Civil litigation brief

The new rules on claims against and by partnerships are found in the inserted r 7.2A of the Civil Procedure Rules, which deal with service on partnerships. The rule itself is extremely short, it states that the Practice Direction makes provision for the procedures to be followed when claims are brought by or against a partnership.

Amendments are made to the Practice Direction that supplements Part 7 of the Civil Procedure Rules. The amendments deal with a number of detailed points relating to service against claims brought against two or more persons who:

1. were partners; and

2. carried on that partnership business within the jurisdiction at the time when the cause of action accrued.

The term 'partners' also includes persons claiming to be entitled as partners and persons alleged to be partners.

Action brought in partnership name

The Practice Direction states: 'Where that partnership has a name, unless it is inappropriate to do so, claims must be brought in or against the name under which that partnership carried on business at the time the cause of action accrued.'

Partnership membership statements

There is provision for the obtaining of a 'partnership membership statement', this is a 'written statement of the names and last known places of residence of all the persons who were partners in the partnership at the time when the cause of action accrued'.

There are a number of provisions ancillary to this.

(1) If the partners are requested to provide a copy of a partnership membership statement by any party to a claim, the partners shall do so within 14 days of receipt of the request.

2) The party making the request must state the date when the relevant cause of action accrued.

Where an individual carries on business in another name

The Practice Direction states that where a claim is brought against an individual who carries on business in the jurisdiction in a name other than his own name ('the business name'), the claim may be brought against the business name as if it were the name of the partnership.

A warning

There is a potential problem area here. The Practice Direction does not make it clear whether or not you can bring an action against an individual in business if the cause of action arose out of or as a result of that business.

In these circumstances issuing against someone who has a business name may not fall foul of the rules, however service at the business address could lead to problems.

CPR 6.5(6) deals with service and has a general heading 'nature of party to be served':

• The proprietor of a business can be served at his usual or last known residence or the place of business or last known place of business.
• An individual who is suing or being sued in the name of a firm can be served at his usual or last known residence or 'principal or last known place of business of the firm'.

This raises two issues:

• Service on an individual being sued in the name of a firm must be at the 'principal' place of business.

There is a strange distinction between the requirements for service on the proprietor of a business who can be served at the 'place of business', whereas an individual being sued in the name of a firm must be served at the 'principal' place of business. There is scope for an argument that service on any place of business is not good enough. A person sued in the name of a firm must be served at their 'principal' place of business.

• Service on a place of business may not be good service when the defendant is being sued as an individual

In O'Hara v McDougall [2005] EWCA Civ 1623, the Court of Appeal held that service on a rented property was not service on a 'place of business' and, therefore, not good service. However, at first instance, the circuit judge had also held that service could not take place at a place of business when the defendant was not being sued as a proprietor of a business. In that case, the claimants' case was in nuisance and the defendant was the owner of a property. The defendant was not being sued as the proprietor of a business. A result, the circuit judge held that proper service could not have taken place even if the address of service was a place of business. This issue was not considered by the Court of Appeal where the case was decided on the issue of 'place of business' alone.

This remains an open issue. However, it is clear that:

1. There could be problems in serving an individual at a business address when the action is not brought against that individual in his role as proprietor of a business or being sued in the name of a firm.

2. Although the rules may allow it, there could be some problems if an individual is sued in the name of a firm merely because he has a business. A prudent claimant would ensure that there is some connection between the action and the business name. Further, the precise address for service should be clarified at the outset.

Acknowledgement of service by partnerships

There is a change to the Practice Direction at Part 10. Where a claim is brought against a partnership:

1. Service must be acknowledged in the name of the partnership on behalf of all persons who were partners at the time when the cause of action accrued.

2. The acknowledgement of service may be signed by any of those partners, or by any person authorised by any of those partners to sign it.

Enforcing a judgment or order against a partnership

There are new additions to the Practice Direction to Part 70 in relation to enforcing judgment against a partnership. This states:

1. A judgment or order made against a partnership may be enforced against any property of the partnership within the jurisdiction.

2. A judgment or order can also be enforced against any person who is not a limited
partner and who:

(1) acknowledged service of the claim form as a partner;

(2) having been served as a partner with the claim form, failed to acknowledge service of it;

(3) admitted in his statement of case that he is or was a partner at the material time; and

4) was found by the court to have been a partner at a material time.

3. However,an order or judgment cannot be enforced against a limited partner or a member of the partnership may not be enforced against a limited partner or a member of the partnership who was ordinarily resident outside the jurisdiction when the claim form was issued unless he:

(1) acknowledged service of the claim form as a partner;

(2) was served within the jurisdiction of the claim form as a partner; or

(3) was served out of the jurisdiction with the claim farm as a partner with the permission of the court.

A judgment creditor who wants to enforce a judgment against a limited partner or a partner ordinarily outside the jurisdiction must apply to the court for permission to enforce.

Attachment of debts owned by a partnership

When a debt is due to a judgment creditor from a partnership, an interim third party debt order must be served on:

(1) A member of the partnership within the jurisdiction.

(2) A person authorised by a partner.

(3) Some other person having the control or management of the partnership business.

Charging order against a partnership

A charging order or interim charging order may be made against any property within the jurisdiction belonging to a judgment debtor that is a partnership. Again the interim order can be served on:

1. A member of the partnership within the jurisdiction.

2. A person authorised by a partner.

3. Some other person having the control or management of the partnership business.

New provisions relating to s 23 of the partnership Act

The Practice Direction also sets out new procedures under s 23 of the Partnership
Act 1890 '“ that is, proceeding against partnership property for a partner's separate judgment debt.

An application under s 23 must be served on the judgment debtor and on any other of the other partners that are within the jurisdiction. Note that the requirement is only to serve on one or more partners, the requirement is to serve on 'any' of the partners and not all, and the Practice Direction states, specifically:

'An application notice or order served under this paragraph on one or more, but not all, of the partners of a partnership shall be deemed to have been served on all the partners of that partnership.'

However, when a partner of the judgment debtor makes an application in the course of the proceedings, the application, and any order made, must be served on both the judgment debtor and judgment creditor and '...the other partners of the judgment debtor who are not joined in the application and who are within the jurisdiction'.

An application under s 23 may be heard by a Master, the Admiralty Registrar or a district judge.