S J Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd

[1989] 2 Qd R 87

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Between: S J Mackie Pty Ltd
And: Dalziell Medical Practice Pty Ltd

Court:

Judges: Macrossan J
McPherson J
Shepherdson J

Subject References:
PARTNERSHIP
Formation
Express agreement on procedure for admission to existing firm
Person treated as partner without adhering to agreed procedure
Whether new partnership constituted
Equitable remedies and relief
Accounts
Partner's interests to be benefited by distributions from service trust which charged partnership at greater than commercial rates
Form of account

Case References:
Allen v Carbone - (1975) 132 CLR 528
Austen v Boys - (1858) 2 De G J & S 626; 44 ER 1133
Baird's Case - (1870) L R 5 Ch App 725
Birtchnell v Equity Trustees, Executors and Agency Co. Ltd - (1929) 42 CLR 384
Federal Commissioner of Taxation v Everett - (1980) 143 C.L.R. 440
Geddes v Wallace - (1820) 2 Bligh 270; 4 ER 328
Re Hulton; Hulton v Lister - (1890) 62 LT 200
Masters v Cameron - (1954) 91 CLR 353
Murgatroyd v The Silkstone & Dodsworth Coal & Iron Co. Ltd; ex parte Charlesworth - (1895) 65 LJ Ch 111
Sadler v Whiteman - [1910] 1 KB 868
Swain v Ayres - (1888) 21 QBD 289
United Dominions Corporation Ltd v Brian Pty Ltd - (1985) 157 CLR 1

Hearing date: 3, 4 October 1988
Judgment date: 8 December 1988

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Two proprietary companies carried on the practice of radiology pursuant to a deed of partnership.  The third plaintiff, M., was employed as a radiologist.  M. was offered and accepted a partnership in the radiology practice and was treated as an equal member for at least two months.

Subsequently M. was excluded from the partnership and he sought an account of profits and a share in the goodwill of the partnership.  A new partnership deed had been discussed but not completed by the time the partnership was dissolved.  Had the partnership continued a company not in existence when the new partnership was formed, would, in M.'s interests, have received a distribution from the trustee of a service trust associated with the partnership.  The distribution would have been increased and the partnership's income decreased because the services provided by the trustee of the service trust were charged at greater than commercial rates.

Held, allowing the appeal in part:

(1)

  That a provision in a partnership deed stating that the partnership was not dissolved by transfer of a unit or other interest was not effective to exclude a basic principle of partnership law that any change in membership destroyed the existing partnership.

(2)

  That the existing partners were bound by the existing partnership agreement although they could by common consent or by acquiescence choose to ignore it.  However, an incoming partner was not bound by the pre-existing partnership agreement.

(3)

  That the existence and terms of the partnership could be ascertained from the conduct of the parties.

(4)

  That, in the taking of an account, the disbursements of the partnership to the trustee of the service trust, should be allowed only at the commercial or market rate payable for similar services.

ORDER

Appeal allowed in part.