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 & Ors1, 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 states 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 used from the partnership account to
purchase the land. Therefore, it is a partnership property, not individual.

2
(1849)3 De. G & Sm. 613
3
(1881) T LR Ir 428,
4
(1980)1 MLJ 282.
 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.