Administration of Partnership in UK Law

The important thing to ascertain is the meaning of the word "person" in the vocabulary of the Income Tax Acts. The word constantly occurs throughout the Acts, and I think that it is most generally used to denote what may be termed an entity of assessment, i.e., the possessor or recipient of an income which the Acts require to be separately assessed for tax purposes.

This is because, while partnership is a consensual arrangement based on agreement, it is more than a simple contract (to use the expression of Dixon J. in McDonald v. Dennys Lascelles Ltd); it is a continuing personal as well as commercial relationship.

But that would deprive this provision of all content, for it is clear that surviving partners have no right to bind the assets of the dissolved firm by making new bargains or contracts. In my view this must mean that 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.

But their rights under section 38 are limited by the provision that they may only do so so far as it may be necessary to wind up the affairs of the partnership and, this is the important passage, to complete transactions begun but unfinished at the time of the dissolution, and this is equally true of course of contracts in English law but, as I have said, it is less likely to be necessary to invoke that section.

The account on the basis of which the deceased partner's share in the capital of the partnership is to be ascertained, in the present case, is a pre-event account. So, in the present case, the usage or course of dealing in relation to the General Accounts which were prepared year by year does provide a relevant context in which to determine the question "what did the partners intend the expression 'a just valuation' to mean in relation to the Brantwood Road property.

Mr Leeming has not satisfied me that the judge's exercise of discretion can be impugned. On the contrary, it seems to me that in the unusual circumstances of this case to refuse to order an account was entirely justified. It is of some significance that all the other Malkin Janners partners who did not join Malkins in some capacity were in the same position as Mr Hurst, but have raised no complaint about the terms on which Malkins received partnership assets.

The position is no different if the two bands contain common members. If, as here, they are partnerships at will which are dissolved when one or more partners leave, they are two separate legal entities. This is not affected by the fact that some, even a majority, of the partners in the first band become members of the second.