Carlton Christensen Success in Court of Appeal Partnership Determination

Carlton Christensen Success in Court of Appeal Partnership Determination
December 4, 2014

Carlton Christensen appeared on behalf of the Appellant in the case of Indika Kommala Kommalage v Sinnarajah Sayanthakumar (CA Ref A/22014/0797 – ICLR Online [2014] CN 2036) in which the Court of Appeal,  upholding the appeal, decided that a monetary judgment against a named partnership gave rise to a debt only as against the partners carrying on business under that name at the time the cause of action accrued.

The Respondent had served a statutory demand on the Appellant in respect of an interim costs order made against a firm of solicitors going by the name of Srinivasans. The claim in which the order was made was for an assessment of bills served on him in respect of work done by Srinivasans and for return of monies paid on account in so far as they exceeded the assessment.  The Appellant applied to have the Statutory Demand set aside essentially on the ground that he was not a member at the relevant time.  This terminology reflected the wording of § 6A of the Practice Direction to Part 70. It was not in dispute that the Appellant was a partner in Srinivasans at the time the costs order was made.  Both at first instance and on appeal to the High Court it was held that sufficed to make him liable.

The Court of Appeal, on a second appeal, reversed the decisions below on the basis that the persons bound by the judgment were the partners at the time the cause of action accrued and that since it was not in dispute that the Appellant was not one of them the statutory demand must be set aside.  In so deciding, the Court relied on the requirements of Practice Directions 7A and 10 of the Civil Procedure Rules regarding commencement of proceedings against and acknowledgment of service by partnerships respectively.  Both refer to the partnership name “at the time the cause of action accrued”.  The Court expressly declared that the provisions of Practice Direction 70 had no application.  They pointed out that had the Respondent wished to obtain his costs against the Appellant it would have been open to him to make an application for a third party costs order under s.51 of the Senior Courts Act 1981 which had not been done.

Comments from Carlton Christensen

Where a partnership has a name, it must be sued in that name “unless it is inappropriate to do so” – § 5A.1.3 of Practice Direction 7A of the Civil Procedure Rules.  That means that most commonly, where a claim is made against a partnership, judgment entered against “the Defendant” will refer to the partnership so named.  This leaves open the question as to who is bound by that judgment where the same firm name has been used by several different partnerships resulting from retirements and admissions of new members.  This appeal decided that it is the partners at the time the cause of action arose.

The difficulties encountered in this case derive very much from the confusion inherent in the language adopted both in the Partnership Act 1890 and in the Civil Procedure Rules whereby a firm is referred to as if it were an on-going entity which individuals might join or from which they might retire.  The true position is that each change creates a new partnership distinct in law from the earlier one. Sadly, that has not been addressed in the judgments in this appeal

The effect of the Court of Appeal’s conclusion as to the inapplicability of §6A of the Practice Direction to Part 70 of the Civil Procedure Rules raises the question as to what purpose it serves if it is not to decide when a partner is liable.  In Ide v Ide (1886) 18 QBD 755, the Court of Appeal considered the equivalent provisions under the prevailing Rules of the Supreme Court to be relevant in determining whether or not there was an enforceable debt for the purpose of serving a bankruptcy notice under the Bankruptcy Act 1883.

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