Relationship between Jason, Tom and Rupert: Partnership or Not
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Dec 17th, 2019

Relationship between Jason, Tom and Rupert: Partnership or Not

To answer the question either the nature of relationship between Jason, Tom and Rupert is the partnership relationship or not ,first we need to define what is the partnership? A partnership is the relationship between persons who carry on a business together in common with the view of making a profit. First of all we should consider, Is there any valid agreement between the parties? In this case, Jason, Tom and Rupert have no partnership agreement.

The partnership agreement can be oral but it is recommendable to put the agreement in writing because a partnership is a contractual relationship itself.

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So the relationship between them may be not a partnership relationship. However, based on the definition of partnership, there are three essential elements that are required for the existence of a partnership. The following factors have to provide in order to conclude that partnership exist among the parties: Carry on a business In common; and With a view of profit Firstly, we consider, Are the parties carrying on a business? According to the Partnership Act define that business includes trade, occupation and profession and carrying on a business implies some continuity or repetition of action.Jason, Tom and Rupert work together and run a Real Estate Agency which is considered to be a carrying on business with a view of continuity. Secondly, is the business carried on in common? We can say partnership is a branch of agency law because the meaning of partnership means the partners act as agents for each other. Carry on a business in common mean the business must be carry on by, or on behalf of, all the partners.

In this case Tom, Jason and Rupert are working together to run a business so they must to take an active role in the affair of business. We can see the case of Checker Taxicab Co Ltd v Stone (1930).The court held that the relationship between the parties was not partnership because it was not a business being carried on by persons in common. The driver hired a taxi car from the owner of a garage so the owner have no control over the driver so that there is no evidence of mutual rights and obligations between owner and driver. Plus working together to form a company is not carry on a business in common, check in case Spicer v Mansell (1970). Come back to the case of Jason, Tom and Rupert, the Real Estate Agency already run a business which is already set up everything and making profit as well.The parties Tom, Jason and Rupert clearly have a common purpose and active role in their company, the proof is company pay them salaries.

They involve in the company’s activities such as Jason contact customer and sold the house to Mrs Rogerson and so on. In this circumstance, we can clearly conclude that the parties are carrying on a business in common. Thirdly, are they carrying a business in common with a view of profit? In this rule the business must be established with the intention of making a profit for the partner.Back to the fact, we can see the parties set up everything, open bank account, create trust account. They are running a real estate agency, absolutely with a view of profit. There are another 3 rule to determine when a partnership exists: Co- ownership of property, sharing of gross returns and sharing of profit. However, in this circumstances we should not consider these three rules .

b/ In section 11 Partnership Act 1982-Misapplication of money or property received for or in the custody of the firm: “In the following cases involving general partners in an incorporated limited partnership: a) where one general partner acting within the scope of the general partner’s apparent authority receives the money or property of a third person and misapplies it, (b) when an incorporated limited partnership in the course of its business receives money or property of a third person, and the money or property so received is misapplied by one or more of the general partners while it is in the custody of the incorporated limited partnership, The incorporated limited partnership is liable to make good the loss”According to section 11, the firm and partners are liable for misapplication of money or property but in detail in section 13 say: “If a partner in a firm other than an incorporated limited partnership being a trustee improperly employs trust property in the business or on account of the partnership, no other partner is liable for the trust property to the persons beneficially interested there in: Provided as follows: (1) This section shall not affect any liability incurred by any partner by reason of the partner’s having notice of a breach of trust, and 2) Nothing in this section shall prevent trust money from being followed and recovered from the firm if still in its possession or under its control. ” In this case, Rupert took the decision by him self without discussion and authority of another partner Jason and Tom but he did not use that money for his personal purposes, he used the money to replace the firm’s computer system. Plus he is a person incharge of office equipment, he has a right to maintain the computer system and increase the company assets and the expenses for computer system may replace in a few day as he expected.On the other hand, he is wrong for not following procedure and disregard his partners. If the misapplication of money lead to a big loss or unnecessary expense for the company, Rupert will completely liable to the company and his parties. For Jason and Tom, according to section 11 and 13, if the consequences are not serious and the company still in its possession or under its control, they may not liable. However, the parties normally liable for their partners conduct because liable for wrong is “joint and several”.

So Tom and Jason may liable for Rupert conduct even Rupert took the decision by himself but in common Mrs Rogerson is Jason customer, he should follow up the case and Tom is working within the company he should keep an eye and manage the business as well. See in the big picture, If Tom and Jason so much careless and Rupert do some wrong decision or advice to the customer, as a partners Tom and Jason also liable for his partner conduct. See case Polkinghome v Holland (1934)Question 2 a/ Trustees have a official responsibility to act with honesty and fairness on behalf of the property’s beneficiaries. In this case, there is a lost on those tasked with these responsibilities or we can say the trustee is being “breach of trust”. The trustee action of sold four of six shops, which are belong to the unit trust holder, to the friend at a price less than the market value is evidently show the dishonestly of the trustee.When this thing happen, as a position of a beneficiary who have a right to apply for court orders under the trustee Acts of each state and territory, the trust holder have the right to inspect trust documents and to receive information from the trustee. As a trustee who will not able to use the trust asset, he also has to act honestly according to his duties including: Keep the proper financial records, Give full and frank disclosure to the beneficiaries of important matters relating to the administration of the trust, Act only within the term of the trust deep, or on instructions from the beneficiariesExercise due care and diligence in the administration of the trust Act fairly between the beneficiaries and, Act only in the interest of the beneficiaries within the term of the trust and avoid conflicts of interest.

Base on that duties of the trustee, the trust holder have a right to ask trustee disclose all the financial record show that when and how much he sold the shops to his friend, collect all the proofs for the court and sick for the directions from the court to assist in enforcing the proper administration of the trust.Because the trustee acts in breach of their obligation and duties see the case Scott v Scott (1962) 109 CLR 649, the trust holder can seek relief from the court including: Replace the trustee because the trustee has taken advantage of his position to get his own benefits Windy up the trust An injunction again further breaches to stop the trustee for further more action against the beneficiary. A rescission of a contract entered into by the trusteeThe imposition of a constructive trust over property improper obtained by the trustee and, An account of a profits improperly made by the trustee b/ The situation also like in the case above, the trustee used the property for his own use, he withdrew $200,000 and purchase a property in his own name and now it worth $350,000. In this serious problem, it is also a right of the beneficiaries to make the trustees accountable to the trust and to sue the trustee for their acts against the terms of the trust deed.The trust holder can make a claim in damages and compensation. In this case, the property that worth $350,000 should be belong to the trust holder because the trustee use the money from the trust holder property to invest on another property, trustee put non of his own money in, so there is no personal risk see the case of Paul A Davies Pty Ltd v Davies (No 2) [1983] 1 NSWLR 337. Plus he use the money to invest without consult to the trust holder, this is the action of dishonestly and breach of duties

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