Clarke & Anor v Slay & Anor

A claim that a person is liable as an apparent partner must be pleaded as a holding-out case. It must identify the representations relied upon and plead reliance upon them, with sufficient particularity. A claim based on actual partnership is materially different.

Whether to permit a late amendment is a discretionary case-management decision. The court may consider the lateness of the application, the need for an adjournment, the evidence supporting the proposed case, and the interests of all parties under the overriding objective.

The claimants brought county court claims against traders and their wife for unpaid loans and vehicle transactions. The pleaded case alleged an actual partnership. At trial, the claimants sought to advance instead a case that the wife had represented, or knowingly allowed herself to be represented, as a partner under section 14 of the Partnership Act.

The county court judge held that the new case was not pleaded and refused permission to amend, observing that an amendment and adjournment would be required. The claimants appealed, arguing that amendment was unnecessary or should have been allowed. The central issues were whether the pleadings covered holding out and whether the refusal to amend was an improper exercise of discretion.

1. Appeal dismissed. The pleaded allegation of actual partnership did not raise a claim based on holding out.

2. A claim under section 14 of the Partnership Act depends on representations that the alleged partner was a partner. Those representations, the facts and matters relied upon, and the claimant’s reliance upon them must be properly pleaded and particularised. A holding-out case is therefore different from an assertion of actual partnership.

3. The refusal to permit amendment was a discretionary case-management decision. The judge was entitled to consider that the application was made very late, that an adjournment would be necessary, and that the witness statements disclosed little evidence capable of establishing holding out. The interests of the defendants also formed part of the overriding objective; compensation by costs was not necessarily sufficient.

4. The proposed evidence was tenuous. Documents involving third parties and the wife’s participation in the business were equivocal and did not show that either claimant had seen or relied upon them. The employers’ liability insurance certificate was insufficient because reliance upon it was not pleaded or stated in the evidence.

5. The court observed that discontinuance might have enabled fresh proceedings with a properly pleaded case, but that, after dismissal, a further action might be vulnerable to an abuse-of-process objection.

• Colchester County Court: Mr Justice Brandt dismissed the claims after refusing permission to amend the pleadings to allege holding out.
• Court of Appeal (Civil Division): The appeal was dismissed. The Court held that the amendment was necessary and that the refusal to grant it was a proper exercise of discretion.