Joyce v Morrissey & Ors

Under Partnership Act 1890, partners share equally in capital and profits unless an express or implied agreement provides otherwise. A partner’s greater contribution, management role or commitment does not itself displace that presumption.

Variation of an established equal-sharing arrangement requires a contractual agreement. The terms must be sufficiently certain, and consideration must be shown. Silence on receiving accounts does not ordinarily amount to acceptance of a new profit-sharing arrangement unless the proposed variation has been clearly communicated.

Absent an express power, a majority cannot expel a partner. An appellate court should not interfere with factual findings unless a proper basis for doing so is established.

The claimant was a drummer and partner in the pop group The Smiths. The partnership was dissolved in 1987, and it was accepted that its affairs should be wound up.

The only issue at trial was whether the claimant was entitled to an equal one-quarter share of partnership profits, subject to the agreed exclusion of songwriting and publishing profits, or whether the parties had agreed to shares of 40 per cent, 40 per cent, 10 per cent and 10 per cent.

His Honour Judge Weeks QC, sitting in the Chancery Division, decided the preliminary issue in favour of the claimant. The first defendant appealed, challenging the judge’s factual findings and the inference that no variation of the equal-sharing arrangement had occurred.

The Court of Appeal unanimously dismissed the appeal, with costs to be taxed if not agreed. Leave to appeal to the House of Lords was refused.

1. Statutory starting point. Section 24 of the Partnership Act 1890 establishes equal sharing of capital and profits, subject to an express or implied agreement. The parties’ unequal contributions to management, organisation, skill or commitment did not rebut that presumption.
2. No proved variation. The partnership began on an equal-sharing basis. The evidence, including the solicitor’s letters and accountants’ draft accounts, supported the conclusion that no variation had been agreed by 1985. The later distribution of sums was inconsistent and did not establish a settled 40/40/10/10 arrangement.
3. Requirements for variation. To establish a variation, the appellant had to show that the claimant contractually accepted unequal sharing. The terms had to be certain, and consideration was required. In the absence of an express partnership power, consideration would normally consist of an agreement not to terminate the partnership on the new terms. No such agreement was proved. A vague agreement to share unequally would itself have been too uncertain.
4. Accounts and silence. Sending accounts did not constitute an offer that the partnership would continue only on unequal terms. The claimant’s silence could not amount to acceptance because the alleged offer had not been clearly communicated and the claimant had not understood the accounts as proposing such a variation.
5. Expulsion and factual findings. Section 25 of the Partnership Act 1890 prevented a majority from simply expelling a partner without an express power. The trial judge was entitled to assess credibility, consider the evidence both individually and overall, and reject the challenged accounts and conversation evidence. The appellate criticisms did not establish any error warranting intervention.

• Court of Appeal (Civil Division): dismissed the appeal from the decision of His Honour Judge Weeks QC, sitting as a judge of the Chancery Division, and ordered costs to be taxed if not agreed. Leave to appeal to the House of Lords was refused.