Kak Loui Chan versus John Zacharia, Partnership

[1984] HCA 36

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(Judgment by: Dawson (5) J. )

Kak Loui Chan
vJohn Zacharia, Partnership

Court:

Judges: Gibbs C.J.(1)
Murphy J.(2)
Brennan J.(3)
Deane J.(4)
Dawson (5) J.

Subject References:
Partnership
Dissolution
Assets
Partnership business conducted in leased premises
Agreement for new lease obtained by one partner before partnership affairs wound up
Whether held for benefit of partnership
Fiduciary relationship
Constructive trust

Legislative References:
Partnership Act 1891 (S.A.), - s. 38,39.

Hearing date: Adelaide, 1983, August 24-25;
Judgment date: 7 June 1984

Canberra

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Judgment by:
Dawson (5) J.

I agree with Deane J. that the two partners held the lease of the premises and any rights under the lease as trustees for the partnership and after dissolution for the partnership in receivership. Moreover, there was a fiduciary relationship between the partners arising from the partnership which survived its dissolution and extended to the partnership property. The relationship continued for the purposes of the realization, application and distribution of the partnership assets in accordance with the terms of the partnership agreement and any obligations imposed by law. I agree, therefore, with Deane J. that both as a trustee and as a former partner Dr Chan is required to account as a constructive trustee for any benefit or gain that he has received in seeking to obtain a new lease for himself in disregard of his position as a trustee of the lease and as a partner in the partnership being wound up.

2. The appeal should be dismissed.