LAW604 : LAW OF ASSOCIATION I

COMMON WRITTEN ASSIGNMENT

CLASS O

PREPARED FOR:
Miss Sharifah Nur Asmaa' Syed Azman

On :
9th December 2019

PREPARED BY:
NAMES ID

1. NUR AMIRAH BINTI NOOR AZLAN 2017678146

2. SHARIFAH HAMIZAH BINTI SYED ABU HASSAN 2017678226

BASRI

3. RASRINA BINTI PATRICK 2017678266

4. NADZIRATUL FAKHRIAH ASPAR 2017683514

5. NUR ADRIANA FARHANI BINTI MOHAMAD ZALAL 2017683596

The next issue is whether the land bought by AA, one of the partnership falls under
partnership property?
 In general, partnership property consists of all the property contributed by the partners or
acquired for the partnership with its funds. A partnership may own real property as well as
personal property. Partnership property is subject to sharing among the partners. Partner property
belongs solely to that partner. One factor a court will consider in determining whether or not
property belongs to the partnerships is whether or not the partnership’s funds were used in
purchasing the property. Another factor a court may look into is how the property is titled,
especially in the case of property that is traditionally titled. If a car is purchased and titled to the
business, a court may be more likely to announce that the car is considered partnership property.
If a car is purchased and titled to the individual, a court may be less likely to announce that the car
is considered partnership property.

Section 22(1)1 defines what partnership property is. The provision stated that partnership
property is property which is originally brought into the partnership stock. How? The property is
whether brought into the partnership by purchase or otherwise. For what purpose? For the purpose
in accordance with the partnership business or on account of the firm. Thus, the property must be
held and applied by the partners exclusively for the purpose of the partnership or to make use in
line with the partnership agreement.

Subsection 22 of the same provision stated that the partners of the firm are co-owners of
an estate or interest in which the said property are not partnership property, gained profits from
the use of the said land and later purchase other property using the profits gained previously, the
land belong to them as co-owners, not as partners of their firm when their partnership agreement
is silent on this issue.

Section 233 further explained the general rule if there is absence on the partnership
agreement, the property is deemed to be on account of the frm if the property is bought using the
money belong to the firm (the fund of the firm). But, if there is a contrary intention appears which

1
Partnership Act 1961.
2
Section 22 of the Partnership Act 1961.
3
Partnership Act 1961.
means if the property was bought using the personal money or other via other manner, the property
would be owned personally by the partners involved. This means that each partner has an equal
right to use the partnership property for partnership purposes unless there is an agreement to the
contrary.

An example case is the case of, Soo Boon Siong @ Saw Boon Siong v Saw Fatt Seong
dan Soo Hock Seang and Others4. In this case, the issue disputed was whether the property
purchased by the respondent namely shares, land and etc belong to the partnership or belong
personally to the respondent? What important to settle this issue is whose money were used to buy
such property. If it was the partnership’s, therefore, without no doubt, the partnership will hold the
property even though the property in question was named after one of the partners only.

The Federal Court also referring to the case of Ponnukon v Jebaratnam5, where if the
property is bought using the partnership money, the presumption that the intention to treat the
property being as partnership property would incur even though the property was bought in the
name of one partner only instead of all. But, the said presumption would not be rely on if the
money used to buy the property are not the partnership's property. For example, the firm’s money
was lent to one of the partners and the said partner bought a property using the money to lend.
Therefore, the property being bought is not owned by the partnership as a whole because the
intention for using the money of the firm was for lending purposes and not for an account of the
firm.
The Judge also referring to a book titled on Lindley & Banks on Partnership, 18th
Edition, where the partners may enjoy their freedom to ascertain the ownership of the property
which is via an express agreement. But, in a case where no express agreement was made, such
relevant factors may help to determine the status of the property. First, the facts of acquiring the
property, second is the intention of such acquiring and lastly is the manner of how the assets are
being dealt with. According to (name of judge), the source, circumstances and purpose of acquiring
and the manner of dealing with the particular property would constitute that the property would be
the partnership’s.

4
[2007] MLJU 537
5
[1980] 1 MLJ 282.
 The land would eventually be the property of the partnership if the assets were paid by the
firm even though it was under the name of one of the partners and despite the fact that no
declaration of memorandum was declared and signed by the partners of the partnership stating that
the property will be owned by the firm itself. Undoubtedly, the only evidence that shows the
property is partnership’s is when the Appellant in this case prove that it was used for the benefit
of the partners. Why? The reason for this is that the properties were being purchased using the
profits from the partnership business and they were partners in the business. Therefore, the
substantial factor is who pays for the purchase of the said property is upheld regardless whether
the named person of the said property is only one partner in his own name or other person’s name.
As long as the property is found to be obtained via the firm’s fund, it belongs to the partnership.

Subsequently, there are three ways to determine in which ways do the property being
acquired. Oen of it is via purchase for the benefit of the firm. For instance, the case of Tham Kim
Fai[Commat] Tham Kim Fay V Ng Kon Seong6. In this case, the plaintiff and the defendant were
partners to a firm called Kim Seong Medical Provisions and Supplies (‘partnership business’). In
1991, the partnership were to dissolve due to animosity occurred between them and due to reason
which the conduct of the defendant in running out the business. A report was produced disclosing
that the accounts of the partnership business were recorded in an ambiguous, misleading and
fundamentally wrong manner to reflect discrepancies and irregularities in the running of the
partnership business by the defendant. It was then found that the defendant had used the
partnership’s funds in order to acquire an asset in his wife’s name.

Based on the decision made by Abdul Malik Ishak J, an asset acquired at the expense of an
individual partner may be considered as a partnership asset. Furthermore, by virtue of section 23
of the Partnership Act 1961, property bought with money belonging to the partnership business is
deemed to have been bought on account of the partnership business. The defendant in purchasing
property under his wife’s name and that of his own, the defendant was certainly purchasing that
property for the benefit of the partnership business because he used the funds belonging to the

6
[2006] 7 Mlj 1
partnership business. It is immaterial that the property was purchased in his name and that of his
wife.

In applying to the current situation, AA, one of the partners of ABC legal firm. Later, via
the partnership profits, AA bought a piece of land but not for the use of the business and the said
land also does not generate any profits for the business. But, upon discovery of the existence of
the said land, BB and CC wish to sell the land and used the money from the purchase price to
expand their partnership business. However, it was contended by AA that the land is his personal
property in lieu of partnership’s because in his contention, he stated that the partners never objected
him when he found out that he bought the land.

Therefore, whether the said land owned by the partnership or AA personally owned it.
According to the definition of partnership property, partnership property is being derived as which
property acquired or purchased using the partnership funds and as a result of this, the land is subject
to sharing among the partners, namely AA, BB and CC. Accordingly, the court will take into
account several factors namely whether the acquiring of the land is by using the partnership or not
and how the titlement of the said land was made. For this reason, obviously it could be proven that
the said land was bought using the partnership’s money because AA using the partnership’s profits
to buy the land without telling the other partners when he bought the land. Nevertheless, the title
of ownership could be only AA because he bought the land individually without consent of the
other partners.

Subsequently, by virtue of Section 22(1)7, the land would be a partnership property if it

was bought as partnership stock either by purchase or otherwise and this shows how to identify
whether the land bought was partnership property or not. Other element is , the land must be for
the purpose of the business or on account of the firm. Therefore, the elements under Section 22(1)8
in order to determine whether the land is partnership property or belong personally to AA are; (1)

7
Partnership Act 1961.
8
Partnership Act 1961.
land was bought as partnership stock, (2) the land was bought via the purchase or other means and
(3) the land was bought for the purpose of the partnership business or on account of the firm.

Exception to the general rule via Section 239 is that, since the partnership agreement silent
on matters pertaining to partnership property, the land would be the firm’s property because it was
bought using the firm’s profits. Thus, this exception would prevail because their agreement is silent
on this issue. As a result, the land bought by AA using the firm’s profits would owned by all the
partners namely AA, BB and CC as the land subsequently must be shared among themselves. This
exception is supported by the case of Soo Boon Siong @ Saw Boon Siong v Saw Fatt Seong dan
Soo Hock Seang10 and Others and the case of Tham Kim Fai[Commat] Tham Kim Fay V Ng
Kon Seong.11

By referring to both cases, the land would be partnership property as the land was paid
using the partnership’s profits. Therefore, it is regardless whether the land was named after AA
only, but in the end, the land would be shared among them. Hence, BB and CC may proceed with
their intention to sell off the land in order to use the money received to expand their business. Here,
according to one of the elements stated under Section 22(1), the land purchased must be for the
benefit of the business and applying the same case, the benefits for the partners referring to when
the purchase was made using the partnership’s funds which they (AA, BB and CC) are all partners
to the partnership. Hence, to say here, the land would be regarded as the partnership property
despite the fact that only AA was named as the owner.

In conclusion, the land is considered as partnership property by virtue of Section 22(1) and
Section 23 of the Partnership Act 1961 because the money used to purchase the said land was the
partnership profits and for the benefit of the partners. Hence, BB and CC may conduct to sell the
land to obtain money for the expansion of their business.

9
Partnership Act 1961.
10
[2007] MLJU 537.
11
[2006] 7 Mlj 1
References:

Cases
Soo Boon Siong @ Saw Boon Siong v Saw Fatt Seong dan Soo Hock Seang [2007] MLJU 537.
Tham Kim Fai[Commat] Tham Kim Fay V Ng Kon Seong [2006] 7 Mlj 1.

Statute
Section 22(1) Partnership Act 1961.
Section 23 Partnership Act 1961.

Articles
Trembly Law. (2016). “Partnership Property: What Is Yours and What Is the Partnership’s?”.
Trembly Law Firm. Retrieved from https://tremblylaw.com/partnership-property-what-is-
yours-and-what-is-the-partnerships/ on Dec 12, 2019.

USLEGAL.COM. “Partnership Property”. Retrieved from

https://partnerships.uslegal.com/partnership-property/ on Dec 12,2019.