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Partnership | BPTC Opinion

2949 words (12 pages) BPTC Help Guide

1st Jun 2020 BPTC Help Guide Reference this In-house law team

Jurisdiction / Tag(s): UK Law



  1. I am asked to advise the Defendant, Mr TURTON, in relation to a claim made by Mr Vincent. The case relates to shares claimed in the proceeds of the sale of the ‘Tiverton Jewel,’ replicas of such and the shop premises in “The Malting” Lower Peover. I am asked to consider the nature of the statement of case and whether an application should be made for all or part of it to be struck out. Additionally, I am asked to comment on the defence, the possibility of an injunction being obtained by the Claimant and the position of my instructing solicitor with regard to the acceptance of a replica jewel from the Defendant.
  2. The brief facts of the case are that Mr TURTON, his friend Roy Lions and the Claimant are all members of a metal detecting club. Members of the club organise metal detecting trips and the usual arrangement is that the proceeds of anything found are divided between the landowner and those on the trip.
  3. The Claimant asserts that he was in a partnership with Mr TURTON on the day that he and Mr Lions found the ‘Tiverton Jewel’ – due to be sold at auction with a reserve price of £3 million. As such, he requests a one half share in the jewel, the proceeds of the sale of replicas of the jewel and a half share of the Defendant’s shop premises.
  4. The Defendant denies that he ever entered into a partnership with the Claimant and disputes his claim to any share in the above items.

The ‘Partnership’

  1. It is stated in the Particulars of Claims that after discussions in September 2001, a partnership was formed between the Claimant and the Defendant
  2. As I am sure those instructing me are aware, the Partnership Act 1890 deals with provisions relating to partnerships. Section 1 of the Act defines a partnership as: “the relation which subsists between persons carrying on a business in common with a view of profit.” Thus there is no reason why an arrangement as alleged by the Claimant could not amount to a partnership under this definition. Whether it does in fact, however, requires further examination.
  3. A partnership requires a contractual relationship between the parties. The contract is based on the division of profits that stem from a commercial activity. In the current case, it is claimed by Mr Vincent that he and Mr TURTON entered into a partnership to split the proceeds of finds made whilst metal detecting.
  4. In this case, there is no written partnership agreement as is usually desirable but this does not prevent the court from deciding that a partnership nevertheless existed.
  5. An informal agreement to undertake a profit-making venture is sufficient to amount to a partnership. Indeed, a partnership can arise by written or oral agreement or can simply be inferred from the conduct of the parties involved. The court will need to decide here whether a partnership was made by oral agreement as alleged by the Claimant.
  6. Whether a partnership existed is a matter of law for the court to decide. They will take into account the key features of a partnership when determining whether such a relationship existed. Firstly, there were two people involved – a partnership must consist of at least two people. Secondly, profits were shared between the Claimant and the Defendant. The court is therefore free to conclude that a partnership did exist even if the Defendant did not wish to enter into such an arrangement. The court will consider all of the surrounding circumstances rather than simply basing its decision on the word of one or other of the parties concerned.
  7. One of the problems that the Claimant may have in asserting that a partnership existed is that the Defendant regularly undertook metal detecting outings with others people on the same understanding that the profits of any finds be split between them and the landowner. If the personnel involved in a partnership are subject to change, this means that a new partnership comes into existence. It could therefore be argued that agreements such as the one between the Claimant and Defendant were replaced as and when each party undertook to go metal detecting with another person.
  8. Overall, it will be up to the court to determine the nature of the relationship between the two sides in this dispute but there the Defendant clearly has some evidence to dispute that it was in fact a partnership.


  1. As those instructing me are aware, restitution is a remedy available in the event of breach of contract. It should be borne in mind that in terms of assessing damages for breach of contract, the courts do not generally consider any gain by the Defendant but simply require that the Claimant be put in the same position as if the breach had not been committed.
  2. A claim in restitution is clearly a possibility here. It is unlikely that the Claimant will pursue such a claim in this instance, however, as there is no general rule of awarding restitutionary damages in such cases. The facts of this case seem to rest easier within a straightforward claim for breach of contract than they do for a claim in restitution and it is therefore my view that the claim will probably proceed on this basis.

Striking Out

  1. As those that instruct me are no doubt aware, if the particulars of claim are struck out, the result is that the claim will be stayed or dismissed. Under Civil Procedure Rule 3.4, the grounds for striking out are as follows:
    • “The court may strike out a statement of case if it appears to the court –
    • (a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
    • (b) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
    • (c) that there has been a failure to comply with a rule, practice direction or court order.”
  1. Under CPR rule 3.4(1), reference made to a statement of case also includes reference to part of a statement of case so the court can strike out all of the particulars of claim or just part of them. The general rule is that cases should only be struck out if the case does not require serious argument. It is thus most likely to be used in instances where a case – or part of it, is clearly weak.
  2. Dealing with each section of CPR rule 3.4 in turn, a claim may be struck out if it is established that the statement of case discloses no reasonable cause of action. It is my view that the existence of a partnership in this case would be viewed by a court as requiring further examination. It is therefore unlikely that they would deem that the particulars disclosed no reasonable grounds for bringing the claim. As such, there seems little chance of persuading the court to strike out the entire statement of case.
  3. As mentioned above, however, there is the possibility of parts of the particulars of claim being struck out. It is my view that the weakest parts of the claim centre upon the entitlement to equal share in the proceeds of the sale of the jewel replicas and the claim that the Defendant’s shop premises form part of the partnership estate. I will address each issue in turn:

Tiverton Jewel Replicas

  1. Under CPR 3.4(a), there appears to be no reasonable grounds for bringing this claim for a share in the proceeds of the sale of the replicas. Mr TURTON, at his own considerable expense has commissioned the making of these replicas. The Claimant has had no involvement whatsoever and indeed, in Mr TURTON’s statement, he says that the Claimant has only discovered the existence of the replicas after reading about them in a newspaper. As such, the law does not give the Claimant entitlement to a share in these items and I advise that an application be made to strike out this element of the claim.

Share In Business

  1. With regards to the claim that the business premises form part of the partnership estate, again an application may be made to have this element of the statement of case struck out. The Claimant’s argument is that as he sometimes deposited articles for sale in the Defendant’s shop, this entitles him to a claim of ownership.
  2. Mr TURTON states that the shop belongs to both him and his wife who have run the business for a number of years. Mr TURTON states that the Claimant has not had any involvement in the shop save for an arrangement by which he would deposit items, which Mr and Mrs TURTON would try to sell on his behalf.
  3. In his statement, Mr Lions says that he has a similar relationship with Mr TURTON as Mr Vincent did regarding items sold in the shop. In both cases, items that had been found which were of no interest to the local museum, were put on sale in the shop. This was on the basis that if such items sold, Mr TURTON would pay half of the value to the person who had deposited them and if they were unsold, he would return the items at no cost.
  4. Under the Partnership Act 1890, determining whether something is partnership property is not always a simple matter. Whether the shop is an asset of the partnership will need to be determined by the court. Their decision will be based on the partnership agreement. As there was no express agreement between the Claimant and the Defendant regarding the shop premises, the court will take into consideration factors including the reason why the asset was acquired and the circumstances surrounding its acquisition. In addition, the court will consider the source from which the asset is financed.
  5. According to Mr TURTON’s statement, the shop was acquired so that he and his wife could run their business. Both Mr and Mrs TURTON funded the shop and held the accounts in their names. Mr TURTON asserts that the Claimant has never had anything to do with the shop and thus in light of these factors, it appears as if there is little merit in Mr Vincent’s claim of ownership in relation to the shop. An application may be made to strike out this part of the particulars of claim but the court may feel that the nature of the agreement between the two parties regarding the selling of various items requires further consideration – even if their ultimate decision seems almost certain to be that the shop premises are not partnership property.

Procedure For Striking Out

  1. An application to strike out may be made by the court on its own initiative as part of the case management process. Additionally, either party can make an application for a claim to be struck out by issuing an application notice. An application can be made at any time but should be done as soon as possible – certainly it is preferable to do so prior to track allocation which will begin shortly after the defence is filed. As those who are instructing me are no doubt aware, this clearly fits with the aims of the Civil Procedure Rules – specifically, those geared to keeping case costs to a minimum.
  2. It is my view that the court is unlikely to strike out the particulars of claim as a whole. The main issue appears to centre upon the status of the relationship between the Claimant and the Defendant and how this applies to the finding of the Tiverton Jewel. Thus matters pertaining to this will require full argument and do not appear to fall into the categories required under CPR rule 3.4

Accepting Replica Jewel In Lieu of Fees

  1. As I’m sure those instructing me are aware, although the matters relating to professional conduct are subject to imminent change, currently the position regarding accepting gifts from a client is covered by rule 16D(5) of the Solicitor’s Practice Rules. The rule states that:
    • “Where a client proposes to make a lifetime gift or a gift on death to, or for the benefit of:
    • (a) you;
    • (b) any principal, owner or employee of your firm;
    • (c) a family member of any of the above,
  2. and the gift is of a significant amount, either in itself or having regard to the size of the client’s estate and the reasonable expectations of the prospective beneficiaries, you must advise the client to take independent advice about the gift…. If the client refuses, you must stop acting for the client in relation to the gift.”
  3. Clearly this applies here, as the gift of the replica Tiverton Jewel was a lifetime gift falling under (a) or (c), the value of which is certainly of a significant amount. I am unaware whether those instructing me advised the client to seek independent advice but clearly this is something that should have been done. If the client did indeed seek such advice then those instructing me remain compliant with the relevant rules of professional conduct. If, however Mr TURTON failed to seek independent advice, then those instructing me would be in breach of their professional code of conduct if they continued to act in relation to the gift. At this stage, I can merely set out the applicable provisions but if those instructing me wish to furnish more details of the circumstances surrounding the gift, I would be happy to advise further.


  1. Those instructing me have indicated that it is likely that the Claimant will seek an injunction before the trial in order to prevent the Defendant from selling the Tiverton Jewel at auction. As those instructing me are no doubt aware, the availability of an interim injunction pending the outcome of the trial will be at the discretion of the court. Their decision will be based on the principles laid down in American Cyanamid.
  2. Firstly, the courts must consider whether there is a serious question to be tried. Here it is likely that they will conclude that there is since the claim does not appear to be spurious or vexatious.
  3. Once the courts have decided that there is a serious issue to be tried, they will then consider the balance of convenience. The matters that can be considered are varied and numerous and a detailed examination of them all is beyond the scope of my instructions. The relevant point pertaining to this case is that the court will consider whether damages would be an adequate remedy for the Claimant if he were to succeed at trial. There can be no doubt that this is the case since he is seeking a monetary share of the proceeds of the Tiverton Jewel, replicas and shop.
  4. If damages would be an adequate remedy and the Defendant would be in a position to pay them, an interlocutory injunction will not usually be granted. The courts need to consider whether the Defendant would be able to pay damages if he is found liable after a trial. Clearly, he would be able to do so as he would have the proceeds from the sale.
  5. There does not seem to be any doubt that damages would be an adequate remedy for both parties and as such, it is likely that the court will deem an injunction unnecessary. In the event that the injunction is granted and the sale date has to be postponed, if the Claimant subsequently loses the case, the Defendant will be able to re-arrange an auction date and sell the jewel then. As such, he will not suffer loss beyond that of delay in receiving the proceeds. If it transpires that those instructing me become aware of a reason why the Defendant would suffer loss for which damages would not be an adequate remedy, then I will be happy to further advise.

Draft Defence

  1. After having an opportunity to read through the defence, it appears to fulfil the relevant requirements. It clearly states that each and every allegation in the particulars of claim is denied. Additionally, it contains the required statement of truth. I would however, add more detail upon the denial of the Claimant’s assertion to a share of the proceeds of the replicas of the Tiverton Jewel and to his assertion that the Defendant’s shop premises form part of the partnership estate. I am sure that those instructing me are more than capable of making these amendments but I will be happy to view the final draft of the defence if required.

Further Action

  1. I suggest the following be undertaken:
  • Defence be amended to deal with Claimant’s assertion that he is entitled to a share of the sale proceeds of the replicas of the Tiverton jewel and his claim that the Defendant’s shop is partnership property.
  • Consider making an application to strike out part of the Particulars of Claim as discussed above.
  • Confirm that there is no reason why damages would not be an adequate remedy for the Defendant.
  • Check whether the Defendant sought independent advice about the gift made to my instructing solicitor.
  1. In conclusion, Mr TURTON does appear to have substantial grounds to dispute the claim made against him by Mr Vincent. The defence should be finalised and an application made to strike out the elements of the claim relating to the replica jewels and the shop premises. In terms of an injunction, as damages do seem to be an adequate remedy for both parties, the court may be minded not to grant one. Those instructing me should now undertake the next steps as advised above, after which I would be happy to advise further if required.

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