A Trio of Successes in Court –> Part 2 – When is a Partnership Agreement not “clear and unambiguous”?

The Gilson Gray Litigation & Dispute Resolution Team is at the cutting edge of dispute work in Scotland.  This is the second in a short series of blogs by Iain K Clark Solicitor Advocate, Partner and Head of Litigation and Dispute Resolution at Gilson Gray, regarding 3 of the team’s recent significant cases.

The team recently secured another success in what seems likely will become a significant case in partnership disputes: Tait v RGM Solicitors & Others 2015 SC GLA 50

The embarrassing thing here is that this case was a dispute between former partners in a firm of solicitors, and involved ambiguity in the wording of their partnership agreement.

We secured a successful Judgment in the Commercial Cause at Glasgow Sheriff Court, with our client being found entitled to payment of a fixed annual sum, irrespective of the firm being in profit.  The Commercial Sheriff also ruled that the agreement did not provide for the Pursuer to bear any of the losses of the firm.

The defenders appealed, but on 30 June 2015, we were successful again. The Sheriff Principal commented that:

“Whatever one makes of the preamble to [the] clause, its interaction with the wording which follows falls far short of creating a clause whose terms can be said to be clear and unambiguous.”

The appeal Judgment confirmed a long-standing legal rule that ambiguous wording should be given a meaning that makes ‘commercial common sense’; and, applying more recent case law, where there was a choice of ‘commercially sensible’ interpretation, the Court should choose the one which best makes commercial common sense.

In this case, because our client hadn’t become better off in practical terms by becoming a partner – but instead had approximately the same income – then the court thought that common sense meant he would not share his firm’s losses.

 When the Judgment was published, our client tweeted:

 “Great result for his client by Iain Clark, Solicitor Advocate of @GilsonGray”

This case illustrates the principle that a partner in a business may not automatically be responsible for his partnership’s losses; and that, if you want to have certainty in such matters, then you need to make sure that the partnership agreement properly reflects what the partners agreed.

The case was also of such general interest, it was reported in Scottish Legal News. 

The defenders have appealed further to the Inner House of the Court of Session and Grounds of Appeal are awaited.   The Appeal Hearing will likely take place in the spring of 2016.

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For More Information Contact:

Iain Clark
Mobile: +44 (0)7908 022 304
Direct Dial: +44 (0)141 530 2025
Email: iclark@gilsongray.co.uk

Alex Garioch
Mobile:  +44 (0)7841 921 685
Direct Dial: +44 (0)141 530 2041
Email: agarioch@gilsongray.co.uk

Rosie Walker
Mobile: +44 (0)7841 921 684
Direct Dial: +44 (0)131 516 5374
Email: rwalker@gilsongray.co.uk

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The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.