Class 3 – The relation of partners to one another/inter se *class 2 in book

#fact check

*partnership comes with an agreement – no agreement, Act applies

variations on the term ‘partnership’ – can be ascertained through agreement or act

-S. 21 – rights and duties of partners may vary through agreement of Act – intention can be express
or implied through course of dealings – Cruikshank v Sutherland 1923 – Although the accounts of the
partnership were prepared based on book value, when the plaintiff died, the court Held that his
share of the partnership’s property should be based on fair value as no course of dealing had been
proven to show that the value should be the book value # done

-S.22 – property acquired within the partnership is ‘partnership property’ and have to be applied for
the purposes of the partnership

-Miles v Clarke – photography business, which of these constituted partnership properties

(properties tht partners can claim once business is dissolved): furniture, lease, personal connections,
consumable stock in trade? – Held, only photograph negatives (used up properties) constituted as
partnership assets (P and D brought those in together) – lease, equipment, furniture, personal
connections did not

-other cases: Ponnukon v Jebaratnam – what constitutes partnership property depends on intention
of parties – A and R formed a partnership to build a housing estate, but R financed development w
his own funds – Held, there was no agreement tht land owned by appellant and subsequently
developed into a housing estate by respondent was a partnership property – respondent developed
land with his separate funds frm bank, nephew and sons – previously, A and R applied to a bank for
loan to finance the development of the land, since it was rejected, R ONLY found external sources to
source the project, making land separate property, and not joint property in a partnership

*continuation of S. 22 – partnership property devolves according to nature and tenure (???)

-S. 22(2) – co owners – Davis v Davis – being a co-tenant doesn’t mean hes a partner (as to the
freehold property – 3 houses) and automatically assumed to own partnership property – there was
partnership of the business (drew equal sums weekly, represented to customers they were partners)
but they co-tenants, not partners of the freehold property

Partnership property – def: S. 23 – property bought with partnership money, bought with money
belonging to the firm, DEEMED to have been bought on account (to be used) by the firm

-Wray v Wray - North Hill House Gate bought by partner (prob WW wife, EW #) is partnership asset
cause property bought with partnership money

- Tay Guan Ho v Chin Huat Hin Co – the deceased Tay Gek Lin, established a firm ran by sole
proprietorship, on the façade of partnership, transferred land to A (eldest son) – R (youngest son
Douglas) became owner of shophouse subsequently, didn’t pay rent, A filed for rent order and
subsequently a distress order against R for failure to pay rent – R counterclaimed shophouse was
partnership asset, trial judge ruled for R – Held, shophouse wasn’t partnership property, deceased
ran it like personal property, ex: took in partners without them having to pay for the partnership,
capitol provided by deceased only, transfer of property to appellant wasn’t informed to other
partners, not enough adduced evidence to show tht shophouse loan with Chartered Bank was paid
through partnership account – R ordered to vacate and arrears of rent to be paid w proceeds frm
sale auction

-S. 24 – devolution (lowered) of property – partnership property converted to personal estate ???
partnership property will be dealt as partnership property, and not real estate, can be dealt with by
deceased’s estate and heirs

-S. 25 – procedure against partnership property for payment of debt

-cant issue writ of execution (S. 25(1)) unless judgement is obtained against the firm

-Peake v Carter – Peake and partner (B) acquired machinery for business – Carter, through sheriff
claimed machinery to pay off B’s debt towards him – Peake claimed machine was his – Held,
execution of machine cant be issued unless a judgment is obtained against the firm

-Brown, Janson v A Hutchinson – charge order w interests (S. 25(2)) Plaintiffs placed charge (to place
a lien – placing ownership on another’s assets until debt is repaid) on Defendant’s bill of exchange
(an order tht makes someone pay a certain amount of money to the instrument maker/bearer – in
this case, Hutchinson) (3000 pounds in value) for repayment of debt to the firm, court affirmed and
declared this order – Def has to pay 3034 pounds to partners

-can redeem or purchase charge (in PA)

-S. 35(2) PA – separate liability - partner can leave/partnership can be terminated if charge is ordered
on partnership’s assets to secure another partner’s debt (?)

Rights of Partners

*rights in agreement read together with s. 26 PA – agreement takes priority over the Act

-26(a) – equal right to equal capital, profit and liability

7.30pm – 7.49

– Garner v Murray – Murray, Wilkins and Curtis entered into a woollen merchant business with Curtis
contributing to most of the capital – Garner later purchased Curtis’s shares – later, Wilkins went into
insolvency and was unable to pay equal part of his losses as agreed by the three parties – Issue, shld
losses and capitals be borne equally as per agreement? - Held, by Justice Joyce, losses shld be shared
between Garner and Murray ‘shld make good their share of deficiency’, and assets shld be divided
based on capital proportions (???)

10.20 – 11.11

-26(b) - indemnity of every partner for actions done in the ordinary course of business/OR to
indemnify for the preservation of business (indemnify: compensate for harm or loss)

-basically, a person who resolves the liability of the firm has to be indemnified for payments made
and personal liabilities incurred to him

*contingent claims – claims tht emerge after a future event

*novation – to replace one party in a contract with another (ex: A and B in a contract – B replaced by
C)

*cestui que (setee kee trust – beneficiary of a trust ; trustee – a person who administers assets for a
trustor (person who establishes a trust)

*indemnity – security or protection against financial loss

– Matthews v Ruggles-Brice -

Although the assignment by a cestui que trust of his absolute beneficial interest to a new cestui que
trust terminates the trust relationship between the trustee and the old cestui que trust, it does not
terminate the personal liability of the old cestui que trust to indemnify the trustee against contingent
claims that may arise under existing contractual liabilities, and the mere fact that the trustee concurs
and takes an indemnity from the new cestui que trust against those liabilities does not in itself
amount to novation.

-1879, two partners, as trustees to a partnership, took a lease

-1886, all partners, including two trustees, transferred assets and liabilities to a limited company –
limited company agreed to indemnify and bring about novation of all liabilities of the partnership

-1887, surviving trustee (other one died – OE Coope) assigned lease to the company and conveyed
other freehold and leasehold properties, without reserving any part to cover indemnity - limited
company was cestuis qui trust (trusted to indemnify partners) supposed to pay freehold properties
rental to Public Trustee – failed cause insolvent)

-1909, limited company was insolvent, Matthews executors ordered to pay arrears of rent and breach
of lease covenant, costs amounting to 5874 by Public Trustee (body in which freehold reversion was
vested) – Held, the agreement, assignment, and conveyances did not constitute a novation of the
surviving trustee's original right to indemnity and contribution against the partners. As a result, the
trustee's executors have the right to enforce indemnity and contribution against the partners or their
estates. -basically, Matthew’s executors can enforce Ruggles-Brice (Def, O.E Coope’s executors) to
indemnify for arrears in rent, breach of lease, and costs cause novation frm Matthews x jadi

-why novation frm Coope to limited company didn’t work? – look to cl 4 cl 6, emphasised

1-2

-Kok Hong Leong v Seow Kah Cheng - The respondent (R) has succeeded in the defence to an action
against the firm - It involved a claim (4000 dollars) for breach of contract - When the partnership
dissolves, the court ordered that the legal cost incurred by R is paid from the firm's asset – A appeals
against court order – Held, firm or partnership has duty to indemnify R for personal liability incurred
due to contract breach (KHL indemnifies SKC)

-Chop Cheong Tuck v Chop Tack Loong – 2nd D can claim indemnity frm D for personal liability
incurred frm the ordinary course of the firm (3rd D lent money frm P, never pay back – D whole firm
held liable)

2-3

-26(c) advances beyond capital – normal amount is 8% per annum – want more than tht, agreement

-26(d) interest on capital – has to be ascertained (ditetapkan), isn’t automatically entitled to partner
-26(e) partner MAY take part in management, subject to agreement – some may be sleeping
partners

-26(f) not entitled to remuneration, has to be ascertained in agreement

-26(g) introduction of a partner

– Byrne v Reid – father admits son as a partner as soon as hes 21 – partner rejects – Held, son can be
admitted, admission was in partnership agreement clause

-Wong Pong Yuen v Senanayake -

-26(h) difference in opinion solved with majority, but to change of structure of business needs
consent frm ALL partners

– Highley v Walker – P sought injunction against D who brought son in for consultation -Held, son’s
expertise is regarding ordinary partnership matters, isn’t to introduce him as a new partner, majority
sufficient, don’t need Ps consent

-26(i) every partner may access partnership book – kept at an easily accessible place

-Bevan v Webb - The sleeping partner in a partnership decided to sell their interest to the managing
partner. For valuation purposes, the sleeping partner appointed a valuer to inspect the partnership
book – But, the managing partner refuses access - The sleeping partner applied for an injunction to
allow the valuer to gain access to the partnership book – Held, access granted to sleeping partner
and valuer

-27 expulsion prohibited even by majority unless provided by express agreement (expulsion through
majority has to be stated in agreement)

-Re a Solicitor’s Arbitration 1962 - E, N and S are partners in a legal firm. In the partnership
agreement, there was a clause stated that if any partner shall commit or be guilty on any act of
professional misconduct, then the other partner may by notice in writing, expel him from the
partnership. E served on the other 2 partners a notice to expel both of them from the partnership on
the ground of their alleged misconduct -Held, The court held that E had no power to expel both of
them as he is not a majority. Alternatively, E will have to join with any 1 of N and S to expel 1 partner
in the partnership – basically, majority is needed for expulsion even tho expulsion is provided in
agreement

– Green v Howell - there is a clause in the partnership agreement stated tht in the event of any one
of the partner breach any duty as a partner, the other partner is not entitled to expel them unless
there is a good faith. Subsequently, 1 of the partner had breach the partnership agreement – Held,
even tho got expulsion clause, preliminary warning and hearing needed to ensure natural justice

-S. 28 – determination of life of partnership can be determined at any time with notice

-Moss v Elphick- partnership cant be dissolved through notice – importance to agreement clause
(partnership is only terminated w mutual consent)

-S. 29 – continuance of partnership, rights and duties remain the same as when partnership initially
expired

– Brooks v Brooks 1901 – CANT FIND

Duty of a partner

-Uberimmae fidei – ‘THE DUTY TO DISCLOSE ACCOUNTS AND FULL INFO – BENEFIT FRM ANY
TRANSACTION, AND PROFIT ATTAINED FRM A COMPETING BUSINESS’

-S. 30 – true and full information of info and accounts

– Law v Law - The defendant (D) acquired the plaintiff's (P) shares for an amount that is less than
what P paid – P sued D cause he failed to disclose the fact to him – Held, D has a duty to disclose all
material facts regarding assets

-S. 31 - informed of benefit

– Pathirana v Pathirana - Both plaintiff (P) and the defendant (D) are partners in a partnership. The
partnership belonged to a company who has appointed them as an agent of the company. D gave 3
months notice to terminate the partnership, but negotiated a new agreement with the company to
transfer the agency into his own name. Not only that, he also continued to trade in the same way at
the same premises of the previous partnership

HELD: P was entitled to a share in the profits frm D business. the agency agreement was a
partnership asset and D's use of it was a breach of fiduciary duty

- S. 32 – informed of profits from competing business

– Trimble v Goldberg - a partner is forbidden from withholding from the firm any opportunity of
advantage which falls within the scope of its undertakings, and from using for his own exclusive
benefits, information, knowledge or resources to which the firm is entitled

Assignee

-S. 33(1) – assignee (outsider) entitled to share, not management of business

-Ong Kian Loo v Hock Wah Trading – Ong being an assignee is only entitled to shares, and not
administration of the business

-33(2) – dissolution of partnership, assignee entitled to share or assets expressed in agreement

-NO CASE

-Q: remuneration v profits – remuneration – wages earned for performing one job ; profits –
difference between excess earnings and cost

-Q: assignee v partner – assignee – person who is assigned something, like a trust, or a partnership –
being an assignee to a partnership doesn’t mean assignee has management rights ; partner - ori
partner in a partnership, has managing rights