Partnership Property Notes

Law (Universiti Teknologi MARA)

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 Partnership Property

1. Intro 1) Mat Shah bin Mohamed & Anor v Foo Say Meng & Ors, Wan Suleiman FJ considered three
reasons why it is important to determine partnership property:
i) The value of the property to the 9rm or an individual partner
ii) The creditor’s right in event of the 9rm’s insolvency
iii) The posi<on of those who take the partner’s real estate and those who take his
personal estate

2. Sec 22 S. 22(1) All property, and rights and interests in property originally brought into the partnership
stock are partnership property and must be held and applied by the partners exclusively for the
purposes of the partnership.

S. 22(2) Where co-owners of any land, which is not partnership property, are partners as to pro9ts
made by the use of that land, and purchase other land out of the pro9ts to be used in a like manner,
the land so purchased belongs to them, not as partners, but as co-owners.

3. Sec 23 1) The presump<on that property or assets purchased with partnership money have been brought
on account of the 9rm and thus, cons<tutes partnership property is rebuEable where it can be
proven that there was a contrary inten<on.

4. Three 1) All property brought in originally as partnership stock.

ways of
idenBfying i) Whether or not the property was brought in originally as partnership stock is dependent
partnership on the agreement between the par<es.
property
ii) Miles v Clark: A photographer who ran a sole enterprise that was not thriving brought in
the plain<F as a partner as he had more business contracts. He allowed his equipment to
be used in the course of the photography partnership, without any de9nite agreement
between them. Despite the business doing well, they ended the partnership over some
diFerences. Held: Assets such as the lease of the business premise, photography
equipment, and the 9rm’s “goodwill” were not partnership property, but the personal
property of the partner who had brought them into the partnership.

iii) Gian Singh v Devraj Nahar: The appellants, the tenants of the shop premises, sought to
recover possession of the premises which they had sublet to the respondent on the ground
that the respondent by taking two partners into his business and entering into a
partnership deed had broken his agreement not to assign or sublet the premises without
the landlord’s wriEen consent. The partnership deed contained no speci9c reference to
the tenancy but stated that the business would be carried on the premises. Held: The
partnership deed did not cons<tute an assignment of the premises. Although the tenancy
of the shop was an asset to the 9rm, it was not partnership property as property used for
partnership purposes are not necessarily partnership property. Thus, the respondents
should not be ordered to vacate the premises.

2) Where property is acquired through partnership money or other means, for the Irm.

i) Ex Parte Hinds: It is a trading partnership where the partners were trading in Liverpool
and the Barbados. Without the knowledge and consent of the other, the partner in
Liverpool used the 9rm’s money to buy shares in a railway company on behalf and for the
9rm. Held: The shares were partnership property.

ii) Waterer v Waterer: A nursery business and land owned by a nurseryman was leP to his
three sons as tenants in common (property was inherited). Two of the sons bought out the
shares of the third son who had died, and con<nued with the business. On the death of
one of the surviving sons, the court held: All the land, including the nursery, was
partnership property.

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3) Where property is acquired through any lawful means for all means and purposes for the
partnership business.

i) Not all property bought that is used in the partnership business is assumed to be
partnership property.

ii) Ratna Ammal & Ors v Tan Chow Soo: Where the respondent was the registered owner
of the trademark, the issue in this case was the ques<on of ownership of the trademark.
Held: From the wriEen agreement between the par<es, it was clear that the trademark
was the personal property of the respondent, and not the partnership.

iii) Ponnukon v Jebaratnam: The appellant entered into a partnership with the respondent
to build houses and shops for sale, and to share such pro9ts. The land in ques<on was
owned by the respondent. Held: the land was not partnership property because:
-there was no agreement between the par<es for land to be treated as
partnership property;
-the object of the 9rm being land development does not necessarily mean that
land must be owned by the 9rm; and
-the land was not paid using the partnership money, but the funds raised by the
respondent on his own separate act independent from the appellant or the
partnership.

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