Lie v Mohile

After dissolution, a partnership business continues for the purpose of winding up, and each partner ordinarily retains the right to participate in that business. Where partnership premises are owned by one partner, an implied licence permitting the other partner to enter continues while the partnership business remains there. The court may enforce that entitlement by injunction, but relief is discretionary and depends on the circumstances. Relevant considerations include the conduct of the partners, the effect on the business and patients, and the need to protect a partner’s position pending appeal. An order for dissolution is not itself the end of the partnership’s winding-up process.

The appeal arose from partnership proceedings between two general practitioners. The County Court dismissed Dr Lie’s claim based on a purported expulsion notice and ordered dissolution of the partnership under section 35 of the Partnership Act 1890. The partnership premises were owned by Dr Mohile. An earlier injunction had restrained his excluding Dr Lie from the premises until disposal of the dissolution proceedings.

Following the dissolution order, Dr Mohile excluded Dr Lie and sought discharge of interim orders requiring restoration of access, professional subscriptions, the NHS smart card and drawings. The central issues were whether Dr Lie retained a right to enter the premises during winding up, whether that right should be protected by injunction, and whether the appeal should be transferred to the Court of Appeal.

The application to vary or discharge the interim order was dismissed.

1. The earlier injunction had expired when the County Court made its order disposing of the dissolution proceedings. Its terms tied its duration to the making of that order, not to completion of the subsequent winding up.

2. The expiry of the injunction did not terminate the underlying licence. Although the tenancy of the premises had ended, a partner owning premises used for the partnership business is taken to have granted the other partner a licence to enter for partnership purposes. That principle was illustrated by Harrison-Broadley v Smith [1964] 1 WLR 456.

3. Dissolution begins the winding-up process. The partnership business may continue to preserve goodwill and maximise a sale, or solely to effect the winding up. Until a receiver is appointed, each partner is entitled to participate in the business being wound up. The implied licence therefore continues while partnership business remains at the premises.

4. An appeal court may grant an injunction to enforce that entitlement pending appeal, particularly where permission to appeal has been granted. The court is not bound to do so. The discretion depends on the circumstances.

5. Continuation of the injunction was appropriate. Dr Mohile had excluded Dr Lie without justification, treated the practice as his own, and prevented Dr Lie’s participation in a partnership asset and in the performance of the primary care contract. The risk that the partners’ relationship would damage the practice was outweighed by their having operated together for three years without detriment to patients.

6. The court also retained the requirements concerning the NHS smart card, professional subscriptions and drawings. There was no proper basis for disabling the smart card or cancelling Dr Lie’s subscriptions. Drawings could be addressed in the final account, but should not meanwhile be withheld.

7. The appeal lay to the High Court because the claim had not been allocated to the multi-track. Transfer under CPR 52.14 required some other compelling reason for the Court of Appeal to hear it. The circumstances relied on did not amount to such a reason.

• High Court (Chancery Division): the appeal from the Central London County Court was heard by Mr Justice David Richards. The application to discharge the interim order was dismissed.