The next issue is whether the land purchased using the fund from partnership account without

the knowledge of other partners is considered as partnership property or not.

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. In the case of Mat Shah bin Mohamed & Anor v Foo Say Meng & Ors 1,
the court held that 3 reasons why it is important to determine partnership property. First, is it
value to firm or partner. Second, the creditors right in event of firm’s insolvency and lastly to
those who take partner’s real estate or personal estate.

Section 22(1) of Partnership Act 1961 state that all property and rights and interests in
property originally brought into the partnership stock or acquired, whether by purchase or
otherwise, on account of the firm or for the purposes and in the course of the partnership
business, are called in this Act partnership property and must be held and applied by the
partners exclusively for the purposes of the partnership and in accordance with the
partnership agreement.

Section 23 of Partnership Act 1961 states where the property was bought with the
firm’s money then the property is deemed to be partnership property, although in the name of
a partner. The presumption that property or assets purchased with partnership money have
been bought on account of the firm and thus, constitutes partnership property is rebuttable
where it can be proven that there was a contrary intention.

There are 3 was of identifying partnership property namely first, all property brought
in originally as the partnership stock. The question of whether the property has been
originally brought in as partnership stock or not depends on the agreement between the
partners. Second, where property acquired through purchase or other means, for the firm.
This is normally where the purchase is made using partnership money and property for the
firm. This is a much easier way of determining partnership property. Lastly, where property
acquired through any lawful means for all means and purposes of the partnership business.
Not all property bought that is used in the partnership business is assumed to be partnership
property.

The relevant ways in the question above is where the property is acquired through
partnership money or other means for the firm, this situation can be referred to the case Ex

1
[1984]1 MLJ 237
Parte Hinds2. In this case, there was a trading partnership where the partners were trading in
Liverpool and the Barbados. The partner in Liverpool, without the knowledge and consent of
the other, used the firm’s money to buy shares in a railway company, on behalf and for the
firm. The court held that the shares were partnership property. In the case of Murtagh v.
Castello,3 it was held that a property bought using partnership asset, although not used in the
business, was regarded as a partnership property. If the property is obtained using an
individual partner's money, the property will remain the individual partner's property.

In the case of Ponnukon v Jebaratnam4, appellant entered into partnership with the
respondent to build houses and shops or sale, and to share such profits. Land in question was
owned by him. Federal Court held land was not partnership property because (i) no
agreement between parties for land to be treated as partnership property; (ii) object to develop
land does not necessarily mean land must be owned by the firm; (iii) land was not paid from
partnership money. The essential element to determine the property partnership is by looking
at Partnership Agreement. If there is no Partnership Agreement, then look at the intention of
parties on ow they treat property. If no intention to treat as partnership property, then the
inference is individual property. However, when property is bought with partnership money
then presumption is partnership property regardless if the property in the sole name of
partner.

In applying to the current issue, it is important to determine the partnership property

due to its value of the property to the firm. It is because, although the land was never used by
the partnership business to generate profits, however, when the partners found out about it,
they wanted to sell the said land in order to use the purchase price for expanding the
partnership business. This shows that the land property has a great value to the partnership to
expand their business and this is the important of partnership property by virtue of Mat Shah
bin Mohamed & Anor v Foo Say Meng & Ors. In addition, applying Section 23 of
Partnership Act, it shows that the land should belongs to the partnership as their property
because it was bought using the partnership fund and it is not stated whether AA has any
other attention for purchasing it. In contrast with the case of Ponnukon v Jebaratnam, AA

2
(1849)3 De. G & Sm. 613
3
(1881) T LR Ir 428,
4
(1980)1 MLJ 282.
used from the partnership account to purchase the land. Therefore, it is a partnership
property, not individual.

AA bought the land without the consent of other partners and deemed the land as his personal
property. Although the partners were never objected by the other partners for one whole year
it was due to AA breached his fiduciary duty to disclose all transactions relating to the
partnership. Thus, the land should be held as to be the partnership property since the land was
bought using the partnership’s fund by referring to the case of Ex Parte Hinds. Moreover,
even though the land purchased by AA is not used to carry out and gain profit from the
partnership business, the land still considered as partnership property by virtue of the case
Murtagh v Castello.

In conclusion, AA cannot claim the land as his personal property as it was bought using the
fund from partnership account. Hence, the land is the partnership property by virtue of
Section 22(1) of Partnership Act 1961.