Court of Appeal holds no default setting to value assets at fair value for payment of an outgoing partner

This recent Court of Appeal judgment provides important guidance to partnership practitioners.

In the case, the partnership deed provided for an outgoing partner, leaving the partnership by reason of death, bankruptcy, mental incapacity or retirement, to be paid for his share of the partnership by reference to the partnership’s annual general accounts. However, the deed was silent as to the basis on which to value the assets for inclusion in those accounts. The question which arose was whether the assets should be included at their actual value or only at their book value (which was much less than their actual value). Mann J at first instance held that they should be included at their actual value but the Court of Appeal held that there was no starting point or default rule that actual values should be taken, and that the assets should be included in the accounts at their book values.

Alan Steinfeld QC and Helen Galley acted for the successful appellant, Elspeth Talbot Rice QC for the respondents. Permission to appeal to the Supreme Court is being sought.

If you would like further detail on the case, please contact Paul Matthews on 020 7691 2424 or paul.matthews@xxiv.co.uk.