TaxTMI 
TaxTMI 
TaxTMI 
1966 (4) TMI 42
X X X X Extracts X X X X
X X X X Extracts X X X X
....ptcy. The respondents to the petition are the company, one Leslie George Breden and one John Edward Menear. [His Lordship stated the facts, referred to the affidavits sworn in support of the petition, commenting that he did not find either the bankrupt or Menear particularly reliable witnesses and continued : ] It now becomes necessary to consider shortly the law. [The petitioner's case is based on the proposition that this company represented a quasi-partnership between the three individuals and that, looking at the company as such it is in the circumstances just and equitable that the company should be wound up. There is no doubt that where a company is carried on by individuals as a quasi-partnership, the court will so regard it in rel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Cas. 131, Simonds J. applied the Yenidje [1916] 2 Ch. 426 principle, but he made an extremely important extension of that principle. He said [1937] Ch. 392, 398 : "It has been pressed on me in considering this case that I am to be guided by the principles which influence the court in determining whether or not a partnership shall be wound up. I propose faithfully to follow that injunction, laid down as it was by the Court of Appeal in In re Yenidje Tobacco Co. Ltd. [1916] 2 Ch. 426, and followed recently in In re Davis & Collett Ltd. [1935] Ch. 693; 5 Comp. Cas. 467, by Crossman J. Whether it be a matter of articles of association or articles of partnership the rights of the parties are determined by those articles, and the question whethe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....les. This being the position, it seems to me that the bankruptcy itself afforded no ground for winding up the company. If it had been a true partnership, then, subject to any agreement to the contrary, the partnership would automatically have been dissolved by the bankruptcy of any one of the partners : see the Partnership Act, 1890, s. 33. However, in the case of this company, as of almost every company, the event of bankruptcy is covered by express provisions, here the transmission articles in Table A. The effect of those provisions is not that the company comes to be automatically wound up, but that the interest of the bankrupt member vests in his trustee in bankruptcy; and the Table A provisions contain regulations as to the rights of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the three individuals as to equal participation in profits, the bankrupt, who had been a director of the company for practically the whole of that period of account, ought to have had one-third of the gross profits for the period of account, and that the arrangement under which he waived his share and the other two took GBP1,500 each is such that the trustee in bankruptcy is entitled to entertain a justifiable lack of confidence in Menear and Breden. The relevant provision of the Partnership Act, 1890, if one is applying it by analogy, is section 35 (d) : "When a partner, other than the partner suing, wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tainly it did not continue to subsist when the bankrupt's trustee inbankruptcy came into the saddle. From that moment on, the trustee in bankruptcy had no right or duty to take part in carrying on the business of the company. His position was from the start simply that of an ordinary minority shareholder. There never was a quasi-partnership between the trustee in bankruptcy on the one hand, and Breden and Menear on the other hand. The trustee in bankruptcy, as a minority shareholder, could have complained if he considered that the sum of GBP 1,500 taken by each of the two remaining directors was excessive having regard to their services to the company. That, however, is not the case which he has made. He could also, of course, as the truste....