4th Annual Conference of the Partnership, LLP and LLC Law Forum
Nottingham Law School, Nottingham Trent University,
9 September 2021 (10am-4pm, registration from 9.30am)
Registration is now open for this one day in-person conference. The deadline for registration is 31 August 2021. We look forward to welcoming academics, postgraduate students and practitioners.
https://www.ntu.ac.uk/about-us/events/events/2021/09/4th-annual-conference-of-the-partnership,-llp-and-llc-law-forum
The programme includes:
• Roderick I’Anson Banks, Partnership Counsel, 9 King’s Bench Walk - Share and share alike – or are they?
• Professor Geoffrey Morse, University of Birmingham - What is the point of section 26 of the Partnership Act 1890?
• Lida Pitsillidou, University of Central Lancashire (Cyprus) - Derivative actions and LLPs
• Jeremy Callman, Ten Old Square, Lincoln’s Inn - Forfeiture in LLPs and Partnerships: an aberration or a new frontier?
• Mark Baldwin, Macfarlanes - Director/shareholder, partner, member – what’s in a name?
• Luke Burgin, trainee solicitor, St James’ Square Law Firm - Old Dogs and New tricks – the evolving role of the General Partnership in the professional services sector
• Oliver Bullough, investigative journalist - Why the UK failed to regulate Limited Partnerships
The programme will be updated on this Forum website as required - please register to receive email alerts of updates.
Attending the Conference
• To register for the conference please visit our online store at https://www.ntu.ac.uk/about-us/events/events/2021/09/4th-annual-conference-of-the-partnership,-llp-and-llc-law-forum
• The deadline for registration is 31 August 2021.
• There is a conference fee of £25 payable via the online store.
• There will be lunch provided, as well as tea/coffee and refreshments at registration and during the morning and afternoon breaks.
• This will be an in-person event unless the re-imposition of Covid-19 restrictions require it to be moved online.
Please do email Elspeth Berry at elspeth.berry@ntu.ac.uk if you have any queries.
We look forward to seeing you!
In December 2020 the UK government issued a number of further consultations on Corporate Transparency and Register Reform, including 'Consultation on implementing the ban on corporate directors'. This proposes that, in addition to the existing requirement that companies must have at least one director who is a natural (rather than a corporate) person, all corporate directors may themselves only have directors who are natural persons.
Despite the title of the consultation, it is of relevance to limited partnerships (LPs) and LLPs, because it consults on whether:
i) LPs and LLPs should also be allowed to be corporate directors and, if so, whether the proposed new restriction on corporate directors which are companies should apply also to them ie that the partners/members of an LP/LLP which is a director must all be natural persons; and
ii) whether the restrictions on corporate directors of companies should also apply to corporate partners of LPs/corporate LLP members.
The consultation is available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/942194/Corporate_Directors_Consultation.pdf and the deadline for responses is 3 February 2021.
UK law firm CM Murray has published a short article on 'The Four Key Questions Every Firm Needs to be Prepared for When Dealing with Allegations of Partner Misconduct' (20 October 2020). It is available at:
https://www.cm-murray.com/knowledge/the-four-key-questions-every-firm-needs-to-be-prepared-for-when-dealing-with-allegations-of-partner-misconduct/
Malik v Hussain and others [2020] EWHC 2334 (Ch)
This case involved a business operated though an alleged combination of partnerships and companies. In 2002 the claimant and the first defendant took preparatory steps to enter into a restaurant business together. They later incorporated a company and acquired a property from which the restaurant was to operate, and in 2003 the restaurant began trading. They only entered into a formal partnership deed in 2006. In 2013 the first defendant opened a restaurant trading under the same name but in a different location.
The court held that there was a partnership in relation to the property and the business, that the two partners held their shares in the company as partnership property, and that the partnership should be dissolved and wound up. It stated that the normal rules applicable to the construction of written commercial contracts applied equally to partnership agreements, and the relevant principles were clear. The parties were therefore bound by the written terms of the deed and could not seek to imply inconsistent terms.
The court held that there was sufficient evidence that an informal partnership came into existence in 2002. The claimant and the first defendant had agreed to go into business together, with a view to owning property and using it to run a restaurant business, they had opened a joint bank account which they were using for the development of the business, and they had decided to take out a joint loan. The company which they had set up had never been intended to take over the whole of the business, and there was no evidence that the opening and operation of the company current account, and the treatment of the restaurant business in the accounts, the property rental statements and the personal tax returns, were carefully considered decisions, the effect of which had been explained by the accountants. In the absence of such evidence, they were insufficient to infer that the claimant and the first defendant had agreed to hive the restaurant part of the partnership business completely out of the partnership and into the company. The court concluded that the parties had intended to own the whole business as partners but for the company to operate the restaurant business on behalf of the partnership.
In the absence of an exhaustive definition of the partnership assets in the partnership deed, the court held that particular attention should be paid to the statements that the parties wished to carry on the business of an Indian restaurant in partnership, that all the equipment and fittings in the property and used for the purposes of the business should be partnership assets, and that the capital was £6 million, which was only explicable if the value of the business was included. These demonstrated that the business was a partnership asset and that this was the basis on which the shares in the company were held by the partners as partnership assets.
The court also held that the obligations in s29 of the Partnership Act 1890 to account for benefits derived from the partnership, and in s30 to account for the profits of a competing business, did not arise. Any benefit derived by the second restaurant from the use of the name of the first and its reputation was modest and short lived, and there had been no meaningful competition given that the second restaurant was over 200 miles from the first. In any event, the parties had given prior consent to either of them operating a competing business. Although the deed was silent on this point, a separate prior oral agreement had been reached and recorded in a file note, and this amounted to a valid consent under s30.
The court concluded that the relationship between the two partners had wholly broken down, and therefore that it was it was just and equitable to make an order for the dissolution of the partnership under s35(f) of the Partnership Act and for the partnership to be wound up and a final account taken.
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.
Re A&C Restoration LLP: Manolete Partners plc v Riches [2020] EWHC 1404 (Ch)
(Judgment in this case was given in May 2020 but the transcript has only recently become available)
Riches was a designated member of A&C Restoration LLP until he retired under the terms of a retirement deed. At that time a new member was appointed. The deed included a waiver of any claim by the LLP for sums owed by Riches as a result of drawings by him which exceeded profits.
The court noted that the LLP was insolvent at the time the deed was entered into. It held that designated members of an LLP, such as Riches, owed the same duties as company directors owed to limited companies (McTear v Eade [2019] EWHC 1673 (Ch)), and that these duties included a duty to take into account the interests of creditors at a time when the firm was insolvent. It concluded that it was a breach of duty, objectively viewed, to cause the LLP to agree to a waiver which released a debt, since this could not be in the interests of the creditors. Riches was therefore estopped from relying on the clause, and remained liable for the debt. He was not able to ask the court to grant relief for any breach of duty pursuant to s1157 of the Companies Act 2006 (applied to LLPs by the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009), because that section was dependent on him having acted honestly and reasonably, and the court considered that it could not be a reasonable decision to waive one’s own liabilities in the context of insolvency.
Maebhdh Clancy, Editor of the second edition of Twomey on Partnership, has published a short article on the reform of Irish limited partnerships in the Commercial Law Practitioner. The full citation is Maebhdh Clancy, 'Limited partnerships - time for long-awaited reform' (2020) 27(9) CL Pract 192-195.
Professor Laura Macgregor, one of the speakers at our most recent conference, has published a short article on good faith and partner expulsion:
Laura J Macgregor, ‘Rennie v Rennie: the requirements of natural justice on expulsion from a Scottish partnership (Case Comment)’ (2020) 24(3) Edin LR 416-421.
Matthew Pollack and Prasad Taksal of law firm DLA Piper have published two short article on Canadian partnerships:
'Partnerships: what, how and when' -vailable at
https://www.dlapiper.com/en/us/insights/publications/2020/08/types-of-partnerships/
'Partnership agreements: A primer' - available at:
https://www.dlapiper.com/en/canada/insights/publications/2020/08/partnership-agreements/
George Sim, 'Unscrambling partnership disputes' (2020) 170(7906) NLJ 19, available at:
https://www.newlawjournal.co.uk/content/forensic-accounting-unscrambling-partnership-disputes
If you are not already a subscriber to the New Law Journal you can register free of charge for two weeks.