Elite Business Systems UK Ltd v Price

Liability for holding out under section 14(1) of the Partnership Act 1890 requires a clear and unequivocal representation of partnership, together with knowing conduct by the alleged partner which permits that representation. Opening a bank account described as the alleged partner trading as a business does not, without more, authorise a different representation that he is in partnership with another person. A representation made without authority cannot found liability for the other's debt.

Elite Business Systems UK Ltd v Price was an appeal by Huw Price against a judgment of Judge Chambers QC sitting as Mercantile Judge at Cardiff. The judge rejected the claim that Mr Price and his son were actually trading in partnership, but held Mr Price liable under section 14(1) of the Partnership Act 1890 on the basis that he had knowingly permitted himself to be represented as a partner.

The representation relied on arose from the son's registration form for a mobile-telephone business and from a bank account opened by Mr Price, described as H Price trading as Price Communication. The central issue was whether opening that account amounted to knowingly suffering the son's separate representation that Mr Price was his partner.

Appeal allowed; claim dismissed. The Master of the Rolls delivered the leading judgment. Lord Justice Dyson agreed, and Lord Justice Wall agreed with both judgments.

1. Under section 14(1) of the Partnership Act 1890, the claimant must identify a representation that the alleged partner was a partner in the particular firm and establish that the defendant made it or knowingly suffered it to be made. The representation relied upon here was the son's statement in section 3 of the registration form. The issue was whether Mr Price had knowingly suffered that statement to be made.
2. The description of the bank account as H Price trading as Price Communication did not represent that Mr Price was in partnership with his son. The letters T/A indicated that Mr Price was trading as a sole trader. Opening the account was not objectively calculated to lead third parties to conclude that father and son were conducting the business in partnership. There was no evidence that third parties had in fact drawn that conclusion.
3. The judge's reasoning involved an impermissible leap from the existence of the bank account to consent to the separate representation in the registration form. Even if the full account description had appeared in the form, that would not establish that Mr Price knowingly suffered himself to be represented as Andrew's partner. The court did not need to decide the hypothetical case where opening the account had objectively conveyed an impression of partnership.
4. Lord Justice Dyson additionally held that a claim under section 14(1), like an estoppel claim, requires a clear and unequivocal representation of partnership. The account description was inconsistent with partnership and, at the least, was insufficiently clear and unequivocal.
5. Mr Price had not authorised the son's representation. It was therefore untrue and unauthorised, and there was no legal basis for holding Mr Price liable for the debt owed to Elite. The appeal was allowed with costs here and below. The costs below were subject to detailed assessment, with the costs judge able to disallow costs unreasonably incurred because of inadequate discovery.

• Court of Appeal (Civil Division): In [2005] EWCA Civ 920, allowed Mr Price's appeal, set aside the liability imposed below and dismissed the claim.
• Cardiff Civil Justice Centre: Judge Chambers QC rejected actual partnership but awarded Elite £105,522.27 plus interest on the holding-out basis.