Barnes v Bennett et Al

JurisdictionJamaica
CourtCourt of Appeal
JudgeCarey, J.,Wright, J.A.,Carey, J.A.,Dower, J.A.
Judgment Date15 March 1993
Neutral CitationJM 1993 CA 18
Docket NumberNos. 58 & 59 of 1991
Date15 March 1993

Court of Appeal

Carey, J.A.; Wright, J.A.; Downer, J.A

Nos. 58 & 59 of 1991

Barnes
and
Bennett et al
Appearances:

R.N.A. Henriques, Q.C., Allan Wood & Richard Williams for appellant.

Dennis Goffe, Q.C., Miss Minette Palmer for respondents.

Partnership - Registration of Business Names Act, s. 3 — Registration of Titles Act, ss. 65, 74 — No proof of intention to form or carry on Champion Mufflers as a partnership at this stage — Appellant sole operator of business venture and occupant of premises — Appellant should recover costs.

Carey, J.
1

The parties in this case are brothers and a sister. The question which arises for decision is whether a partnership existed among them. There are two separate and distinct actions which were consolidated. In the first action, Lyle Barnes sued Jocelyn Bennett, Dalton and Michael Barnes to recover $295,488.15 which he claimed he had paid on their behalf pursuant to an agreement which involved all the parties purchasing a property situate at 76 Constant Spring Road in St. Andrew. The second action concerned a claim by Jocelyn Bennett, Dalton and Michael Barnes against Lyle Barnes in which the following relief was claimed:

  • “(i) a declaration that a partnership existed between themselves and the defendant.

  • (ii) a declaration as to when the partnership started.

  • (iii) a declaration as to when the partnership ended.

  • (iv) an order that the defendant shall render an account for the period of the partnership.

  • (v) an order that the defendant delivers up to the plaintiffs the various pieces of equipment found to be contributed to the business by them.

  • (vi) alternatively an order for payment to the plaintiffs of the true value of the equipment contributed by them.

  • (vii) an order for the defendant to repay to the plaintiffs all monies found to be contributed to the business by them.

  • (viii) an order severing the joint tenancy and for the defendant to pay to the plaintiffs their respective shares in the real property owned jointly by them or alternatively for the sale of the said property and the division of the proceeds equally between all the owners.

  • (ix) damages for loss of profits from the respective investment by the plaintiffs in the business.”

2

After the evidence was all in and in the course of the closing address by Mr. Goffe, Q.C., the judge granted amendments to the reliefs sought in respect of paragraphs (iv) to (ix) as under:

  • “(iv) An order declaring the joint tenancy severed.

  • (v) A declaration as to the respective beneficial interests of the owners.

  • (vi) An order for the sale of the land and that the net proceeds be distributed in accordance with the declaration as to the respective beneficial interests of the owners.

  • (vii) An order that the plaintiffs and the defendant are to be at liberty ti bid for and become the purchaser or purchasers as such sale of the said land.

  • (viii) an order that in respect of the period from December 1986 until the sale of the said land, the defendant pay to the plaintiff three quarters of such sum as represents a fair rent which would be the amount assessed under the Rent Restriction Act without regard to any such provisions of the said Act and if such sum be not agreed between the parties an order that an enquiry be conducted by the Registrar of the Supreme Court into the rent payable on that basis.

  • (ix) Damages for loss of profits from the respective investments by the plaintiffs in the business.”

3

By a judgment dated 26 th July, 1991, Chester Orr, J. ordered as follows:

  • A. (a) that in the Suit C.L. 8084/87 Judgment be entered for Dalton Barnes.

  • (b) that in the Suit C.L. 129/87 Judgment be entered for the plaintiffs, whereby it was adjudged:

    • (I) a declaration that a partnership existed between Jocelyn Bennet, Darlton Barnes, Michael Barnes and Lyle Barnes.

    • (II) A declaration that the partnership started in October 1983.

    • (III) A declaration that the partnership ended on 13 th February, 1987.

    • (IV) A order declaring the joint tenancy dissolved.

    • (V) A declaration that the equitable estate is to be held by the owners as tenants in common.

    • (VI) An order for sale of the land 76 Constant Spring Road and that the net proceeds of sale be distributed in equal shares.

    • (VIII) An order that all parties are at liberty to bid for and become the purchaser or purchasers at such sale of the said land.

    • (IX) Damages fro loss of profits assessed at $3,221,985.00 to be paid by Lyle Barnes. Cost to be taxed as agreed.”

4

Lyle Barnes questions that determination in his appeal to this court.

5

There is in this country, no Partnership Act or legislation similar to the United Kingdom Partnership Act, 1890. Partnerships are governed by the common law principles to be ascertained by reference to decisions of courts in England prior to the passing of that Act. Decisions on those provisions of the Act which have not altered the common law remain valid and helpful. Our Partnership (Limited) Act is, as its title implies, is limited in scope and creates a special statutory partnership subject to terms and conditions prescribed by the Act. That statute has no bearing whatsoever on what we are called upon to determine in this appeal.

6

The question whether a partnership existed is a question of mixed law and fact. Parties cannot by their mere say so, create a partnership nor is the fact that they assert that they are not determinative of the mater. See Weiner v. Harris [1910] 1 K.B. 285. In Stekel v. Ellice [1973] 1 W.L.R.191 at page 199 Megarry, J. helpfully suggested a test. He said this:

“…..What must be done, I think is to look at the substance of the relationship between the parties, and there is ample authority for saying that the question whether or not there is a partnership depends on what the true relationship is, and not on any mere label attached to that relationship. A relationship that is plainly not a partnership is no more made into a partnership by calling it one than a relationship which is plainly a partnership is prevented from being one by a clause negativing partnership.”

7

In Lindley on the Law of Partnership (14 th edition) p.126, the learned editors state as follows:

“As between the alleged partners themselves the evidence relied on, where no written agreement is forthcoming, is their conduct, the mode in which they deal with each other, and the mode in which each has, with the knowledge of the other, dealt with other people. This can be shown by books or accounts, by the testimony of clerks, agents, other persons, by letters and admissions…..”

8

The Partnership Act, 1890 (U.K.) defines partnership as the relation which subsists between persons carrying on business with a view of profit. This Act, it should be noted, is declaratory of the common law. One of the rules under the Act for determining whether a partnership exists is that the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business: section 2 (2) Partnership Act. It is important to bear in mind as well that the test of partnership is the carrying on of a business and not the agreement to carry it on. Partnership, properly so called, must be also distinguished from some loose agreement such as was held to be in the case of Keith Spicer Ltd. v. Mansel [1970] 1 W.L.R.333. With that brief exegesis on the law which I think to be applicable to the facts in this case, I can now turn to consider the evidence adduced at the trial.

9

It was argued, certainly on behalf of the appellant, that the case was starved of evidence relating to the first issue of whether or not a partnership existed. The onus in this regard was wholly on the plaintiffs in the second action (the respondents in this appeal). Mr. Henriques argued most forcefully that they had not. He pointed out that the particulars of their pleadings, which alleged three agreements, were never supported by evidence, nor were the specific agreements put to the appellant in cross-examination. On the question of profits, he contended that no evidence in that respect was adduced. To illustrate his first point, he referred to paragraph 3 of the statement of claim which averred as follows:

“3. In or about the year 1982 the second and third plaintiffs and the defendant agreed to set up a family partnership to operate a muffler specialist manufacturing, installing and repairing business and the business was duly set up and operated at 5 Red Hills Road in the Parish of St. Andrew.”

10

The plaintiffs condescended to particulars of this agreement in paragraph 4 of the statement of claim as follows:

“4. The agreement was that the second and third plaintiffs would purchase a welding machine, pipe bender machine, additional sets of oxy-acetylene torches and hoses, and that each of the partners would own one-third of the business and earn one-third of the profits, that the defendant would run the operation and be paid by the partnership for his work in addition to his share of the business and profits.”

11

The averment of the second agreement is to be found in paragraph 7:

  • “7. The first plaintiff found a place at 76 Constant Spring Road, Kingston 10 in the parish of St. Andrew, registered at Volume 1199 Folio 367 and bought it and it was agreed–

  • (a) to buy it in the name of the three plaintiffs and the defendant, for the price of $367,500.00

  • (b) and to operate the business there on the condition that the

    • (iv) partnership would be expanded to four to include the 1 st plaintiff and that the business would be owned by all four in equal shares.

    • (v) the defendant would continue to manage and operate the business and to be paid by the business.

    • (vi) the place would be for his work as before

    • (vii) the profits would be distributed equally among the partners.”

12

A third agreement is pleaded in paragraph 11 thus:

  • “11. The plaintiffs and...

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