Titanium Capital Investment Ltd & Anor v Jonathan Hughes & Ors

Factual and Procedural Background

The appeal concerned a partnership formed in autumn 2020 to sell Covid-19 lateral flow tests, with the partners agreeing to share profits and losses equally and to trade under a shared business name. One partner supplied funding and administrative support through his own company, while the business sourced tests from a Chinese supplier and later sold them through a distributor connected with the other partner’s family. The partnership was dissolved by email in June 2021, after which both sides continued trading in tests, including sales later described as the Danish deal. The first-instance judge ordered a split trial, and this appeal challenged the resulting findings on post-dissolution liability, conspiracy, and knowing receipt. [Para 48][Para 51][Para 52][Para 53][Para 56][Para 89][Para 96][Para 99][Para 140][Para 141][Para 156][Para 158]

Legal Issues Presented

1. What is the proper meaning of “business connexion” in section 29 of the Partnership Act 1890, and did the supplier relationship fall within it? [Para 48][Para 223][Para 230][Para 240][Para 338][Para 339][Para 543]
2. Did post-dissolution sales of lateral flow tests fall within section 29 because they were derived from partnership property, the partnership name, or a partnership business connexion? [Para 240][Para 245][Para 429][Para 662]
3. Did section 42 of the Partnership Act 1890 apply where both former partners continued trading in different ways after dissolution? [Para 162][Para 449][Para 456][Para 460][Para 661]
4. Were the appellants’ unlawful means conspiracy and knowing receipt claims properly disposed of at trial, given the limited closing submissions? [Para 477][Para 497][Para 520][Para 526][Para 508][Para 530]
5. Did the secret profit arrangement involving one partner’s separate company affect the other partner’s entitlement to relief? [Para 107][Para 108][Para 398][Para 419][Para 425]

Arguments of the Parties

Appellants’ Arguments

• The appellants submitted that “business connexion” in section 29 should be limited to relationships that are effectively part of goodwill, with some exclusivity, special value, or saleable character. [Para 259]
• They argued that the supplier relationship did not qualify because the partnership merely bought goods from a source open to others, and post-dissolution trading did not involve misuse of partnership property or a continuing partnership business. [Para 259][Para 344][Para 352]
• They said the partnership business was confined to branded tests, so sales of unbranded tests fell outside section 29. [Para 259][Para 393][Para 396]
• They also argued that the other partner’s undisclosed profit-sharing arrangement and lead diversion were so serious that he should not be entitled to complain or obtain equitable relief. [Para 259][Para 398][Para 419]
• On section 42, they contended that two people cannot both be “continuing” and “outgoing” partners in relation to the same business after dissolution. [Para 453][Para 456]

Respondents’ Arguments

• The respondents said section 29 is a free-standing provision and should be read according to its words, supported by older partnership and fiduciary authorities. [Para 262][Para 266][Para 275][Para 298]
• They argued that the supplier relationship was a business connexion because the supplier was selective, the partnership’s access to it was central to the business, and the supplier tried to prevent circumvention of the partnership. [Para 383][Para 384][Para 386]
• They maintained that section 29 continues after dissolution, and that the appellants’ post-dissolution sales derived from partnership assets, the partnership name, or business connexions. [Para 357][Para 390][Para 429]
• They also said the other partner’s misconduct did not extinguish the appellants’ liability or defeat the claims by a clean-hands argument. [Para 418][Para 419][Para 424]
• On section 42, they supported the judge’s view that both former partners could continue different parts of the business after dissolution. [Para 449][Para 452]

Table of Precedents Cited

Court's Reasoning and Analysis

On section 29, Newey LJ held that “business connexion” is not limited to exclusive customer relationships; it can include any third-party relationship of value or potential value to the partnership, including, in some circumstances, a supplier relationship. He reached that view by combining the statutory language with pre-1890 partnership cases and general fiduciary principles, especially the “no profit” and “no conflict” rules. [Para 52][Para 54][Para 56][Para 59][Para 60][Para 68][Para 69]

Applying that approach, Newey LJ considered the supplier company to be a business connexion because it was selective, central to the partnership’s trading, and actively resisted circumvention of the partnership. He also held that the partnership business was not confined to branded tests, so post-dissolution sales of unbranded tests could still fall within section 29. [Para 383][Para 384][Para 386][Para 394][Para 396]

Snowden and Falk LJJ agreed that the statutory wording had to be read in context, but they rejected the judge’s and Newey LJ’s broader treatment of business connexion. They held that the relationship had to be an asset belonging to the partnership, and that a non-exclusive supplier relationship, without something special or enforceable about it, was not enough; in their view, the judge had not sufficiently examined whether anything about the supplier relationship could be realised in winding up. [Para 549][Para 550][Para 556][Para 559][Para 586][Para 594][Para 650][Para 652][Para 658]

On section 42, Newey LJ accepted the appellants’ argument that the statute contemplates one set of surviving or continuing partners and one outgoing partner, not fragmented continuation by both former partners in different parts of the business. He therefore held that the trial judge had applied the section on the wrong basis and that the section 42 order had to be set aside. [Para 456][Para 457][Para 459][Para 460]

On the unlawful means conspiracy claim brought by Appellant 1, Newey LJ said the judge should have determined the claim on its merits rather than dismissing it because the closing submissions were thin. He considered remittal appropriate because the evidence and pleaded case were before the court, but the trial judge had not been fully assisted on intention. [Para 477][Para 480][Para 487][Para 488][Para 508][Para 509]

On knowing receipt, Newey LJ held that Company A had beneficially received traceable fruits of a breach of fiduciary duty, and that, because Claimant 2 was its sole director and shareholder, the company’s knowledge made retention unconscionable. He therefore concluded that the knowing receipt claim against Company A succeeded. [Para 531][Para 532][Para 536][Para 537]

The judges also rejected the argument that Claimant 2’s serious misconduct automatically barred his claims or released Appellant 1 from his own obligations. They held that the authorities on reciprocity and clean hands did not establish any automatic forfeiture, and that the misconduct was not sufficiently connected to defeat relief under section 29. [Para 418][Para 419][Para 420][Para 424]

Holding and Implications

Appeal allowed in part. The Court set aside the section 42 ruling, allowed the conspiracy issue to be remitted, and held that the knowing receipt claim against Company A succeeded. By majority, the Court also allowed the appeal on the section 29 “business connexion” issue and remitted that question for further determination. The immediate consequence is that Trial 2 must address the extent of any accounting liability and the unresolved conspiracy/busness-connexion issues. [Para 539][Para 540][Para 542][Para 543][Para 661][Para 662][Para 663][Para 664]