BL-2020-CDF-000003 - [2025] EWHC 2226 (Ch)

I do not think that the answer to this question is of practical significance, and I shall therefore address it fairly shortly.

Section 1 of the Partnership Act 1890 provides in material part:

“1.

Definition of partnership

(1)

Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.”

Mr Lloyd’s case is that the Joint Venture resulted in a business carried on in common with a view of profit and therefore constituted a partnership within the terms of section 1 of the Act. Mr Hayward’s case is that there was no partnership because the parties were not carrying on “a business in common”, as Mr Lloyd was simply being remunerated for his provision of services as manager of the Site.

Section 2 of the Partnership Act 1890 provides in material part:

“2.

Rules for determining existence of partnership

In determining whether a partnership does or does not exist, regard shall be had to the following rules:

…

(2)

The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived.

(3)

The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but the receipt of such a share, or of a payment contingent on or varying with the profits of a business, does not of itself make him a partner in the business; and in particular—

…

(b)

A contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such:

…”.

In Worbey v Campbell [2017] CSIH 49, Lord Glennie, delivering the Opinion of the Inner House, Court of Session, said at [66]:

“Putting the matter broadly, what section 2 makes clear is that the carrying on of business (in whatever way) by a number of individuals with a view to making a profit and sharing such profits between them does not necessarily mean that there is a partnership. The matter is pre-eminently one for the first instance judge hearing all the evidence and submissions pertaining to the business relationship between the parties.”

In the same paragraph Lord Glennie remarked: “Certain aspects of the relationship, such as agency (sections 5 and 6) and joint and several liability (section 9), are of importance to the existence of a partnership.” I was also referred to the judgment of HHJ Mithani QC in Patel v Barlows Solicitors [2020] EWHC 2753 (Ch), [2021] 4 WLR 6, at [100]-110], and to the views expressed by the author of Lindley & Banks on Partnership (21^st edition, with 1^st supplement) at paras 2-16 and 5-10 to 5-12.

In agreement with the submissions of Mr Healey, I do not consider that the Joint Venture constituted a partnership; rather, it was a contractual joint venture. There was no business in common. Sirocco was the landlord of the Site. It alone invoiced the tenants for the rent, was entitled to receive the rent from the tenants and had mutual rights and obligations vis-à-vis the tenants. Mr Lloyd was Sirocco’s agent for collecting rent, managing the Site and carrying out construction works at the Site. On the evidence before me, there was no contractual relationship between Sirocco and those engaged by Mr Lloyd to carry out the works. What happened was simply that Mr Lloyd contracted on his own account and then was reimbursed within the accounting process of the Joint Venture. In short, neither party acted in relation to third parties in such a manner as to impose joint and several liability on the other party. The nature of the arrangement between Sirocco and Mr Lloyd was in essence simply that Mr Lloyd provided services to Sirocco, for which he was remunerated by a combination of a fixed fee of £20,000 per annum and a share of the net profits generated by the letting of the units on the Site.

The reason why this conclusion does not appear to have any importance is that it is common ground between the parties that, while the Joint Venture existed, Mr Lloyd was entitled to a share of the net profits and that, in principle and subject to questions of limitation, he is entitled to an account of those profits. (See Mr Healey’s Skeleton Argument, paragraph 21.) The substantive relief sought by Mr Lloyd in these proceedings is an order for the taking of an account and an order for payment of the moneys found due to him on the taking of the account, or in the alternative damages for breach of contract. The existence of a partnership is unnecessary for the entitlement to any of these remedies. The particulars of claim do allege that the defendants were subject to a number of duties of good faith or of a fiduciary nature by reason either of the existence of a partnership or of the “relational” nature of the contract. However, the existence of those duties does not feed into the remedies claimed, which rely simply on the terms of the agreement for the Joint Venture.