Section 13(1)(d) of the Prescription Act 1969 delays prescription where there is a debt between partners arising out of the partnership relationship. The legal relationship of partnership arises from a contract between two or more persons who each agree to make a contribution (whether in money, property or service) to a venture to be carried on jointly by them with a view to making a profit and on the basis of sharing profits and losses. Where persons agree to conduct a joint venture through a company and become co-shareholders, the company is not a partnership and the shareholders are not partners.
In Cook v Morrison the joint venture was a mixture of relationships. There was some evidence of a partnership in relation to the purchase and holding of land for game farming and ecotourism. Save in relation to the land, the parties were associated as shareholders of companies owning other assets.
Parties may cooperate with each other to enhance their individual businesses. Such cooperation does not mean that they are partners. Co-shareholding in a company is not a partnership. The exit agreement was an arrangement by which the plaintiff would dispose of his shares in the company and not the dissolution of a partnership.
This is an important decision. The debate is often held whether a corporate joint venture is a partnership. If the parties specifically do not want it to be a partnership they can easily say so in the joint venture agreement as is often done.
The case is Cook v Morrison.