Rennie v Rennie: The Requirements of Natural Justice on Expulsion from a Scottish Partnership
|01 September 2020
|01 September 2020
The extent to which duties of good faith, on the one hand, and fiduciary duties, on the other, operate within Scottish partnerships are complex questions. Given that the Scottish firm possesses separate legal personality,
There are clearly separate good faith duties at work in Scottish partnerships, operating on a partner-to-partner basis. These apply, for example, where representations are made to induce a partner to join a partnership,
The recent Outer House decision from Lord Clarke,
In cases of this type we must look carefully not only at the behaviour of the partners towards one another, but also the terms of the partnership contract governing what must happen should disputes arise. The dispute in this case concerned a farming partnership. The pursuer was in partnership with his son, the first defender. The second defender was the partnership itself and the third and fourth defenders, the pursuer's brother and sister, were partners. The fifth defender, not a partner, was formerly married to the pursuer. Another partner was a discretionary trust, of which the pursuer, and the first, third, fourth and fifth defenders were trustees.
The relationship between the partners appears to have deteriorated because of a dispute over the pursuer's entitlement to receive certain net rental income generated by rental properties at the farm. The pursuer indicated that he wished to withdraw a significant part of his capital from the partnership. The first defender resisted this, on the basis that the amount of capital held on behalf of the pursuer was not known and the partners had not reached agreement on the annual accounts. In October 2017, the pursuer transferred £273,000 from the partnership bank account to a bank account held in his own interests. The first defender commenced legal proceedings seeking...
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