Darbyshire and Another v Ramage

A partner’s limited participation in a partnership, or lack of knowledge of its dealings, does not remove responsibility for a true account where partnership status is accepted. Receipts arising from post-dissolution events may fall outside the partnership accounts where they represent personal compensation rather than partnership assets. Permission to appeal should be refused where carefully made factual findings disclose no reasonable prospect of being upset. The Court of Appeal will likewise decline to interfere with a trial judge’s discretionary costs assessment absent a proper prospect of appellate intervention.

The claimants and the applicant were partners in a business partnership which was dissolved on 21 February 1992. An earlier accounting action brought by the applicant was dismissed for want of prosecution in 1997. The claimants commenced these proceedings on 20 February 1998.

After a week-long trial, the Lincoln County Court ordered the applicant to pay £2,424.87 plus interest and £2,500 towards the claimants’ costs. Her husband, who had initially been joined as a defendant, was awarded £300 in costs after being dismissed from the proceedings. The applicant sought permission to appeal on grounds concerning her role as partner, payments connected with the business, goods left after dissolution, and the costs order. The central question was whether any ground disclosed a reasonable prospect of success.

Application dismissed. Lord Justice Rix refused permission to appeal after considering each proposed ground.

1. Responsibility as partner. The applicant accepted that she had been a partner until dissolution and did not dispute in her evidence, pleadings or the judgment her ultimate responsibility for a true account of the partnership dealings. Her limited day-to-day involvement and asserted ignorance of the business affairs therefore provided no reasonable prospect of challenging the judge’s conclusion.
2. Post-dissolution payments. The judge had carefully considered the £12,500 paid to Mr Darbyshire and the £19,000 paid to Mr Ramage in connection with the Cenix business. The payments arose from events after dissolution. The £12,500 was properly treated as personal compensation for profits which might have been earned had the partnership continued, rather than as a partnership asset. The fact that Mr Darbyshire initially accounted for it as partnership income did not alter that conclusion.
3. Goods remaining after dissolution. The judge had carefully assessed the carton boxes and the other items left after the partnership failed, making appropriate adjustments. No reasonable prospect existed that those findings would be overturned.
4. Costs. The £300 awarded to Mr Ramage represented the trial judge’s discretionary assessment of his entitlement up to his dismissal from the proceedings. The Court of Appeal could not properly interfere with that assessment on the material advanced. Although the applicant’s £2,500 costs liability was not formally under appeal, the same conclusion applied to it.

The court expressed sympathy for the applicant’s personal predicament but held that it could provide no legal relief. The application was dismissed.

• Court of Appeal (Civil Division): Permission to appeal refused and the application dismissed: [2001] EWCA Civ 1540.
• Lincoln County Court: Following a week-long trial, HHJ Inglis ordered payment of £2,424.87 plus interest and £2,500 towards the claimants’ costs. Mr Ramage was awarded £300 in costs after being dismissed from the proceedings.