Joyce v Morrisey & Ors, Court of Appeal - Civil Division, November 06, 1998, [1998] EWCA Civ 1711

Issuing Organization:Civil Division
Actores:Joyce v Morrisey & Ors
Resolution Date:November 06, 1998
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IN THE SUPREME COURT OF JUDICATURE Case No: CHANF 97/0150/CMS3

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

(His Honour Judge Weeks QC)

Sitting as a judge of the High Court

Royal Courts of Justice

Strand, London, WC2A 2LL

Friday 6th November 1998

B e f o r e :

LORD JUSTICE PETER GIBSON

LORD JUSTICE THORPE

LORD JUSTICE WALLER

JOYCE Respondent

v.

MORRISEY AND OTHERS Appellant

(Handed down transcript of

Smith Bernal Reporting Limited

180 Fleet Street, London EC4A 2HD

Tel: 0171 421 4040 Fax: 404 1424

Official Shorthand Writers to the Court)

MR MURRAY ROSEN QC and MR TIM PENNY (instructed by Messrs Angel & Co) appeared on behalf of the Appellants (Defendants).

MR NIGEL DAVIS QC and MR EDMUND CULLEN (instructed by Messrs Rowlands, Manchester) appeared on behalf of the Respondent (Plaintiff).

J U D G M E N T

(As approved by the court)

©Crown Copyright

LORD JUSTICE WALLER:

Introduction

"The Smiths" were a very successful pop group formed towards the end of 1982. The group was a partnership comprising 4 members: the plaintiff (Mr Joyce), the 1st defendant (Mr Morrissey), the 2nd defendant (Mr Marr), and Andy Rourke (Mr Rourke). Mr Rourke was initially a party to the litigation but settled his claim very shortly after the writ was issued. The group disbanded in 1987.

Mr Joyce was the drummer for the group. In March 1989 he issued proceedings claiming a declaration that he was a partner in "The Smiths", entitled to ¼ share of all nett profits arising out of the activities (other than songwriting or publishing) of "The Smiths". He sought an account on that basis. By order of Deputy Master Price made on 8 July 1993 it was directed that Mr Joyce's entitlement to the relief set out in paragraphs 1 - 4 of the prayer to his statement of claim be tried as preliminary issues. The trial of those preliminary issues took place between 2 - 11 December 1996 before His Honour Judge Weeks QC sitting as a judge of the Chancery Division. By the time the issues came to be tried it was not in dispute that Mr Joyce was a partner; it was accepted that the partnership was dissolved as from 31 May 1987 and it was further accepted that the affairs of the partnership should be wound up. The only contentious issue was whether Mr Joyce was an equal partner entitled to ¼ of the profits arising out of the activities (other than songwriting or publishing) of "The Smiths".

It was that issue which the judge, after a 7 day trial, decided in favour of Mr Joyce. At the trial Mr Morrissey and Mr Marr were separately represented. It is only Mr Morrissey who has pursued an appeal against the judge's decision being now represented by Mr Murray Rosen QC and Mr Tim Penny.

It was common ground both before the judge and before us that the starting point was s. 24 of the Partnership Act 1890 which provides as follows:-

"The interests of partners in the partnership property and their rights and duties in relation to the partnership shall be determined, subject to any agreement express or implied between the partners, by the following rules: (a) all the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses whether of capital or otherwise sustained by the firm ..... "

It was Mr Joyce's case that apart from the agreement that he should not be entitled to share in the profits resulting from songwriting and publishing there was no other agreement which disentitled him from sharing equally in the capital and profits of the business.

It was the defendants' case that it was a term of the partnership that profits would be shared in the proportions Mr Morrissey 40%, Mr Marr 40%, Mr Joyce 10% and Mr Rourke 10%. They did not assert or seek to establish an express agreement to that effect but alleged that the same was to be inferred from conduct, relying on various matters including certain alleged discussions between the parties. They in the alternative alleged that the same conduct and/or discussions gave rise to an estoppel by convention by which it was alleged that Mr Joyce was estopped from asserting a partnership other than one which shared the profits 40%, 40%, 10% and 10%.

The facts relied on by the defendants to support the agreement and the estoppel were in substance the same and the judge held that the estoppel argument added nothing because if, on the facts, there was no agreement, then there could be no common shared assumption on which to found an estoppel (pp 40-41 of the judgment). That part of the judgment is not appealed against, and although Mr Rosen referred in his submissions to estoppel, he ultimately accepted that if he did not succeed in establishing an agreement he could not succeed on estoppel. That was a concession in my view he was bound to make.

In his skeleton argument Mr Rosen summarised conveniently in paragraph 9 the matters relied upon by Mr Morrissey and Mr Marr in order to rebut the presumption in s. 24 of the 1890 Act.

First, they relied upon a wide range of matters showing that Mr Morrissey and Mr Marr alone controlled the management and organisation of the band and had a far greater contribution and commitment thereto.

Second, Mr Marr alleged that during a recording session at Pluto Studio in or around October 1983, he threatened to leave the band because Mr Morrissey was insisting on a 40/40/10/10 split. Mr Marr alleged that Mr Joyce persuaded him to stay and in the process accepted the stated division.

Third, Mr Marr alleged that on the evening of "The Smiths" appearance on Top of the Pops on 26 January 1984, he watched television at Mr Joyce's flat and Mr Joyce asked for an increase in his 10%. Mr Marr said that he spoke to Mr Morrissey, and that the idea was rejected.

Fourth, Mr Morrissey claimed that in or around early 1986 Mr Marr telephoned him to say that Mr Joyce and Mr Rourke were angry that they were only receiving 10% that Mr Marr had informed them that the 10% share would not be increased.

Fifth, Mr Morrissey claimed that in or around Spring of 1986 during a car journey from Manchester to London, Mr Joyce asked Mr Morrissey how he could earn a 25% share and offered to act as a manager for the band, but this suggestion was rejected.

Sixth, Mr Morrissey claimed that shortly thereafter he and Mr Marr informed Mr Joyce that if he was not happy with his share he should leave the band, but Mr Joyce decided to remain.

Seventh, Mr Morrissey and Mr Marr relied upon the receipt by Mr Joyce and Mr Rourke of sums equivalent to 10% of the profits from the activities of the band.

Eighth, Mr Marr and Mr Morrissey relied upon the receipt by Mr Joyce of a set of 1983/84 accounts on or around 4 July 1986 and the fact that Mr Joyce did not mention the fact that the accounts showed the profits of the band being split 40/40/10/10.

Ninth, Mr Marr and Mr Morrissey each relied upon a conversation between an accountant Mr Patrick Savage of O.J. Kilkenny & Co recently appointed by Mr Marr and Mr Morrissey to act for "The Smiths", which Mr Savage said he had with Mr Joyce and Mr Rourke, in the kitchen of the Woolhall Studio in or around May 1987. Mr Savage said that he asked on that occasion Messrs Rourke and Joyce as to their understanding of the percentage split, in response to which Mr Rourke said in the presence of Mr Joyce, "We get ten percent". Mr Savage said that Mr Joyce made no comment or protest when Mr Rourke so stated.

It will be seen that the matters relied on involved almost exclusively questions of fact for the judge. In relation to the background facts, the management and organisation of the band, the judge accepted the position as described by Mr Morrissey and Mr Marr but found that they did not give rise to any inference rebutting the presumption in s.24. Mr Rosen accepts that those facts do not give rise to any inference that the presumption is rebutted, but he criticises the judge for failing to take the background matters into account in considering the probabilities as to whether the four members of the band agreed a split of profits on an unequal basis.

Mr Rosen further criticises the judge for taking each of the above matters separately instead of looking at the matter overall. In taking the matters separately the judge found that there was no reference to specific percentages at the Pluto Studio in October 1983 albeit there may have been some conversation during which Mr Marr threatened to leave the band. It should be said in relation to this Pluto Studio incident: (1) that Mr Marr had not even in a re-amended defence originally made any reference to discussions at the Pluto Studio; (2) that in Mr Marr's witness statement some reference was made to Mr Marr threatening to leave the band whilst recording at the Pluto Studio in October 1983 and to him "understanding"...

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