Agreement between property developers and builders–Whether agreement constituted a partnership or was merely a building contract–Agreement provided expressly for sharing profits but not for sharing losses–Despite some contrary indications the agreement pointed to a joint venture with a view to profit rather than two separate businesses, one of land development and the other of building under contract–Held that the two companies were carrying on a business in common, namely, the development of land and the building of houses for sale, with a view to profit–The agreement therefore constituted a partnership, subsequently dissolved by a letter
This was an
appeal from a decision of Fox J, holding that there had been a partnership
between Walker West Developments Ltd, plaintiffs in the action and respondents
to the present appeal, and F J Emmett Ltd, defendants in the action and the
present appellants. Walker West Developments Ltd had claimed that there had been
a partnership, constituted by an agreement dated July 17 1974 and dissolved by
a letter dated July 29 1976. F J Emmett Ltd had contended that there had been
no partnership, but a building contract only whereby they had been employed as
builders. The dispute related to development at Fremington, in Devonshire. Fox
J gave judgment in favour of Walker West Developments Ltd, and F J Emmett Ltd
appealed.
Roger Buckley
(instructed by Blyth, Coles & Stevenson, of
Gregory, Rowcliffe & Co, agents for J V Vobe & Co, of Chelmsley Wood,
Birmingham) represented the respondents.
Giving the
first judgment at the invitation of Buckley LJ, EVELEIGH LJ said: This is an
appeal from a judgment of Fox LJ, whereby it was adjudged and declared that the
partnership between the plaintiffs and the defendants constituted by an
agreement dated July 17 1974 had been dissolved, and whereby it was ordered
that the affairs of the partnership be wound up. By a specially endorsed writ
the plaintiffs claimed a declaration to that effect and the defendants, by
their defence, denied that there was, or had been, a partnership. The issue
that was argued before the court, and in this court, was simply whether or not
there was a partnership between these parties.
Land was being
developed, and houses were being built, at Fremington, in Devonshire; the
houses were being built for sale. Both the plaintiffs and the defendants were
involved. The plaintiffs were property developers and the defendants were
builders. The question is: what was the nature of their involvement
respectively? The plaintiffs say that
they were partners. The defendants say no; they say that the plaintiffs were
building owners and that the defendants were builders and employed as such.
It is
necessary to have in mind the definition of a partnership as contained in the
Partnership Act 1890 section 1(1). That reads: ‘Partnership is the relation
which subsists between persons carrying on a business in common with a view of
profit.’
What the
relation between the parties was in this particular case has to be determined
from the evidence and from all the admissible surrounding circumstances. As it
happens, the only evidence in this case is contained in an agreement dated July
17 1974, and it must be assumed that the activities of the parties and their
conduct each towards the other was in pursuance of that agreement and in
conformity with its terms.
The argument
on behalf of the defendants to the effect that this was the relationship of
building owner and contractor, and not that of partners, placed great emphasis
upon the fact that nowhere in the agreement is there a reference to the sharing
of losses. Mr Buckley has submitted that while he cannot go so far as to say
that a reference to the sharing of losses is essential for there to be a
partnership, the absence of such a reference is a very strong indication
against the existence of a partnership. To that the plaintiffs say that
reference is not necessary, and if there is no provision as to the sharing of
losses the matter falls to be dealt with in accordance with section 24(1) of
the Act.
Section 24
itself begins:
The interests
of partners in the partnership property and their rights and duties in relation
to the partnership shall be determined, subject to any agreement express or
implied between the partners, by the following rules: (1) All the partners are
entitled to share equally in the capital and profits of the business, and must
contribute equally towards the losses whether of capital or otherwise sustained
by the firm.
On behalf of
the plaintiffs it is said that there was no need to make a specific reference
to losses unless it was the intention of the parties that there should be some
other sharing of the losses than that provided for by the Act.
Mr Buckley,
for the defendants, also submits that the terms of the agreement are more
appropriate to those of a building contract than to those of a partnership
agreement; to this the reply by Mr Mummery is that where those terms are to be
found in words particularly appropriate to a building contract they are,
generally speaking, mere machinery to indicate the particular participation and
the role and the contribution of each party to the partnership and to the work
of the partnership.
There is a
provision in the contract for the sharing of profits; this is relied upon
strongly by Mr Mummery. Mr Buckley answers, however, that the mere sharing of
the profit is not enough to constitute a partnership and, looking at this agreement
as a whole as the court has to do, the profit-sharing is merely a method of
arriving at a price for the builders’ work. Moreover, it is said by the
defendants that in this agreement, by implication from the use of the words
‘other contractors’ in a clause to which I shall refer later, it can be said
that the plaintiffs were regarded as contractors; but to this the plaintiffs
would reply that the parties, throughout this agreement, are referred to by
their names, Emmett on the one hand and Walker West on the other, and there is
no mention of ‘building owner’ or of ‘contractor’ as such.
With those
conflicting arguments in mind, one turns to look at the agreement itself. It
begins on the front page with the statement ‘Agreement for building dwelling-houses
on land at Fremington in the County of Devon.’
Turning then to the agreement itself, we see that it is divided into
five parts, A, B, C, D and E. The first part, A, is the general agreement
between the parties; it shows what is to be done in relation to the building
and the sale of houses. Part B is entitled ‘Amplification’; it deals with the
building works and sets out how the building works and the site works shall be
done. Part C is entitled ‘Building Works Payment,’ and it deals with the method
of payment. Part D relates to profit sharing, as its heading indicates, and
there are set out detailed provisions for arriving at the profit which is to be
shared. Finally there is section E, which is headed ‘Miscellaneous.’ There appears in section E a third party to
the agreement, Alfred Walker & Son Ltd, who are introduced as guarantors
and who have no other relevance for the purpose of the solution of the problem
with which the court has to deal.
Turning now to
the agreement in closer detail, it is in my opinion proper to look first at
section A and to form a picture of what the whole matter is about. It is of
course vital, before reaching any final conclusion, to have the whole agreement
in mind and to have regard to all its terms. However, as by the form of
agreement itself, the all-embracing effect purports to be set out in section A,
I think that a permissible approach is to study section A itself closely.
Section A
begins as follows: ‘In respect of land at Fremington contracted to be conveyed
by Emmett to Walker West on this date’; from that statement, and from what is
set out in the miscellaneous section, section E, of the contract, it appears
that there was a contract for the sale and purchase of land between Emmetts as
the vendors and Walker West as the purchasers, and it was that land which was
to be developed. The court has in fact been told by counsel that a substantial
price was paid for the land; the court has not been told whether that was the
market price; the court does not know whether any part of the value of the land
can be said to be contributed by Emmetts, though perhaps one could assume that
the court would have been told if that had been the case. I therefore approach
this case upon the basis that there was a perfectly normal sale of the land
from Emmett to Walker West, but a sale of the land which envisaged the
development that was to take place thereon, and the participation by the two
parties in the development. The nature of that participation falls to be
determined.
Section A1 is
entitled ‘Site Works,’ and it reads under (a): ‘Emmett will forthwith at its
own expense but subject to reimbursement under Clause 1(c) hereof and at the
speed required by Walker West construct roads and all services (hereinafter
called ‘site works’) in positions and to specifications agreed with Walker
West. . . .’ (b), so far as it is relevant, reads: ‘Such work shall be carried
out to the satisfaction of Walker West and in accordance with the said
specifications.’
Then A2 deals
with the building works; (a) reads as follows: ‘Emmett will construct dwelling
units and outbuildings (hereinafter together called ‘Units’) to specifications
elevations and plans required by Walker West and approved by the Planning
Authority and shall connect them to the roads and services. The speed of
construction shall be as required by
following).’ The contract concludes with
an arbitration clause. There is a noticeable difference between the wording of
the Site Works paragraph and that of the Building Works paragraph in that the
positions and specifications of the Site Works are ‘as agreed’ with Walker
West, whereas the specifications and the speed of the Building Works are ‘as
required’ by Walker West.
Then
respectively under those headings of Site Works and Building Works appears a
payment clause. In relation to the Site Works the payment clause reads as
follows; it is A1(c): ‘Walker West will reimburse Emmett for the Site Works by
stage payments at monthly intervals the amount being the prime cost of the work
done as agreed by a Director of Walker West and a Director of Emmett.’ In relation to the Building Works, the
payment clause is under A2(b) and reads as follows: ‘Emmett and Walker West
will agree the prime cost of materials and labour initially attributable to
each of the units and will also agree the stages into which the construction of
each of the units shall be divided and will also agree the amount of the said
prime cost to be actually attributable to each such stage.’
Then there
followed two clauses, (c) and (d), which should be read at least in part.
Omitting certain words, (c) reads: ‘. . . Walker West will reimburse Emmett for
the amount of these prime costs at monthly intervals in accordance with the
stage of construction of each of the units at that time the amount so payable
being assessed in accordance with clause C(c) hereof’; in my opinion the
precise method of assessment is not important for the moment.
(d) reads: ‘At three-monthly intervals Walker
West shall pay to Emmett in adition to the sums paid in accordance with the
preceding clauses in the preceding three months in accordance with subclause
(c) hereof a sum equal to 2 1/2 per cent of the sums so certified being a contribution
towards overheads incurred by Emmett relating to work done under this agreement
and shall also pay to Emmett as a further contribution to such overheads the
sums specified below on the dates specified below: the sum of £20,000 on March
31 1975; the sum of £20,000 on March 31 1976’ and then two other substantial
payments in respect of 1977 and 1978 are set out.
Section A3 is
headed ‘Sales’; that clause reads as follows: ‘The project shall be advertised
as a joint Walker West and Emmett project, and Agents to be agreed by the
parties will advertise and effect sales and Walker West’s Solicitors will carry
out the legal work involved in sales.’
Then finally
there is A4; that is headed ‘Profit Sharing’ and it reads as follows: ‘The net
profit in the total project shall be as defined later and . . . shall be
divided between the parties in equal shares.’
Looking at A
alone for the moment, in my opinion it reveals that there was land to be
developed; there were houses to be built and sold, and profit-sharing. The
defendants were to do the constructional work; there was to be consultation so
far as the site works were concerned. The plaintiffs were to have control of
the dwelling specifications, and there should be consultation so far as the
appointment of estate agents was concerned; and the project–for that is what
the parties themselves have called it–should be advertised as a joint project,
so that so far, bearing in mind the definition of ‘partnership,’ a view to
profit-sharing is in my opinion established, and so far the agreement points
very strongly and, taking in isolation this part of the agreement, I should say
conclusively, to a development business being carried on in common. So far as
payment is concerned it is said that the defendants are being paid by Walker
West; that this shows that Walker West are employers and the ones who stand to
lose. From the other clauses in this agreement it is clear that the money
received from sales is received in the first instance by Walker West. They,
Walker West, reimburse the defendants. On the assumption that there will be
sales (and the parties assuredly proceeded on that assumption) Walker West will
have money coming in that has been jointly earned, and that is money with which
they are able to pay the expense of construction. It may be said that they
would have to find the initial capital, and this is true; but provision is made
in clause A for Walker West to control the speed of the building, and they have
a very large element of control over the number of houses to be built;
provision is made that the number shall not exceed 10, plus one for each house
sold, which is an indication that the building progress should be geared to the
money coming in from house sales.
Thus we see a
position in which, while it is true that Walker West may in one sense be
regarded as the paymaster, as soon as a sale has been effected, for the further
development of this substantial site Walker West will in effect be in a
position to reimburse the expenses of Emmetts in building the houses, from
moneys received by Walker West as a result of the parties’ joint endeavour.
That is the situation, as far as I can see it, revealed under section A.
There is a
further conclusion to be drawn from that section. While each side is
contributing something, while provision is made to reimburse Emmetts for their
cost of building work, Emmetts will be suffering a financial outlay in respect
of overheads, and thus there are introduced the two clauses A2(c) and (d),
dealing with that matter. It is significant, in my opinion, that the terms used
there are ‘reimbursed’ so far as prime costs of work are concerned, and
‘contribution’ and ‘further contribution’ so far as overheads are concerned. To
my mind that envisages a situation in which each side is making a contribution.
The obligation upon Walker West is not to indemnify in respect of overheads in
full; it is to make a contribution to the extent set out in clause (d).
I have
therefore reached the conclusion that if it were permissible to look at A on
its own as indicating, as it does in my view, the general nature of this
contract, that general nature appears clearly to be a joint development
enterprise with a reasonable distribution of financial burden, coupled with a
degree of sharing of the overheads. Then, if one adds to this the wording of
clause A3, headed ‘Sales’ and the provision therein for consultation on the
appointment of the estate agent, in my view section A of the contract clearly
shows a business in common. As I say, there is no doubt that the profit-sharing
requirement of the definition of ‘partnership’ is there in as many words, and
in my view the activity of carrying on a business in common is also
established. It is a business in which each is concerned from the laying out of
the site to the sale of the houses. That of course is not legally essential for
there to be constituted a partnership, but it is there in this case and in my
opinion provides an argument in support of the plaintiffs’ case.
Having said
that, one is not of course entitled to decide the case simply by looking at one
part of the contract; one must look at the contract as a whole. It is, however,
because I have read the contract as a whole in the first instance that I
concentrate attention on section A of it, for, having read the contract as a
whole, section A seems to me to provide the key to answer to the problem facing
the court.
Turning now to
those other provisions, they are provisions which have strongly been relied
upon by the defendants. One turns to B: ‘Amplification: Building Works.’ There is provision there for variation in the
works by Walker West; there is a timing programme laid down, with which it is
said Emmetts should comply; as I have already said, reference is made to the
maximum number of plots ‘on which Emmett shall be building at any one time
shall, unless otherwise agreed between the parties, be 10 plus one additional
plot for each plot in respect of which a contract for sale shall have been
exchanged.’ Provision is then made for
extension of time in the event of the usual building contract difficulties,
such as strikes, lockouts or bad weather; provision is made as to the standard
of materials to be used and to the ownership of unfenced materials–all matters
very commonly found in building contracts. Emmett undertakes to conform with
statutory provisions and regulations; and then there follows, at B(h)(ii):
‘Emmett and Walker
affiliated to the NHBC ‘–the National House Building Council–‘and Walker West
shall register each house and pay the appropriate fee before building work
commences on that house and Emmett shall do all such things as are necessary to
comply with the requirements of that Council and Walker West shall ensure that
all purchasers of houses on the land shall have the benefit of the Guarantee
issued by that Council and Emmett shall remedy any defects or omissions which
shall be required under the terms of the (Council) Agreement during the
Guarantee Period.’ So both parties are
seen to be taking advantage of the facilities provided by that council.
There is then
a reference to variation and a consequent provision as to payment; Emmett
undertakes an obligation to insure, in the joint names of Walker West and
Emmett, to the full value of the buildings in the course of erection, and also
to insure against other risks ‘against which a prudent contractor should
insure.’ Then provision is made as
follows: ‘On such determination of the contract ‘–I should interpolate here that
the determination envisaged was in the case of insolvency–‘ the further use by
Emmett of the plant implements and materials then upon the ground shall cease
and plant and machinery belonging to Emmett shall forthwith be removed from the
site and Walker West may employ other contractors or workmen either by contract
by measure and value or by day work to perform and complete the works’ etc.
That is strongly relied upon by Mr Buckley; he says that that is a typical
building contract provision and is wholly inappropriate in a partnership
agreement.
I appreciate
the force of that contention, but it seems to me that if you have an agreement
in which one party is contributing his expertise as a property developer and
the other is contributing his skill and experience as a builder, and the
parties are seeking to regulate the position reached vis-a-vis each
other, it is not inconsistent with a partnership agreement for provision to be
made for what is to happen if one of the parties, as it were, defaults in the performance
of his side of the partnership business; and when you have parties who are
offering to contribute to the partnership business the work of their own
peculiar calling, I do not find it strange that they should use contractual
language with which they are familiar, and which is appropriate to the calling
and the services which they are contributing. It seems to me that section B was
in fact defining the role and the contribution that Emmett was to make to this
development.
One then turns
to section C, ‘Building Works Payment.’
There provision is made for the sum of £100 to be retained by Walker
West; if one were to pause there, the resemblance to a building contract would
be very strong. The £100, however, is to be paid into a bank deposit account in
the joint names of Walker West and Emmett, and provision is then made for the
use of that £100 to satisfy the respective individual expenditure of either one
of the two parties to the contract in relation to making good any defects in
the work. The whole wording of this clause is, in my view, perfectly consistent
with the £100 being regarded as the joint property of the two parties, to be
dealt with as set out in this agreement or as otherwise agreed between the two.
One then turns
to the profit-sharing clause. In my view there is nothing in that clause which
militates against this agreement producing a partnership between these two
parties, for the profit-sharing clause shows that expenditure incurred by
Walker West, which is largely expenditure incurred in paying for the prime cost
of the work, although there are other items, and expenditure incurred by
Emmetts, shall be deducted from the gross receipts before arriving at the
profit. While no specific provision is made for the repayment to Emmett of expenditure
incurred by Emmett, it seems to me that a term must be implied in this contract
that Emmett will be reimbursed from the gross receipts for such expenditure.
That being so, in my view it indicates that the money coming in from sales was
regarded as money which was at the disposal of both, but in effect Walker West
were the treasurers for the enterprise.
I have
therefore come to the conclusion that the relationship between the parties in
this case was that of a partnership, and I would dismiss this appeal.
Agreeing, GOFF
LJ said: The question we have to determine is whether there was a partnership
between Walker West and Emmett under the agreement of July 17 1974. Mr Mummery
says: Look at the definition of ‘partnership’ in the Partnership Act, section 1(1);
that definition is ‘Partnership is the relation which subsists between persons
carrying on a business in common with a view of profit,’ and he says that that
is what we have here.
Merely to look
at the definition is, of course, to beg the question. The question is: Was
there, as he submits, a common business, that of developing the land at
Fremington which Walker West had purchased from Emmett, or were there two
businesses; one, that carried on by Walker West, the development of their own
land, and the other, that carried on by Emmett as building contractors? Mr Mummery also relied very strongly upon
section 2 of the Partnership Act, which contains rules for determining
existence of partnership, subsection (3) of which is as follows: ‘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. . . .’ Mr Mummery very rightly conceded that that
does not mean that receipt of profits raises a presumption that has to be
rebutted, but equally rightly he relied upon profit-sharing as an important
factor to be weighed in determining the true position between the parties.
He referred us
to the case of Davis v Davis reported in [1894] 1 Ch 393, a
decision of North J in which, at p 398, citing from a judgment of Lindley LJ in
Badeley v Consolidated Bank (1888) 38 ChD 238 he said: ”I take
it that it is quite plain now, ever since Cox v Hickman (1860) 8
HL Cas 268, that what we have to get at is the real agreement between the
parties.” Then, in his own language, at
p 399, North J said:
Adopting then
the rule of law which was laid down before the Act, and which seems to me to be
precisely what is intended by section 2(3) of the Act, the receipt by a person
of a share in the profits of a business is prima facie evidence that he is a
partner in it, and, if the matter stops there, it is evidence upon which the
Court must act. But, if there are other circumstances to be considered, they
ought to be considered fairly together; not holding that a partnership is
proved by the receipt of a share of profits, unless it is rebutted by something
else; but taking all the circumstances together, not attaching undue weight to
any of them, but drawing an inference from the whole.
Those are the
principles by which I guide myself in seeking the solution of this problem.
Mr Buckley
argued that there were in truth two businesses and, apart from specific
indications, he submitted that the whole tenor of the agreement shows that this
was a building contract, albeit of a somewhat unusual nature in that it was
speculative, the profit being tied not to the contract price but to the overall
profit on realisation. He relied very strongly on an argument that the
agreement contains no provision rendering Emmett liable for losses, and indeed
he submits that the provisions of it show positively that they should not be
liable for losses. He argues, that being so, that it would be strange if, by
finding that there was a partnership, they could indirectly be made liable for
losses. If he will forgive my saying so, in my view the last part of that
argument is a fallacy. Of course, if there be a partnership, then both the
partners are liable to third parties, but as between themselves the partnership
accounts must be taken in accordance with the agreement, and if the terms of
the agreement are such that on taking the accounts as provided therein Emmetts
do not suffer losses, they will not suffer them because the agreement is held
to be a partnership agreement.
So far as
losses are concerned, as at present advised it seems to me that Emmetts are not
liable because Walker West receive the moneys and account only for profits. If
there be an interim distribution of profit and then a subsequent loss, no doubt
Walker West may recoup themselves out of future profits and I think it is
probable, at latest on final settlement of the accounts, if Emmetts have
received interim profits and there is in truth a loss, they will have to recoup
the profits, which they have received and which, on taking the final account,
it appears should not have been distributed. But in so far as there is an
ultimate loss, there does not appear to be anything to make Emmetts contribute
out of their own moneys.
On the face of
it there are two respects in which, if the agreement is construed literally,
Emmetts would be out of pocket, in that they have to pay for insurances, and
the agreement seems to contemplate that they may also have to pay certain fees.
But, like my Lord, I think one must imply an agreement that they should be recouped,
otherwise the rather extraordinary result would obtain that they would have to
bear those expenses, however profitable the venture, and could not get
reimbursement, and yet, in calculating the profit they would be debited with
that expenditure.
I do not reach
a final conclusion on these points, because I do not think they have been fully
argued and it would be open, when the accounts and inquiries are taken, for
either party to argue one way or the other how they ought to be taken and what
is the result upon liability for losses. But assuming that it be right to say
that Emmetts are not liable for losses, though that is a factor to be weighed
in considering the position as a whole, I think it is common ground, and is
certainly right, that it is by no means conclusive.
In the end,
the question is as I postulated it earlier: was there one business carried on
in common as a joint venture with a view to profit, or were there two separate
businesses? That must depend upon the
true construction of the agreement as a whole; see Davis v Davis,
which I have already cited.
In my judgment
there are indications both ways, and I admit that my mind has fluctuated at
times during the argument. Indeed, at one stage I felt that the provisions of
section B, headed ‘Amplification,’ did contain a number of pointers which would
bring one down on the side of holding that this was not a partnership. In
particular there is the provision in section (k) that Emmett should insure as
therein provided and when so requested, ‘produce to Walker West all policies
and receipts for premium and also shall effect and maintain adequate insurance
against claims by third parties’ and so on. The important words are ‘shall when
so requested produce to Walker West all policies and receipts for
premium.’ If this be a partnership, the
policies and receipts would be partnership documents and Emmetts would be
required to produce them at the request of their partner without any specific
provision to that effect.
Even more
strongly I was impressed at one stage by the provision in subparagraph (i):
‘Emmett shall not without the written consent of Walker West assign or sublet
this contract or any part thereof.’ If
there were a partnership, of course, they could not assign their share of the
partnership so as to admit anybody else as partner, without the consent of
Walker West.
It seemed to
me, however, that Mr Mummery successfully answered those points when he
stressed that though those provisions might be unnecessary, and even unusual in
a partnership agreement, they are not inconsistent with the conclusion that
this was a partnership, for they do indeed provide, by express covenant, that
which is inherent in a partnership.
Then one has
to consider also the provisions in subparagraph (m) which, on the determination
of the contract by Walker West, entitles them to employ other contractors or
workmen to perform and complete the works. That is the sort of provision which
one would expect to find in a building contract, but not perhaps in a
partnership, and that has weight. But on the other hand, again it does not seem
to me to be inconsistent with a partnership of this nature that in the case of
default by the partner who was charged with carrying out the building works,
the other partner should be empowered himself to complete, or to arrange for
the completion of, the work.
Then one
considers the obligations imposed upon Emmett to build to specifications and
elevations and plans required by Walker West and the power given to Walker West
to vary the works. Mr Buckley relied on that very strongly and I feel the force
of his argument.
On the other
hand Emmett are given some control by this agreement over the development. In
the first place the site works, which must control the layout, are to be
agreed; that is provided in section A, clause 1(a). Secondly, under section A
1(b), the stages of development are to be agreed between the parties; and then
there is the important provision in section A, clause 3, that the selling
agents are to be agreed between the parties, and here I would advert to what
is, I think, significant, that there is no price agreed at which the houses
then built are to be sold, and it seems to me in these circumstances that that
price would be one which Walker West could not dictate to Emmett. It would have
to be agreed between them and in default of agreement it would have to be a
matter for arbitration. That, I think, is a factor telling strongly in favour
of partnership.
Mr Mummery
also relied upon the fact that the agreement, as he submits, contains no
provisions for remuneration. Mr Buckley sought to answer that by saying: ‘Yes,
it does; because it provides that Walker West shall pay the prime cost to
Emmett.’ But I cannot regard that as
remuneration. It is merely reimbursement for expenditure, and there is force in
Mr Mummery’s point, although of course it may be said that there is a provision
for remuneration here in the form of the share of profits.
In the end,
however, I have reached the conclusion that the learned judge was right in
holding that there was a partnership. I think the clue is really to be found in
clause A3, in the way in which the parties have themselves described what they
were doing. That clause says ‘the project.’
It deals with it as one and entire, not as two projects or two
businesses. If there might be any doubt upon it, that is removed because it
goes on to say that ‘the project’ shall be advertised as a joint Walker West
and Emmett project. The learned judge said, and I agree with him, that there is
no reason why what the parties have said they were doing should not accord with
the reality; and again in A4 one finds the provision that the net profit in the
total project shall be divided between the parties in equal shares.
Having myself
been through the whole agreement more than once and having weighed the various
points that I have indicated, and others which have crossed my mind in the
course of setting one part of the agreement against another, I have come to the
conclusion, as I have said, that this agreement did constitute a partnership,
and I, too, would dismiss the appeal.
Also agreeing,
BUCKLEY LJ said: The parties in this case have, by the form of their agreement,
set the court an ingenious and difficult problem of interpretation, and I
confess that in the course of the argument my mind has fluctuated. But finally,
taking all the provisions of the agreement into account, for reasons which have
been developed by my brethren, through which I do not propose to travel again,
I have reached the conclusion that the effect of the agreement in this case was
to constitute a partnership.
By his formal
order the learned judge declared that the partnership constituted by the
agreement had been dissolved by a letter of July 29 1976. It is common ground
between the parties that if there was a partnership here it was so dissolved,
and no question arises upon that.
The working
out of the respective rights of the parties in the dissolution of the
partnership must be in accordance with their respective rights under the agreement,
and nothing that we have said should be taken to prejudge any question which
may arise in the course of working out, and giving effect to, those rights.
For the
reasons given by my brethren, I would dismiss the appeal, and accordingly the
appeal is dismissed.
The appeal was dismissed with costs.
