The defendant, possessing financial means, decided to establish a commercial and fashion photography business. He leased premises for seven years at an annual rent of £400.
The defendant initially incurred significant losses. He approached the plaintiff, an experienced and well-connected photographer, to join the business as a partner. Although initially reluctant, the plaintiff eventually joined as a full-time partner, bringing his own clientele and expertise to the business, resulting in its success.
They agreed to share profits equally and the plaintiff to draw £125 monthly on account of profits.
There were discussions about forming a limited company for the business, but no formal agreement was reached.Disagreements arose over the treatment of various assets and liabilities, including the lease, studio equipment, and goodwill.
Following a dispute between the parties, the partnership was dissolved in May 1952.
ISSUE
Whether there was a partnership between the plaintiff and the defendant.
The classification of assets such as the lease, studio equipment, photographic negatives, and goodwill.
JUDGEMENT
The court ruled that a partnership existed from April 1, 1950, to May 29, 1952 on the terms that they shared profits between them.
It was established that items like films and negatives, considered stock in trade, were assets of the partnership based on the assumption that they were brought in. Whereas lease of the premises, equipment and personal goodwill will be considered as personal property.
LEGAL ANALYSIS
The court determined that since the parties did not reach an agreement regarding the inclusion of certain assets into the partnership, it cannot be assumed that the defendant transferred ownership of the lease and equipment to the partnership
Only items actively used and consumed during the business operations were considered as part of the partnership assets.
The stock of negatives of photographs taken during the course of the partnership must be a partnership asset.
Neither plaintiff connection, nor the defendant’s connection should be treated in any way as being a partnership asset. Now that the parties have separated, the plaintiff will take away his own connection and his own clients, just as he brought them, and the defendant will presumably keep his own.
COMMENTARIES RATIO
Miles v Clark affords an instance of a case where there was no agreement except as to division of profits…. It was held, as there had been no agreement except as to division of profits, no further agreement should be implied than was necessary to give business efficacy to the relationship between A and B and in the circumstances, the consumable stock which was actually used in the business should be treated as a partnership assets but all other assets should be treated as being the property of the partners who brought them in.