“Are we partners or are our companies partners? 😬😬😬"
Various Cos entered into a partnership deed. Each was the corporate vehicle of a natural person (“Principal”).
The deed was signed by the Principals on behalf of their Cos. The firm operated an accounting business, holding the Principals out as partners.
One Principal was appointed to the board of one of the firm’s big clients.
He took advantage of an investment opportunity relating to that client without telling any partners.
The yield? $11M. Another entity under his control received a gift of $4.861M from another client.
The corporate partners sued, saying the Principal owed fiduciary duties to the corporate partners and also that he – in his personal capacity – was himself a partner.
The deed itself caused confusion: [74] The term “partner” or “partners” referred to the Cos in some clauses and the Principals in others: [86]
Some clauses (e.g. relating to death, illness, bankruptcy, or age) were nonsensical if they referred to the Cos: [105]
The deed would lack commercial utility if the Principals were not bound to it: [106]
The court found the deed contemplated the Principals and Cos having rights and obligations *as partners*: [120]
