Dr Sonny Lie (Appellant/ Claimant) v Dr Rajan Mohile (Respondent/ Defendant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Birss |
| Judgment Date | 05 February 2015 |
| Neutral Citation | [2015] EWHC 200 (Ch) |
| Court | Chancery Division |
| Date | 05 February 2015 |
| Docket Number | Appeal Ref: CH/2014 /0485 |
[2015] EWHC 200 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM HER HONOUR JUDGE WALDEN-SMITH SITTING IN THE CENTRAL LONDON COUNTY COURT
Royal Courts of Justice
Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Birss
Appeal Ref: CH/2014 /0485
Mr Oluwaseyi Ojo solicitor advocate, Taylor Wood for the Appellant / Claimant
Mr Martin Palmer (instructed by Attwood & Co.) for the Respondent / Defendant
Hearing dates: 4th December 2014
The appellant appeals from the order made by Her Honour Judge Walden-Smith sitting at Central London County Court on 24 th July 2014 following a trial. I gave permission to appeal on 12 th September 2014. An issue arose about whether the correct destination for this appeal was the High Court or the Court of Appeal. In his judgment on 11 th November 2014, David Richards J noted that since the case had been a Part 8 claim, the correct court to hear the appeal was the High Court. He rejected the respondent's submission that the matter should nevertheless be transferred to the Court of Appeal. There were no compelling grounds why it should be transferred.
Dr Lie and Dr Mohile are GPs in a partnership. The trial was of a claim and counterclaim between them concerned with bringing their partnership to an end. The issue before the judge was whether there should be a dissolution of the partnership under s35 of the Partnership Act 1890 or whether there should be expulsion of Dr Mohile from the partnership pursuant to a notice served by Dr Lie on Dr Mohile on 2 nd March 2014. Dr Mohile contended for the former, Dr Lie for the latter. It is plain that there is no future in the partnership; the debate is about the mechanism by which it should come to an end. If Dr Lie is right the way the relationship comes to an end is very much more advantageous to him.
In a careful and complete judgment HHJ Walden-Smith found in favour of Dr Mohile. Dr Lie submitted that the judgment contained errors of law and relied on six grounds of appeal. Dr Mohile submitted that the judgment contains no error of law at all. In addition Dr Mohile submitted that a number of the points taken on appeal by Dr Lie were not matters raised before the judge. In any event they did not reveal errors of law either.
As the judge said in paragraph 4, the litigation between these two gentlemen has been protracted and has raised a number of different points. By the time the trial came before HHJ Walden-Smith in July, the dispute had already been to the Court of Appeal twice. There are also proceedings between these two parties and what was then the NHS South West Essex Primary Care Trust and is now NHS England. The judge recorded that it was agreed that that strand of litigation did not have any impact on the issues before her.
The circumstances are as follows. On 15 th July 2002 the Dr Lie and Dr Mohile entered into a partnership agreement. They were the only partners. Clause 2(ii) provides that subject to the provisions in the agreement for retirement, expulsion and dissolution, the partnership shall continue for the joint lives of the parties.
The medical practice would operate from premises in Chadwell St Mary in Essex. Dr Mohile owned the freehold to the premises. The two doctors were granted a periodic tenancy as joint tenants. Thurrock Primary Care Trust (PCT) entered into a Personal Medical Services Agreement with both doctors on 1 st April 2004. The contractors' premises defined in the agreement are the premises in Chadwell St Mary.
They worked together amicably and successfully for a number of years but problems began to emerge. On 3 rd June 2011 Dr Mohile served at least two notices on the partnership. One was a notice under s25 of the Landlord and Tenant Act 1954 terminating the tenancy on 1 st January 2012. The other was a purported notice of dissolution of the partnership. Dr Lie started proceedings by issuing a claim form on 22 nd March 2012. He sought dissolution of the partnership and claimed Dr Mohile was in repudiatory breach of the partnership agreement. A key objective of the claim was to arrange things so that Dr Lie would have the benefit of the existing or a continuing contract with the PCT.
In March 2012 Dr Lie sought and Mr Recorder Bedingfield granted an interim injunction restraining Dr Mohile from excluding Dr Lie from the premises. The order expressly did not permit Dr Lie to enter any part of the premises which was not part of the surgery.
In March 2013 the notice of dissolution came before HHJ Taylor at CLCC in March 2013. It then went on appeal to the Court of Appeal on 24 th October 2013. Before the Court of Appeal Dr Mohile accepted that the purported notice of dissolution was not effective. That is because s26 of the Partnership Act 1890 does not apply because the partnership is not a partnership at will.
The focus then turned to the tenancy and notice to terminate. That came before HHJ Walden-Smith at the end of February 2014. Dr Lie was seeking to obtain the grant of a new tenancy to himself alone under s24 or s41A of the 1954 Act. A key problem for Dr Lie was because the partnership was continuing, Dr Lie could not rely on s41A on his own. Section 41A(1)(d) could not be satisfied by Dr Lie alone when the relevant business was being carried on by both joint tenants. The judge's judgment was upheld by the Court of Appeal on 9 th May 2014.
On 2 nd March 2014, immediately after Dr Lie had lost the argument about the construction of s41A and obviously as a reaction to losing the point, Dr Lie served an expulsion notice on Dr Mohile. The expulsion notice is said to be in accordance with clause 21(i) of the partnership agreement. Sub-clause (a) of clause 21(i) provides that a partner may by notice expel another partner from the partnership if that other partner has committed a grave breach or persistent breaches of the agreement.
The matter came before HHJ Walden-Smith for trial in July 2014. Dr Lie argued that the service of the notices in 2011 was a breach of the partnership deed and also relied on other breaches which were said to be sufficiently grave or persistent to justify a notice to expel. The parties argued about the state of the pleadings but the judge held that the key issues were sufficiently pleaded.
HHJ Walden-Smith heard evidence from both Dr Lie and Dr Mohile and also from Dr Lie's witness Paula Pasquale.
Dr Mohile's evidence, which the judge accepted, was that by 2009/2010 the relationship between the two doctors had broken down. She found that by this time the only discussions between them were in respect of clinical matters (and not administration) and even those discussions only took place by email. That was, as the judge said in paragraph 54 "no way in which a functioning partnership could continue". The judge also held that Dr Mohile had tried to be conciliatory and that the difficulties were not caused by him. All these findings were open to the judge and could not be seriously challenged.
Focussing on events after the notices in 2011, the judge noted that Dr Lie had continued to work in the practice throughout the period. She also accepted the evidence and submission of Dr Mohile that in 2013 Dr Lie had been deliberately and wrongly using what purported to be clinical appointments to carry out administrative work and had erased appointments. This meant that Dr Mohile, despite being an equal partner, was having to shoulder too much of the burden.
The judge decided that Dr Lie was not entitled to expel Dr Mohile from the partnership. She decided that the partnership should be dissolved pursuant to s35(f) on the ground that in all the circumstances it was just and equitable to do so. A direction was given for an account to be taken.
On Dr Lie's behalf, the following grounds are advanced on appeal:
Ground 1: That in considering the effect of Dr Mohile's notice in 2011, the judge did not give the partnership agreement contractual effect. The notice was a repudiatory breach of the agreement and entitled Dr Lie to expel Dr Mohile.
Ground 2: That the judge was wrong to find that Dr Mohile was not in breach of his duty of utmost good faith.
Ground 3: That the judge erred in her construction of "grave" and /or "persistent" breach and ought to have held that the 2011 notices were a grave and persistent breach within clause 21(i)(a) of the partnership agreement, entitling Dr Lie to serve a notice expelling Dr Mohile.
Ground 4: That the judge erred in finding that Dr Lie had affirmed Dr Mohile's breaches.
Ground 5: That the judge erred in making findings that were not pleaded or in evidence
Ground 6: that the judge erred in accepting an inconsistent pleading from Dr Mohile in that his original defence asserted that the partnership was dissolved by the 2011 notices whereas his Counterclaim seeks dissolution on the equitable ground.
For the respondent Dr Mohile, counsel simply submitted that the judge had correctly identified the issue of substance between the parties. She had heard from both individuals and had determined the issue. The judge made no error of law in doing so.
Grounds 1, 2 and 4
Grounds 1, 2 and 4 can be considered together. The judge held that while the 2011 notice was ineffective in law to bring about the dissolution of the partnership, the notice was a justifiable reaction by Dr Mohile to what was happening. Moreover she held that even if the notice and other actions of Dr Mohile were a breach of the agreement of whatever character (including whether they were "grave" or "persistent" within clause 21), in any event Dr Lie did not accept them and the partnership continued. Dr Lie continued to work in the practice for a further three years and continued to take his drawings as...
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Duties
...The details of the duty may, however, be modified in 1 Const v Harris (1824) Turn & R 496 at 525, 37 ER 1191 at 1202. 2 Lie v Mohile [2015] EWHC 200 (Ch), [2015] All ER (D) 97 (Feb). 60 Partnership and LLP Law that agreement or by the practice of the parties. 3 In Tann v Herrington 4 (see a......
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Table of Cases
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