UCB Home Loans Corporation Ltd v Soni & Anor

Section 14 of the Partnership Act 1890 requires a close match between the representation knowingly made or suffered by the apparent partner and the representation on which the claimant gave credit. The claimant must have relied on a representation that the apparent partner was a partner in the particular firm to which credit was given. Where businesses operate under the same name from different offices, the relevant office or practice may identify a distinct firm for this purpose. A person is not liable merely because they knowingly suffered a different, broader representation about partnership status. The apparent partner must also have known of the relevant representation and, while able to prevent or correct it, failed to do so. On the facts, the respondent neither knew of nor suffered the representations used to obtain the loans.

UCB lent approximately £2.5 million to Mr Soni on the supposed security of five mortgages. Mr Soni conducted the transactions through a sole practice using the name Soni & Co, but represented to UCB that Ms Kherdin was his partner and had handled the conveyancing. He forged her signatures on certificates of title.

Ms Kherdin did operate a separate partnership with Mr Soni under the same name from an office at Gants Hill. The High Court held that she was not liable under section 14 of the Partnership Act 1890. UCB appealed, arguing that her use of general stationery showing several offices and both solicitors as partners amounted to knowingly suffering the relevant holding out, and that she had knowledge of the final transaction. The central issues were the identity of the particular firm and whether she knowingly suffered the representations on which UCB relied.

1. Appeal dismissed. The requirements of section 14 of the Partnership Act 1890, and the corresponding common-law principles, were not satisfied.
2. Section 14 required UCB to establish a representation that Ms Kherdin was a partner in a particular firm, that she knowingly suffered that representation to be made, and that UCB gave credit to that firm on the faith of the representation. The representation and the reliance had to match. It was insufficient that she had knowingly suffered a different representation about her partnership status.
3. The relevant particular firm was the supposed firm operating as Soni & Co at 23 Ansdell Street, with Mr Soni and Ms Kherdin as partners. The address was material. UCB’s lending procedures identified authorised practices by name and address, and it would have made further enquiries before dealing with the Gants Hill office. The general stationery used by Ms Kherdin referred to other offices, including Gants Hill, but not 23 Ansdell Street. The fraudulent documents used by Mr Soni referred to Ansdell Street and concealed Gants Hill. Those were materially different representations.
4. In this context, knowingly suffering a representation required knowledge of its making and the ability to prevent or correct it, followed by failure to do so. Section 14 did not require knowledge of the person to whom the representation was communicated, but Ms Kherdin had no knowledge of the relevant representations to UCB and had not authorised their use.
5. There was no sufficient basis for interfering with the judge’s factual finding concerning the May 2007 transaction. The communications received at the Gants Hill office did not establish that Ms Kherdin knew she had been represented to UCB as Mr Soni’s partner in the Ansdell Street practice or as the solicitor responsible for the conveyancing. Lord Justice Toulson agreed with Lloyd LJ’s reasons, and Lord Justice Ward also agreed.

• Court of Appeal (Civil Division): [2013] EWCA Civ 62. Lloyd LJ dismissed the appeal, with which Toulson LJ and Ward LJ agreed.
• High Court of Justice, Chancery Division: His Honour Judge Dight held that Ms Kherdin was not liable to UCB under section 14 of the Partnership Act 1890.