Solicitor – Fraudulent transaction – Section 14 of the Partnership Act 1890 – Solicitor representing to appellant that respondent was his partner – Appellant obtaining judgment against solicitor in respect of fraudulent transaction – Whether respondent knowingly suffering herself to be represented as partner – Appeal dismissed
S was a solicitor who took advantage of his position to defraud the appellant lender. He borrowed £2.5m from the appellant, apparently on the security of five mortgages of properties in his own name, but in fact he gave no security to the appellant for any of the loans. He handled the conveyancing on each transaction himself, through a solicitor’s practice of which he was the sole proprietor. He had to overcome precautions on which the appellant insisted in order to avoid being defrauded in such a situation. To do so he represented that the relevant solicitors’ practice was one which had two partners, and that the conveyancing was handled by the other partner. In addition to his sole practice, he had another practice in which he did have a partner, the respondent. This carried on business from a different office and address, but under the same name. He told the appellant that the respondent would deal with the conveyancing, and he forged her signature on the critical document in each case, a certificate of title. The appellant had a worthless judgment against him for some £2.4m.
Section 14 of the Partnership Act 1890 provided that someone who was not, but was held out to be, a partner in a partnership might be liable as if he or she were a partner, to someone who relied on the representation. Among other things that depended on whether the person who was so represented (the apparent partner) made the representation or knowingly suffered it to be made. It also depended on what representation had been made.
An issue arose in the present case whether the respondent was also liable to the appellant for its loss, on the basis that she was held out to them as S’s partner. A judge of the Chancery Division, held that she was not. The appellant appealed. The dispute focussed on whether the respondent knowingly suffered the representation to be made and on what was meant by a representation that she was “a partner in a particular firm”, on the facts of the present case.
Held: The appeal was dismissed.
The requirements of section 14 had not been satisfied. The representation had to be that the apparent partner was a partner in a firm, and the appellant had to give credit to that firm (or supposed firm) on the faith of that representation. It followed that the representation and the reliance had to match one another. Since the appellant intended to deal with a particular firm, the representation had to be that the apparent partner was a partner in that firm. Knowingly suffering a representation to be made, in the present context, required that the apparent partner knew of the making of the representation and, being able to prevent it being made or to correct it, did not do so. In this case, there was nothing to show that the respondent knew of the making of the representations to the appellant. In practice, therefore, the judge was entitled to pose the question whether she knew and authorised the making of the representations to the appellant on the facts of this case.
Even though the respondent had made a representation, and knowingly suffered it to be made, that she was a partner with S in either a single entity called Soni & Co or a number of different businesses operating from the four addresses identified in the general letterhead, no such representation had been made to the appellant, and the representation that was made to the appellant by S was that she was a partner with him in a firm carrying on business as solicitors at 23 Ansdell Street under the name Soni & Co, and Fenchurch Avenue, but not anywhere else. That was not within the scope of the representation made and suffered to be made by the respondent since she did not accept, and would not have accepted, the use of a letterhead that referred to an obsolete address and that did not refer to her own office address.
It followed that the appellant did not give credit to S (or to the supposed firm) on the faith of the representation, which the respondent made, or authorised or knowingly suffered to be made, which was the representation in the form of the general letterhead. The representation on the faith of which it did give credit to S was the one which S made, by the forged certificates of title and the covering letters, but those representations were not made, authorised or knowingly suffered by the respondent, and were different from those which she did make or knowingly suffer to be made.
Furthermore, on the facts, there was no reason to conclude that the respondent had any reason to think that S had made any false representations to the appellant as to her status as his partner in the supposed Ansell Street practice or as to her responsibility for the conduct of the conveyancing.
Nicholas Davidson QC and Timothy Polli (instructed by Glovers Solicitors LLP) appeared for the appellant; Michael Douglas QC and Hugh Evans (instructed by DAC Beachcroft LLP) appeared for the respondent.
Eileen O’Grady, barrister
Solicitor – Fraudulent transaction – Section 14 of the Partnership Act 1890 – Solicitor representing to appellant that respondent was his partner – Appellant obtaining judgment against solicitor in respect of fraudulent transaction – Whether respondent knowingly suffering herself to be represented as partner – Appeal dismissedS was a solicitor who took advantage of his position to defraud the appellant lender. He borrowed £2.5m from the appellant, apparently on the security of five mortgages of properties in his own name, but in fact he gave no security to the appellant for any of the loans. He handled the conveyancing on each transaction himself, through a solicitor’s practice of which he was the sole proprietor. He had to overcome precautions on which the appellant insisted in order to avoid being defrauded in such a situation. To do so he represented that the relevant solicitors’ practice was one which had two partners, and that the conveyancing was handled by the other partner. In addition to his sole practice, he had another practice in which he did have a partner, the respondent. This carried on business from a different office and address, but under the same name. He told the appellant that the respondent would deal with the conveyancing, and he forged her signature on the critical document in each case, a certificate of title. The appellant had a worthless judgment against him for some £2.4m. Section 14 of the Partnership Act 1890 provided that someone who was not, but was held out to be, a partner in a partnership might be liable as if he or she were a partner, to someone who relied on the representation. Among other things that depended on whether the person who was so represented (the apparent partner) made the representation or knowingly suffered it to be made. It also depended on what representation had been made.An issue arose in the present case whether the respondent was also liable to the appellant for its loss, on the basis that she was held out to them as S’s partner. A judge of the Chancery Division, held that she was not. The appellant appealed. The dispute focussed on whether the respondent knowingly suffered the representation to be made and on what was meant by a representation that she was “a partner in a particular firm”, on the facts of the present case. Held: The appeal was dismissed. The requirements of section 14 had not been satisfied. The representation had to be that the apparent partner was a partner in a firm, and the appellant had to give credit to that firm (or supposed firm) on the faith of that representation. It followed that the representation and the reliance had to match one another. Since the appellant intended to deal with a particular firm, the representation had to be that the apparent partner was a partner in that firm. Knowingly suffering a representation to be made, in the present context, required that the apparent partner knew of the making of the representation and, being able to prevent it being made or to correct it, did not do so. In this case, there was nothing to show that the respondent knew of the making of the representations to the appellant. In practice, therefore, the judge was entitled to pose the question whether she knew and authorised the making of the representations to the appellant on the facts of this case. Even though the respondent had made a representation, and knowingly suffered it to be made, that she was a partner with S in either a single entity called Soni & Co or a number of different businesses operating from the four addresses identified in the general letterhead, no such representation had been made to the appellant, and the representation that was made to the appellant by S was that she was a partner with him in a firm carrying on business as solicitors at 23 Ansdell Street under the name Soni & Co, and Fenchurch Avenue, but not anywhere else. That was not within the scope of the representation made and suffered to be made by the respondent since she did not accept, and would not have accepted, the use of a letterhead that referred to an obsolete address and that did not refer to her own office address.It followed that the appellant did not give credit to S (or to the supposed firm) on the faith of the representation, which the respondent made, or authorised or knowingly suffered to be made, which was the representation in the form of the general letterhead. The representation on the faith of which it did give credit to S was the one which S made, by the forged certificates of title and the covering letters, but those representations were not made, authorised or knowingly suffered by the respondent, and were different from those which she did make or knowingly suffer to be made. Furthermore, on the facts, there was no reason to conclude that the respondent had any reason to think that S had made any false representations to the appellant as to her status as his partner in the supposed Ansell Street practice or as to her responsibility for the conduct of the conveyancing.Nicholas Davidson QC and Timothy Polli (instructed by Glovers Solicitors LLP) appeared for the appellant; Michael Douglas QC and Hugh Evans (instructed by DAC Beachcroft LLP) appeared for the respondent.Eileen O’Grady, barrister
