Turner v Fenton
| Jurisdiction | England & Wales |
| Date | 1982 |
| Year | 1982 |
| Court | Queen's Bench Division |
Arbitration - Stay of judicial proceedings - Partnership - Partnership deed containing arbitration clause - Partnership action - Allegations in proposed counterclaim of incompetence, negligence and impropriety affecting professional reputation - Whether proceedings to be stayed -
The plaintiff ceased on January 11, 1981, to be a partner in a firm of solicitors, of which the eight defendants were the other partners. By a writ dated January 19, 1981, the plaintiff sought against his former partners accounts of moneys alleged to be due to him from the partnership, both as to profits and capital. By a summons dated February 24, 1981, the second to eighth defendants asked that the action should be stayed pursuant to section 4 of the Arbitration Act 1950, on the ground that by a partnership deed of October 11, 1973, it had been agreed to refer to arbitration the matters in respect of which the action was brought. The first defendant, the senior partner, neither joined nor opposed the application. The affidavit sworn in support of the summons contained a statement that certain matters in dispute arose out of the plaintiff's actions as a partner and after he ceased to be a partner; that it was intended to raise those matters by way of counterclaim, and that an outline of the matters in question had already been given to the plaintiff. The matters to which reference must have been intended were contained in a letter, dated January 28, 1981, which was headed “without prejudice” and was addressed to the plaintiff by the fourth defendant, acting on behalf of all the defendants. The letter, the admissibility of which was disputed by the defendants, contained express allegations of improper professional conduct and negligence and implicit allegations of dishonesty and breach of contract. In a later affidavit for the defendants it was stated that any defence or counterclaim would not include allegations of fraud or dishonesty, but that the allegations would be based on negligence, breach of duty of care and breach of contract.
On the hearing of the summons: —
Held, (1) that a party seeking exercise of the court's jurisdiction under section 4 of the Arbitration Act 1950, to grant a stay of the proceedings in the High Court, was under an obligation candidly to inform the court what issues were going to be raised in the proceedings, and therefore that the reference in the affidavit in support of the summons, which was necessary in order that the court should not be misled, amounted to a waiver of privilege in regard to the “without prejudice” letter, which therefore became admissible in evidence (post, p. 59F–60A).
(2) That where allegations of incompetence, negligence and impropriety were made so that a man's professional reputation was at stake, he ought to have the benefit of a trial in the High Court, even though no allegations of actual fraud or dishonesty were involved; further, that questions of the construction of a partnership agreement were also justification for retaining a case in the High Court despite an arbitration agreement, and, accordingly, the stay of proceedings would be refused and the action allowed to proceed in the High Court (post, p. 63C–D, H–64D).
The following cases are referred to in the judgment:
Barclays Bank Ltd. v. Cole [
Daintrey, In re, Ex parte Holt [
Derry v. Peek (
Everett v. Islington Guardians [
Osenton (Charles) & Co. v. Johnston [
Radford v. Hair [
Stafford Winfield Cook & Partners Ltd. v. Winfield [
No additional cases were cited in argument:
PROCEDURE SUMMONS
By a writ dated January 19, 1981, the plaintiff, Keith Turner, a solicitor, claimed against his former partners in the firm of Curwen, Jessopp & James. namely, Michael James Fenton, Thomas Wyndham James, David Anthony Sheppard Pickering, Robert Alexander Christoforides, Graham Louis Fry, Peter Jerzy Todleben Poole, David Charles Brooks and Stephen Brian Rofe, inter alia, accounts in respect (i) of profits and other moneys which he alleged should have been credited to his account in the quarterly account for the period ending December 31, 1978, and which remained undrawn as at January 11, 1979, the date on which he ceased to be a partner in the firm; (ii) of the profits or other benefits, not already drawn out, to which he would have been entitled in the quarter ending March 31, 1979, if he had remained a partner throughout that period; (iii) the credit balance in his ordinary capital account in the quarterly account for the period ending December 31, 1978; and (iv) of the credit balance in the plaintiff's special capital account at January 11, 1979.
By a summons dated February 24, 1981, the second to eighth defendants sought an order that all further proceedings in the action be stayed, pursuant to section 4 of the Arbitration Act 1950, the plaintiff and the defendants having, by the partnership deed between them of October 11, 1973, agreed to refer to arbitration the matters in respect of which the action was brought. The first defendant neither joined nor opposed the application.
The facts are stated in the judgment.
Gordon Bishop for the plaintiff.
I. B. W. McDonnell for the first defendant.
Roydon Thomas for the second to eighth defendants.
WARNER J. This is a procedure summons in an action brought by a solicitor against his former partners, the firm of solicitors concerned being Messrs. Curwen, Jessopp & James. There are eight defendants. The plaintiff was until January 11, 1981, when he left the firm, in charge of its Northampton office. The summons which was issued by the second to eighth defendants asks for an order that all further proceedings in this action be stayed pursuant to section 4 of the Arbitration Act 1950, the plaintiff and the defendants having, by the partnership deed between them, dated October 11, 1973, as subsequently varied and supplemented, agreed to refer to arbitration the matters in respect of which this action is brought.
The first defendant, who is the senior partner in the firm, neither joins in nor opposes the application made by the other defendants. He leaves the matter to the discretion of the court. He was, nonetheless, represented before me by Mr. McDonnell to whom I am grateful for his assistance. There are, in fact, independent proceedings in which the senior partner seeks an order for the dissolution of the partnership and for its affairs to be wound up. But I do not think that the existence of those proceedings has any bearing on the question that I have to decide.
Section 4 (1) of the Arbitration Act 1950 reads as follows:
“If any party to an arbitration agreement, or any person claiming through or under him, commences any legal proceedings in any court against any other party to the agreement, or any person claiming through or under him, in respect of any matter agreed to be referred, any party to those legal proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to that court to stay the proceedings, and that court or a judge thereof, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the agreement, and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings.”
I am satisfied, although Mr. Bishop who appeared for the plaintiff questioned it, that the second to eighth defendants were at the time when the proceedings were commenced, and still remain, ready and willing to do all things necessary to the proper conduct of the arbitration.
I was referred also to section 24 (2) and (3) of the Act, though, as I understand it, Mr. Bishop does not rely on that. Those subsections read:
“(2) Where an agreement between any parties provides that disputes which may arise in the future between them shall be referred to arbitration, and a dispute which so arises involves the question whether any such party has been guilty of fraud, the High Court shall, so far as may be necessary to enable that question to be determined by the High Court, have power to order that the agreement shall cease to have effect and power to give leave to revoke the authority of any arbitrator or umpire appointed by or by virtue of the agreement. (3) In any case where by virtue of this section the High Court has power to order that an arbitration agreement shall cease to have effect or to give leave to revoke the authority of an arbitrator or umpire, the High Court may refuse to stay any action brought in breach of the agreement.”
The plaintiff accepts that there is here a relevant arbitration clause in the partnership agreement, and that the dispute between himself and the defendants is within the scope of that clause. But he contends that there are a number of grounds on which I should be satisfied that there is sufficient reason why the matter should not be referred to arbitration in accordance with the partnership agreement, but should proceed in the High Court. He therefore contends that I should exercise my...
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