Thus application of dissolution under the Act is subject to express agreement.
H: Notice was invalid, Sec 26(1) was inapplicable.Because according to the partnership deed termination could be by mutual arrangement only.
# 3 – Decided in Jones v Lloyd
Mc Leod v Dowling F: P/ship btwn McL & D. A Clause; if either p’ner died during the term, the biz and goodwill will go to the surviving p’ner.P/ship ws for 7 yrs but continue without new terms. 23 rd March 1927, McL gv notice to terminate the p/ship, posted on 23 rd march.D received it on 24 th at 10 am. McL died on 24 th 3.15 am.D claimed the dissolution was by death (Sec 33-ours Sec 35) thus entitled to the biz and good will. Held: He was so entitled. The dissolution by notice was not brought about until it had been communicated as required by Sec 32 (c);i.e. Sec 34 (c)
Refer also McLeod v Dowling.
Date of the dissolution will be the date of the commencement of the bankruptcy.
i.e. known as dissolution by illegality of partnership. R v Kupfer Issue: Whether the partnership was dissolved by the outbreak of war. H: Dissolved.
Application by a partner to dissolve the partnership. The court may grant the dissolution if it falls under one of the six grounds provided by the provision. Can be applied by a partner or the insane’s representative For dormant partner who became insane, cannot apply for dissolution because his situation does not affect the business except in exceptional circumstances.
Court did not grant diss. cause there is a possibility of recovering.
The conduct not necessarily connected with the partnership, but has give rise to injurious consequential effects on the business. #1 P’ner travelling without ticket. A clause ‘ may dissolve …guilty of any flagrant breach’. H:There was a breach, application for dissolution rendered. #2 Scandalous remark ,It was held that the partner’s conduct or the App was prejudicial and the p’ship shd be dissolved. #2 Plaintiff claimed t
ii) Which injurious to the business Compare with Sec 37(c) – the partner’s misconduct has to be directly related to the partnership business.
The court should be satisfied that it is impossible to make profit. The situation is not temporary in nature.
Dissolution of Companies
Dissolution Of Partnership:MethodsGeneral rule:Dissolution can be in any manner and for anyreason as stated in the partnership agreement.In the absence of any agreement referenceshould be made to the Act.
Dissolution by AgreementClifford v TimmsF: ‘if either p’ner …guilty of professionalmisconduct the other party…give notice todissolve…’. App had made scandalousremark. Resp gave notice to dissolve on theground of professional misconduct.H: Notice valid in accordance with the deed.
Dissolution – Sec 34 Sec 34(1)(a)A partnership entered for a fixed period, isdissolve by the expiration of that period. Sec 34(1)(b)A partnership entered for a single adventure, isdissolve by the termination of that adventure. Sec 34(1)(c)A partnership with undefined time, is dissolved bynotice.
Partnership at will When the partnership agreement does not have anyprovision relating to dissolutionAbbot v AbbotThere is a clause in the partnership agreement whichprovides ‘If any partner shall …do or suffer any actwhich could be a ground for dissolution of thepartnership by court, he shall be considered to haveretired .’A partner decided to dissolve the firm and gave noticeof dissolution to other partners. He claimed that he hasright to issue the notice as the firm is a partnership atwill.
Held:The notice was ineffective.The partnership wasnot a partnership at will but one to continueunless dissolve by court or some other event.
J.W.W Lewis & Ors v W.EBalasingamThe pp agreement has two clause whichprovides for dissolution. The first one statedthat the pp may be dissolved by giving noticeand the second clause provides that the ppmay be dissolved by the court.Held: A notice of dissolution would beineffective to dissolve the pp having regard tothe fact that there is in existence an agreementwhich has otherwise provided for a means ofterminating the pp.
Moss v ElphickIn 1907, the plf and def entered into a pp oftobacconist. Their partnership agreement provides thatthe agreement shall be terminated by mutualagreement only. In 1909, the plf gave a notice todissolve the firm to def but the def contended that thenotice was not effective as the pp agreement providesthat pp shall only be terminated by mutual consent.Held: Where no fixed term has been agreed forduration of the pp, it should be determined according tothe agreement, I.e. only by mutual agreement.
Retirement from p’ship at willSec 28(1) – no fixed term for theduration of partnership- a partner may determineby noticeSec 28(2) –where there is written pp agreement,then the notice should be in writing and signed
Notice to Dissolve Communicated to all partners Effective date – once communicatedAriff v YeoH: Effective date is date of service (not date offiling) of the writ on the defendant. Notice once given cannot be withdrawn, unlessthere is consent from all partners.
Notice may be prospective.McLeod v DowlingThe notice would have no effect if before the operative date, anevent occurred and it dissolved the partnership. Notice should be well informed to others.Tan Boon CheoHeld: Actual verbal or written notice of his retirement should havebeen given by the plaintiff to the defendant.
Sec 29-Conversion of fixed term ppinto pp at willSec 29(1) – Upon expiration of the fixed termand the partners decided to continue withoutany new terms,the pp agreement shall still bevalid as long as the terms are consistent with app at will.Sec 29(2) – There is continuance of a fixedterm partnership if partners continue businesswithout any settlement or liquidation of thepartnership affairs.
Re Chop Yew SingH: When a known partner retires or apartnership is dissolved, notice of that factmust be given to the world at large byadvertisement and to old customers by somespecial communication.
Kam Hoy Trading v Hup Aik Tin MiningH: In a dissolution of a partnership, partnersshould sent notice to all persons who havetrusted them as partners…or taken steps tosee that their withdrawal was duly registeredwith the Registrar of Businesses.
Dissolution – Sec 35(1) Death and bankruptcy are grounds fordissolution of a partnership, unless otherwiseprovided by the agreement.Lee Choo Yam Holdings Sdn BhdH: No evidence either oral or in writing that thepartnership should continue thus death of apartner dissolve the partnership
When a partner was declared bankrupt, thepartnership will be dissolved unless otherwiseprovided by the pp agreement. Date of the dissolution will be the date of thecommencement of the bankruptcy.
Dissolution due to involuntaryassignments– Sec 35(2) If a partner’s share in the partnership propertyhas been charged by a court order for hisseparate debts, the other partners have theoption to dissolve the partnership.
Dissolution due to illegality – Sec36 A partnership would be dissolved upon thehappening of an event which makes itunlawful to carry on the business For example, a partnership comprisingenemy aliens will be illegal due to theoutbreak of war.
Hudgell Yeates & Co v WatsonOne of three partners in a solicitor firm forgot to renewhis practicing certificate without which he is not allowedto practice.H:The partnership shall automatically be dissolvedunder sec 34 (equivalent to sec 36). There could not bea partnership between professionally qualified partnerand a non qualified partner in a professional firm.Whether the other partners knew about the lapse wasimmaterial.
Any clause in the partnership agreementwhich states that the partnership is to continuein the event of illegality was ineffective. Illegality is the only ground forautomatic/immediate dissolution.
Dissolution by the courtSec 37: Upon application by a partner, the courtmay dissolve the pp on any of the followinggrounds.
Grounds for dissolution by thecourt(a) Insanity- The state of insanity should be permanent- Court will seek expert evidenceJones v NoyHeld: Insanity of a p’ner is a ground for dissolution ofa pp because it is immediate incapacity but it maynot be the result prove to be a ground for dissolutionif the partner may recover from his malady.
(b) Permanently incapable- no prospect of recovery.Whitwell v ArthurF: A partner had a paralytic attack. Other partners soughtfor the diss. of the pp.H:Medical evidence showed that the D’s health wasimproving – order for dissolution was not granted.
(c) Prejudicial Conduct- Means a partner had committed serious misconduct whichprejudicially affect the firm’s business.Carmichael v EvansThe plf was a partner in a drapery business. He wasconvicted of traveling on a railway without a ticket. The otherpartner sent a notice of dissolution to the plf. The plf appliedor interlocutory injunction to stop the other partners fromdissolving the firm.Held : Injunction was not granted. The publicity upon hiscriminal conviction was not calculated to injure the firm’sreputation in the eyes of its customers.
Clifford v TimmsThe app and resp are dental surgeons registered underthe Dentist Act 1878. They were also also partners of adental clinic in England. The app was also a director ofa company in USA, the American Dental Institute Ltd.He was involved in a self-puffing advertisements. TheGeneral Medical Council found him guilty and removedhim from the register.Held: The app conduct was prejudicial to the firm’sbusiness and the pp should be dissolved
(d) Wilful and persistent breach Wilful or persistently commits a breach of thepartnership agreement Express term of the agreement or breach ofstatutory duties imposed upon the partners bythe PA 1961
Cheeseman v PriceIt was held that the persistent failure of apartner to account to his co-partners for moneywhich he had received from the firm’scustomers was a ground upon which the courthad jurisdiction to make a decree of dissolution
(e) Business was at a loss-must prove that it is impossible to make profitHandyside v CampbellA pp had been running at a loss but the evidence showthat this was due the absence of the active partnerdue to his illness. If the business is given properattention, it could run at a profit.H: Dissolution not granted, loss due to temporarycircumstances.
(f) Just and equitable-Give court a wide discretionEbrahimi v Westbourne Galleries LtdA director of the company was excluded fromparticipating in the management of the business.Held: It is just and equitable to dissolve the business asthe exclusion of the management rights was in breachof a clear understanding that the director should be soentitled.
Re Yenidje Tobacco Co Ltdthe company was ordered to be wound upbecause the two person who were the onlydirectors and the only shareholders hadreached such a state of personal antagonismthat they refused to communication each other.
Dissolution by order of arbitratorA partnership may be dissolved by an order ofan arbitrator if there is such provision in thepartnership agreement.
A particular slide catching your eye?
Clipping is a handy way to collect important slides you want to go back to later.