Greville v Venables

A partnership requires an agreement between the alleged partners. The agreement may be express or implied from conduct. Where the parties have expressly discussed partnership and one has declined to agree, the court cannot infer an agreement from conduct which contradicts those dealings. Holding out may support an implied agreement in an appropriate case, but is irrelevant between alleged partners where their discussions were inconclusive. Partnership by estoppel is not a true alternative between the parties without a pleaded representation relied upon to detriment.

The claimant appealed from a preliminary-issue decision of His Honour Judge Wyn Williams in the Chancery Division. He alleged that he and the defendant had formed an oral partnership to conduct an equine business, with estoppel pleaded in the alternative. The judge rejected the alleged oral agreement and concluded that no partnership had arisen on any other terms.

Permission to appeal was limited to whether a partnership could be implied from conduct and whether the claimant could advance that case. The claimant also sought permission to amend his pleadings. The central issues were whether the conduct supported an implied partnership and whether the unpleaded alternative case could be raised after the preliminary hearing.

1. Disposition. The appeal was dismissed. The claimant’s application for permission to amend his pleadings to allege a partnership implied from conduct was refused. The order for costs was summarily assessed at £13,000 plus VAT, payable within 14 days.
2. Partnership. Under section 1(1) of the Partnership Act 1890, a partnership depends upon an agreement between the alleged partners. That agreement may be express or inferred from conduct. The court applied the approach stated in Phillips v Symes [2002] 1 WLR 853 and treated the parties’ actual dealings as decisive.
3. Although an implied agreement may be inferred where the parties have not expressly addressed the basis of their business cooperation, that inference is unavailable where they have discussed partnership and one party has declined to agree. To infer partnership from the same conduct would contradict the express dealings. The principle that contracts are not lightly implied, and that the court must examine what the parties said and did, was applied from Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195.
4. Holding out as proprietors was irrelevant between these parties because their direct discussions about partnership had been inconclusive. Partnership by estoppel was not a true alternative basis between the alleged partners. No representation by the defendant to the claimant relied upon to his detriment had been pleaded.
5. Pleading and procedure. A distinct case of partnership implied from conduct should have been clearly pleaded before, and at the latest by the start of, the preliminary-issue trial. Facts pleaded in support of an express oral agreement did not fairly raise that alternative case. Allowing the claimant a second opportunity to advance it after losing on the pleaded case would have been inconsistent with the way the matter had proceeded and potentially unfair to the defendant.
6. The dismissal of the partnership claim did not determine other possible rights and obligations, including claims concerning joint ownership or loans. The claimant remained entitled to seek permission at first instance to amend his particulars of claim, subject to the proper formulation of the claim, the court’s discretion and costs. The court also gave a further warning that preliminary issues require great caution, careful preparation and review as the evidence develops.

• Court of Appeal (Civil Division): In [2007] EWCA Civ 878, the appeal was dismissed and permission to amend was refused.
• High Court, Chancery Division, Cardiff District Registry: His Honour Judge Wyn Williams held on 6 October 2006 that no oral partnership agreement had been made and that the parties had not otherwise become partners.
• Permission stage: Waller LJ refused permission to challenge the factual finding concerning the alleged oral agreement, but granted limited permission to consider partnership implied from conduct.