Barber & Ors v Rasco International Ltd & Anor

A partnership formed to obtain and perform a defined commercial project may be governed by equitable partnership principles even where its agreement is expressed in contractual terms. Partners owe one another utmost good faith and cannot unilaterally terminate the relationship unless the agreement or the Partnership Act 1890 permits it. A partnership for a fixed-term project or single undertaking is not a partnership at will.

Acceptance of repudiatory conduct does not automatically dissolve a partnership where equitable principles require court-supervised dissolution and winding-up. Contracts, renewals, variations, replacement contracts and proceeds acquired for the partnership business remain partnership assets until the winding-up is complete. Where trust and confidence have irretrievably broken down, dissolution may be ordered on the just and equitable ground.

The claimants and the second defendant formed a partnership to obtain and perform a pipeline cathodic-protection contract for BP through the first defendant company. The partnership agreement treated the project as including variations, extensions and replacement contracts. Relations later broke down. The second defendant excluded the claimants from the project, controlled the company’s accounts and asserted that the partnership had been terminated, including through proceedings in Azerbaijan.

The claimants sought dissolution, accounts and inquiries, declarations concerning the partnership’s assets and payment of sums claimed through their company. The defendants alleged unilateral dissolution, breaches by the claimants and dishonest invoice mark-ups. The central issues were whether the partnership had already been dissolved, whether the BP contracts and proceeds were partnership assets, and what accounts and remedies should follow.

1. Partnership and fiduciary duties. The relationship was a partnership governed by the Partnership Act 1890 and equitable principles. Each partner owed the others utmost good faith, including honesty, transparency, accountability and proper use of partnership property.
2. Scope and assets. Construed in its factual and commercial context, the agreement made the BP project the partnership business. The original BP contract, its variations, extensions and replacement contracts were partnership assets under section 20. The company and the second defendant held the contracts, proceeds, dedicated account monies and other property derived from them on trust for the partnership.
3. Dissolution. The agreement contained no express or implied unilateral power of termination. The partnership was for a fixed term and a single adventure or undertaking within section 32(a) and (b), rather than for an undefined time under section 32(c). No effective notice, inferred agreement or dissolution by conduct was established.
4. Repudiation. Following Hurst v Bryk and Mullins v Laughton, the court held that the partnership could not be dissolved by accepting the alleged repudiatory conduct of the other partners. Even if dissolution had occurred earlier, partnership assets and later renewals would remain subject to the winding-up.
5. Relief. The partners agreed that their relationship had irretrievably broken down. Dissolution was therefore ordered under section 35(f) on the just and equitable ground. Accounts and inquiries were ordered, including valuation of the BP contracts, generally for the whole life of the partnership. Interim protection was to preserve partnership assets and permit continuation of the BP contract.
6. The negligence counterclaim was not established and was not fully determined. The alleged invoice mark-ups were found not dishonest and made with the first defendant’s knowledge, but an account of the sums paid was nevertheless ordered.

First-instance decision. The judgment records that the claim was amended in the High Court to proceed as a partnership action, with trial divided into stages. No appeal is stated in the judgment.