Partnership Act 1890 Section 20(2)

[carl norman]

Would be interested to know what peoples interpretation of this section of the act actually means. It reads:-
"Provided that the legal estate or interest in any land, or in Scotland the title to and interest in any heritable estate, which belongs to the partnership shall devolve according to the nature and tenure thereof, and the general rules of law thereto applicable, but in trust, so far as necessary, for the persons beneficially interested in the land under this section".

I have a dispute with my ex partner and his lawyers relating to this section. The law firm states this allows them to sell land(against my wishes and without my knowledge) It is admitted by the firm the land was in the name of my ex partner but held on trust for the partnership.
The law firm are acting for my partner during the winding up of our partnership.
We say they are conflicted by selling assets of the partnership without my consent and using the funds to settle debt that my partner has incurred post dissolution.

 

[obscure]

What does your lawyer say?

 

[carl norman]

What does your lawyer say?

My lawyer says that it can be read in a number of ways Hence the question.

He says its an antiquated peice of legislation that was written in victorian times when men walked around in top hats and their word was their bond.

We say that as the partnership is deadlocked then if they wanted to sell assets without my consent then their option lay in sectin 39 of the act (may apply to the court)
which my lawyer states is another example of the antiquate language of the act If the act was written today it would read "must apply to the court"
A little more background infomation my partner and his lawyers are domiciled in Scotland wheras i am in England as is my lawyer Juristiction has never been established .
the land was in Scotland
We also say that the act does not allow them to rely on a single section and All sections are relevent .
Fortunately we do not have to go to court to get a definative answer as the Scottish Law Society have decided to investigate my complaint against the firm


Would still like members opinions please ....call it a straw poll

 

[Newchodge]

any land,.... which belongs to the partnership

On what basis do you clim that the land belongs to the partnership?

You need to find another lawyer. The response you have received means that the one you have instructed does not have a clue what to do.

 

[Mr D]

My lawyer says that it can be read in a number of ways Hence the question.

He says its an antiquated peice of legislation that was written in victorian times when men walked around in top hats and their word was their bond.



Would still like members opinions please ....call it a straw poll

OK so a bunch of people on t'internet - not sure we can read it different than your lawyer that much.

I think the lawyers will win this one.

 

[carl norman]

On what basis do you clim that the land belongs to the partnership?

You need to find another lawyer. The response you have received means that the one you have instructed does not have a clue what to do.

I can assure you he does as does the Duel qualified QC but he is an English lawyer and they are Scotish lawyers as i thought i had made clear
I am sure i do not have to remind the forum that English and Scots partnerships have different "legal personality" and as such both juristictions deal with partnership property in different ways

With regards land ownership ....the partners both agree it is partnership property.


It is not the first time lawyers have disagreed how to read a certain peice of legislation.....thats how most of em make their money.

 

[carl norman]

OK so a bunch of people on t'internet - not sure we can read it different than your lawyer that much.

I think the lawyers will win this one.

I agree the lawyers will win .....fortunatley i wont be paying them as the law society have taken up the case and have to apply the law and the loser pays ......i am only a secondry complainer so cannot get a costs order against me.....happy days

 

[carl norman]

On what basis do you clim that the land belongs to the partnership?

From my original post:-

"It is admitted by the firm the land was in the name of my ex partner but held on trust for the partnership."

 

[The Byre]

This is one funky question! Unfortunately, there just is not enough information to voice an opinion, but I can ask a few relevant questions -

1. Where was the partnership formed and where did you trade?

2. What sort of partnership was this? i.e. general, limited, limited with limited liability?

3. How did you dissolve the partnership and under what circumstances?

The ownership of land would suggest that it was a Scottish Limited Partnership and SLPs have come in for a great deal of negative attention lately. For those of you playing The Home Game, the Scottish Law Society has published a nippy little outline of the basics of Scottish partnership law (just 500 pages) -

https://www.scotlawcom.gov.uk/files/3812/7989/6640/rep192.pdf

 

[carl norman]

This is one funky question! Unfortunately, there just is not enough information to voice an opinion, but I can ask a few relevant questions

1. Where was the partnership formed and where did you trade?

2. What sort of partnership was this? i.e. general, limited, limited with limited liability?

3. How did you dissolve the partnership and under what circumstances?

The ownership of land would suggest that it was a Scottish Limited Partnership and SLPs have come in for a great deal of negative attention lately. For those of you playing The Home Game, the Scottish Law Society has published a nippy little

The partnership traded both in England and Scotland My partner in Scotland and me in England.....It is unclear where it was formed prob via email lol.We held rental properties in England and Development land in Scotland Maybe i should add that the only income it produced was from the rentals in England

It was a partnership at will disolved by notice served by my partner 2 years ago

It is a "FUNKY question" and throws up all sorts of issues hence why i was hoping to stimulate a debate

 

[carl norman]

The Byre
Thanks for the link .....i have read it ...all 515 pages lol......i have also sent a copy to the Scottish law society and the other lawyers and drawn their attention to the chapter on partnership property and the difference between the 2 juristictions on how prartnership property should be dealt with.

My initial thoughts are that the Scottish lawyer has assumed it is a Scots partnership and now i have raised a complaint his bosses (the partners) are using section 20(2) as a defence to the complaint as that is the only one open to them ......it certainly does not help witb all the other sections of the act they have ignored

 

[The Byre]

....it certainly does not help witb all the other sections of the act they have ignored

Assuming that this is an Ordinary Partnership and assuming what you have stated here is correct, i.e. that the other partner sold the Scottish property AFTER the partnership was dissolved and they are not contesting the true ownership of the property as belonging to the partnership, then there is considerable case law on your side.

As for the paragraph above, I have read it and reread it and it would appear to me to regard property held in trust on behalf of the partnership should be sold with the agreement of the partners. I say 'should' because of the knotty little words "so far as necessary". This makes the whole thing conditional and therefore ambiguous.

That one paragraph is badly drafted and has commas strew all over the place, a big no-no in modern drafting. Apart from that, the Act is actually rather well written and very clear - which is why it has not been superseded and is very much still in force. It was and still is a good bit of legislation. Oh would that modern legislation was as succinct and clear!

More to the point, your ex-partner can only have sold the property on behalf of the partnership, as they have admitted that it was partnership property. The Act requires that partnership funds thus realised must be distributed between the partners. Using that money to pay off non-partnership related liabilities is misuse.

You can dance angels on the head of a pin over 20(2), but 20(1) states very clearly -

All property and rights and interests in property originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement.

Settling private debts is a very long way away from the purposes of the partnership.

My fav. bit of the Act is right at the end -

46.The rules of equity and of common law applicable to partnership shall continue in force except so far as they are inconsistent with the express provisions of this Act.

The rules of equity and Common Law mean that you cannot appropriate partnership property. It can hardly be any clearer than that. Simples!

Having now wasted 30 mins reading the Act yet again (partnerships come up quite often in my business - unfortunately!) please let us know what learned folk at the Scottish Law Society decide.

 

[carl norman]

Assuming that this is an Ordinary Partnership and assuming what you have stated here is correct, i.e. that the other partner sold the Scottish property AFTER the partnership was dissolved and they are not contesting the true ownership of the property as belonging to the partnership, then there is considerable case law on your side

That's what i believe lets hope we are both correct

You can dance angels on the head of a pin over 20(2

Never heard that before but will certainly be using it again haha

46.The rules of equity and of common law applicable to partnership shall continue in force except so far as they are inconsistent with the express provisions of this Act.

Yes I was quite happy to keep this section under wraps as I have not mentioned it to them yet but glad you did as I believe it helps me

Having now wasted 30 mins reading the Act yet again (partnerships come up quite often in my business - unfortunately!) please let us know what learned folk at the Scottish Law Society decide.

Thank you for taking the time to take a look for me and I most certainly will keep you informed I have bookmarked my complaints folder to remind me to call back in and let you know how things go, although it seems quite a good forum so may hang around if you folks do not mind ?