Ferguson (Plaintiff) v McGeever and Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE ALLIOTT |
| Judgment Date | 21 December 1998 |
| Judgment citation (vLex) | [1998] EWHC J1221-26 |
| Date | 21 December 1998 |
| Court | Queen's Bench Division (Administrative Court) |
[1998] EWHC J1221-26
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Royal Courts of Justice
The Strand
London WC2A 2LL
The Honourable Mr Justice Alliott
MR D PARRY appeared on behalf of the Plaintiff.
MR J RANDALL QC and Mr S CUNNINGHAM appeared on behalf of the Defendant.
APPROVED JUDGMENT
Monday, 21st December 1998
APPROVED JUDGMENT
On 9th April 1997 the plaintiff and the 8th defendant, who practised in Leicester, merged their firm with the firm of the remaining defendants who practice in Birmingham. As from 1st May 1997 the plaintiff and the defendants were partners in a firm of solicitors practising as Gately Wareing in Birmingham and Leicester.
That partnership was governed by heads of agreement dated 9th April 1997 (volume 3 pages 263 to 292). From May 1997 onwards there was discussion between the partners about revising the agreement and the draft at volume 3 pages 319 to 348 was circulated immediately before a partners' meeting on 13th February 1998. Two major changes were the introduction of majority voting and no fault expulsion under clause 15/2. The revised agreement was never in fact engrossed but the plaintiff responded to the general invitation to submit drafting improvements to the 5th defendant, the designated draftsman, by making in a memorandum dated 16th February 1998 a number of suggestions including an additional phrase to be added to clause 15/2 and ending, "otherwise congratulations for doing such a fine job to the agreement". (Volume 3 pages 353 to 354).
The first inkling of the defendant's dissatisfaction with the plaintiff came to him when he was handed a copy of an assessment of his performance on 4th March 1998. (Volume 3 page 370). In his first affidavit he puts his reaction thus: "I took note of the criticism and addressed them after that date". (Volume 1 page 34). The plaintiff was due to go on a fortnight's holiday on 6th June 1998 and about a week before that he learnt there was to be a partners' meeting on 9th June 1998. He went and spoke to the 8th defendant who told him that there had been a recommendation at a meeting of the remuneration committee that his profit sharing entitlement should be reduced. The plaintiff continues at paragraph 22 of his first affidavit, volume 1 page 36: "My said conversation with the 8th defendant took place on 5th June, the day before my departure on holiday. The 8th defendant recommended that I should find a way to attend the meeting convened for 9th June 1998. I, therefore, discussed the matter with my wife and about 2 pm on 5th June 1998 I telephoned the first defendant on his mobile phone and offered to defer my departure on holiday to enable me to attend the said meeting. The 1st defendant said that I should not defer going on holiday and that no final decision would be made impacting on my interest at the impending meeting. I accepted the 1st defendant's assurances with some reluctance, but as I booked the holiday with my family sometime beforehand it didn't seem fair to them to postpone our departure. I have no doubt that from that conversation the 1st defendant was fully aware of my dissatisfaction with the proposal that my profit share should be reduced rather than increased, as was my entitlement in the absence of any decision before that time that it should stay the same."
With the advantage of hindsight it was an unwise if understandable decision to put the pre-booked family holiday abroad before the partners' meeting. On the plaintiff's return on 20th June 1998 he was alerted to what had occurred at it by first a letter from and then a telephone conversation with the 5th defendant. So it was no surprise when on 22nd June 1998 he was handed by the 8th defendant the recommendation from the remuneration committee (volume 3 page 383) which recommended that his points, the basis upon which the profit share entitlement was calculated, should be moved down, and the minutes of the partnership meeting on 9th June 1998 (volume 3 pages 385 to 390) which recorded at page 389 the view that the plaintiff should work full-time in Birmingham and retrain to carry out pension work and that his points be reduced to 2 from 4.75.
As one would expect, there followed a number of meetings between the plaintiff and various permutations of the defendants, most of which are evidenced in memoranda. For the purposes of this judgment, it suffices to read the plaintiff's memorandum of the 1st July 1998 (volume 3 page 412). It was addressed by him to all the partners. It was headed "conduct of partnership business" and reads: "I am astonished that my partners should see fit to convene and hold a partners meeting for the intended purpose of passing business to the very significant detriment of the two partners who are unable to attend. I became aware of the meeting only a week before I was due to go on holiday and in circumstances when you knew I was unavailable for that reason. What had plainly been the subject of detailed consideration amongst you well before the meeting could have been raised with me before my departure on holiday, but it was not. Such conduct constituted a very obvious breach of the duty of good faith owed by all the partners to each other under the express terms of the agreement by which we agreed to operate the merged practice.
"The minutes of that meeting 9th June 1998 were handed me to me on the morning of my return from holiday, 22nd June 1998. At 10.30 am I met G and G who was in Leicester. At that meeting I handed B and G a note, a copy which is attached, whose terms are self-explanatory. I write to clarify the terms of that note which was necessarily written in some haste:
1. I confirm that I hold you to the terms of 9th April 1997 heads of agreement. The same comprises our partnership agreement which has not been altered, save in relatively trivial ways as demonstrated by a course of conduct. Accordingly, I do not accept a reduction in my points allocation.
2. I do not accept the proposal and you have not the right to require me to relocate to Birmingham to work full-time on the basis of retraining in pensions work. Whether a working arrangement can be agreed remains to be seen. I have already indicated my willingness to consider such an arrangement.
Your treatment of me on 9th June was shabby and cheap. Should you act multilaterally to impose a decision substantially in the terms of paragraph 2B(iii) of the 9th June Minute or attempt to conduct the affairs of our partnership otherwise than in accordance with the heads of agreement of 9th April 1997 I will be compelled to treat such conduct as at least a breach of the conditions of our partnership and even a repudiation of it so as to necessitate recourse to the court. I remain committed to ensuring that the firm as enlarged shall prosper but will not countenance or accept any further attempts to depart from the terms upon which all the partners agreed to merge our two former practices."
Further meetings followed at which the plaintiff kept notes which were a number of points challenged by the defendants present at those meetings.
Finally, on 19th August 1998 the plaintiff wrote to the 1st defendants the letter set out at volume 3, pages 433 and 435 offering without prejudice to negotiate terms for his withdrawal from the partnership. He received no substantive response and on 3rd September 1998 the plaintiff's then solicitors wrote to each of the defendants, as at volume 3 pages 437 to 439, asking for a response and indicating that in the absence of an acceptable response steps would be taken to initiate a dissolution of the partnership.
By fax sent on the morning of 7th September 1998 the 3rd defendant replied to the solicitors. That is at volume 3 pages 440 to 441. That response was not acceptable and in their letter dated 9th September 1998 the solicitors wrote (volume 3 pages 442 to 443) "It now behoves our client to accept with regret the repudiatory breach of the agreement which means that as of now the partnership is in dissolution."
Thereafter, things moved fast. On 11th September 1998 the plaintiff's solicitors issued the plaintiff's writ. On 16th September 1998 the defendants served on the plaintiff by hand a notice of expulsion dated the day before. That is at volume 2 page 450 to 452. Also on 16th September 1998 the defendants issued their writ. The defendants Notice of Motion dated 21st September 1998 was adjourned generally by consent on 24th September 1998, but on 23rd October 1998 was ordered to be heard with the plaintiff's Notice of Motion dated 20th October 1998 which was ordered to be heard as a motion by order. Thus the matter came before me on 14th December 1998.
I can deal shortly with the defendant's motion. It sought inhibition on publication that the partnership had been dissolved which the plaintiff undertook not to do until the hearing of his motion. Since I am not prepared, as I indicated at the conclusion of argument, to give the plaintiff the relief he seeks on his motion by order, it follows that the inhibition on publication must extend until the trial of the action. I am sure that an undertaking to that effect will be forthcoming.
What is the relief the plaintiff seeks? On the face of the document which we have at volume 1 page 8, the Notice of Motion seeks a declaration that the partnership has been dissolved from 10th September 1998, alternatively, an order that the partnership be dissolved. But recognising the potentially dire consequences of dissolution Mr Parry on behalf of the plaintiff, without prejudice to his course of action at trial, limits his submissions to contending that I should exercise my powers under Order...
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