Scottish Court of Session Decisions

The Court of Session (Scotland) Act (Distribution of Business Act) 1857 (20 and 21 Vict. cap. 56), sec. 4, enacts—“All summary petitions and applications to the Lords of Council and Session which are not incident to actions or causes actually depending at the time of presenting the same shall be brought before the Junior Lord Ordinary

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officiating in the Outer House, who shall deal therewith and dispose thereof as to him shall seem just…”

The Partnership Act 1890 (53 and 54 Vict. cap. 39) enacts—Section 35—“On application by a partner the Court may decree a dissolution of the partnership in any of the following cases: … ( c) When a partner, other than the partner suing, has been guilty of such conduct as in the opinion of the Court, regard being had to the nature of the business, is calculated to Prejudicially affect the carrying on of the business. …( f) Whenever in any case circumstances have arisen which in the opinion of the Court render it just and equitable that the partnership be dissolved.”

Archibald Macnab and James Baird Macnab, two of the partners of the firm of Archibald Macnab & Sons, presented a petition to the Junior Lord Ordinary for dissolution of the partnership, under the Partnership Act 1890, section 35, on the grounds that Peter Macnab, the third partner, had been guilty of such conduct as was calculated to affect prejudicially the carrying on of the business, and that circumstances had arisen which rendered it just and equitable that the partnership should be dissolved.

The petitioners made specific and detailed averments of intemperate habits, failure to attend to business, and violence in language and conduct towards the petitioners on the part of the third partner, Peter Macnab.

Answers were lodged for Peter Macnab, in which he denied the averments of the petitioners and maintained that the petition was incompetent.

On 24th January 1912 the Lord Ordinary ( Hunter) dismissed the petition.

Opinion.—“The petition in this case is brought at the instance of two out of three of the partners of a business for dissolution of the partnership under the provisions of the Partnership Act of 1890, section 35, on two grounds—first, that the respondent, who is the third partner, has been guilty of such conduct as, regard being had to the nature of the business, is calculated to prejudicially affect the carrying on of the business; and second, that in the whole circumstances of the case it is just and equitable that the partnership should be dissolved. The averments in the petition with regard to the conduct of the respondent are apparently directed to three points—first, his continued inattention to business, second, his habits of intoxication, and third, violence used by him towards the other partners, i.e., the petitioners.

The respondent maintains that the application being in the form of a petition to the Junior Lord Ordinary is incompetent, and that the proper remedy for the petitioners in such circumstances as set forth would have been by action of declarator.

The Act of 1890 does not prescribe any form of procedure by which application may be made to the Court in a case coming within the provisions of that statute. In the case of Wallace v. Whitelaw, 1900, 2 F. 675, to which I have been referred, the Lord President (page 678), said ‘the term “application” may be held to include any competent proceeding for attaining that object in Scotland, and prior to 1890 this Court repeatedly entertained petitions presented to the Junior Lord Ordinary for dissolution of partnerships and the appointment of judicial factors.’

The question in this case is whether summary application is the proper procedure or not. No instance of such an application having been made to dissolve a partnership without any application for the appointment of a judicial factor—and there is none in this case—was cited at the bar. Although I was to some extent impressed by Mr Christie's argument in favour of entertaining the present application, I do not see my way to disregard what was said in the case of Wallace v. Whitelaw, to which I have just referred. There is no doubt that the circumstances in that case were different from the circumstances in the present, and that the question there decided was that the petition was incompetent as it had not been presented to the Junior Lord Ordinary; but from the opinions delivered in the Inner House it is manifest that the Judges there considered what, under the Act of 1890, was the appropriate form of procedure to be adopted, and in particular considered whether it was proper to proceed by way of summary application or to bring a formal declarator. For instance, the Lord President says, ‘It appears to me that an action of declarator would be the proper form wherever the parties are at variance with respect to matters requiring investigation or inquiry.’ Lord M'Laren at the end of his judgment says, ‘Where there is a dispute between the parties to a contract of copartnery as to the necessity for dissolution, it is according to all the traditions of our practice that it should be decided in an ordinary action where there is an opportunity of appealing on the relevancy or as to the form in which proof is to be taken.’ The remarks so made by these two Judges in that case appear to me to be directly applicable to the circumstances of the present case. The averments here made are not of that character that they can be instantly verified, but must of necessity involve, so far as I can at present see, a somewhat protracted inquiry into the conduct of the respondent extending over a considerable period of time. Looking to that circumstance therefore, in view of the opinions to which I have just referred, I do not see that I can do other than dismiss this petition as incompetent.”

The petitioners reclaimed, and argued—Procedure by petition was certainly not incompetent—Lindley, Partnership (7th ed.) 868–9—and the language of the statute under which the application was brought suggested procedure by petition rather than by action. “Application” was the word used, and in the Court of Session Act (Distribution of Business Act) 1857 (20 and 21 Vict. cap. 56) “application” seemed to be used to describe proceedings of the nature

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of petitions as distinguished from “causes” or “actions.” There was practice both before and after the Partnership Act 1890 (53 and 54 Vict. cap. 39) in favour of procedure by petition— Macpherson and Others, February 16, 1869, 41 Sc.J. 288, 6 S.L.R. 348; Eadie, &c. v. MacBean's Curator Bonis, February 19, 1885, 12 R. 660, 22 S.L.R. 422; Russell v. Russell, November 14, 1874, 2 R. 93, 12 S.L.R. 64; Thomson, June 2, 1893, 1 S.L.T. 59. In Logan v. Cunningham, September 30, 1903, 11 S.L.T. 327, the petition was thrown out because presented in the Bill Chamber. It was certainly expedient that in the present case the procedure should be that most conducive to expedition, for if the averments in the petition were true, then the business was suffering serious detriment, which should be brought to an end as soon as possible. Further, where, as here, the Court was asked to decree a dissolution, in the exercise of its discretion, on equitable grounds, then procedure by petition was more appropriate than by action of declarator, which was suitable rather to cases where a partner claimed a right to a dissolution in terms of a contract. The fact that a proof would be necessary did not matter. Such proof was allowed under, e.g., petitions for custody. The opinions in Wallace v. Whitelaw, February 23, 1900, 2 F. 675, 37 S.L.R. 483, were obiter, and the case raised no such question as was involved here. In any case these opinions recognised the competency of procedure by petition in suitable cases. This was a suitable case.

Counsel for the respondent were not called on.