“Procedure against partnership property for a partner’s separate judgment debt. (1)A writ of execution shall not issue against any partnership property except on a judgment against the firm. (2)The High Court, or a judge thereof, . . . F1 [F2or the county court in England and Wales or a county court in Northern Ireland,] may, on the application by summons of any judgment creditor of a partner, make an order charging that partner’s interest in the partnership property and profits with payment of the amount of the judgment debt and interest thereon, and may by the same or a subsequent order appoint a receiver of that partner’s share of profits (whether already declared or accruing), and of any other money which may be coming to him in respect of the partnership, and direct all accounts and inquiries, and give all other orders and directions which might have been directed or given if the charge had been made in favour of the judgment creditor by the partner, or which the circumstances of the case may require. (3)The other partner or partners shall be at liberty at any time to redeem the interest charged, or in case of a sale being directed, to purchase the same”
“44.It is a well established principle of our constitutional law that a court order must be obeyed unless and until it has been set aside or varied by the court (or, conceivably, overruled by legislation). The principle was authoritatively stated in Chuck v Cremer (1846) 1 Coop temp Cott 338; 47 ER 884, in terms which have been repeated time and again in later authorities. The case was one where the plaintiff’s solicitor obtained an attachment against the defendant in default of a pleaded defence, disregarding a court order extending the period for filing the defence, which he considered to be a nullity. The order in question had been intended to give effect to an agreement between the parties, but had mistakenly allowed the defendant longer to file a defence than had been agreed. The Lord Chancellor, Lord Cottenham, set aside the attachment, and stated at pp 342-343: “A party, who knows of an order, whether null or valid, regular or irregular, cannot be permitted to disobey it … It would be most dangerous to hold that the suitors, or their solicitors, could themselves judge whether an order was null or valid - whether it was regular or irregular. That they should come to the Court and not take upon themselves to determine such a question. That the course of a party knowing of an order, which was null or irregular, and who might be affected by it, was plain. He should apply to the Court that it might be discharged. As long as it existed it must not be disobeyed.” 45.Three important points can be taken from this passage. First, there is a legal duty to obey a court order which has not been set aside: “it must not be disobeyed”
“It is the plain and unqualified obligation of every person against, or in respect of whom, an order is made by a court of competent jurisdiction, to obey it unless and until that order is discharged. The uncompromising nature of this obligation is shown by the fact that it extends even to cases where the person affected by an order believes it to be irregular or even void.”
“Very different considerations apply in the present context. First, the normal rule in relation to an order of the court is that it must be treated as valid and be obeyed unless and until it is set aside. Even if the order should not have been made in the first place, a person may be liable for any breach of it committed before it is set aside.”
“The Board would reject entirely [the appellant’s] submission that the principle established in Boddington is relevant only in the context of criminal prosecutions and not, as here, Ministerial Directions. The Board would reject too the suggested analogy between Ministerial Directions and the orders of superior courts which, it is well established (see for example, Isaacs v Robertson[1985] AC 97 ) must always be obeyed, whatever their defects, until set aside.” 48.As Richards LJ pointed out in Director of Public Prosecutions v T at paras 30-31, although Romer LJ referred in Hadkinson v Hadkinson to “a court of competent jurisdiction” (para 46 above), and although that case, like Isaacs v Robertson and M v Home Office , was concerned with a court of unlimited jurisdiction, the rule has also been applied to courts of limited jurisdiction: see, for example, Johnson v Walton[1990] 1 FLR 350 and In re B (Court’s Jurisdiction)[2004] EWCA Civ 681 ;[2004] 2 FLR 741 . 49.That is consistent with the rationale of the rule. As explained in para 45 above, it is based on the importance of the authority of court orders to the maintenance of the rule of law: a consideration which applies to orders made by courts of limited jurisdiction as well as to those made by courts possessing unlimited jurisdiction. In the present case, the First-tier Tribunal was in any event a court of competent jurisdiction: it possessed jurisdiction under paragraph 22 of Schedule 2 to the 1971 Act to hear and determine applications for bail. 50.It is relevant to note some other recent examples of the application of this approach, in contexts more closely analogous to that of the present case. First, the case of R v Central London County Court, Ex p London[1999] QB 1260 concerned the compulsory detention of a patient in hospital under mental health legislation. The application for his admission by the hospital managers was made by the local social services authority, which had been authorised to make the application by orders made by the county court. The patient subsequently applied for judicial review to quash the court orders and the compulsory admission based upon them. The Court of Appeal concluded that the orders were valid, but went on to consider what the position would be if the county court had no jurisdiction to make them. Stuart-Smith LJ, with whom Robert Walker and Henry LJJ agreed, cited Hadkinson v Hadkinson , Isaacs v Robertson , Boddington and Percy v Hall , and concluded at para 36 that even if the county court had no jurisdiction to make the orders in question, the decision of the hospital managers to admit the applicant was valid. As he explained at para 30, if the orders were made by the county court without jurisdiction, then the applicant was entitled to have them quashed, but he was not entitled to a declaration that the decision to admit him was unlawful: that decision could only be quashed if it was ultra vires the hospital managers at the time when it was made, and it was not. 51.Another recent example, which also illustrates the point that the rule set out in Chuck v Cremer is not confined to orders made by courts possessing unlimited jurisdiction, is the decision of the Court of Appeal (Simon Brown, Mummery and Dyson LJJ) in R (H) v Ashworth Special Hospital Authority[2002] EWCA Civ 923 ;[2003] 1 WLR 127 . The case arose out of the decision of a hospital authority to re-detain a patient after a mental health tribunal had ordered his discharge from detention. The hospital authority then applied for judicial review of the tribunal’s order, on the ground that it was unreasonable and unsupported by adequate reasons, and the patient applied for judicial review of the authority’s decision, on the basis that it was incompatible with the tribunal’s order. Both applications succeeded: the tribunal’s order was held to be unlawful and was quashed, but the authority was also held to have acted unlawfully in making a decision which was inconsistent with the tribunal’s order at a time when that order had not been set aside. The mental health tribunal was, of course, a body exercising a limited jurisdiction. 52.Dyson LJ based his reasoning uponarticle 5(4) of the European Convention on Human Rights , but it was entirely consistent with the common law. He stated at para 56: “In the absence of material circumstances of which the tribunal is not aware when it orders discharge, in my judgment it is not open to the professionals, at any rate until and unless the tribunal’s decision has been quashed by a court, to resection a patient. … To countenance such a course as lawful would be to permit the professionals and their legal advisers to determine whether a decision by a court to discharge a detained person should have effect.”
“… the tribunal’s view must prevail; the authority cannot simply overrule the discharge order. Court orders must be respected - the rule of law is the imperative here.”
“It is an important principle of the administration of justice that an order of a court of competent jurisdiction made in the exercise of that jurisdiction, as it was in this case, is valid and binding until it is varied or set aside, either on appeal or in the proper exercise of the court’s own jurisdiction. (It is unnecessary in this case to consider the position in relation to an order which is unlawful on its face or which is made in excess of jurisdiction, though, as appears from the authorities, an order which is valid on its face is binding even if it was made in excess of jurisdiction and is therefore liable to be set aside.) It is necessary that that should be the case, both in order to preserve the authority of the courts and thereby the orderly administration of justice and to ensure that those who have to take action on the basis of the court’s orders may be confident that they can lawfully do so.”
“Dissolution by expiration or notice. Subject to any agreement between the partners, a partnership is dissolved— (a)If entered into for a fixed term, by the expiration of that term: (b)If entered into for a single adventure or undertaking, by the termination of that adventure or undertaking: (c)If entered into for an undefined time, by any partner giving notice to the other or others of his intention to dissolve the partnership. In the last-mentioned case the partnership is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is so mentioned, as from the date of the communication of the notice”, which refers to the ability of partners to dissolve a partnership by various means including by service of a notice, and where, unless otherwise agreed, section 32 provides the dissolution that occurs as at the date of the notice. He has also taken me to various passages and sections within Lindley & Banks on Partnership in its 20th Edition, including elements of chapter 19 which relates to partnership shares. Subject to any agreement between the partners, a partnership is dissolved— 59. Section 1 of chapter 19 deals with the nature of a partnership share and I read paragraph 19-01 to 19-08 into this judgment. “ Although it is convenient to refer to a partner’s interest in the firm as his “share,” that expression is notoriously difficult to define, not least because its meaning dif- fers according to the context in which it is used. In common parlance, a share is usu- ally seen merely in terms of an interest in the profits of a business and of a capital or “equity” stake therein; indeed, this may well be the partners’ own perception. However, in legal terms, such an approach is too simplistic, since the constituent elements which go to make up a share are not only infinitely variable but subject to potential alteration during the continuance of the partnership and thereafter. Thus, whilst the “share” of an outgoing partner may quite properly be viewed solely in financial terms, reference to the “share” of a continuing partner must include the totality of the rights which he enjoys under the partnership agreement and under the general law. It follows that no single meaningful definition is possible and, if the expression is used without regard to the context, confusion and potential disputes are inevitable. It was for this reason that the Court of Appeal in Ham v Ham emphasised that the meaning to be ascribed to the expression “share” in a partner- ship agreement will ultimately be a matter of construction rather than “the applica- tion of a well defined term”
“A partner in an English partnership has an equitable interest in the partnership assets and thus will be able to show that he had a proprietary interest to the extent of his profit and share in the partnership.”
“As between themselves, partners are not entitled individually to exercise proprietary rights over any of the partnership assets. This is because they have subjected their proprietary interests to the terms of the partnership deed which provides that the assets shall be employed in the partnership business, and on dissolution realised for the purposes of paying debts and distributing any surplus. As regards the outside world, however, the partnership deed is irrelevant. The partners are collectively entitled to each and every as- set of the partnership, in which each of them therefore has an undivided share.”
“What is meant by the share of a partner is his proportion of the partnership assets after they have been all realised and converted into money, and all the debts and liabilities have been paid and discharged. This it is, and this only, which on the death of a partner passes to his representatives, or to a legatee of his share; which under the old law was considered as bona notabilia; which on his bankruptcy passes to his trustee …”
“(2) General dissolution In the event of a general dissolution, each partner will again be entitled to insist on the partnership assets being applied towards payment of the firm’s debts and li- abilities and a division of any surplus proceeds. Until such time as those assets are either sold or divided in specie, it is submitted that each partner’s share will have the same proprietary character as it had prior to the dissolution. Neverthe- less, in terms of value, the share must still be expressed as a net entitlement since, in the absence of some specific agreement between the partners, it cannot properly be viewed in any other light. This analysis was, in effect, confirmed by the Court of Appeal in Popat v Shonchhatra. The fact that a partner’s share may have been ascribed a certain value as at the date of dissolution, e.g. in a dissolution account, is neither here nor there, since it does not represent his ultimate entitlement.” and which he says shows effectively once a dissolution has occurred within the meaning of section 32 is support for his contention but the law as to partnership property should cease to apply. In the event of a general dissolution, each partner will again be entitled to insist on the partnership assets being applied towards payment of the firm’s debts and li- abilities and a division of any surplus proceeds. Until such time as those assets are either sold or divided in specie, it is submitted that each partner’s share will have the same proprietary character as it had prior to the dissolution. Neverthe- in the absence of some specific agreement between the partners, it cannot properly be viewed in any other light. This analysis was, in effect, confirmed by the Court of Appeal in Popat v Shonchhatra. The fact that a partner’s share may have been is neither here nor there, since it does not represent his ultimate entitlement.” 61. In further support of that, he has drawn my attention to paragraphs 19-25—19-27 of Lindley (dealing withsection 39 of the Partnership Act 1890 ) which I also read into this judgment: “Lord Lindley was at pains to point out that, irrespective of the title which it may be given, the foregoing right normally has little practical application prior to the dis-solution of a partnership, when its affairs fall to be wound up or the share of a partner ascertained. This is now expressly recognised by section 39 of the Partner- ship Act 1890, which provides as follows: “39. On the dissolution of partnership every partner is entitled, as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and li- abilities of the firm, and to have the surplus assets after such payment applied in pay- ment of what may be due to the partners respectively after deducting what may be due from them as partners to the firm; and for that purpose any partner or his representatives may on the termination of the partnership apply to the court to wind up the business and affairs of the firm.”
“As a principal [a member of an ordinary partnership] is bound by what he does himself and by what his co-partners do on behalf of the firm, provided they keep within the limits of their authority; as an agent, he binds them by what he does for the firm, provided he keeps within the limits of his authority.”
“ Upon this state of facts Peake has established that the goods are his as against the execution creditor - that is to say, that he has such an interest in the goods that they cannot be taken in execution by the sheriff. By s. 23, sub-s. 1, of the Partnership Act, 1890, it is provided that a writ of execution shall not issue against partnership property, except on a judgment against the firm. Under sub-s. 2 any judgment creditor of a partner may obtain a charging order on that partner's interest in the partnership property. Previous to this enactment the sheriff under a judgment against a partner could seize and sell the interest of the partner in a partnership. Such a seizure was not adverse to the other partners; the sheriff only purported to deal with the share and interest of the partner who was the execution debtor, and it was for this reason that it was held that interpleader proceedings do not lie where the debtor's partner gives notice to the sheriff that the goods are partnership property, and alleges that the debtor has no beneficial interest in them, being indebted to the firm beyond the amount of his share in the effects. The sheriff's duty was to sell the share, though he might not have been able to ascertain the amount of actual interest: Holmes v. Mentze. (1) If the execution creditor disputed that any particular chattels were in fact partnership property and alleged that they were the sole property of the execution debtor, the ordinary interpleader issue would be directed to try this question: Holmes v. Mentze (2); Dibb v. Brooke & Sons. (3) Under the present law, seeing that the sheriff is no longer entitled to seize in execution the share of a partner in a partnership, if on such a seizure a claim is made that the property is partnership property and this is not disputed, an order should be made at chambers for the sheriff to withdraw. If the execution creditor disputes the partnership with regard to particular chattels and claims that they are the sole property of the execution debtor, the other partner may maintain the claim of the partnership to the chattels upon an interpleader issue, and such a dispute will be the proper subject of an interpleader. If on the other hand the other partner maintains that certain chattels are his own property and do not belong to the partnership, this question does not properly fall to be determined on a sheriff's interpleader, as in neither case would the sheriff be right in seizing them under a judgment against the debtor partner. The dispute should be decided by an inquiry directed under s. 23, sub-s. 2, of the Partnership Act, 1890, to ascertain the particulars of the partnership assets and of the debtor's share and interest therein.”
“The practice in interpleader is well settled, and I have dwelt upon it because the judge, in deciding against the claimant in the present case, thought himself bound to do so, owing to the decision in Flude, Ld. v. Goldberg. (3) This view was erroneous. That decision of the Court of Appeal proceeded upon the facts of that particular case, and does not disturb the general rule that a claimant, having claimed under a title which he failed to prove, is not thereby precluded from relying on the title found. In Flude, Ld. v. Goldberg (1) the claimant had filed particulars of his claim under the County Court Order XXVII., r. 5, by which a claimant is required to lodge particulars of the ground of his claim. He stated that "the grounds of my claim are that the said goods and chattels were purchased by me out of my own proper moneys, or upon my own proper credit, from the following firms," whose names he proceeded to state. The partnership was strenuously denied by Isaacs, the claimant, both in his affidavit and in his evidence at the trial, while it was the execution creditor who insisted on the partnership, and that the goods were partnership goods and not that the goods were the sole property of Goldberg. This was the dispute between the parties. No application was made to amend the particulars, and the case proceeded at the trial on the claim as thus appearing on the record. It was under these circumstances that the Court of Appeal decided that the county court judge was right, having regard to the facts of the case, the course of the trial before him, and the conduct of the claimant, in keeping him to the record as it stood and as if limited by his particulars, and in holding that he had failed in his claim. Isaacs persisting in his claim to be sole owner of the goods, the question was left by the judge to the jury, "Were the goods in question the goods of Maurice Isaacs alone?" and the jury answered "No." This answer disposed of the claim. There was no application for leave to amend, and no application to the judge to put the question to the jury whether the goods in question were the goods of the claimant as against the execution creditor. The case must be regarded as having turned on the particular facts. Another instance of a claimant having been held bound by the particulars of his claim is Hockey v. Evans. (2) In the present case the claimant, although alleging that the goods seized are his absolute property, has exhibited a copy of the agreement of July 18, 1914, to which I have before referred, showing the purchase by himself and Bellamy jointly. It may be that in substance all the beneficial interest in the chattels belonged to him, as he found all the money to buy them, and they are said not to be worth or to have realized the amount of his lien. But technically the goods belong to the adventurers jointly. In my opinion the learned judge was wrong in deciding that he was bound by the case of Flude, Ld. v. Goldberg (1) to hold that there was no case for the defendant to answer. The claimant has proved a prima facie case that the sheriff was wrong in making the seizure. The judgment must be set aside and a new trial had. Any costs paid to be repaid. The appellant to have the costs of this appeal. The costs of the former trial and of the new trial to abide the event.”
“The issue came on for trial before Rowlatt J., and at the end of the plaintiff's case counsel for the defendant, the execution creditor, submitted that there was no case because the plaintiff had in hisaffidavit claimed the goods as his absolute property and when that case failed in proof could not set up a claim as partner. In support of this contention he relied on the cage of Flude, Ld. v. Goldberg. (1) Rowlatt J. held that he was bound by that case to uphold the defendant's contention and gave judgment accordingly. The learned judge had not the advantage of a full report of the case; if he had had, I think he would not have felt himself bound by it. It turned entirely upon the peculiar circumstances of that particular case. Something turned upon the nature of the proceedings in the county court and the County Court Rules, but the main ground of the decision was that the conduct of the claimant in that case had been such that he ought not to be allowed to set up a case other than that on which he made his claim in the first instance. This is apparent from the remarks of Bankes L.J. in a note of the judgment supplied to us by the reporter. The learned Lord Justice said "It is just one of those cases where a claimant ought to be bound by his particulars," and it is clear that he was speaking with reference to the special facts of the case. The case did not decide that in all cases the claimant must prove the exact interest which he has alleged in his claim. The affidavit is not a pleading, and the issue is not whether the claimant has proved that all he there swore is correct; it is whether the goods are his property as against the execution creditor, and to succeed in that issue it is sufficient for him to prove such an interest as will make it wrongful as against him that the goods should be seized to satisfy the debt due from the execution debtor. An interest as partner is in my opinion such an interest. Since the Partnership Act, 1890, partnership property cannot be seized to satisfy the debt of one partner; all that can be done is to make an order charging the partner's interest in the partnership property with payment of the amount of the judgment debt, and the share can only be ascertained after satisfying all the partnership liens and other claims. The claimant must state proper materials to enable the judgment creditor to form a correct judgment of the nature of the claim: see per Maule J. in Webster v. Delafield (2); Halsbury's Laws of England, vol. 17, p. 597, s. 1190; but it is nowhere decided that if heakes an incorrect statement or draws a wrong inference from those facts his claim must be dismissed. The decision of the Divisional Court in Flude, Ld. v. Goldberg (1) established the contrary, and was only reversed on the special circumstances of the case. There may be cases in which the claimant may be prohibited from making any alteration in his claim because it is unjust to the execution creditor by reason of his being misled as for other reasons, as in Flude, Ld. v. Goldberg (2); see also Hockey v. Evans. (3) But in this case nothing of the kind exists. All the facts upon which the claimant relies are set out in the affidavit and exhibits, and all that can be said is that the claimant has stated a wrong conclusion from the facts, i.e., that the goods were his absolute property, and that he incorrectly stated that Bellamy had assisted him in the negotiations instead of stating that he was his partner. If the execution creditor had been willing to admit the partnership, some question as to costs might have arisen; but he is not so willing, he wishes to contest the fact of the partnership and to attempt to prove that the goods were the absolute property of Bellamy.”
“A further point was taken before us, i.e., that interpleader proceedings cannot be taken and an issue cannot be granted where the claim is in respect of a partnership. This is stated to be the case in some text-books, and the authority upon which it is so stated is Holmes v. Mentze (4), more fully reported in 4 Ad. & E. 127. This case does not support the proposition. According to the procedure then in force a rule was obtained calling on the claimant and the execution creditor to state their claims. The claimant alleged a partnership; the execution creditor did nothing and did not contest it. The Court discharged the rule on the ground that there was no adverse claim, but on the case coming before it again on another point Patteson J. said that if on the first occasion the partnership had been contested the case would have been within the Interpleader Act and the rule would have been granted. It is therefore no authority that even at that date a claim of partnershipcould not have been the subject of interpleader proceedings. But at that time there was power to seize goods for one partner's debt, and the result of proving a partnership was not that the sheriff was obliged to withdraw, but that he could only sell the partner's interest and not the absolute property in the goods. Since the Partnership Act, 1890, the partnership goods cannot be seized for a partner's debt, and therefore to prove an interest as partner is to prove that the seizure was wrongful as against the claimant, and the sheriff must withdraw. A proper way of deciding whether the claim to such an interest is well founded is in my opinion by interpleader proceedings, and I can see no reason in principle or authority why such proceedings do not apply to such a claim.”
“64. Apparently accepting the point that once the court has determined the applicant’s claim, the prohibition on sale in paragraph 60 ceases, Mr Royle nevertheless submits that, where there is an actual or potential appeal against the court's determination, an enforcement agent would be ‘highly unwise to sell the goods in control’. It was, Mr Royle says, precisely for that reason that the second respondent made the application of4 December 2020 , in that there was a suggestion that Jacqueline Hamilton owned the vessel; and Mr Hamilton had embarked upon various applications, including for permission to appeal against the decisions of Master Cook. An enforcement agent would be likely to lose his protection under paragraphs 63 and 64 of Schedule 12, were he or she to sell in such circumstances. 65. I have to say that I do not accept that last concern. Paragraphs 63 and 64 of Schedule 12 confine an enforcement agent’s liability to two situations. The first is where the enforcement agent ‘had notice that the goods were not the debtor’s, or not his alone’. The mere suggestion that Jacqueline Hamilton might own the goods does not come close to constituting such notice. The second situation is where before sale the ‘lawful claimant had made an application to the court claiming an interest in the goods’. That, too, is not relevant. Mr Newett’s application had been unsuccessful. Even if the position on appeal turned out to be otherwise, I do not consider that that would give rise to liability on the part of the enforcement agent”