Friday, 15 July 2011

UK: England and Wales: access to partnership books and motive

Mr Justice Norris gave judgment yesterday in Inversiones Frieira SL v Colyzeo Investors II LP [2011] EWHC 1762 (Ch). Amongst the matters he considered was the relevance of motive in respect of a partner's statutory right of access to partnership books under section 6 of the Limited Partnerships Act (1907) and, in this regard, he stated (paras. [26] and [27]):

In my judgment the question of motive or purpose is irrelevant to the exercise of a statutory right of access to the partnership books. I accept the proposition (stated in Lindley and Banks on Partnership (19th edition) paragraph 22-16) that because the statutory right of inspection is expressed in unqualified terms the motives and bona fides of the partner seeking to exercise it will be irrelevant.

I would accept that the position may be different in relation to the exercise of a contractual or other non-statutory right. There, if it is absolutely clear that the partner is using a contractual right to obtain partnership documents not for the purpose for which it is expressly or implicitly conferred (in connection with his interests as partner) but for the purpose of injuring the partnership, or for some other manifestly improper purpose, then the Court will not assist the partner to exercise the right to access partnership books, records and information: compare Oxford Legal Group Limited v Sibbasbridge Services Ltd [2008] EWCA Civ 387 at [24]. But that principle can only apply in very plain cases: otherwise (as Slade J pointed out in Conway v Petronius Clothing Limited [1977] 1 WLR 72at 90E) a right of inspection could be rendered more or less nugatory by specious allegations that it was being exercised with intent to injure or for some other improper motive. The principle has no application here. It is simply not the law that if a partner thinks he may have grounds to complain about the way a general partner (or its delegate) has performed its obligations then the partner thereby loses any right to obtain access to partnership documents".

Update (18 July 2011): the ICLR has provided a summary of the decision here.

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