Law of Partnership in UK Law

There is one further matter of principle to be addressed. On behalf of Capital and CIM Mr Platonow states that the present application is a blatant attempt to trawl through Capital's and CIM's day-to-day operational documents with a view to enabling IFS and their appointed forensic accountants to prepare a claim against CIM, and that the mounting of litigation is not a legitimate purpose for which to seek the inspection of documents or the provision of information.

In my judgment the question of motive or purpose is irrelevant to the exercise of a statutory right of access to the partnership books. I accept the proposition (stated in Lindley and Banks on Partnership (19th edition) paragraph 22–16) that because the statutory right of inspection is expressed in unqualified terms the motives and bona fides of the partner seeking to exercise it will be irrelevant.

I would accept that the position may be different in relation to the exercise of a contractual or other non-statutory right.

Where relief has already been given in error, it would in my view be open to HMRC, in completing an enquiry, to amend the return (for example, under section 28A(2) TMA) by altering the amount chargeable to income tax for Year 2 in order to recover the sums which were wrongly paid as relief. Thirdly, section 59B(5) provides for payment of income tax which is payable as a result of an amendment of a self-assessment under section 28A on completion of an enquiry into a personal tax return.

In these circumstances, waiver or correction does not arise. The Court has no jurisdiction to correct any errors, since relief can only be granted once insolvency proceedings have begun. If the appointment is invalid, there are no insolvency proceedings.

This exercise requires the detail of the transaction to be taken into account. Most transactions will obviously fall on one side of the line or the other. For the policy reasons that I have mentioned, the court should not be too ready to find that the ordinary business requirement is not satisfied.