Partnership; rights of partners; right to share of profits after dissolution.
Facts: Oddy was a partner in a firm of solicitors. He retired from the firm in September 1994. At this time, it was agreed then that Oddy was entitled to be paid one-ninth of the value of the firm. But in fact no payment was made until May 1996. Oddy then claimed payment of a further sum, representing the profits made by the firm during the period between his retirement and the date on which he received payment of his share of the assets. This claim was based on s 46 of the Partnership Act 1958 (Vic), which states:
"Where any member of a firm has died or otherwise ceased to be a partner and the surviving or continuing partners carry on the business of the firm with its capital or assets without any final settlement of accounts as between the firm and the outgoing partner or his estate then in the absence of any agreement to the contrary the outgoing partner or his estate is entitled at the option of himself or his representatives to such share of the profits made since the dissolution as the court may find to be attributable to the use of his share of the partnership assets or to interest at the rate of seven per centum per annum on the amount of his share of the partnership assets…"
Issue: Was Oddy entitled to a share of the partnership profits for the period in question?
Decision: The profits made by the firm after Oddy's retirement were partly attributable to the assets belonging to Oddy that had remained in the firm until payment was made to him in 1996. Oddy was entitled to a share of these profits under the provisions of s 46 of the Partnership Act 1958.
Reason: The profits made by a partnership are prima facie attributable to the use of its assets. The extent to which this is true in a particular case is a question of fact. On assessing the extent to which profits are due to the use of assets, Ormiston J said (at 578):
"It is a question of estimation and in the end the real issue is what amount shall be attributable to the former partner's share and what attributable to other established causes."