Court of Appeal substantially allows appeal in major partnership dispute

Titanium Capital Investments Limited & Anor v Hughes and Ors [2026] EWCA Civ 976

The Court of Appeal has handed down a significant judgment on the Partnership Act 1890 (the “1890 Act”) sections 29, 42 and 38. The appeal was by the Defendants against the Claimants and Additional Parties in a partnership dispute concerning a business that sold Covid Tests (LFTs) for a period of less than 7 months before the First Defendant, Mr Hughes, dissolved the partnership because, as he said in his notice of dissolution, he no longer trusted the Second Claimant, Mr Manduca.

The Court of Appeal substantially allowed the Defendants’ appeal on all Grounds with the majority holding that the trial Judge fell into error when he held that the Chinese supplier of LFTs to the partnership was a business connexion of the partnership within the meaning of the 1890 Act, section 29, so that Mr Hughes was obliged to account to the partnership for profits made from purchases of LFTs from the supplier post-dissolution but before the final winding up of the partnership.

The Court of Appeal also held that the Judge fell into error when he held that Mr Hughes was obliged to account for profits made pursuant to the 1890 Act, section 42. Section 42 requires a continuing partner who carries on the business of the partnership with its capital or assets without any final settlement of accounts to account for such share of the profits made since dissolution as the court may find to be attributable to the use of the outgoing partner’s share of the partnership assets or to interest at the rate of five per cent per annum on the amount of the outgoing partner’s share of the partnership assets. The Court of Appeal accepted Mr Hughes’ argument that section 42 applies only where one partner carries on the business of the partnership post-dissolution to the exclusion of the other; that where, as in this case, both Mr Hughes and Mr Manduca had carried on the business post-dissolution, section 42 did not apply.

The Court of Appeal further held that the Judge fell into error when he dismissed Mr Hughes’ claim against Mr Manduca’s company Titanium, for knowing receipt of Mr Manduca’s secret profit share in his son’s company, Newfoundland, a partnership distributor of LFTs. Newey LJ stated that he regarded the breaches of Mr Manduca’s fiduciary duties in connection with his secret profit share as “very serious.”

The Court of Appeal finally allowed the Appellants’ appeal against the Judge’s finding that they were liable for unlawful means conspiracy and knowing receipt and allowed the Appellants’ appeal against the Judge’s finding that the Respondents were not liable for unlawful means conspiracy.

The Court of Appeal held that the application of section 29 to the concept of “business connexion” should be remitted to the Judge together with other claims that were parasitic on the section 29 claim and for the Judge to apply the guidance given by the majority of the Court of Appeal on the concept of “business connexion.” That guidance was that for a connection to be a “business connexion” there must be a business relationship with the connection that is “properly to be regarded as an asset belonging to” the partnership and that post-dissolution a partnership relationship with a supplier could only be treated as an asset of the partnership if the relationship pre-dissolution was a relationship which was “specific or exclusive to the partnership and which would be able to be realised in its winding up post-dissolution.”

Lexa Hilliard KC represented the successful Defendants in the appeal leading Kate Rogers and Sam Lane of Radcliffe Chambers, instructed by Gardner Leader LLP.

Read the full judgment