In 1990, Mr Lewis, a sole practitioner, invited Mr Williams to
become a salaried partner in his firm of solicitors. Mr Williams
accepted the offer and, thereafter, his name was added to the
In 1991, the firm was retained by the Plaintiff Building Society to
act in a mortgage transaction. The matter was handled solely by Mr
Lewis, but the report on title was sent to the Building Society
together with a letter on the firm's headed notepaper which showed
the names of Mr Lewis and Mr Williams.
Subsequently, the Plaintiff commenced proceedings against Mr Lewis
and Mr Williams alleging negligence in the preparation of the
report on title.
The Solicitors' Indemnity Fund declined to indemnify Mr Lewis owing
to allegations of dishonesty.
Mr Williams did, however, defend the proceedings with the backing
of the Solicitors' Indemnity Fund. He contended that, although he
was held out as a partner in the firm, he was only an employee and
was not therefore liable for the report on title prepared by Mr
As a preliminary issue, the Judge held that Mr Williams was liable
on the basis that he was held out as a partner of Mr Lewis. In that
regard, the Judge referred to the Partnership Act 1890 Section
14(1) which provides that, anyone who represents himself as a
partner in a firm is liable as a partner to anyone who has given
credit to the firm on the faith of that representation.
As the report on title was supplied with a covering letter showing
the names of Mr Lewis and Mr Williams, the Plaintiff was entitled
to regard the report as being the advice of a two - partner firm.
Reliance by the Plaintiff could therefore be presumed and, as a
result, Mr Williams was estopped from denying responsibility for
the report on title.
Mr Williams appealed on the basis that there was no evidence the
Plaintiff did anything in reliance on the representation that he
was a partner and that the Judge was wrong to presume such
The appeal was successful.
The doctrine of estoppel requires a person to show he has relied on
a representation to his detriment. If so, the party who made the
representation is estopped from denying its truth.
The Court of Appeal held that the Judge was wrong to find that
reliance on the representation made in the firm's notepaper could
be presumed. The burden of proof rested on the Plaintiff to show
On the facts of the case, there was no evidence that anyone at the
Plaintiff Building Society had noted Mr Williams' appearance as a
partner on the firm's notepaper, and still less that they had
relied on that fact. There was no evidence that Mr Williams had
ever done any work for the Plaintiff. It did not follow from the
fact that the Plaintiff had relied on the report on title that it
had also relied on Mr Williams as giving authority to that
Accordingly, as it could not be shown that the Plaintiff had relied
on the fact that Mr Williams was held out as a partner, the claim
against Mr Williams failed.
- This case is an important one for professional indemnity
insurers, as it shows that a salaried partner in an insured firm
will not automatically be liable in relation to negligent advice
given by other partners in the firm. In view of the composite
nature of most professional indemnity policies, this may be
particularly important in circumstances where (as here) there is an
innocent salaried partner who is entitled to indemnity.
- The outcome in the present case may well have been different if
(a) the Building Society had been in a position to say they had
placed some reliance upon Mr Williams appearance on the notepaper
and (b) they had produced evidence to that effect - e.g. that it
was not their practice to instruct sole practitioners and that they
had, therefore, drawn comfort from the apparent existence of a
- A salaried partner is, in reality, only an employee of a firm.
If he allows his name to appear on the notepaper, he is allowing
himself to be represented as a partner in the firm. If a client
relies upon that representation, the salaried partner may find
himself liable in relation to any claim brought against the firm.
The question of reliance will depend upon the facts of each case.
As Sir Christopher Slade stated in his judgment:
"...an employee who, in order to enhance his apparent status,
allows his name to appear on the firm's notepaper as an apparent
partner exposes himself to peril. Let there be no doubt about that.
I would accept that, on the particular facts of some other cases,
even in the absence of explicit evidence of reliance, the Court
might readily infer that persons dealing with the firm had done so
in reliance on the representation that the employee was a partner,
particularly, for example, if all their dealings had been with the
employee himself ..."
- The position of salaried partners should be contrasted with
equity partners who are jointly and severally liable for the acts
of all other equity partners (Nationwide Building Society -v- Lewis
& Another CA: judgment 24th February 1998).