Dutia v Geldof & Ors

An inferred partnership requires an agreement, express or implied, that the parties will carry on business in common with a view to profit. An agreement to own, work for, or receive profits from a corporate vehicle is not, without more, an agreement to carry on business personally. Under CPR Part 24, summary judgment may be granted where the claim has no real prospect of success. Avoiding a mini-trial does not prevent examination of the claimant’s own case to determine whether it is fanciful and fit for trial.

Miten Dutia appealed from Chief Master Marsh’s decision granting summary judgment to Robert Geldof, Mark Florman, Philip Pritchard and Gordon Moore on the Partnership Claim. The claim alleged that those defendants, Mr Dutia and CLSA Ventures Ltd had agreed to carry on business in common with a view to profit, thereby forming a partnership under the Partnership Act 1890.

The Chief Master also refused permission to amend the Particulars of Claim and refused permission to appeal. The central issues were whether the evidence disclosed a real prospect of an inferred partnership before or alongside the establishment of 8 Miles LLP, and whether the Chief Master had impermissibly conducted a mini-trial.

1. Appeal dismissed. The Chief Master was right to grant summary judgment on the Partnership Claim. The evidence showed an intended business to be carried on through 8 Miles LLP, with individuals working for or owning an interest in that vehicle and receiving rewards through its management profits and a separate carried-interest vehicle. It did not show an agreement that the individuals would carry on business themselves.
2. Section 1(1) of the Partnership Act 1890 requires persons to carry on a business in common with a view of profit. A concluded agreement is required. Labels such as “partner” and “partnership” have little weight where they describe membership or status within an LLP.
3. Parties intending ultimately to use a corporate vehicle may, in some cases, begin business together before incorporation. The issue was whether the work was referable to an agreement to carry on business personally rather than to establish a business for the LLP. The consultancy agreements, offer of LLP membership and structure documents were wholly inconsistent with the alleged partnership.
4. A partnership alleged between six parties requires proof that all six agreed to become partners. The allegation could not succeed in the absence of any explanation of how CLSA became a partner.
5. The prohibition on conducting a mini-trial does not prevent the court from examining the claimant’s own evidence and documents to decide whether the claim has any real prospect of success. Where that material gives no support to the pleaded case, and there is no realistic prospect that further evidence would alter the position, summary judgment is proper.

• High Court (Chancery Division) — Mr Justice Nugee dismissed the appeal from the Chief Master’s summary judgment decision.
• Chief Master Marsh — On 15 January 2015, granted summary judgment to the first four defendants on the Partnership Claim, refused permission to amend, and refused permission to appeal.