ACTUAL OR CONSTRUCTIVE NOTICE IN PARTNERSHIP?

• Published date: 01 December 1990
• Author: TAN CHENG HAN
• Date: 01 December 1990

Philips Singapore Pte Ltd v. Han Jong Kwang & Anor

This very brief article seeks to examine what form of notice a partner ought to give when retiring from the partnership business and the starting point now for an such discussion must be the recent decision of the Singapore High Court in the case of Philips Singapore Pte Ltd v. Han Jong Kwang & Anor. Philips Singapore concerned an appeal by the second defendant against the decision of the deputy registrar of the District Court giving leave to the plaintiffs to enter final judgment in the sum of $13,969 being the balance payable for goods sold and delivered by the plaintiffs to the partnership firm of HP Electronics Centre from 3 April 1987 to 28 May 1987. The second defendant’s defence was that he was not liable for goods sold and delivered after his retirement from the partnership on 9 May 1987 and that he had caused particulars of his retirement to be registered in the Registry of Businesses. In support of the defence a copy of a document called Instant Information Service was produced. Notwithstanding that, in the District Court the deputy registrar found that the plaintiffs had no actual notice of the second defendant’s retirement and this finding was not challenged on appeal.

In the absence of other measures taken by the second defendant to notify the plaintiffs of his retirement, that ought to have been the end of the matter. The current edition of Lindley on the Law Of Partnership (15th ed. 1984) states the law as follows:2

But when an apparent partner retires, or when a partnership between known partners is dissolved, the case is very different; for then those who dealt with the firm before a change took place are entitled to assume that no change has occured until they have notice to the contrary….An old customer, however, is entitled to a more specific notice than a person who never dealt with the firm at all; and in considering whether notice of dissolution or retirement is or is not sufficient, a distinction must be made according as the person sought to be affected by notice was or was not a customer of the old firm.

A series of Malaysian cases3 has accepted this proposition of law. In the first of those cases, for instance, Re Siew Inn Steamship Company,4

Prichard J. said the real issue before him was “whether or not the Defendants had had actual notice that Plaintiff had ceased to be a partner.”5 He then went on to find as a question of fact that the plaintiff never actually notified the defendants. In his view, “[t]he notices in the Chinese newspapers, even though they appeared 18 times were not sufficient. Actual verbal or written notice of his retirement should have been given by the Plantiff.”6

However, the position has become less clear (at least in Singapore) following the judgment of Mr Justice Chan Sek Keong in the Philips Singapore case. When the appeal came before Mr Justice Chan, his Lordship, after stating the above facts, and despite purporting to apply s.36(1) of the Partnership Act 1890, said:

Accordingly, the only issue before me was whether registration of the retirement of a partner under s12(1) of the Business Registration Act (Cap 32, 1985 Ed) constituted constructive notice to the plaintiffs. (Emphasis added).

With respect, it is difficult to see how constructive notice can be relevant on the facts, this being a case involving a customer of the old firm. Furthermore, insofar as His Lordship’s statement implies that constructive notice will generally suffice, it is contrary to all authority and cannot be supported. A distinction must be drawn between those who have had dealings with the firm in the past and those who have not. In Tower Cabinet Co. Ltd. v. Ingram,7 Lyknskey J. (with whom Lord Goddard C.J. and Birkett J. agreed) held that both s.36(1) and (2) of the Partnership Act 1890 are concerned with cases where the partners in question are apparent members of the old firm. The word “apparent” in his view did not mean notoriety to the world at large but meant being apparent to the particular person dealing with the firm. Such members may be apparent either by the fact that the customer has had dealings with them before, or because of the use of their names on the notepaper, or from some sign outside the door, or because the customer has had some indirect information about them. In other...