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Court of Appeal rules that Whistleblowing Partner is not protected

3rd January, 2013

A ‘worker’ who acts as a ‘whistleblower’ – disclosing breaches of the law – receives statutory protection under the law if he or she suffers detrimental treatment as a result of having made the protected disclosure to the appropriate authorities.

In the recent case of Clyde and Co LLP v Bates Van Winkelhof, a partner in a law firm acted as a whistleblower, accusing a fellow partner of engaging in criminal activity including money laundering and bribery.

She claimed to have suffered a detriment and sought to rely on the legislation protecting workers, claiming that her disclosures were ‘protected disclosures’.  However, the Court of Appeal rejected her argument, concluding that for such disclosures to be protected by the legislation, there had to be ‘a hierarchical relationship whereby the worker is to some extent subordinate to the employer’.  This could not apply to an equity partner.  The facts of the case are complex as it involved a Tanzanian joint venture, but the principals are clear.

The Court found that the whistleblowing legislation does not protect equity partners.  This puts someone who becomes aware of criminal misdeeds on the part of their fellow partners in a difficult position, particularly as partners can be jointly and severally liable for losses to the partnership that result from the activities of their fellow partners.

The case does not look at the LLP Members’ Agreement in place at the time.  The right for the LLP to expel members without reason (so long as it is not discriminatory) is usually included.  There may have been other routes open to the whistleblower to challenge the offending behaviour; we do not know.  The LLP Agreement should create a duty of good faith for all members and also a duty to comply with legislation, in this case anti-bribery rules.

 

 

 

 

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