been affirmation in any event, because the most serious of Mr. Bishop's breaches of his partnership duties to Mr. Golstein were still continuing at the end of June.

Last Straw

The same disconnect with Section 35(d) of the Act affects Mr. Bishop's attempt to rely upon the judge's supposed misapplication of the 'last straw' principle. As explained by Dyson LJ in Omilaju v Waltham Forest London Borough Council [2004] EWCA Civ 1493 [2005] ICR 481, at paragraphs 14 to 16, this enables an employee to aggregate a series of instances of alleged breach by the employer of the implied term of trust and confidence to justify a claim of constructive dismissal, where none may individually amount to repudiatory conduct, so that resignation after the last of them may be justified even if, viewed independently, it is relatively insignificant. This is because the final incident may properly be regarded as the last straw in a course of conduct which, taken together, justifies the assertion by the employee that there has been a repudiation. It is, as I have said, a particular aspect of the doctrine of discharge by breach, applicable to contracts of employment. At paragraph 16, Dyson LJ said:

"Although the final straw may be relatively insignificant, it must not be utterly trivial: the principle that the law is not concerned with very small things (more elegantly expressed in the maxim "de minimis non curat lex") is of general application."

Miss Eilledge's criticism was that the judge did not identify any 'last straw' within the last three months of the partnership upon which Mr. Golstein could rely, as triggering his decision to bring about a termination of the partnership at the end of June 2010. Read literally, the judgment did not indeed do so. Rather, having accepted that the last straw doctrine might afford a useful analogy when considering whether a course of conduct made it impracticable for an innocent partner to continue within the meaning of Section 35(d), the judge said this, at paragraph 176:

"Miss Eilledge submitted that for the last straw doctrine to apply there had to be some triggering event which constituted the final straw, and on the facts there was none here. However it seems to me that Mr. Salis is right when he says that where conduct is continuing, it may not be necessary to identify a specific act which constitutes the trigger. If an employer is squeezing out an employee, or a partner is conducting himself in such a way as to make it impracticable to carry on in business with him, this may well be enough even if it is not easy to point to a specific act."

It needs to be borne in mind that the judge was, at one and the same time, conducting an analysis under Section 35(d), together with a repudiation analysis, in case a higher court might disagree with his conclusion that repudiation had no place in partnership dissolution: see paragraph 124. In my view he could have said simply that the part of the last straw doctrine which requires some trigger to be identified has no application to dissolution under Section 35(d). This is because the doctrine is, at least in part, a means whereby the employee may erect a bridge between earlier more serious misconduct by the employer and some later but less significant misconduct so as to surmount the difficulty that the employee's adherence to the contract (by performance and receipt of payment) in the meantime constituted an affirmation of it. For the reasons which I have already given, no such affirmation difficulty affects a partner seeking a dissolution under Section 35(d).

Miss Eilledge asked rhetorically why a partner should be better off than an employee in this respect. There are I think two answers. The first is that the partner may invoke the court's power under Section 35(d) whereas the employee must rely on the contractual rules as to discharge by breach. The second is that, by contrast with employees, partners at least in small professional firms cannot necessarily walk away from the firm at the moment when the other partner or partners' conduct becomes intolerable. There may be clients with ongoing affairs for whom transitional arrangements have to be made. More generally, partners share responsibility for the ongoing business of the firm to an extent which is not necessarily or even usually so in the case of individual employees. There is of course no more general injustice or unfair disparity between partners and employees, since the latter enjoy large statutory protection, from example against unfair dismissal, which partners entirely lack.

As I explain below, the judge's conclusion that, in any event, the most serious aspects of Mr. Bishop's breach of his partnership duties were continuing at the end of June 2010 is a separate and sufficient reason why the grounds of appeal based upon the last straw principle must fail.

Waiver

The grounds of appeal, taken as a whole, appeared to take it for granted that a successful challenge to a conclusion that there had been a repudiation of the partnership contract was, without more, sufficient to undermine the judge's decision that Mr. Bishop was liable for damages for breach of contract. The essentially concessionary basis upon which the judge proceeded was that, if he were to find that Mr. Bishop's conduct would have justified a dissolution under Section 35(d), that it amounted to breaches of the partnership agreement, and that those breaches caused the early termination of the partnership, then damages for the adverse consequences to Mr. Golstein of that early termination would follow: see paragraph 207.

Miss Eilledge submitted that, if the same facts did not justify an accepted repudiation, for example because there had been affirmation after the last proven breach, then damages for breaches proven thus far would have been waived. This is in my judgment a simple fallacy. All that the innocent party to a contract does by affirming it in the face of a repudiatory breach is to waive his right thereby to treat the contract as at an end. He does not by simple affirmation waive a right to damages for any loss caused by that breach. This is trite law which needs no authority. When this difficulty was put to Miss Eilledge during argument, she could offer no persuasive answer to it.

Continuing breach

Although Mr. Bishop did not challenge on appeal any of the judge's specific findings of breach of contract (or of duty) on his part, or even his conclusion that, collectively, they caused the early termination of the partnership, Miss Eilledge tended to treat them as if they were a miscellany of specific items or events of breach, the last of which occurred, ended or was remedied by March 2010. While it is true that a small number of the particulars of breach did consist of specific matters which were later remedied, it is more accurate to describe the findings against Mr. Bishop as examples or symptoms of a more general and fundamental determination on his part to act inconsistently with his partnership obligation of trust and confidence toward Mr. Golstein, which continued in full force until the end of June 2010.

It is of course correct that allegations of a general nature, such as a determination to squeeze out a partner, to deny him a share in the management of the business and to omit to require the firm's staff to treat him with proper respect must be supported with pleaded particulars and sufficiently focussed evidence. But it by no means follows that the particulars themselves are to be equated with the alleged breaches of duty, or that the period of a general breach of one of those kinds is thereby to be taken as having ended on the date of the occurrence of the last particular example proved.

A review of the judge's careful but concise analysis of Mr. Bishop's alleged misconduct demonstrates that an attempt to treat them as a series of individual breaches is an exercise in illegitimate salami-slicing. First, the judge found that, between September or October 2009 and February 2010, Mr. Bishop had told the partnership's accountants not to forward draft accounts to Mr. Golstein. This was, he found, an obvious breach of Mr. Bishop's obligation to cooperate in good faith with his partner in the drawing up of accounts. He concluded that, although this instruction did not persist after February 2010, some five months before the partnership ended, it was "part of the overall conduct of Mr. Bishop." (para 137).

Secondly, Mr. Golstein alleged that Mr. Bishop had wrongly purported to terminate the lease of the partnership's premises. In fact, the judge found that he had not done so since the relevant business tenancy continued under Part II of the Landlord and Tenant Act 1954. The allegation related to a letter which Mr. Bishop had written to the firm's landlord in November 2009, stating that it was not Mr. Bishop's intention to renew the Lease after its contractual term expired. At paragraph 153 the judge held that, although the termination allegation was not made out, Mr. Bishop's action in writing unilaterally to the landlord without first consulting with Mr. Golstein was a breach of the provision in the Heads of Agreement requiring the firm to be managed by both partners equally and that it:

"was symptomatic of an attitude that Mr. Bishop had that he need not consult Mr. Golstein on matters pertaining to the partnership."

Thirdly, paragraph 8(e) of the Re-Amended Particulars of Claim allege that Mr. Bishop breached the agreement by:

"since around November 2009 ignoring the Claimant (Mr. Golstein) on many occasions and refusing to discuss matters of any nature with him."

An example was given of such a refusal, by an email in December 2009. At paragraph 154 the judge found that allegation proven. He said that:

"I am satisfied that at that date Mr. Bishop had stopped communicating with Mr. Golstein entirely on partnership matters save for the correspondence being conducted with Healys" (Mr. Golstein's solicitors)

The judge sets no end-date to his conclusion that, as alleged, Mr. Bishop simply ceased discussing partnership matters with Mr. Golstein. My reading of the judge's conclusion is that, therefore, it continued until the partnership actually dissolved, at the end of June 2010. Nothing in the judgment, nor even in the evidence which Miss Eilledge showed us about what did happen in the three months prior to dissolution, suggested any other conclusion.

Next, paragraph 8(f) alleged a general failure by Mr. Bishop to permit joint management of the firm, by excluding Mr. Golstein. Again, the judge found this proven, at paragraphs 156-157. He found that:

"Mr. Bishop did indeed make unilateral decisions in relation to management without reference to Mr. Golstein, and carried on making decisions in relation to the practice very much as he had done before the merger."

He found that this was a breach both of the Heads of Agreement and of Mr. Bishop's general obligation to manage the firm jointly with Mr. Golstein, rather than unilaterally. His finding contained, again, no end-date and I read it as including a conclusion that it continued until the firm was in fact dissolved.

Finally, paragraph 8(g), supported by sub-paragraphs (k) and (l), alleged a failure by Mr. Bishop to require or encourage partnership staff (all of whom had originally worked for him as a sole trader before the partnership was entered into) to respect Mr. Golstein's authority as a partner, or to deal with specific instances of which Mr. Bishop was aware, where staff had been rude, disrespectful or otherwise unco-operative with Mr. Golstein. The judge found that Mr. Bishop's failure to deal with these matters was a breach of duty, save in respect of one instance where, to his knowledge, the member of staff concerned later apologised to Mr. Golstein. Again, nothing in the judgment or in the further evidence to which Miss Eilledge drew our attention suggested that Mr. Bishop ever remedied these omissions. Rather, the staff's disrespectful, rude and unco-operative attitude toward Mr. Golstein persisted until the dissolution in June 2010.

The judge's overall conclusion about Mr. Bishop's conduct leaves no doubt that he regarded the pleaded particulars as examples of a continuing course of conduct in breach of the fundamental obligation of trust and confidence, without which a partnership business cannot reasonably be carried on. In paragraph 176, in finding that the Section 35(d) threshold test was satisfied, the judge said:

"I have detailed the matters above and do not need to repeat them all, but Mr. Bishop's persistent obstructiveness in co-operating in having accounts drawn up and agreed; his ignoring of Mr. Golstein in making unilateral decisions in relation to the partnership premises, the staff, and other matters; and his undermining of Mr. Golstein's position in the firm in my judgment cumulatively meant that it was not reasonably practicable for Mr. Golstein to carry on in partnership with him. I accept Mr. Salis's submission that his position had become intolerable and that by June 2010 he was at the end of his tether."

Later, at paragraph 209, he said:

"I find however that it was the cumulative effect of Mr. Bishop's behaviour as set out above which made it intolerable for Mr. Golstein to continue. … I have detailed above matters which led me to the conclusion that it was not reasonably practical for Mr. Golstein to continue to carry on practice in partnership with Mr. Bishop; and I find that it was the cumulative effect of these matters which led to the partnership coming to a premature end."

It is instructive briefly to review the evidential materials about what did take place during the last three months before the partnership dissolved, which Miss Eilledge showed us in support of her criticism that the judge had ignored this period. They consist almost entirely of letters and emails. After an unsuccessful mediation Mr. Bishop wrote Mr. Golstein a long letter on 29^th March 2010. On the final page, at sub-paragraph 7, he said:

"The reality of the situation is that the relationship between us has been damaged beyond repair. I cannot believe that you would seriously think to suggest otherwise. It is time that we both recognised that fact and went our separate ways. How we get to that point is almost secondary."

Mr. Golstein's solicitors Healys replied on 9^th April, asserting that the partnership had not terminated pursuant to an earlier notice given by Mr. Bishop, but stating:

"Our client believes that it is possible (at least for the present) for the partnership to subsist for practical purposes and does not except that dissolution is inevitable. Insofar as it may be considered by the Court to be inevitable in due course, then this is a direct result of your, not our client's, conduct which has been the subject of previous correspondence."

Later, in relation to Mr. Bishop's sub-paragraph 7, they said:

"Our client believes that the partnership can subsist until the end of the four year period. If it cannot, then this is a result of your breaches of the Heads of Agreement and conduct about which complaint has previously been made."

On 12^th April Mr. Bishop replied, repeating his assertion that the partnership relation had irretrievably broken down, and seeking Mr. Golstein's agreement to a dissolution. On 19^th April Healys replied, including the following passage:

"As to whether our client will agree to a dissolution, we believe we have already made his position clear. Your client has made the continuance of the partnership extremely difficult but the practical reality is that our client is 63 years old and simply seeks the monies due to him and to be compensated for his loss of future income in the event of dissolution. If you concede in open correspondence that our client is entitled to such compensation on dissolution, then we believe that matters can be resolved without recourse to litigation, which would be to all parties' benefit."

Finally, Miss Eilledge drew our attention to an email from Mr. Golstein to a member of the firm's staff on 30 April 2010, giving her a written warning as to her attitude and behaviour towards him. She submitted that it showed Mr. Golstein continuing to participate in the affairs of the firm. In my judgment it simply demonstrates that the exclusion of Mr. Golstein as a partner, inter alia by the rude, disrespectful and disobedient attitude of the staff, which Mr Bishop was doing nothing to curtail, was continuing. There was, as I have said, no evidence that it was ever remedied in the final two months before dissolution.

That correspondence demonstrates a number of matters. First it shows that the judge was broadly correct in his finding that, long previously, discussion between the partners as to the affairs of the firm had ceased, save for broadsides in correspondence. Secondly it shows, in particular in the quoted passage from Healys' letter of 19 April, that at no time did Mr. Golstein waive his rights to compensation for breach of the partnership agreement by Mr. Bishop. On the contrary he continued resolutely to assert them, and to seek an admission of his entitlement to compensation. Thirdly it demonstrates that, in response to the enquiry from Sullivan LJ during the hearing whether there was evidence that Mr. Bishop had attempted to rebuild trust and confidence, the contrary was the case. His unrelenting position during the months prior to dissolution was that the necessary relationship of trust and confidence had entirely broken down. When it is recalled, as Mr. Bishop now concedes, that this was because of his misconduct, this goes a long way to demonstrate that, indeed, there was a continuing breach by Mr. Bishop of his obligations of trust and confidence, a breach which, during those three months, continued as much by his failure to do anything about the breakdown which he had created, as by anything which he did to aggravate it further.

Conclusion

For all those reasons, both of legal and factual analysis, I consider that this appeal should be dismissed.

Lord Justice Sullivan

I agree.

Lord Justice Maurice Kay

I also agree.