Hameed v Packe & Anor

A partnership may be dissolved even where the parties have not agreed every consequential accounting matter. Assets not shown to have been allocated on dissolution remain partnership property and must be accounted for according to the existing profit-sharing proportions.

Where partners operate for many years on an equal profit-sharing basis, a later assertion that unequal contributions constituted a breach requires compelling evidence of an agreed variation. A partner who assumes control of the partnership finances bears primary responsibility for maintaining proper records and cannot ordinarily insist on documentation which that partner failed to obtain or retain. Partners are remunerated by their agreed or presumed profit share unless remuneration for additional services was agreed.

The claimant, Islam Hameed, sought declarations, accounts and consequential relief following his purported dissolution of two property partnerships with Charles Packe. Ahsan Hameed, the claimant’s brother and a former partner in AC Properties, took no part in the proceedings.

The principal issues were whether AC Properties had dissolved in 2007; whether a disputed document recorded the parties’ final distribution of its assets; whether Church Road properties had been allocated to Mr Packe; whether Apsley Road profits were to be shared equally or in unequal proportions; and which party bore responsibility for deficiencies in the partnership accounts and related payments.

1. AC Properties. AC Properties was dissolved in 2007, and Ahsan Hameed left the partnership on the basis reflected in the disputed document. However, Mr Hameed had not authorised the allocation of Church Road, comprising 281 Church Road and relevant development land, to Mr Packe. Those assets therefore remained partnership property and had to be accounted for between the remaining partners on the 2:1 basis reflecting their agreed shares. The balancing figure of £115,800 could remain undisturbed, subject to proper accounting.
2. Apsley Road. The partnership was agreed to operate on a 50:50 basis. That was also the default position under section 24(2) of the Partnership Act 1890. The parties had acted on that basis for nearly ten years. Mr Packe failed to establish either a breach arising from the unequal value of properties made available to the partnership or an agreed variation requiring equal contributions.
3. Accounting and partnership property. Under section 29(1) of the Partnership Act 1890, Mr Packe had to account for the entire benefit derived from the reacquired freehold of 279 Church Road, the Car Park, 279 Garden, 281 Church Road and subsequent development attributable to those assets. The obligation extended beyond the net £50,000 received on the Car Park transaction. Primary responsibility for poor financial records lay with Mr Packe, who controlled the banking and financial information. He could not require further documentation as a condition of recognising partnership expenditure where he had made payments without obtaining or retaining proper records.
4. Remuneration. There was no evidence that Mr Hameed agreed to mortgage-brokerage fees for Mr Packe. Applying the principle in Robinson v Anderson (1855) 20 Beav 98, partners were remunerated by their agreed or presumed profit shares unless a separate agreement provided otherwise.
5. The court directed the parties’ accounts on those bases. Mr Packe was not entitled to mortgage-brokerage fees, and no further account was required from Mr Hameed for sums paid to Emertons or himself.