UK: Scotland: does a dissolved partnership have a continuing legal personality?

The Scottish High Court of Justiciary, Scotland's supreme criminal court, has considered some interesting points regarding partnerships under Scots law and the Partnership Act (1890). In Balmer and others v Her Majesty's Advocate 2008 HCJAC 44, the court was required to consider whether a partnership continued to exist as a legal person after its dissolution. Lord Eassie delivered the court's opinion and held that "the dissolved partnership does not have any continuing legal personality following dissolution" (para. [83]). As a result, an indictment against a dissolved partnership was held incompetent.

Notes:

[1] Section 4(2) of the Partnership Act (1890) provides that "In Scotland a firm is a legal person distinct from the partners of whom it is composed".  Under English law the general partnership does not have a separate legal personality; however, in W Stevenson & Sons (A Partnership) and Anor v R [2008] EWCA Crim 273 (noted in this earlier post), Phillips LCJ stated (para. [30]):

In as much as business activities are conducted in the name of a partnership and the partnership has identifiable assets that are distinct from the personal assets of each partner there is no reason why a partnership should not be treated for the purposes of the criminal law as a separate entity from the partners who are members of it".

[2] The case has been reported on the BBC news website here, where the following comments of Solicitor-General Frank Mulholland QC are noted: "The prosecution of a dissolved partnership was previously unknown in Scots law. Today's decision of the Appeal Court has clarified the law in relation to the liability of a dissolved partnership for alleged crimes that occurred prior to it being dissolved. The Appeal Court has held that criminal liability does not rest with the former firm in its firm name".

 

Europe: companies and the European Convention on Human Rights

A good illustration of the way in which the European Convention for the Protection of Human Rights and Fundamental Freedoms can be relied upon by companies is provided by a recent decision of the European Court of Human Rights. In Meltex Ltd v Armenia [2008] ECHR 531, a company complained that its freedom of expression under Article 10 of the Convention had been violated by the refusal of the Armenian authorities to grant it broadcasting licences. Article 10 provides:

Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises"

The Court held that the refusals constituted interferences with the company's freedom to impart information and ideas. In the course of the opinion some interesting points were made with regard to the separate legal personality of the company. The Court observed:

... a person cannot complain about a violation of his or her rights in proceedings to which he or she was not a party, even if he or she was a shareholder and/or executive director of the company which was party to the proceedings ... Furthermore, while in certain circumstances the sole owner of a company can claim to be a “victim” within the meaning of Article 34 of the Convention in so far as the impugned measures taken with regard to his or her company are concerned ..., when that is not the case the disregarding of an applicant company's legal personality can be justified only in exceptional circumstances, in particular where it is clearly established that it is impossible for the company to apply to the Convention institutions through the organs set up under its articles of incorporation or – in the event of liquidation – through its liquidators".

England and Wales: Partnerships: a separate entity for the purposes of criminal liability?

Under English law, partnerships do not have a separate legal personality. This raises many interesting academic and practical questions, one of which the English and Scottish Law Commissions referred to in their 2003 report on the law of partnership (para. 4.43):

"Whether a partnership governed by English law can commit a criminal offence is rather obscure. There are some judicial dicta which indicate that it cannot. On the other hand, our researches have revealed some old statutes which show or appear to show an intention or assumption that a partnership can commit an offence under the statutes in question. The courts have not explored the matter in recent years and we are not aware of any modern prosecutions of a partnership in England and Wales".

Against this background a recent Court of Appeal decision is of particular interest. One of the questions considered in W Stevenson & Sons (A Partnership) and Anor v R [2008] EWCA Crim 273, The Times Law Reports, March 5, 2008, was whether it was possible for legislation to render a partnership criminally liable as a separate entity from the individual partners. Phillips LCJ stated (para. [30]):

"In as much as business activities are conducted in the name of a partnership and the partnership has identifiable assets that are distinct from the personal assets of each partner there is no reason why a partnership should not be treated for the purposes of the criminal law as a separate entity from the partners who are members of it".

The Law Commissions recommended that "except so far as is provided by or under any enactment, whether expressly or by necessary implication, a partnership should not be capable of committing an offence" (para. 4.47). The Government declined, however, to implement the Commissions' recommendations concerning general partnership law (see the ministerial statement).

England and Wales: Separate legal personality upheld

In Sheldon Adelson v Associated Newspapers Ltd. [2007] EWHC 3028 (QB), it was argued that a company could recover damages for libel in respect of other companies within the same corporate group, and that there was no need for the companies suffering loss to be made parties to the litigation.

The trial judge, Eady J., rejected these arguments, noting that companies are individual legal entities and that companies cannot recover losses incurred by another. His Lordship also rejected the contention that the Court of Appeal had suggested otherwise in related litigation (see
[2007] EWCA Civ 701, noted in The WLR Daily).