Recent UK case on partnership winding up

Loveridge and others v Loveridge [2020] EWCA Civ 1104

A caravan park business was operated through several companies and three oral partnerships at will. The partnership proceedings related to the winding up of the three partnerships.

The first instance court had appointed the respondent partner to manage the partnerships pending their winding up, and ordered that the three other partners be restrained from interfering with the business. It discounted the possibility of appointing a third party receiver or manager because it would involve unjustified expense, and there also insufficient time for it to be done.

The Court of Appeal allowed the appeals. It noted that when appointing a partner rather than a third party receiver or manager, it was necessary to take account of the fact that the majority partners, by definition, had the most to lose from any mismanagement. Further, where several partnerships were involved, it was not necessary for the court to order ‘unitary control’ by one partner of all the partnerships. There was no reason to disrupt the status quo of the management of the partnerships by removing all control from the appellants. The respondent was not the only person capable of running any individual partnership, and as it was unclear whether he was a partner at all in one of the partnerships - in which case he would have no say in its future - and at most he had a 25% interest, and as he had made no complaints about the its continued management by the partner who might in fact be its sole owner, the court ruled that she should remain in sole day to day control of this partnership pending trial of the respondent’s claim. The court awarded sole control of one of the other partnerships to the two appellants, since they lived on its principal site, and awarded the respondent sole control of the other partnership.

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