THE COURT

(Lord McGhie, Mr D J Houston)

HUMPHREY v GREENLAW

(Application RN SLC 135/11 – Order of 18 Jan 2012)

AGRICULTURAL HOLDINGS – TENANCY – LIMITED PARTNERSHIP – LANDLORD A LIMITED PARTNER – PURPORTED NOTICE OF DISSOLUTION- NO CONTRACTUAL RIGHT TO GIVE NOTICE – PARTNERSHIP TERMINATING ON AGREED DATE – RIGHT OF GENERAL PARTNERS TO BECOME TENANTS – AGRICULTURAL HOLDINGS (SCOTLAND) ACT 2003, Secs 70 and 72(3) & (6) – PARTNERSHIP ACT 1890 Secs 27 & 32 – LIMITED PARTNERSHIP ACT 1907 – Secs 6 & 7.

The applicant was landlord of a farm which had been let to a limited partnership. He himself was the limited partner. The partnership agreement specified the termination date: 28 November 2010. On 4 November 2009 solicitors acting for the landlord purported to give notice to quit to the partnership in respect of the lease. On the same day they sent a formal notice to the general partners narrating that in terms of the agreement the partnership was to be dissolved as at 28th November 2010. The parties were agreed that the partnership terminated on that date. In reliance on the partnership having been terminated, the general partners duly served notice in purported reliance on section 72(6) of the Agricultural Holdings (Scotland) Act 2003. If that section applied they would have fallen to be treated as tenants entitled to security of tenure, subject to any action which might be taken by the landlord under the provisions of section 73. It was agreed that the question of whether section 72(6) applied depended on whether the partnership had been terminated as a consequence of the dissolution of the partnership by the notice.

HELD that in sec 72(3) Parliament must have intended to distinguish between dissolution by notice and dissolution in accordance with the partnership agreement; the notice of 4 November 2009 was not effective as a notice of dissolution; but the partnership did end on its contractual date 28 November 2010 and when that happened the tenancy also ended as there was no longer a tenant. The position of the general partners was not saved by the provisions of sec 72.

The note appended to the Court’s order is as follows:

The applicant was landlord of a farm which had been let to a limited partnership. He himself was the limited partner. On termination of the partnership, questions arose as to whether the general partners had a right to continue as tenants in virtue of the provisions of section 72(6) of the Agricultural Holdings (Scotland) Act 2003. We heard debate at Edinburgh on 14 December 2011 when Mr Clubb, solicitor Advocate, appeared on behalf of the landlord and Mr Robert Sutherland, Advocate on behalf of the general partners.

Statutory material

Partnership Act 1890 (“the 1890 Act”)
Limited Partnership Act 1907 (“the 1907 Act”)
Agricultural Holdings (Scotland) Act 1991 (“the 1991 Act”)
Agricultural Holdings (Scotland) Act 2003 (“the 2003 Act”)

Authorities

Neilson v Mossend Iron Co (1886) 13 R (HL) 50
Wallace v Wallace’s Trustees (1906) 8 F 558

Textbook authorities

Bell, Principles (10th edition)
Bell Commentaries 7th edition
Miller, Partnership Second edition
Lindley and Banks on Partnership 19th edition

The relevant statutory provisions are in the following terms:

Sections 27 and 32 of the 1890 Act:

27. Where partnership for term is continued over, continuance on all terms presumed

(1) Where a partnership entered into for a fixed term is continued after the term has expired, and without any express new agreement, the rights and duties of the partners remain the same as they were at the expiration of the term, so far as is consistent with the incidents of a partnership at will.

(2) A continuance of the business by the partners or such of them as habitually acted therein during the term, without any settlement or liquidation of the partnership affairs, is presumed to be a continuance of the partnership.

32 Dissolution by expiration or notice

Subject to any agreement between the partners, a partnership is dissolved –

(a) If entered into for a fixed term, by expiration of that term:

The other provisions of this section are of no relevance to the present case.

Sections 6 and 7 of the 1907 Act are in the following terms:

6. Modifications of general law in case of limited partnerships

(1) A limited partner shall not take part in the management of the partnership business, and shall not have power to bind the firm:

The rest of subs (1) and subs (2) to (4) were not referred to in course of the debate.

(5) Subject to any agreement expressed or implied between the partners –

(e) A limited partner shall not be entitled to dissolve the partnership by notice.

7. Law as to private partnerships to apply where not excluded by this Act

Subject to the provisions of this Act, the Partnership Act 1890, and the rules of equity and of common law applicable to partnerships, except so far as they are inconsistent with the express provisions of the last-mentioned Act, shall apply to limited partnerships.

The 2003 Act contains the following provisions:

70 Rights of certain persons where tenant is a partnership

(4) Where this subsection applies, if the tenancy purports to be terminated as a consequence of -

(a) the dissolution of the partnership –

(i) in accordance with the partnership agreement; or

(ii) due to the actings of any partner mentioned in the subsection (2)(a);

Subsection (5) applies.

72 Rights of certain persons where tenant is a limited partnership

(3) Where this subsection applies and the tenancy purports to be terminated as a consequence of -

(a) the dissolution of the partnership by notice served on or after 16 September 2002 by a limited partner mentioned in subsection (1)(b);

Subsection (6) applies …

Factual background

[1] It is not necessary to say much about the detail of the background because it became clear that the issue between the parties turned essentially on the question of whether a limited partnership of fixed duration would continue indefinitely in absence of some sort of formal warning or notice, if one party wished it to do so.

[2] It is appropriate to recognise that limited partnership tenancies were in common use. Arrangements were made whereby a landlord became part of a limited partnership which then became party to a lease as tenant, leaving the general partner with sole responsibility for management of the farm. Such an arrangement allowed the landlord to avoid the provisions of the 1991 Act relating to termination of a tenancy because the tenancy could, effectively, be brought to an end when the partnership was dissolved and the tenant ceased to exist. There was no dispute that, prior to the 2003 Act, such arrangements were valid and effective.

[3] In the present case the landlord entered a partnership agreement with Robert A Greenlaw in 1990 to run for a period of 10 years. The landlord was to be the limited partner. On expiry of that agreement, in November 2000, the tenancy continued of consent for a period, apparently as a partnership at will, although there was dispute about the detail and it is unnecessary to say more. By an amendment of the partnership agreement on 2 February 2001, involving the original parties and also Gavin James Greenlaw and Euan Robert Greenlaw, the latter two persons were assumed as general partners and Clause Three of the original agreement was amended. Save as amended the terms of that agreement were to remain in full force and effect.

[4] As amended, Clause Three was in the following terms:

“The partnership shall notwithstanding the date or dates hereof commence on 28 November 1990 (‘the Commencement Date’) and shall be dissolved and terminate automatically without the requirement of further notice by or to any party on the date on the first to occur of:-

the expiry of the period of twenty years after the Commencement Date;”.

The other provisions are not relevant to the present debate.

[5] On 4 November 2009 solicitors acting for the landlord purported to give notice to quit to the partnership in respect of the lease. This was an embarrassingly inept document and no more need be said about it. On the same day they sent a formal notice to the three general partners in the following terms:

“TAKE NOTICE that in terms of the Contract of Limited Partnership between the then General Partner and the Limited Partner dated 26th November 1990 and subsequent date, as amended by Minute of Amendment dated 2nd February 2001 constituting the Limited Partnership of Groddy (sic) Farm Partnership Registered Number SL001600, that in terms of Clause (THREE) of the said Agreement Groddy Farm Partnership is to be DISSOLVED as at 28th November 2010.

This Notice is sent to you by recorded delivery however it would be helpful for our files if you could acknowledge safe receipt”.

The notice to quit and notice relating to the partnership were sent with a covering letter which included the following: “In terms of the Agricultural Holdings Act I enclose formal Notice to Quit and formal Notice of Dissolution of the Limited Partnership”.

[6] The parties treated the partnership as having terminated on 28 November 2010. It was not disputed that, in reliance on the partnership having been terminated on that date, the general partners duly served notice in purported reliance on section 72(6). If that section applied they would fall to be treated as tenants and enjoy security of tenure, subject to any action which might be taken by the landlord under the provisions of section 73. It was agreed that the question of whether section 72(6) applied depended on whether the partnership had been “terminated as a consequence of the dissolution of the partnership by [the notice of 4 November 2009]”. We did hear submissions that any acting by a limited partnership showing an intention not to extend the partnership might fall to be treated as equivalent to notice, but the essential issue can be addressed by reference to the formal notice in this case. No other actings were relied on.

Submissions for applicant

[7] Mr Clubb set out his submissions with commendable clarity. We deal with them in the discussion below and it is unnecessary to set them out at length. He took us to the relevant terms of the Partnership Agreement and noted that it was subject to the provisions of the 1907 Act. In summary, the Agreement provided for automatic dissolution and sec 6(5)(e) of the Act expressly provided that the limited partner was not entitled to dissolve the partnership by notice. He dealt with the terms of the notices of 4 November 2009 and the covering letter of that date. He stressed the need to look at the formal documents. The covering letter was loose and imprecise and he suggested that it could be ignored. He then took us through the relevant provisions of section 72. He contrasted the provisions of section 70(4) and section 72(3) and submitted that the difference in drafting could not have been accidental.

[8] Finally, Mr Clubb dealt, at some length, with the issue of tacit relocation or tacit consent. He accepted that these concepts applied to partnerships. He spent some time on the respondents’ averments of events in early 2001 but Mr Sutherland did not ultimately found on these and it is unnecessary to say more about them. In relation to the 2009 notice, Mr Clubb said that its purpose was simply to draw attention to the termination date. But, even if the intention had been to avoid any question of tacit relocation arising, that was irrelevant. The real question was whether it was necessary for that purpose. He submitted that the matter was governed by section 27 of the 1890 Act. He submitted that there was a critical difference between tacit relocation in a lease and the rights arising under section 27 in relation to a partnership. In a partnership there needed to be some positive action before the partnership would continue. If the Court had to look at ambiguous actings, the notice might be a relevant factor. But the notice would not, itself, have precluded tacit consent to continuation after the fixed date. In any event, the important point was that the notice did not dissolve the partnership. He referred to Bell Principles, para. 373 and Neilson v Mossend Iron Company. Both these references demonstrated that the lease would terminate if not continued. A partnership at will needed some notice to terminate but that had to be distinguished from what would happen during the contractual period. He founded on the decision in Wallace v Wallace’s Trustees as being clear authority for the proposition that a partnership would terminate where there was no evidence of positive continuation. It was, he concluded, a complete misunderstanding to suggest that the partnership in this case was terminated by notice.

Submissions for respondents

[9] Mr Sutherland moved us to repel the applicant’s fourth plea and allow a proof of the averments in answer 4. He opened the substantive submission by stressing that in terms of section 6(1) of the 1907 Act, only the general partner had power to conduct the business of the partnership. Plainly the general partners had wished the partnership to continue. He submitted that Wallace v Wallace’s Trustees dealt with a relatively unusual situation. It was based on section 27 of the 1890 Act. Under subsection (2) a continuation without any settlement or liquidation of the partnership affairs was presumed to be a continuance. He stressed that there had been no settlement or liquidation in the present case. He referred to dicta of Lord Watson in the Wallace case at page 563. He submitted that this made it clear that the actings of one partner might suffice to point to continuation. He accepted that, in an ordinary partnership, it would not be enough that one party had an intention to continue but he submitted that in a limited partnership the intention of a general partner to continue would suffice in absence of any contrary indication from the limited partner. Any such contrary indication would fall to be regarded as “notice” by the limited partner, within the meaning of section 72(3). What the Wallace case had decided was simply that in the absence of averment of either prior agreement or intention to carry on the business, the pursuer’s case necessarily failed. This was because of the absence of relevant averment not because it was not possible to show that a business would have continued after its expiry. He submitted that the decision in Wallace was of limited assistance because of its special facts and the absence of any averment of prior agreement or intention to continue the case.

[10] Asked whether there was any distinction between the application of the concept of tacit relocation in a lease and a partnership, he referred to some aspects of the common law relating to leases but said that he would not be relying on the law relating to leases. He would deal with tacit relocation solely in the context of a partnership.

[11] Turning to the detail of the statutory provisions, he referred again to section 6(1) of the 1907 Act. This restricted the power of the limited partner to take part in the management of the business. Accordingly, if the business was to continue it would be through the actings of the general partner. Section 7 showed that the provisions of the 1890 Act applied except where inconsistent with the 1907 Act. He accepted that section 32(a) of the latter seemed clear in its terms but it was effectively qualified by section 27. He accepted that, in the present case, the partnership had not in fact continued but stressed that the general partners had intended it to continue. What would have happened, but for the notice, was that the limited partnership would have been converted to a partnership-at-will after the term date. The limited partner would then become a general partner like the others. The legal consequences and nature of the partnership would have changed but it would have been the same partnership. The effect would be the same as if a limited partner had taken part in management in terms of the provisions of section 6 of the 1907 Act.

[12] Mr Sutherland then cited Bell’s Principles, section 373. He relied on the first two sentences. However, as he later accepted that no notice was needed to bring an ordinary partnership to an end on the contractual date, the relevance of this citation may be doubted. His submission was ultimately based on the special status of a limited partnership and Bell was not dealing with that. He contended that a limited partner had to show an intention to terminate. Whether that required to be in written or simply verbal form was, perhaps, an open question, but it did not arise here. There had to be some notice and in this case there was a notice. If a general partner had asked the limited partner whether he was prepared to continue and had received a negative answer that would still be notice within the meaning of section 72(3)(a).

[13] It was common to have a fixed period in all limited partnership agreements but if neither party said anything, the general partner would simply continue the business and that would turn it into a partnership-at-will. He accepted that, in a general partnership, where a period was fixed in point of time and neither party said anything to the other as to its intentions, it would be correct to say that the other could act on the basis that he was free to walk away from the contract. That was implicit in the Wallace decision. But that case suggested that in a situation where one party was in the habit of running the business, the active party’s intention to continue could be deemed. He accepted that continuing a business was not necessarily the same as carrying on a partnership but submitted that this distinction was not relevant to the present argument.

[14] He went on to refer to Bell Commentaries at page 521-522; to Neilson v Mossend Iron Company at page 54; Miller at page 453 and to Lindley and Banks at paragraph 29-13. The passage in Lindley clearly supported the view that a limited partnership could continue because of the actings of the general partner; in other words that section 27 of the 1890 Act would apply even without the knowledge or consent of the limited partner.

[15] In course of this submission, Mr Sutherland continued to make reference to the role of tacit relocation in leases but on examination it was clear that his references were all to statutory provisions. He suggested that, at common law, tacit relocation in a lease worked only in favour of the tenant. But, in a partnership, if both parties were silent and there was a fixed term, the presumption would be that the partnership came to an end although there might be facts and circumstances which overcame this. He expressly accepted that his argument was based on the special circumstances of limited partnerships. The limited partner had no day to day role in management. Accordingly, if he did not do anything to recognise or give effect to the termination, the general partner would be free to carry on - with the risk for the limited partner which was referred to in Lindley.

[16] Mr Sutherland did not accept that the notice in this case was doing no more than draw attention to the provisions of Clause Three of the Partnership Agreement. But, he submitted that, in any event, it was relevant to take account of the covering letter. Plainly the notice was intended to operate as a notice of dissolution. That was plain on the face of the notice and the covering letter. But, if there was any doubt, the matter should go to proof.

[17] Asked by the court about the possible implications of the contrast between section 70(4) and section 72(3) and the question of the policy behind the provisions of section 70 to 73, counsel submitted that it was clear that Parliament recognised a distinction between ordinary partnerships and limited partnerships. Parliament could, accordingly, be taken to have known that notice was required to bring about the dissolution of a limited partnership if the general partner did not want it to end. The policy of Parliament appeared to be to give a few more years to general partners who wished to stay as tenants. This must have been intended to give them more time to regulate their affairs before having to leave the farm. He recognised that there might be thought to be less need for this when the limited partnership agreement had a definite terminal date but, as the policy was not clear, it could not affect issues of construction. The draftsmen had plainly recognised a need for notice to end a limited partnership. He, accordingly, invited the Court to refuse the applicant’s motion and to fix a hearing.

Response for landlord

[18] In response, Mr Clubb said that he had understood that parties had agreed that the issue between them was the need for notice. That could be determined by debate. It was not clear what relevant evidence could be led. Parties were agreed that the partnership was dissolved on 28 November 2010 and no question of actual conduct after that had any bearing.

[19] He took support from Bell’s Commentaries at page 521. He said there was no good basis for the alleged contrast between an ordinary partnership and a limited partnership in relation to the need for notice. Both terminated automatically on the contractual date. In any event, there was no well established distinction. There was no authority for the proposition that a limited partnership required notice of dissolution. The very fact that, in terms of section 6(5)(e), a limited partner could not give notice gave powerful support to the view that no such notice was required. In all the provisions and dicta it was continuation after the fixed date, not the notice, which was relied on. There had to be some evidence of continuation to prevent dissolution.

Final response for tenant

[20] Mr Sutherland asserted that all limited partnerships were, in practice, for a fixed period. Parliament would have recognised this. Parliament would also have been aware of section 6(5)(e) and yet section 72 made express reference to the situation of a partner serving a notice. It followed that they recognised that the purpose of the notice under section 72 was not to dissolve the partnership but to prevent tacit relocation. That was plainly the purpose in the circumstances of this case.

Discussion

[21] We have little doubt that the intention of the limited partner, in serving the notice of Nov 2009, was to dissolve the partnership. But we accept that the fundamental question was whether the notice had that effect in law. It was not disputed that this case turned on proper construction of the provisions of sec 72. Unless it could properly be said that there was a “dissolution of the partnership by notice” - within the meaning of subsec (3) - the general partners would not be entitled to be treated as tenants under the provisions of sec 72(6).

[22] In terms of sec 7 of the 1907 Act, the provisions of the 1890 Act apply to limited partnerships subject to the provisions of the 1907 Act. The relevant modifications are set out in sec 6 of that Act. Section 6(5)(e) provides expressly that, subject to any agreement to the contrary, a limited partner is not entitled to terminate the partnership by notice. Whatever the effect of such a provision after expiry of a fixed contractual period, we have found no reason to doubt or qualify its application during the subsistence of such a period. There was no provision for notice in the partnership agreement. Standing the provisions of sec 6, the notice of 4 November 2009 was invalid. It was agreed that the partnership in this case came to an end at the contracted date. The only agency which could have had had the effect of dissolving the partnership was the expiry of its contractual term. That seems sufficient to answer the question before us. However, consideration of the wider arguments advanced leads us to the same conclusion.

[23] Mr Sutherland accepted that an ordinary, or general, partnership would be dissolved automatically on expiry of its contractual term unless there was some evidence pointing to continuation. It would not be enough to prevent dissolution that neither party had given any indication that the partnership should end - although that might be a factor to take into account in weighing any evidence of continuation. This concession was plainly in accordance with the principle underlying the decision of the court in Wallace v Wallaces Trs. Mr Sutherland argued that the decision turned simply on questions of pleading but there can be no doubt as to the underlying principle on which the court proceeded. We must give effect to it. In any event, it appears simply to reflect the terms of sec 32 of the 1890 Act: “Subject to any agreement between the partners, a partnership is dissolved – if entered into for a fixed term, by the expiration of the term.”

[24] The argument turned on the proposition that a limited partnership was different from a general partnership in this respect. Counsel contended that, because the general partners were in a position to continue to manage the business of the partnership without interference from the limited partner - who was precluded from active involvement by sec 6(1) - some positive action was necessary by him to bring the partnership to an end. Such action fell to be described as “notice” whatever form it took. If no such “notice” had been given the general partners would simply continue and that in itself would suffice to prevent dissolution,

[25] We think that this argument, based on the conduct to be assumed by the general partners in seeking to continue the business, ignores the need to make a balancing assumption as to the conduct of the limited partner in seeking to ensure that the partnership had ended. When considering the proposition that some form of action - equivalent to “notice” - would inevitably be required to prevent the general partners from simply continuing the partnership business, we must keep in mind that, just as the general partners can be assumed to wish to continue so the limited partner can be assumed to wish the partnership to end. It can be assumed that the main purpose of the arrangement was to avoid security of tenure. The limited partner would be entitled, without prior notice, to call for liquidation of the partnership affairs at the end of the contractual term. There is no reason to assume that the limited partner would not do so. It is only by making such an assumption that the supposed need for “notice” can be advanced.

[26] When it is clear that one well established way in which a partnership ends is by expiry of the contractual term, it would be surprising if Parliament had deliberately opted to avoid express reference to that method in reliance on an understanding that it was implicitly covered on the basis of an assumed contrast, in that respect, between a general partnership and limited partnership. That is particularly so when no clear indication of such a contrast is readily found in any text-book or Scottish authority. We note, in passing, that the material on Partnership in the Stair Encyclopedia - vol 16 at para 1120 - says simply that: “The events giving rise to dissolution and the powers of partners to dissolve a limited partnership are the same as in a general partnership with certain exceptions relating to limited partners. The first exception is that, subject to any agreement between the partners, a limited partner is not entitled to dissolve the partnership by notice”. Another text book source might have been Gloag and Henderson, The Law of Scotland, 12th ed. where the specialities of a limited partnership are dealt with at para 46.30 without mention of the purported distinction. It is hard to avoid the conclusion that if Parliament had been intending to catch every way in which a limited partnership might come to an end against the will of the general partners, the provisions of sec 72(3) would have been expressed in much wider terms and would, in particular, have made explicit reference to expiry of a fixed term as being the most obvious way in which that was likely to happen.

[27] A straightforward construction of sec 72(3) would be consistent with the scheme of Part 6 of the 2003 Act and, in particular, consistent with the very obvious contrast between the provisions of sec 70(4)(a) and those of sec 72(3). Both provisions can apply to limited partnerships, although the former refer only to such partnerships created after the coming into force of the 2003 Act. Sec 70(4)(a) makes express reference to “dissolution of the partnership in accordance with the partnership agreement” and adds a reference to dissolution “due to the actings of the [landlord’s representative] partner”. If the intention in sec 72 had been to include dissolution in accordance with the agreement, it would surely have used the same language as the former provision. If it had been intended to address the question of actings which might prevent tacit relocation a wide provision like the second provision of sec 70(4)(a) could have been used.

[28] The effect of sec 72(6) is not to give the tenant permanent security. The general partners’ rights as tenant are subject to the provisions of sec 73. Effectively, a general partner is given protection for, at most, an extra three years. Mr Sutherland suggested that the policy must have been to ensure that general partners had ample time to arrange their affairs after termination. It is unnecessary to express any confident view but if this was, indeed, the policy, it would explain why sec 72(3) made no reference to the case of a partnership ending on a fixed contractual date. In such a situation, the general partners would have good notice of the agreed date.

[29] In testing Mr Sutherland’s argument that something beyond silence would always be need to prevent a limited partnership continuing, we postulated a situation where the general partner explicitly asked whether the partnership was to continue past its date and was told that the limited partner had no such intention. We understood him to accept that this would prevent continuation being implied. A refinement of this example would be where the answer was simply that the limited partner intended to stick to his contractual rights. Mr Sutherland’s argument required to treat both such examples as equivalent to “notice” within the meaning of sec 72(3) but it must be said that neither of these situations would readily be described as the service of notice by the limited partner and we cannot accept that this type of situation is what Parliament had in mind.

[30] We think that, underlying Mr Sutherland’s argument, there lies an assumption that Parliament intended to prevent termination of a limited partnership tenancy in every case where the general partners did not want it to end and a policy of giving all general partners three years or so more than they had actually agreed. No reason for such a broad policy was advanced. Without that assumption there would be no reason for any strained construction. One clear way in which partnerships end is by expiry of the term. Another quite distinct way is by notice. The distinction is reflected in the contrasting terms of secs 70 and 72. There would have been no reason whatsoever for Parliament to have relied on a wide meaning of “notice” if it intended to deal with agreements terminating on their contractual date.

[31] Mr Sutherland is no doubt correct to say that all limited partnerships would initially be for fixed terms and if his analysis of the implications of a conversion to a partnership at will was correct, it might seem that there was little content in sec 72(3) if it applied only to dissolution by service of notice in the more obvious sense of that expression. But, many agreements go on to provide for the partnership to continue from year to year unless notice is given. A recent case dealing with sec 72, Salvesen v Riddell SLC-242-04 is an example. Such agreements provide an obvious context for sec 72(3).

[32] It was suggested that when a partnership for fixed term was continued beyond its contractual term by the actings of the original general partners, it remained the “same partnership” but had different characteristics. It was not disputed that it became a partnership at will. Mr Sutherland suggested that it lost its status as a limited partnership. The limited partner became a general partner and the original partnership became a general partnership. This submission seemed to be based on an assumption that any partnership at will was necessarily a general partnership. It was not supported by any attempt to rely on authority or text-book exposition and we are not persuaded that this is a sound analysis. The concept “at will” clearly relates to duration. The obvious characteristic of a partnership at will is simply that it can be brought to an end by intimation or notice to all the other partners. We are satisfied that the effect of the provisions of sec 27 of the 1890 Act, when taken with the 1907 Act, is that the reference to the “incidents of a partnership at will” is limited to terms of the contract, express or implied, which are in some way related to or dependent upon termination. In any event, leaving aside any possible difficulties arising if there has been some failure of registration, we see no reason why a limited partnership should not continue subject to its own terms and to the right to termination by notice consistent with its status as partnership at will. Such an understanding gives further content to the provisions of sec 72(3).

[33] Reference was made to a comment in Lindley and Banks, at para 29-13, in support of the proposition that the limited partnership could be continued by actings of the general partners and the risk that this might turn the limited partner into a general partner. We recognise that the statutory provisions for registration to preserve the limited liability of the limited partner may give rise to some difficulties if a partnership goes on “at will” but we were not addressed on them and do not consider that they have any direct bearing on this case. It appears to be implicit in the passage from Lindley that conversion to a general partnership is not an inevitable consequence of continuation.

[34] We are satisfied that it is not necessary for the purposes of this decision to attempt a full analysis of the concept of tacit relocation and its bearing, if any, on partnership. Mr Clubb accepted that “tacit relocation or tacit consent” could apply to partnership agreements. It is enough to say that we are not yet persuaded that tacit relocation can be prevented simply by giving an indication of an intention that the contract is not to continue. Although Mr Sutherland expressly said that he was not relying on an analogy with leases, he did make several references to such a comparison. It may be observed that, in the case of a lease, if notice to quit is required and is not properly given, tacit relocation will not normally be avoided by informal notice however clear its terms.

[35] For completeness, we may be said that we have considered the scope of the expression “tenancy purports to be terminated” where it occurs in sec 72(3). In the present case, the formal notice did not “purport” to do more than draw attention to the provisions of the contract but taken with the covering letter an argument that it “purported” to terminate the partnership might have been open. However, purporting to terminate a partnership is not the same as purporting to terminate a tenancy - even if termination of the partnership would have that effect. No attempt was made to advance an argument that the reference to purported termination of a tenancy included purported termination of the partnership and we think it clear that the reference was included simply to fit the subsequent provisions of the section allowing the tenancy to continue despite purported termination.

Decision

[36] We are satisfied that Parliament did intend to distinguish between dissolution by notice and dissolution in accordance with the partnership agreement. Whatever the intention, the notice of 4 November 2009 was not effective as a notice of dissolution. But the partnership did end on its contractual date 28 November 2010. When that happened the tenancy also ended as there was no longer a tenant. It was not saved by the provisions of sec 72. According, we are satisfied that the applicant is entitled to the findings he seeks. However, in accordance with our usual practice we shall allow parties time to agree the date and details of removing, if possible, rather than pronounce a formal order for ejection at this stage. The applicants will be entitled to come back to the Court at any time before our final award of expenses to seek a formal order for ejection if so advised.

For the applicant: Stuart Clubb, solicitor advocate; HBJ Gateley Wareing, LLP, Edinburgh

For the respondents: Robert Sutherland, Advocate; Ledingham Chalmers, LLP, Aberdeen