Hopper v Hopper and Another
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Etherton,Lord Justice Moore-Bick,Lord Justice Thomas |
| Judgment Date | 12 December 2008 |
| Neutral Citation | [2008] EWCA Civ 756,[2008] EWCA Civ 1417 |
| Docket Number | Case No: HC07C00123,Case No: A3/2008/0610 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 December 2008 |
[2008] EWCA Civ 1417
Lord Justice Thomas
Lord Justice Moore-Bick and
Lord Justice Etherton
Case No: HC07C00123
Mr Mark Blackett-Ord (instructed by Messrs William Sturges) for the Appellant
Mr Richard Mawhinney (instructed by Clarke Wilmott) for the Respondent
Hearing dates : 28 th October 2008
Robert Edward Hopper (“Mr Hopper”), his wife June Lillian Hopper (“Mrs Hopper”), their son Robert John Hopper (“Robert”) and his wife Lyn Patricia Hopper (“Lyn”) were formerly partners in a fruit and vegetable wholesale business (“the Market Partnership”) and, separately, a farm business. Both partnerships, being partnerships at will, were automatically terminated by the death of Mr Hopper on 3 December 2003. In January 2007 Mrs. Hopper commenced proceedings against Robert and Lyn for various heads of relief in relation to those partnerships, including a declaration as to dissolution of the Market Partnership and an account of its profits. This is an appeal against declarations made by Mr Justice Briggs by order dated 17 March 2008 on the trial of preliminary issues in the proceedings (“the Preliminary Issues”).
At the same time as hearing the Preliminary Issues, Mr. Justice Briggs conducted the trial of other proceedings brought by Robert in relation to the land on which the farm business was conducted. He gave a single judgment in respect of both sets of proceedings. This appeal is not concerned with Robert's proceedings or the orders Mr. Justice Briggs made in respect of them.
The issues on this appeal concern entitlement to undrawn partnership profits, the application of the Limitation Act 1980 and the equitable doctine of laches to a claim for such undrawn profits, and entitlement to the profits of post-dissolution trading.
Relevant facts
Mr Hopper developed a successful fruit and vegetable wholesale business in the Western Market in Southall, Middlesex, during the 1970s and 1980s. By about 1985 that business was being run by Mr and Mrs Hopper, Robert and Lyn in partnership (“the RE Hopper Partnership”). In about 1989 the assets, liabilities and goodwill of the RE Hopper Partnership were transferred to the Market Partnership. That was a partnership at will, with no written partnership agreement, in which each of Mr. and Mrs. Hopper, Robert and Lyn were entitled to 25 per cent of the partnership profits.
The earliest accounts of the new business, entitled “Mr and Mrs R J Hopper and Mr and Mrs R E Hopper trading as R J Hopper”, were for the year ended 31 December 1989, and include prior year entries for an undefined period in 1988. It is common ground that at about this time Robert took over the day to day running of the market business from his father. Mr Hopper played no active part of any kind in the running of the Market Partnership or in the giving of instructions to its accountants. Although they were each entitled to 25 per cent of the Market Partnership's profits, Mr and Mrs Hopper never drew their full share of the profits. Mr Hopper drew £250.00, rising to £300.00, per week. In addition, they were paid an amount equal to their mortgage instalments, and additional specific sums from time to time. The income tax on the shares of all four partners was also paid out of the main trading account.
Following Mr Hopper's death, Robert continued to run the Market Partnership's business. The weekly payments continued to be made to Mrs Hopper at the same rate until they ceased at the end of December 2005.
Mrs Hopper claims, on her own behalf and, as personal representative of her late husband, on behalf of his estate (“the Estate”), to recover a sum slightly less than £300,000.00 as at December 2005 in respect of the shortfall between the actual drawings of Mr and Mrs Hopper and their respective 25 per cent shares of the Market Partnership's profits. Mrs Hopper also claims that, following her husband's death, she, in her personal capacity and also on behalf of the Estate, continued to be entitled to half the profits of the Market Partnership's business. Robert disputes both those claims.
Mr. Justice Briggs held that Mr. and Mrs Hopper's undrawn profit shares since the inception of the Market Partnership were added each year to their share of the capital of the Market Partnership; that share of capital was held by them jointly, and was separate from the share of capital of Robert and Lyn; and there was no bar by limitation or laches to Mrs. Hopper's claim, in her own right and on behalf of the Estate, to the capitalised undrawn profits shares. He further held that Mrs. Hopper, on her own behalf and on behalf of the Estate, continued to be entitled, after the dissolution triggered by Mr. Hopper's death, to the same shares of profit as before dissolution.
By his order, so far as relevant to this appeal, Mr Justice Briggs declared that Mrs Hopper and the Estate are each entitled to the undrawn balance of the 25 per cent profit shares of Mr and Mrs Hopper in respect of each accounting year of the Market Partnership back to 1989; that they are to be treated as having a separate capital entitlement (jointly between them) in the Market Partnership; that, following the death of her husband, Mrs Hopper was not an “outgoing partner” of the Market Partnership within the meaning of s.42 (1) of the Partnership Act 1890 (“the 1890 Act”); and that the payments of £300.00 per week made by Robert to Mr and Mrs Hopper, and after Mr Hopper's death to Mrs Hopper alone, were drawings on account of their profit share entitlements.
The appeal
Both Robert and Lyn have appealed the order of Mr Justice Briggs. For convenience, I shall refer in the rest of this judgment only to the submissions of Robert, reflecting the manner in which the appeal was conducted before us.
Robert contends that there was no evidence on which Mr Justice Briggs could hold that undrawn profit shares had become capitalised so that no limitation period applied to them. He also contends that there was no evidence on which the Judge could find that Mr and Mrs Hopper ought to be treated as having a separate capital account. He contends that all the partners had a single joint account. He further maintains that, in any event, a claim to set aside and reopen the accounts would be barred for any accounts signed more than six years before the present action was brought in January 2007. If the undrawn profit shares of Mr and Mrs Hopper are not to be regarded as capital, but rather as undrawn profits, he claims that the limitation period applicable is six years, and the claim in relation to any period before the accounting year to 31 December 2000 is, therefore, statute barred. Finally he claims that Mrs Hopper was an “outgoing partner” within the meaning of s.42 of the 1890 Act and that, following Mr Hopper's death, there was not a continuing partnership with Mrs Hopper either in her personal capacity or as personal representative of her husband.
Addition of undrawn profits to capital
The first issue is whether Mr and Mrs Hopper's undrawn share of profits was added to capital. This turns on whether or not there was an agreement between the partners to that effect. Mr Blackett-Ord, for Robert and Lyn, emphasised that partnership capital contributed by the partners cannot be increased or withdrawn without agreement of all the partners. Subject to any such agreement, the capital is repayable only on dissolution of the partnership (subject to the priorities specified in s.44 of the 1890 Act). The position is explained in Lindley & Banks on Partnership (2002) (18 th edn) at paras 17–10 to 17–11 as follows:
“In the absence of some contrary agreement, the capital of a firm cannot be increased or reduced without the consent of all the partners…A partner who agrees to contribute a sum of capital is not only bound to bring that sum into the firm but he will be prevented from withdrawing any part of it for so long as he remains a partner. Whether he will be entitled to the return of his capital once he has ceased to be a partner will depend on the terms of the agreement and/or the proper application of section 44 of the Partnership Act 1890…”.
By contrast, partnership profit belongs to the partners as soon as it has been ascertained, and the partners are entitled to take it as of right. Mr. Blackett-Ord submitted that, in properly drawn partnership accounts, each partner has a current account and a capital account. If a partner does not withdraw profit from the firm, it is, in the absence of agreement, part of the partner's current account, which, in the absence of agreement to the contrary, he or she can take when they wish. It can only be turned into capital by express or implied agreement of the partners, whereupon it can be paid out prior to dissolution only if all the partners agree. In Bouche v Sproule (1887) 12 App Cas 385 at 402 Lord Bramwell said:
“Where there is a partnership, whether an ordinary partnership or an incorporated partnership… There the undivided profits of any period, a year or shorter or longer time, continue to be undivided profits unless something in the articles of partnership or some agreement by all the partners make them capital. They do not become capital by effluxion of time or by their being used in the trading”.”
The significance of this analysis is that Robert contends...
To continue reading
Request your trial
-
Appeal From The Sheriff Appeal Court By Dr Andrei Sheveleu Against Drs Andrew Brown And Christopher Ducker
...pursuer’s share of profits. Its purpose is to enable former partners to wind up the affairs of a dissolved firm (see Hopper v Hopper [2008] EWCA Civ 1417 (otherwise unreported) at paras 45 to 49). To fall within the terms of section 38 it must be shown that the survival of authority, a righ......
-
Robin Steve Harry Holden v David Andrew Holden
...the agreement of the partners — see Bouch v Sproule (1887) 12 App Cas 385 at 402 where in a passage cited at [12] in Hopper v Hopper [2008] EWCA Civ 1417 (“ Hopper”) Lord Bramwell said: “Where there is a partnership, whether an ordinary partnership or an incorporated partnership… There the......
-
Jaswinder Singh Bahia v Inderdeep Singh Sidhu (as Personal Representative of the Estate of Tara Singh Sidhu)
...carried on post-dissolution, the estate of the deceased is entitled to a share in the continuing profit: see also Hopper v Hopper [2008] EWCA Civ 1417 at [48–49] per Etherton LJ. v) On the taking of an account: a) If the partners have agreed that the partnership's annual accounts, once app......
-
Sheveleu v Brown and Ducker
...CSOH 128; 2006 SLT 975; 2007 SCLR 155 Emerson v Emerson's Estate [2004] EWCA Civ 170; [2004] 1 BCLC 575; [2004] NPC 17 Hopper v Hopper [2008] EWCA Civ 1417 Inland Revenue Commissioners v Graham's Trs 1971 SC (HL) 1; 1971 SLT 46; [1970] TR 343 and 1970 SLT 149; [1969] TR 519 MacCredie's Trs ......
-
Formation and Expansion
...Savage Associates (1983) 127 Sol Jo 441. 41 Pilling v Pilling (1865) 3 De G J & Sm 162, 46 ER 599. 42 Hopper and another v Hopper [2008] EWCA Civ 1417. Formation and Expansion 25 that they had not; the accounts for each year were consistent with the original agreement and there was no evide......
-
Table of Cases
...All ER (D) 160 (Mar) 14, 15 Hopper v Hopper [2008] EWHC 228 (Ch), [2008] 1 FCR 557, [2008] All ER (D) 275 (Feb) 151 Hopper v Hopper [2008] EWCA Civ 1417, [2008] All ER (D) 129 (Dec) 24, 105 Hosking v Marathon Asset Management LLP [2016] EWHC 2418 (Ch), [2017] 2 WLR 746, [2016] All ER (D) 23......
-
Financial Issues
...done for the preservation of the partnership business or property (s 24(2) of the Partnership Act). 6 Hopper and another v Hopper [2008] EWCA Civ 1417. 7 Popat v Shonchhatra [1997] 3 All ER 800. 106 Partnership and LLP Law Loans Subject to contrary agreement, partners may be paid interest o......