APPEAL COURT, HIGH COURT OF JUSTICIARY
|
Lord
Eassie Lord
Wheatley Lady
Paton |
Misc 119/07 Misc 121/07 Misc 120/07 |
|
|
2008 HCJAC 44 OPINION OF THE COURT delivered by LORD in the petitions to the nobile
officium of the High Court of Justiciary by (First) THOMAS WILLIAM BALMER, (Second) ANNE BALMER, and (Third) ALAN THOMAS BALMER Petitioners; against HER MAJESTY'S ADVOCATE Respondent. |
Act: (First
Petitioner) Brodie; Levy & McRae, Glasgow
(Second Petitioner) Duguid Stacey, Q.C., AndersonBalfour; HBM Sayers, Glasgow
The Anderson Partnership.
(Third Petitioner) Stacey DuguidDuguid Q.C., Balfour;G. Anderson
HBM Sayers, Glasgow
Alt:
Bain Q.C., A.D., Gill; Crown Agent.; The
February 2008
Introduction
[1] Each of the
three petitioners, Thomas William Balmer, Anne Balmer and Alan Thomas Balmer,
has presented a petition to the nobile
officium of the High Court of Justiciary.
The three petitions are in similar terms and raise
the same issue relating to tthe competency
of an indictment brought by the respondent against "Rosepark Care Home also
known as Rosepark Nursing Home, a now dissolved firm". The petitions were heard together.
[2] The first and second petitioners are husband
and wife, and the third petitioner is their son. They formerly carried on business in
partnership under the firm name of Rosepark Care Home (or Rosepark Nursing Home). The firm formerly owned and operated a care
home ("the home") under that name at
[3] It is alleged
by the respondent that on
The present indictment
[4] The
respondent has served on each of the petitioners an indictment in inter alia the following terms:
"ROSEPARK CARE HOME also known as
ROSEPARK NURSING HOME, a now dissolved firm, in respect of which Thomas William
Balmer ... Anne Balmer ... and Alan Thomas Balmer .....are the whole surviving
partners thereof, and which firm between the dates of 1 April 1996 and 28
February 2005 at 261 New Edinburgh Road, Viewpark, Uddingston, carried on
the business or undertaking of a residential care home; ...
you are indicted at the instance of
The Right Honourable ELISH ANGIOLINI, Queen's Counsel, Her Majesty's Advocate,
and the charges against you are that ...".
The indictment contains seventeen charges against the
firm.
[5] A second
accused has also been indicted, namely Balmer Care Homes Limited, and fourteen
separate charges are laid against that company in respect of the conduct of a
different care home. These petitions are
not concerned with the charges brought against Balmer Care Homes Limited.
[6] Each charge
libelled against the firm is a charge of contravention of a statutory
provision. All the charges against the
firm proceed on an averment that the firm was at the material time an employer
in terms of the Health and Safety at Work etc. Act 1974 ("the 1974 Act"). It is unnecessary to set out the terms of the
charges in detail. Charge 1 may be taken
as an example. It libels that between 1
April 1996 and 31 January 2004 at the home the dissolved firm did carry on the
business or undertaking of a residential care home registered to provide care
and nursing for up to 43 residents in the categories of frail elderly, elderly
with mild mental illness, terminally ill and young physically disabled, and
being an employer in terms of the 1974 Act, did fail to conduct its undertaking
in such a way as to ensure so far as was reasonably practicable that persons
not in its employment who might be affected thereby were not thereby exposed to
risks to their health and safety, and did fail to devise, institute, implement
and maintain an adequate and effective system or strategy for fire safety at
the home. There then follow averments
giving further specification of the alleged failures. The narrative then sets out the occurrence of
the fire on
The previous indictment
[7] In order to
understand how matters have developed, it is necessary to note certain events
that preceded the service of the present indictment. On
[8] On or about
[9] At a
preliminary hearing on 19 and
[10] The respondent
appealed against Lord Hardie's decision, but at the hearing of the appeal on
The petitions
[11] Following the
abandonment of the appeal, the present indictment, summarised in paragraphs [4]
and [5] above, and relative citations were served on the petitioners. They each presented a petition to the nobile officium of this court. The remedies which they sought were (a)
declarator that the dissolved firm had not been competently indicted; (b)
dismissal of the purported indictment; (c) declarator that the petitioners were
not "accused" within the meaning of section 66 of the Criminal Procedure
(Scotland) Act 1995 ("the 1995 Act") and thus under no compulsion to attend
court in answer to the purported citations served on them; and, (d) in any
event, declarator that in the event that the dissolved firm was convicted, the
Crown might not recover from the petitioners any penalty imposed on the
dissolved firm.
[12] In her Answers
to the petitions, the respondent admitted that the only parties to the indictment
proceedings were herself and the accused, the accused being (1) the firm and
(2) Balmer Care Homes Limited. It was
averred that the Crown did not consider the petitioners to be parties to the
proceedings.
[13] The respondent
pleads that the petitions are incompetent.
The issues raised by that plea are not, however, readily separable from
those relating to the merits of the petitions.
At a procedural hearing on 25 September 2007 the petitions were
accordingly appointed to a conjoined full hearing on the whole issues therein. When the petitions came before the court for
the latter hearing, it was agreed among the parties and accepted by the court that,
notwithstanding the respondent's plea to competency, the petitioners would
address the court first.
[14] In the very
briefest outline, the petitioners' contention is that the firm was a legal
person which ceased to exist when it was dissolved on
The Partnership Act
1890
[15] The issues
between the parties to the petitions turn on aspects of the law of partnership. The law of partnership is partially codified
in the Partnership Act 1890 ("the 1890 Act"), and it is convenient at this
stage to set out for reference those provisions of it which are relevant to the
issues which will be discussed.
[16] Section 1(1)
of the 1890 Act deals with the definition of partnership, and provides:
"Partnership is the relation which
subsists between persons carrying on a business in common with a view of
profit."
[17] Section 4
deals with the meaning of firm.
Subsection (1) provides:
"Persons who have entered into
partnership with one another are for the purposes of this Act called collectively
a firm, and the name under which their business is carried on is called the
firm-name."
[18] Section 4(2)
provides:
"In
[19] Section 5 deals
with the power of partners to bind the firm, and provides:
"Every partner is an agent of the
firm and his other partners for the purpose of the business of the partnership;
and the acts of every partner who does any act for carrying on in the usual way
business of the kind carried on by the firm of which he is a member bind the
firm and his partners, unless the partner so acting has in fact no authority to
act for the firm in the particular matter, and the person with whom he is
dealing either knows that he has no authority, or does not know or believe him
to be a partner."
[20] Section 38
deals with the continuing authority of partners for the purposes of winding
up. It provides inter alia as follows:
"After the dissolution of a partnership
the authority of each partner to bind the firm, and the other rights and
obligations of the partners, continue notwithstanding the dissolution so far as
may be necessary to wind up the affairs of the partnership, and to complete
transactions begun but unfinished at the time of the dissolution, but not
otherwise."
[21] Section 46
provides:
"The rules of equity and of common
law applicable to partnership shall continue in force except so far as they are
inconsistent with the express provisions of the this Act."
Submissions for the
petitioners
[22] The
submissions for the first petitioner were made on his behalf by Mr Brodie. Mrs Stacey for the second petitioner, and Mr
Duguid for the third petitioner, each adopted Mr Brodie's submissions without
qualification, elaboration or addition.
[23] At the outset
of his submissions, Mr Brodie summarised the topics which he would cover under
five headings:
(1) The Crown had
purported to indict the dissolved firm.
None of the former partners were was indicted.
(2) On dissolution of
a firm, the firm (and its separate legal persona) ceases to exist.
(3) If, contrary to
that submission, the firm had some continuing existence after dissolution, it
was for the limited purpose of winding up.
Liability to prosecution for crime does not fall within the scope of
winding up. The limited continued
existence for which the Crown contended therefore was of no avail as a basis
for indicting the dissolved firm.
(4) Thus, on either
view of the question of the dissolved firm's continued existence, there was no
basis for prosecution of the dissolved firm.
(5) In the
circumstances, recourse to the nobile
officium of the court was necessary to afford the petitioners a remedy, and
the petitions were therefore competent.
[24] Mr Brodie's
first topic required little, if any, elaboration. Although the form of citation used by the
respondent in serving the indictment led to some apprehension on the
petitioners' part that they were being treated as if they were accused persons,
it is evident from the form of the indictment that that is not so. Although it is narrated that the petitioners
are the "whole surviving [sic]
partners" of the dissolved firm, they are not named as accused, and the charges
are not laid against them. The matter is
put beyond doubt by the terms of the respondent's Answers referred to in
paragraph [12] above. It was not
suggested in argument before us that the petitioners were indicted. The respondent's submissions proceeded on the
basis that the sole accused in charges (1) to (17) is the dissolved firm.
[25] The major
proposition on which the petitioners relied, namely that on dissolution a firm
ceases to exist, and ceases to be a legal person, was elaborated upon in the
second topic of Mr Brodie's submissions.
He began with reference to sections 1 and 4 of the 1890 Act. In terms of section 1(1), the partnership is
the relationship which subsists between or among persons carrying on business
in common with a view of (or to) profit.
In terms of section 4(1), the firm is the collective term for the
partners as a body. In terms of section
4(2), the body of partners, so collectively described, is in Scots law given a
legal personality distinct from those of the individual partners. Mr Brodie thus sought to preserve, in his
submissions, the distinction that the term "partnership" laid emphasis on the
relationship of the partners inter se,
whereas the term "firm" laid emphasis on the collective body of partners which
has, in Scots law, a separate legal personality. Mr Brodie acknowledged that the
distinction was not uniformly maintained in ordinary usage, but relied on it
for the sake of clarity in his own submissions.
[26] Mr Brodie went
on to emphasise the contrast between sections 5 and 38 of the 1890 Act. Section 5 defines the power of a partner to
bind the firm and his partners. Section
38 defines the limited powers of the partners after dissolution of the
firm. If, contrary to his submissions,
the firm has a continued existence after dissolution, there would be no need,
he suggested, for section 38, because the partners' powers under section 5 to
bind the firm would continue to exist.
It was because the firm ceased to exist as a separate legal person on
dissolution that the specific provision in section 38 giving the partners of
the dissolved firm certain limited continuing powers was necessary.
[27] The language
of the 1890 Act, Mr Brodie pointed out, was the language of civil rights and
obligations. There was no use of
language appropriate to crime or criminal proceedings. That, he suggested, was scarcely surprising,
since partnership was a vehicle of mercantile usage. In the nineteenth century, it was not thought
that a partnership could be prosecuted as such (Clark on Partnership, Vol. 1, 591).
For an illuminating discussion of the relationship between the 1890 Act
and the antecedent common law, Mr Brodie referred to the opinion of Lord Reed
in Duncan v MFV Marigold PD145, 2006 SLT 975 at paragraphs 24 to 27.
[28] In making his
submissions on the effect of dissolution of a firm, Mr Brodie turned first to Inland Revenue v Graham's Trustees 1971 SC (HL) 1.
The issue in that case related to the valuation of a farm. That turned in part on estate duty
legislation and in part on whether, on the death of a partner, the surviving
partners were entitled to take up the firm's secure agricultural tenancy. Mr Brodie first cited the following
observations made (at page 4) by Lord Hunter in the
"Considerable argument was presented
to us on the question whether, after dissolution of a partnership by the death
of a partner, the firm has any continued existence. In the argument presented on behalf of the
respondents a good deal was made, in this connection, of passages from the
institutional writers and from textbooks, which were said to suggest that,
despite dissolution by the death of a partner, the firm as a legal persona continues to exist ... The matter depends largely on the particular
choice of language and, in a sense, the dissolved firm might be said to
continue in existence in such circumstances, although only for certain limited
purposes, in order that it may be wound up and the assets distributed in
accordance with the law. Possibly a more
accurate statement may be that the surviving partners of the firm have, in such
circumstances, the rights and powers necessary to enable them to wind up the
affairs of the dissolved firm and distribute its assets ... Such rights and powers may, in appropriate
cases, include the completion of depending contracts. In my opinion, the foregoing view of the law
accords with the terms of section 38 of the Partnership Act 1890 and avoids the
logical difficulty of asserting that the partnership continues in existence
after it has been dissolved by the death of a partner."
Reference was also made to Lord Fraser, p 11. Those observations were relevant, Mr Brodie submitted,
in the context of any dissolution, not only one resulting from the death of a
partner. In the House of Lords, Lord
Reid said (at page 19):
"There is no doubt that in
Having rejected arguments based on the terms of the
particular contract of co-partnery (a) that there was agreement that the
partnership should continue notwithstanding the death of a partner, and (b)
that the lease was a contract with the "house", Lord Reid went on (at page 20)
to say:
"So, in my opinion, it must be held
that this contract of co-partnership came to an end on the death of Mr
Graham. All that remained was to wind up
its affairs. It follows that thereafter
there was no tenant, because the farm had been let to the partnership and to no
one else."
His Lordship then considered section 38, and said (at page
21):
"In my view ... the surviving partners
have the right and duty to complete all unfinished operations necessary to
fulfil contracts of the firm which were still in force when the firm was
dissolved. Otherwise the position would
be intolerable. ... In my opinion, section 38 does not make the
surviving partners parties to the firm's contracts and so keep those contracts
alive. That would involve a radical
change in Scots law. But I see no
difficulty in holding that this section does require unfinished operations to
be completed under the conditions which would have applied if the contract had
still existed."
His Lordship added that the surviving partners were entitled
and bound to carry on the work of the farm at least to the end of the year
current at the date of death, but added (at page 22):
"In order to do this the surviving
partners had to occupy the farm. But
they would not thereby become tenants under any lease. The lease had gone, and they would be in
occupation merely for the purpose of winding up the firm's affairs, as required
by section 38."
Mr Brodie referred also to the speeches of Lord Guest at 23 to
25, and Lord Upjohn at 26 ("upon
the death of R. F. Graham the lease came to an end, because it was a lease to a
legal person who had ceased to exist") and 37.
[29] Mr Brodie then
referred to Dickson v The National Bank of Scotland Limited 1917
SC (HL) 50, per Lord Finlay LC at 52, to Duncan
v MFV Marigold per Lord Reed
at paragraphs 18, 30, 31 34 and 37 et seq., and to Lujo
Properties Limited v Green 1997
SLT 225 per Lord Penrose at 233L, 234A and J, 236G and 237F.
[30] From Graham's Trustees and those other cases
Mr Brodie drew five propositions, namely (1) that a firm has separate legal
personality; (2) that on dissolution of the firm that separate legal
personality ceases to exist; (3) that on dissolution, the affairs of the firm
require to be wound up by the partners; (4) that prior to dissolution the
partners' powers to bind the firm are to be found in section 5 of the 1890 Act;
and (5) that following dissolution those powers are continued by virtue of
section 38, but only in so far as is necessary to wind up the affairs of the
partnership.
[31] Mr Brodie
recognised that for the contrary view - that a dissolved firm had continuing
existence as a separate legal persona
- the respondent relied on passages in Clark
on Partnership and Bell's
Commentaries and on the case of Gordon
v Douglas, Heron & Co (1795)
3 Paton's App 428, and therefore turned his attention to those
authorities. In Clark on Partnership, Vol. 2, 672 the view is expressed that:
"When a partnership is brought to a
termination, it still continues to subsist for the purpose of winding up; and
until this has been accomplished, the partnership relation cannot be said to
have entirely ceased. In the absence of
special agreement to the contrary, the former partners have the right and power
of winding up. ...
But the partnership, and with it the
agency of the former partners to bind their fellows, at once ceases as to all
future contracts; it subsists only for the purposes of winding up."
That passage, Mr Brodie submitted, was concerned with the
continuation of the relationship between the partners for the limited purpose
of winding up. It did not vouch the
continued existence after dissolution of the firm as a separate persona.
A similar construction should be put upon the passage in Bell's Commentaries at 527 (the page
references given in this Opinion are to the 1990 reprint of the seventh
edition) where it was said that: "Partnership subsists after dissolution for
the purpose of winding up the concern".
In Gordon v Douglas, Heron & Co (which is cited
by
"Finds that every copartnery must,
from its nature, subsist after it has been dissolved, or the term for which it
was entered into expired, to the effect of winding up its affairs, although
there were no proviso in the contract constituting it for that purpose: Finds,
that the contract in question does, in the 15th Article, contain a
special proviso for that purpose, which has been followed out, by naming
persons as therein directed: ... On all,
and each of these grounds, repels the defender's objection to the title of the
pursuers to insist in this action."
The report indicates that on appeal in the House of Lords it
was ordered and adjudged that "the interlocutors be affirmed". Some doubt on that latter point is introduced
by the fact that in the Appeal Papers relating to the case there appears a
manuscript version of the order of the House of Lords which omits reference to
the interlocutors being affirmed. That
aside, Mr Brodie submitted, first, that the case was concerned only with title
to sue, and secondly, that the terms of the Lord Ordinary's second finding
rendered the more general observation in his first finding obiter. In any event, there
was actually no dissolution of Douglas, Heron & Co. That was evident from the report of the
related case of Douglas, Heron & Co v
Hair (1778) M 14605. In that report the terms of the resolution
passed by the partners were set out: "That, from and after that date, the
Company shall give over the business of banking in all its branches"; and a
committee was appointed for winding up of their affairs, with "ample powers". At page 14606 it is reported that the Court
were of opinion: "That the Company was not dissolved by the resolution August
1773, and that the propriety and necessity of the measure were sufficiently
ascertained by the situation of their affairs."
In all these circumstances, Mr
Brodie submitted, Gordon v Douglas, Heron & Co, despite its subsequent
citation, could not be treated as good authority for the proposition that a
firm continues to subsist as a separate legal persona after dissolution. Later
in his submissions Mr Brodie referred to Buchanan
v West of Scotland Malleable Iron Co (1855)
17 D 461. It contained in the opinion of
Lord Curriehill (at 474) a strong assertion of the continued subsistence
of the separate persona after
dissolution. His Lordship said:
"I am of opinion that, according to
the law of
Mr Brodie pointed out, however, that that observation was obiter, because the resolution which the
company had passed expressly provided for its continued subsistence for the
purpose of winding up. It was, moreover,
a joint stock company rather than a simple partnership. The case thus did not support a general
proposition that the personality of a firm continues to subsist after
dissolution. Mr Brodie also referred to Grant v Chalmers (1771) M 14581, Paul
v
[32] Mr Brodie
submitted that, on the contrary, there were cases which demonstrated that in the
nineteenth century it was recognised that upon dissolution a firm ceased to
exist as a separate persona. He referred first to Snodgrass v Hair (1848) 8
D 390. In that case it was held that one
of the former partners of a dissolved firm had no power, after dissolution, to
grant a bill in name of the firm for an unconstituted debt alleged to be due by
the firm. Lord Medwyn said (at 397-398):
"After the dissolution of a company,
it is quite true that it subsists to a certain effect, and that the partners,
and more especially the partner who is appointed to wind up the concern, may
use the firm in gathering in the effects and discharging the obligations of the
company ... [His Lordship then set out a
number of examples, and continued.] Now,
all such acts fall under the character of acts in the necessary administrative
powers for winding up the concern. But I
think such powers go no further, and they do not extend to the effect of
constituting a debt by granting a bill for it, thus giving the creditor of the
dissolved company rights and privileges which he had not acquired during the subsistence of the company
... I can find no authority for saying
that the former partner of an expired or dissolved company has this power of
binding his copartners, by using the company firm after the company no longer exists" (emphases added).
In Campbell of
Shawfield v The Calder Iron Co
"The only contracting party with Hoey
was the firm, and when it was dissolved by the death of MacEwan the contracting
party ceased to exist. ... This seems a purely personal contract, and
one that cannot exist after the death of the employer; or, what is the same thing,
the dissolution of the partnership by the death of one of the partners."
In
"... it is a fundamental rule in the
law of partnership that when a company is sequestrated it is thereby ipso facto dissolved; and if a company
which is a tenant is a dissolved company, it no longer exists, except for the
purpose of the partners who may be left winding up the business. ... There
is no persona to represent the tenant
at all."
In Collins v Young (1853) 15 D (HL) 35, which was
cited by Lord Hunter in Graham's Trustees
in support of his preferred view of the effect of dissolution, the following
observation of Lord Cockburn was quoted with approval by Lord Cranworth LC:
"When a partner dies, a right to wind
up the partnership concerns is by law vested in the surviving partners."
In Muir v Collett (1862) 24 D 1118, following the
dissolution of a firm that had carried on business in
"When a company has been dissolved,
the partners are put in the ordinary position of correi debendi. If you sue
one of them for a company debt, you are bound to call all the others if you
can. You are not bound to do so if it is
impossible."
That, Mr Brodie submitted, illustrated that on dissolution
the separate persona of the firm was
lost. In Nicoll v Reid (1877) 5 R
137 a firm was dissolved by agreement.
Thereafter, one of the partners died.
The surviving partner sued in his own name for a firm debt. The defender challenged his title to sue
"otherwise than in name of the firm (which still subsists for the purpose of
winding up)". That plea was repelled. It
was submitted that if the firm continued in existence, it would then be the
firm that undertook the winding up. Were
the Crown's argument correct, namely that the firm continued after dissolution, that would produce
the uncomfortable result of the continuance of the firm after all but one of
the partners had died.
[33] Mr Brodie then
turned to the third topic of his submissions.
If, contrary to his primary submission, a firm continues to have some
form of existence after dissolution, he submitted that that continued existence
(a) is for the purpose of winding up only, and (b) does not lay the dissolved
firm open to criminal prosecution for an offence allegedly committed by the
firm before dissolution.
[34] The limitation
of the partners' post-dissolution rights and obligations to winding up, and the
scope of what is understood by "winding up", are illustrated in a number of
authorities. Mr Brodie referred again to
Clark on Partnership at 672-673:
"When a partnership is brought to a
termination, it still continues to subsist for the purposes of winding up; and
until this has been accomplished, the partnership relation cannot be said to have
entirely ceased."
That passage, Mr Brodie submitted, was concerned with the
post-dissolution rights and obligations of the former partners. He did not accept that the "partnership
relation" continued; the post-dissolution rights and obligations of the
partners were not part of that relation, but were a legal consequence of the
cessation of that relation. If, however,
it was right to say that the partnership relation continued to subsist after
dissolution, it was clear that it did so only for the purposes of winding
up. In Bell's Commentaries the matter is put thus (at 533):
"When a partnership expires, whether
by death, or by lapse of time, or by bankruptcy, the partnership is considered
in one sense as determined, but in a sense also as continued, that is,
continued till all the affairs are settled.
After this no act can be effectually done, or contract entered into, in
the name of the firm as in partnership, but every act of administration which
is necessary for winding up the concern may effectually be done. See above, page 527."
In the passage from his opinion in Snodgrass v Hair quoted
in part in paragraph 23 above, Lord Medwyn said (at 397):
"... the partners, and more especially
the partner who is appointed to wind up the concern, may use the firm in
gathering in the effects and discharging the obligations of the company; he may
receive payment, and grant a discharge in name of the company; he may draw a
bill upon a debtor, and indorse it; nay, he may pay a debt due by the company
funds in his hands, and these funds may be the produce of such bills, or even
the bills themselves, provided always the debts paid be just debts; and he will
be liable to his partners if he act improperly, and admit debt as just against
the company which are not so. Now all
such acts fall under the character of acts in the necessary administrative
powers for winding up the concern. But I
thinks such powers go no further ...".
(See also Lord Cockburn at 399).
[35] The criminal
prosecution of the dissolved firm in respect of acts or omissions allegedly
committed before dissolution, and the defence of the dissolved firm against
such prosecution, does not, Mr Brodie submitted, fall within the scope of the
winding up of the firm's affairs. There
is no support in the decided cases for the inclusion of criminal prosecution in
such winding up. That is not surprising
in light of the nineteenth century view reflected in the passage from Clark on Partnership at 591 cited in
paragraph 27 above. It appeared that the
respondent, in arguing for the inclusion of criminal prosecution in the process
of winding up, sought to draw an analogy between civil and criminal
liabilities. That analogy was
ill-founded. Criminal liability was
substantively different from civil liability.
The common law has always been unwilling to regard criminal liability as
anything other than personal to the wrongdoer.
In Erskine's Institute IV, 4,103,
it is said that:
"... it is a received rule, Crimina morte extinguuntur; crimes are
extinguished by the death of the criminal."
In Keane v Adair 1941 JC 77 a person convicted on
summary complaint brought an appeal by stated case to the High Court of
Justiciary, but died before the appeal was heard. It was held that, as there was no passive
representation in crime, his executors could not be sisted as parties to the
appeal. Lord Justice General Normand
said (at 79):
"I take the view that there is no
basis whatever in our criminal law for passive representation or for the
transmission in any shape of a criminal proceeding against the executors of the
alleged criminal or offender. It is a
maxim which has been recognised by Erskine in his Institute that crimes do not
in any sense survive the death of the criminal: crimina morte extinguuntur; and I think that it is an unassailable
principle. ... The root of the matter is that crime is
personal to the individual criminal, and does not affect his representatives."
In 1997 it was made possible for the executor or other
representative of a deceased convicted person to institute or continue any
appeal that had been or could have been instituted by the deceased (1995 Act,
section 303A, as inserted by the Crime and Punishment (Scotland) Act 1997), but
Mr Brodie submitted that that limited statutory intervention demonstrated the soundness
of the underlying common law rule.
[36] In general
principle, Mr Brodie submitted, the criminal law rejects vicarious
responsibility. In Gair v Brewster 1916 SC
(J) 36 at 38, Lord Justice General Strathclyde said:
"I do not think anyone disputes that,
by the criminal law of Scotland, a man is not held guilty of a crime unless he
has committed that crime himself, and that the doctrine of vicarious
responsibility has no place in our criminal jurisprudence."
The same appears to be the case in
"In general criminal liability only
results from personal fault. We do not
punish people in criminal courts for the misdeeds of others. The principle of respondeat superior is applicable in our civil courts, but not
generally in our criminal courts."
For criminal responsibility to be transferred from one person
to another, there requires to be very clear provision. The examples to be found of circumstances in
which the issue was considered are all in cases of one legal person being
succeeded by another. In Higson v Aberdeen City Council 1999 SCCR 708, a case dealing with the
transfer of functions between a local authority and its successor, the court
declined to hold that the statutory provisions effected transfer to the
successor authority of criminal responsibility for the actions of the
predecessor authority. Lord Prosser said
(at 715C and E):
"One would expect civil rights,
obligations and liabilities to be transferred in some way, rather than be
terminated by the extinction of the former regional councils. But we are not persuaded that the very
special case of criminal liability involves a similar expectation that some new
body will stand in the shoes of the old body, inheriting its guilt.
...
[We] cannot find in [the statutory provisions] any sufficient indication
of either a direct intention to impose criminal responsibilities on new
authorities for criminal conduct on the part of their predecessors, or the
consciousness that such a responsibility might result from the provisions
actually expressed."
In British Airways
Board v
"[Paragraph 2 of the Air Corporation
(Dissolution) Order 1973] provides for the transfer of 'all property, rights
and liabilities' of BOAC to the British Airways Board. That paragraph does not extend to criminal
liabilities".
In R v Pennine NHS Trust [2004] 1 All ER 1324
at paragraph 22 Tuckey LJ said:
"Logically the first question is
whether [the legislation under consideration] gives the Secretary of State
power to transfer criminal liability from an old to a new trust. In considering this question one is bound to
start by thinking that it is unlikely that this was intended. The criminal law renders the offender liable
to a penalty. What purpose would be
achieved by making someone else liable as if they were the offender? ... We
do not say that it is impossible to transfer criminal liability but our view is
that if that is the intention of the legislature it should say so clearly. This legislation does not."
These cases illustrated the general approach that, even where
statutory provision is made for the succession of one body to the liabilities
of another, such provision is not lightly to be interpreted as covering
criminal liability. Even if, contrary to
his submission, criminal liability could be equated with civil liability, that
did not, Mr Brodie submitted, carry the respondent to the point of being
entitled to indict the dissolved firm, since the liability had not been
"constituted" against the firm prior to its dissolution.
[37] Mr Brodie
recognised that, if on dissolution a firm ceased to exist as a separate person,
and criminal liability could not be regarded as part of the winding up of a
dissolved firm, the result would be that a firm facing the prospect of
prosecution could be dissolved, and would thus avoid criminal liability. He submitted, however, that that was not as serious
a consequence as it might at first seem.
If the prospective prosecution was in respect of a common law crime and
was well founded, the doctrine of identification meant that an individual
natural person or persons must also have committed the crime (Transco plc v H. M. Advocate 2004 JC 29).
Dissolution of the firm would not allow that person or persons to escape
prosecution. In the case of statutory
offences, there might be express statutory provision allowing individuals to be
held criminally responsible, which responsibility would not be avoided by the
dissolution of the firm. An example of
that situation was to be found in section 36(1) of the 1974 Act.
[38] Turning to his
fourth topic, Mr Brodie submitted that, whether he was right in his primary
contention that on dissolution the firm ceased to exist as a separate legal persona or in his alternative contention
that, if the persona subsisted after
dissolution, it did so only for the purpose of winding up, the consequence was
that the dissolved firm could not be made the subject of criminal prosecution.
[39] Mr Brodie
submitted that statute required that a copy of an indictment be served on the
accused, and that, if that requirement were not obtempered, the whole
proceedings were incompetent (McAllister v
H. M. Advocate 1985 SLT 399). The relevant current statutory provision was
section 66(4) of the 1995 Act. If the
firm, after dissolution, no longer existed as a separate legal person, there
was no accused, and that requirement accordingly could not be complied
with. Equally, if the firm subsisted
only for the limited purpose of winding up, that did not include criminal
prosecution, and again the statutory requirement could not be complied
with. Citation of the former partners
without calling them as accused, the procedure that had been adopted by the
respondent, did not comply with section 66(4).
Section 70(5) of the 1995 Act, which provided for proceedings in absence
against a body corporate was of no assistance to the respondent. A partnership was not a body corporate.
[40] Finally, Mr
Brodie turned to his fifth topic, the competency of the petitions to the nobile officium. `The accused, in respect of charges 1
to 17 of the indictment, was the dissolved firm. The petitioners, although named in the
narrative of the indictment as the former partners of the firm, were not
indicted as such. They were thus not
parties to the indictment proceedings. That
was expressly the Crown position. That
being so, the petitioners were not entitled to present a preliminary plea to
the competency of the indictment against the dissolved firm. That was the effect of sections 72(3) and
79(1) of the 1995 Act (BBC Petitioners
2000 SCCR 533, as noted by Lord Macfadyen at paragraph 10, page 543F-G). Nevertheless, the petitioners had a very real
interest in opposing proceedings against the dissolved firm which they regarded
as incompetent. If the prosecution of
the dissolved firm proceeded to conviction and sentence, there was a real risk
that any fine imposed on the dissolved firm would be enforceable against
them. The petitioners had no other
remedy by which to protect their interest.
Recourse to the nobile officium was
therefore competent (Express Newspapers plc, Petitioners 1999
JC 176 at 178-179; La Torre, Petitioner 2006
SCCR 671 at paragraphs 4 and 5).
The respondent's
submissions
[41] At the outset
of her submissions the Advocate depute indicated that she would present them in
four chapters. The first would set out
the background of the prosecution, and explain why it was in the form it
was. Secondly, she would make reference
to the statutory framework in which the issues raised by the petitions required
to be considered. Thirdly, she would
address the competency of the indictment.
Lastly, she would address the competency of the petitions and the
remedies sought by the petitioners.
Reverting to the third chapter, two alternative bases for the contention
that the indictment was competent would be advanced. The primary contention was that
notwithstanding the dissolution of the firm, it continued and continues as a
separate persona for certain
purposes. After dissolution, the rights
and obligations of the partners continue so far as necessary for the purpose of
winding up the affairs of the firm. As
part of the winding up, the partners could be involved in defending criminal proceedings
in respect of an offence committed by the firm before dissolution. The alternative contention was that, if the
firm was wholly extinguished on dissolution, that did not reflect practical
reality. Dissolution does not discharge
pre-existing liabilities of the firm.
The dissolution of the firm could not be equated with the death of a
natural person. The continued rights and
obligations of the partners after dissolution (section 38 of the 1890 Act) meant
that, criminal liability having been incurred before dissolution, it was proper
to indict the dissolved firm. The only
way to do so was to cite the former partners in a representative capacity, for
the purpose of completing that aspect of the winding up of the affairs of the
firm. Given the dissolution of the firm,
the process of resolving the criminal liability for the pre-dissolution
offences could not be achieved in any other way. That did not involve any transfer of criminal
liability. The dissolved firm and the
former partners were not prejudiced in any way.
[42] In explaining the
background, the Advocate depute outlined the conduct of the business of
Rosepark Care Home by the firm of which the petitioners were all latterly
partners; the occurrence of the fire on 31 January 2004 and its consequences;
the transfer of the business on 28 February 2005 to a limited company, Rosepark
Care Home Limited, of which the petitioners were directors; the dissolution of
the firm on 28 February 2005; and the conduct of the same business from the
same premises with the same staff and the same residents from 1 March 2005
onwards.
[43] In terms of
the present indictment, the firm faced charges under the 1974 Act and various
other legislative provisions. All of the
provisions founded upon place imposed duties on employers. Reference was made to sections 2 and 3, and
33(1) of the 1974 Act. By virtue of
Schedule 1 to the Interpretation Act 1978 the reference in those provisions to
a "person" included reference to a non-natural person, including a Scottish partnership. It was not now disputed that at the material
time it was the firm that was the "person" who was the "employer" of those
employed at the home, and that the firm was therefore the person who had allegedly
committed the offences libelled (John
Gray & Co v Mackenna (1899) 2
Adam 691 at 697).
[44] The Advocate
depute referred to section 36(1) of the 1974 Act which provides:
"Where the commission by any person
of an offence under any of the relevant statutory provisions is due to the act
or default of some other person, that other person shall be guilty of the
offence, and a person may be charged with and convicted of the offence by
virtue of this subsection whether or not proceedings are taken against the
first-mentioned person."
That provision, she submitted, required the Crown to identify
and libel particular acts or omissions on the part of the "other person" which
led to the commission of the offence libelled.
To proceed under that provision against the petitioners would require
that degree of specification. The Advocate
depute gave us to understand that, although there was sufficient evidence of
corporate failings to justify proceedings against the dissolved firm, there was
difficulty in identifying sufficient evidence to proceed against any individual
petitioner under section 36(1). Section
37(1), which permits proceedings against any "director, manager, secretary or
other similar officer of a body corporate" where an offence was committed "with
the consent or connivance of" or was "attributable to any neglect on the part
of" such a person, was of no relevance for present purposes, because it was
accepted that a Scottish partnership was not a body corporate.
[45] Turning to the
1890 Act, the Advocate depute emphasised that it was only a partial
codification, and that by virtue of section 46 the antecedent common law
remained in force except in so far as it was inconsistent with the provisions
of the Act. Both at common law and under
section 4(2) of the 1890 Act, a Scottish firm is a legal person distinct from
its partners. The Advocate depute did
not accept the distinction which Mr Brodie sought to draw between the terms
"partnership" and "firm". Their meaning,
she submitted, was the same. The
separate persona of a firm was
qualified; a partner might be charged on a decree or diligence against the firm
and had a right of relief against the firm and the other partners. The separate persona of a firm was therefore something different from that of a
limited company. In
[46] The Advocate
depute pointed out that, if the petitioners' primary submission were correct,
any criminal proceedings against a partnership could be defeated by dissolution
of the firm before or during the prosecution.
By virtue of section 38, however, following dissolution, certain rights
and obligations of the partners remain.
The language of section 38 supports the contention that the firm
continues to subsist after dissolution.
What continues after dissolution includes "the authority of each partner
to bind the firm" (emphasis added). That language is inconsistent with there
being no subsisting firm after dissolution.
In Graham's Trustees, Lord
Reid said (at 20-21) that section 38 should, if possible, be construed so as to
reach a reasonable result. The section
was designed to provide a solution to a practical problem. There was a real risk that an overly strict
or conceptually pure construction would fail to achieve that result. As Lord Penrose suggested in Lujo Properties Ltd v Green at 236H, the rationalisation of
the continuing rights and obligations is of less significance than the
fundamental recognition of the fact that they continue.
[47] The Advocate
depute reiterated that the 1890 Act is only a partial codification (Joint
Report of the Law Commission and the Scottish Law Commission on Partnership
Law, paragraph 13.33; Prime & Scanlan, The
Law of Partnership, page 1; Miller, The
Law of Partnership in Scotland, second edition, pages 1-2). Since the common law continued to play a
part, therefore, it was relevant to note an observation made by Lord Nimmo
Smith in paragraph 2 of his opinion in Lord
Advocate's Reference No. 1 of 2001 2002 SCCR 435 at 461:
"Ours is ... a 'live system of law' ...,
and it lies within the power of this court, as custodians of the common law, to
review it, and to correct the way in which it is stated, when it is necessary
to do so in order to take account of developments in the law and to meet the
needs of the community."
Reference was also made to Transco plc v H. M. Advocate 2004
SCCR 1, per Lord Hamilton at paragraphs 46 and 56.
[48] The Advocate
depute submitted that whether a firm could be prosecuted was regulated by the
common law. Sections 70 (proceedings
against bodies corporate) and 143 (summary prosecution of inter alia partnerships) of the 1995 Act were merely
procedural. At common law, "where a firm
or company may be guilty of ... an offence, it is sufficient to cite the firm or
company as the offender" (City and
Suburban Dairies v Mackenna 1918
JC 105 at 110). Reference was also made
to Mackenzie, The Laws and Customs of
Scotland in Matters Criminal (1678), pages 19 to 20, and Miles v Findlay & Co
(1830) 9 S 19. In LindlayLindley, The Partnership Act 1890, (1891) at page
25 the view was expressed that "A firm can neither prosecute nor be prosecuted socio nomine in a criminal or penal
action. The proceedings must be by or
against the individual partners". The
same view was repeated in LindlayLindley, Law
of Partnership, sixth edition, in the "Notes on Scotch Law" by J. Campbell
Lorimer at 780. Reference was made to Lord Advocate v Thomson and Hutcheson 1897 SLT 217 and (on appeal) 315, which
concerned the liability of partners in civil proceedings for recovery of
penalties under the Stamp Acts. What
these references bore out was that the source of the power to prosecute a
non-natural person was to be found in the common law, and that it was wrong to
suggest that around the time of the 1890 Act the question of criminal liability
of a partnership was not in contemplation.
[49] Turning to the
issue of the effect of dissolution on a firm, the Advocate depute submitted
that the correct view was that the firm as a separate entity continues in
existence with its own distinct rights and obligations despite
dissolution. It was not just the case
that what survived was the relationship between the surviving partners to
regulate the winding-up of the firm. In
support of that proposition, she placed considerable weight on Dickson v National Bank of
"Section 38 of the Partnership Act
1890 really embodied the old law relating to partnership derived originally
from the Roman law, and it is this - that for certain purposes a partnership
continues notwithstanding dissolution."
That observation was neither overruled by nor disapproved in Graham's Trustees. Numerous similar formulations of the position
were to be found. In
"Partnership subsists after
dissolution for the purpose of winding up the concern.
1.
The partnership is dissolved in so far as the power of contracting new
debts is concerned; but continued to the effect of levying the debts, paying the
engagements of the company, and calling on the partners to answer the demands";
and at page 528 that:
"The question of chief importance
relative to the Dissolution of Partnership arises with third parties; for there
may be a complete dissolution as between the partners, and yet they may all
continue responsible to the public."
At page 533, under the heading "Powers of Partners after
Dissolution", Bell states:
"When a partnership expires, whether
by death, or by lapse of time, or by bankruptcy, the partnership is considered
in one sense as determined, but in a sense also as continued, that is,
continued till all the affairs are settled.
After this no act can be effectually done, or contract entered into, in
the name of the firm as in partnership, but every act of administration which
is necessary for winding up the concern may effectually be done".
And at p.535 it is stated:-
"... until the final settlement of the
partnership affairs and payment of joint debts and distribution of joint
property it cannot be said that the partnership is determined."
[50] The
proposition that partnership continues after dissolution was supported by Gordon v Douglas, Heron & Co. The
decision was referred to in the Appendix by Lorimer to the 6th
Edition of Lindlay Lindley at page 805. Lorimer also referred to -approved. Those cases were referred to in Lujo Properties Ltd v Green 1997 SLT 225 and at page 236
Lord Penrose said:
"...the rationalisation of the
continuing rights and obligations appears to me to be of much less significance
than the fundamental recognition of the fact that those rights and obligations
continue".
[51] Turning to Inland Revenue v Graham's Trustees, the Advocate depute stressed that the decision
in that case did not overrule or question what had been said in Dickson v National Bank of s.section 38 of the
1890 Act. It was thus distinguishable
from Dickson since it was essentially about leases, and it might be
possible to say that for the purposes of a lease the persona had ceased to exist. That
was the approach of the Court, reflected in the speeches of Lord Guest, p.page 24 and
Lord Upjohn, p.page 27.
The Advocate depute also referred to the Opinion of the Lord
Justice Clerk in Dickson v National Bank of
[52] The Advocate
depute submitted that there was accordingly authority for a partnership
continuing after dissolution for the purpose of winding up its affairs. This meant that the separate juristic or
legal person of the partnership continued to exist for those purposes. Further, s.section 38 of the