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PLAINT NO. YO 3316/YZ 420B

[1970] 1 W.L.R. 333


1969 DEC. 9

3PLR/1969/58 (CA)








Peacock AND Goddard for Willmot

East, Poole, Dorset; Haywards.

  1. M. W.



COMMERCIAL LAW – Partnership – Existence of – Persons carrying on business together – Acts performed by one or both persons prior to formation of company – Goods ordered by one person for use of company – Bank account opened by both – Whether in partnership – Partnership Act, 1890 (53 AND 54 Vict. c. 39), s. 1 (1).1


PRACTICE AND PROCEDURE – COURTCourt of Appeal – Fact, question of – Appeal from lower court – Inference from primary facts – Mixed law and fact – Claim in county court for price of goods sold and delivered – Value less than £150 – Goods ordered by one of two persons carrying on business prior to formation of company – Claim by seller against other person as partner – Judge’s finding that no partnership in existence – Whether a right of appeal.



  1. and B. agreed to go into business together and to form a limited company which would carry on business in M.’s restaurant. They decided to do certain acts during the three weeks prior to the formation of the company to enable it, when formed, to start business at once. B. ordered goods from the plaintiffs to the value of £147, intending them to be used by the company when formed. The goods were delivered to M.’s address. M. and B. visited a bank and opened an account in the name of the proposed company, omitting the word “Limited.” Subsequently B. became insolvent and the plaintiffs sued M. for the price of the goods sold and delivered on the basis that M. was carrying on business in partnership with B. at the time when B. ordered the goods, and that M. was accordingly liable. At the trial, there was no evidence that the bank account was ever used. The county court judge decided that there was no partnership between M. and B. at the material time but merely “a loose agreement” to start ordering goods for the proposed company, and he dismissed the plaintiff’s claim.


On appeal by the plaintiffs, the question arose whether a right of appeal lay:-




assuming that an appeal lay, that on the evidence the judge was justified in finding that at the time when the goods were ordered, B. and M. were merely working together to form the company and were not carrying on business in common with a view to profit, and so were not partners within the meaning of section 1 (1) of the Partnership Act, 1890.


Per Harman L.J. The finding that there was no partnership was not a finding of fact from which there is no appeal, but an inference from the primary facts which the judge found. Accordingly, it was a finding of mixed law and fact and it must be assumed that an appeal lies (post, p. 335C, D).

Wood v. Argyll (Duke of) (1844) 6 Man. AND G. 928 not followed.


The following cases are referred to in the judgment:


Hamilton v. Smith (1859) 28 L.J.Ch. 404; 5 Jur.N.S. 32.


Wood v. Argyll (Duke of) (1844) 6 Man. AND G. 928.


1 Partnership Act, 1890, s. 1: “(1) Partnership is the relation which subsists between persons carrying on a business in common with a view to profit.”

The following additional case was cited in argument:

Bright v. Hutton (1852) 3 H.L.C. 341.


APPEAL from Judge Pennant sitting at Bournemouth County Court.


In October, 1967, the plaintiffs, Keith Spicer Ltd., brought an action against the defendant, James Mansell, claiming £147 1s. 8d., the price of goods sold and delivered in December, 1966. They alleged that the goods had been sold to one Brian Trevor Bishop as agent for the defendant and delivered to the defendant’s place of business. The defendant disputed the claim and denied that Bishop had ever been his agent and claimed that whatever goods were ordered were so ordered on his own behalf.


By amended particulars of claim the plaintiffs alleged that the defendant and Bishop had carried on business together as partners prior to forming a limited company by the name of B.M. Vending Ingredients Sales (London) Ltd., which was incorporated on December 23, 1966; that the defendant and Bishop, his partner, bought the goods which were duly delivered to the defendant’s place of business in London and that the goods were accepted and signed for either by the defendant or someone on his behalf. A receiving order and order of adjudication had been made against Bishop on March 7, 1967, the defendant had not paid for the goods and the plaintiffs accordingly claimed the price.


The defendant entered no formal defence to the amended particulars of claim.


The county court judge decided that there was never a partnership between the defendant and Bishop before the company was formed but “a loose agreement” to start ordering for the company, and accordingly there was no partnership between them at the date when the goods were ordered by Bishop; further, that the plaintiffs did not intend to supply goods to a partnership. He dismissed the claim.

The plaintiffs appealed on the grounds, inter alia, that the judge had misdirected himself and was wrong in law in holding that no partnership agreement was in existence between the defendant and Bishop at the time when Bishop ordered the goods from the plaintiffs; that he ought to have found that a partnership existed at all material times and that the goods were ordered from the plaintiffs by Bishop on behalf of the partnership and/or in the course of its business; and that the judgment was against the weight of the evidence.


The facts are fully stated in the judgment of Harman L.J.


Patrick Mayhew for the plaintiffs.

Robert Reid for the defendant.


HARMAN L.J. This case involves a modest sum of just under £150 but it has been argued with a learning and eloquence worthy, so to speak, of a bigger cause, and I am much obliged to both counsel for the way they have entered into a not at all easy controversy – as, indeed, the judge below decided.


The action for goods sold and delivered. The plaintiff company no doubt did sell and deliver £147-worth or so of goods. To whom they delivered them did not very clearly appear, but as the case was launched in the county court the allegation was that the goods were ordered by one Bishop as agent for the defendant and delivered – as they undoubtedly were – at the defendant’s place of business, which was a restaurant. One does not know who accepted the goods or who signed for them: the plaintiffs failed to prove that. But having so launched their action the plaintiffs were met by a strong denial by the defendant, of an informal character, in which he said that Bishop, the so-called agent, never was his employee or his agent but ordered the goods on his own behalf. The plaintiffs, having considered that, changed their tune and said:


“Oh, in fact you, Bishop, and you, the defendant, were not employee and employer: you were partners, and you had agreed so to act and were trading as such. Admittedly you intended to carry on the trade through the means of a limited company, which was in fact afterwards formed, but being” (I suppose) “in a hurry to start business you agreed to act as partners until the company was formed, and it was in pursuance of that agreement that the goods were ordered by Bishop, and he had the authority of the partnership so to do; and Mansell as the other partner is liable, Bishop being insolvent.”


The county court judge held that there never was a partnership, and the first point to consider, I suppose, is whether that is a decision of fact from which, on the amount at stake, there is no appeal. The judge found certain what may be called primary facts, and, as a secondary fact, so to call it, he found that they added up to no partnership.


In my judgment, with respect to the old case of Wood v. Argyle (Duke of) (1844) 6 Man. AND G. 928, which was cited to us, it is not right to say in these days that that is the kind of finding of fact from which there is no appeal. It is a finding of mixed law and fact. It is an inference from the primary facts which the judge found. I say nothing about Tindal C.J. being right in the case cited, in which he left the question “partnership or no partnership” to the jury, but I do not think that today you would count it as a finding of fact from which there is no appeal. Anyway, I shall assume that an appeal does lie.


What, then, do the primary facts come to? They come to this, that Mansell and Bishop, having lost their employment elsewhere, decided to go into business together. They decided to run in agreement and to form a limited company which was going to carry on business in Mansell’s restaurant. Eventually such a company was incorporated. They then came to the conclusion that they would do certain things preparatory to the formation of the company so that the company could carry on business at once when it was formed; and one of the things they did, or that Bishop did, was to order these goods. He intended them to be used, not by himself and Mansell as partners, but by the company when it should be formed. I have no doubt that a good deal of loose thinking went on, but everything that we know was done was so done with a view to the company carrying on business. It was all, I think, preparatory to that event, and the question is whether that in itself involves a partnership.


In that model piece of legislation, the Partnership Act, 1890, s. 1 (1), one finds: “Partnership is the relation which subsists between persons carry on a business in common with a view to profit.” Now were Bishop and Mansell carrying on a business? I do not think there is any evidence of that. There is evidence of the buying of these goods by Bishop. There is evidence of the opening of a banking account and the banker saying “You cannot put the word ‘Limited’ after the name because the company is not formed, but you can use the same title without ‘Limited.'” But what happened about that banking account is left in the shadow, the bank being in liquidation; and I do not think there is enough in the act of going to the bank and opening an account in the name of the proposed company without the word “Limited” to show that the defendant and Bishop were then carrying on business in partnership. They were preparing to carrying on business as a company as soon as they could. I think the county court judge was justified in saying that they never intended to be partners and that therefore they were not partners because they never carried on business as such.


There was a lot of learning envinced in the argument, one of the points taken by Mr. Reid being that in the old days under the Companies (Winding-up) Acts you could have an abortive company wound up although it had never been incorporated; and there are a number of cases which say that promoters involved in such an abortive business were not partners. I think that is because they did not intend to be partners: everything they did was a preparation for the company which they were trying to promote. But I do not think those cases have anything but a very indirect bearing on anything we have to decide. The last of them Hamilton v. Smith (1859) 5 Jur.N.S. 32, came before Kindersley V.C., who deplored the fact that the law was that promoters in that position were not partners.

I cannot find that the county court judge misdirected himself. I think he came to the right inference from the primary facts to be found; and I would dismiss this appeal.


EDMUND DAVIES L.J. For the purposes of this appeal, I am prepared to assume, without actually deciding, that a question of law is involved and that, accordingly, this court has jurisdiction notwithstanding that the amount here involved is only some £147.


It is perfectly clear that at no material time were the plaintiffs looking to the defendant for payment. That is established first of all most strikingly by the manner in which they launched their claim, alleging that their transaction of sale was with Mr. Bishop, and that Mr. Bishop was acting therein as an agent for Mr. Mansell, who employed him.


When we look at the documents, in the letter of December 5, 1966, addressed by the plaintiffs to “B. T. Bishop, Esq., B. M. Vending Ingredients Sales (London) Ltd.,” we find in the last paragraph these words: “My company will be very pleased to help you in any way possible, and since you have just started business on your own we are taking this opportunity of wishing you every success.” Then, a little later, “I have already rung Mr. Partington and indeed Mr. Bull of ex Fisholow has been in today to see me and knows you very well.” The two invoices were of the same date and were addressed to “B. M. Vending Ingredients Sales (London) Ltd.”


When he gave evidence in support of the plaintiff’s claim – a belated claim – that there was a partnership existent between him and Mr. Mansell, Mr. Bishop clearly did not strike the judge as a very credible witness. An apposite statement as to the law is to be found in Lindley on Partnership, 12th ed. (1962), p. 20:


“Persons who are working together to form a company, although they may intend to become members of the company after its formation, are not partners if this be the only relation between them; they are, it is true, engaged in a common object, and that object is ultimately to acquire profit; but their immediate object is the formation of a company, and even if the company is not to be incorporated they are only in the position of persons who intend to become partners after the company is formed.”


I think that if the evidence adduced by the plaintiffs had been more expansive one might feel more assured in one’s mind that the truth had been arrived at. I have the uncomfortable feeling that it has not. The burden of establishing the existence of a partnership was, of course, upon the plaintiffs. We know that a bank account was opened, and that it was opened in the name of “B. M. Vending Ingredients Sales.” That, we were told, was until the company was formed. But we have really no information from the bank as to how that account was operated if it ever was. There was the most exiguous evidence called on the plaintiffs’ behalf, and such evidence as was called is quite ambivalent. On one view it might be said that it veers towards the existence of a partnership. But to my mind there is nothing conclusive about it at all. I have come to the conclusion that, on such material as was presented to the county court judge and, accordingly, upon such material as is available to this court, it is not possible to say that the judge came to a wrong conclusion in absolving this defendant from liability. For that reason, I would concur with my Lord in holding that this appeal should be dismissed.


WIDGERY L.J. I agree. When the plaintiffs amended their particulars of claim they abandoned any attempt to prove that this purchase had been made by Bishop with the authority of the defendant. Instead, they sought to rely on the existence of a partnership and upon the proposition that this was a transaction entered into for the purposes of the partnership business and thus binding on both partners. For that purpose they had to show not only that there was a partnership under section 1 (1) of the Act, 1890, but, furthermore, that the transaction was one which was carried out by Bishop in the usual way of business of the kind carried on by the firm: (section 5).


Like my Lords, I find the evidence and the judge’s finding quite insufficient to show that there was here a carrying on of business in common with a view to profit between Bishop and the defendant at the material time. All the transactions, as far as I can see, were transactions which might perfectly well have been preparatory to the formation of the company, and, accordingly, whatever the truth of the matter might have been if it had been more fully investigated in the evidence, there is in my judgment no material here upon which we can say that the county court judge erred.

Appeal dismissed with costs.

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