Sidhu v Rathor

A partnership may arise from an oral agreement where the parties objectively or subjectively intend a binding contractual relationship and the statutory elements of carrying on a business in common with a view to profit are satisfied. The absence of a partnership deed, accounts or other usual indicia is not conclusive, particularly where the parties’ contractual arrangements and conduct support partnership. A partner may be employed by a separate service company supplying services to the partnership. A partner cannot simultaneously be an employee of the partnership itself. Where the same relief is claimed against more than one party, a prior decision involving only one party may not create an issue estoppel if determining the claims separately could produce inconsistent results. A party may also rely on relevant new material which could not reasonably have been adduced earlier.

Jaswant Sidhu claimed declarations and consequential relief under the Partnership Act 1890, alleging that she and Dr Sangeeta Rathor had carried on the Northolt Family Practice and Allenby Clinic in partnership. Dr Rathor denied any partnership and alleged that Jaswant and Sareet Sidhu, Jaswant’s daughter, had received unauthorised salary increases, withdrawals, cheques and other benefits. Natio Health Care (UK) Ltd brought an additional claim against Sareet.

The court determined the alleged loan, the existence and terms of the partnership, the parties’ employment status, the effect of an earlier Employment Tribunal decision concerning Sareet’s remuneration, and the various counterclaims.

1. Partnership. The statutory definition in section 1(1) of the Partnership Act 1890 was satisfied. Jaswant and Dr Rathor agreed in June 2015 to carry on the two practices together and to share profits equally once there was sufficient income. The signed partnership forms, NHS contract variations and surrounding conduct supported the agreement. The absence of a deed, partnership accounts and other conventional indicia was not decisive.
2. The agreement was contractually binding. Dr Rathor made an offer of partnership and Jaswant accepted it. The parties intended legal relations. The business, contractual obligations, income, costs and liabilities were sufficiently ascertainable from the two NHS contracts and existing arrangements. Consideration consisted principally of Jaswant’s agreement to enter into and perform the contractual obligations of the partnership.
3. Jaswant’s employer after 1 September 2014 was Natio, not Dr Rathor personally. Accordingly, the rule that a partner cannot be an employee of the partnership did not prevent Jaswant from being a partner while employed by the separate service company. The partnership took effect immediately, and the NHS contract variations confirmed the parties’ contractual position from 1 July 2016.
4. Jaswant had lent Dr Rathor £60,000 to assist with the acquisition of the Northolt Family Practice goodwill. Dr Rathor authorised monthly withdrawals of £2,400 and relevant petty-cash balances. The loan was repaid by 1 July 2016, after which the withdrawals constituted partnership drawings.
5. The counterclaim and additional claim failed. Dr Rathor authorised the relevant salary arrangements, bonuses, cash withdrawals, cheque payments, private healthcare and other disputed expenditure. Because the salary increases were authorised, the corresponding pension contributions were also properly payable.
6. The Employment Tribunal decision did not create an issue estoppel preventing determination of Sareet’s claims because substantially the same relief was claimed against Jaswant and Sareet, creating a risk of inconsistent judgments. Alternatively, relevant documents and evidence unavailable in the Employment Tribunal proceedings constituted new material which could not reasonably have been adduced there.
7. Dr Rathor’s counterclaim and Natio’s additional claim were dismissed. Subject to further submissions on quantum and relief, judgment was to be entered for Sareet in the sum of £1,604.60, and directions were to be given for the partnership account and winding up.