Partnership Repudiatory breach of partnership agreement - dissolution of partnership - 'innocent' partner not discharged from obligation to contribute to firm's liabilitiesHurst v Bryk and others: HL (Lord Browne-Wilkinson, Lord Nicholls of Birkenhead, Lord Hope of Craighead, Lord Clyde and Lord Millett): 30 March 2000

The claimant was in partnership with the defendants.

The defendants entered into an agreement to dissolve the partnership as from 31 October 1990, which they invited the claimant to sign.

He refused.Regarding the agreement as a repudiatory breach of the partnership contract, he sought a declaration that he was thereby discharged from any obligation to contribute to the liabilities of the firm as they stood at 31 October 1990 or as they accrued thereafter.

Carnwath J dismissed his claim.

The Court of Appeal [1999] Ch 1 upheld that decision.

The claimant appealed.Clive Freedman QC and Charles Samek (instructed by Robert A Hurst) for the claimant.

Philip Hoser (instructed by Thomas Eggar Church Adams, Reigate) for the first, fourth, tenth, eleventh and twelfth defendants.Andrew Hochhauser QC (instructed by Howard Kennedy) for the nineteenth defendant.

The eighteenth defendant did not appear and was not represented.

The remaining defendants had reached settlements.Held, dismissing the appeal, the partners were jointly and not severally liable for the debts of the firm incurred while they were partners; that, unless varied by agreement, the rules governing the final settlement of the partnership accounts set out in s.44 of the Partnership Act 1890, including the requirement where necessary losses should be paid by the partners individually, in the proportion in which they were entitled to share profits, applied to the winding up of every partnership after a dissolution whatever the ground of dissolution and regardless of the conduct of the parties; that it would, be wrong in principle to have regard to theparties' conduct when taking the dissolution account; the contractual doctrine of repudiation did not afford the claimant an indemnity against his liability for the firm's debts, which could only be obtained by agreement or by rescission of the partnership contract ab initio; that the claimant's liability tocontribute to the accrued and accruing liabilities, and his partners' rights of contribution, arose from the fact that the liabilities had been incurred or assumed by the firm when the claimant was a partner; and those rights were not lost because the claimant's partners afterwards repudiated the contract and the claimant accepted it.

(WLR)