On November 15th, we laced up our dancing shoes, fired up the grill, and came together as a community for an unforgettable evening of fun and music. Our charity Barn Dance was an incredible success, raising an impressive £2,350 for the Children...
The passage of time does not necessarily prevent partners from revisiting partnership accounts that they believe are inaccurate. The High Court demonstrated the point in directing that a number of errors in a family partnership's accounts be corrected.
In 2018, following a breakdown in relations, the partners agreed to dissolve the partnership. One of them sought an order dissolving the partnership and winding up its affairs. He alleged that a binding dissolution agreement had been reached. His brother, one of the other partners, denied this and sought to reopen the partnership accounts for a number of years, or to surcharge or falsify them (object to specific figures in them), on the grounds that they contained significant errors.
By the time the proceedings were heard, the parties agreed that the partnership had been dissolved in 2018 and the Court should make a declaration to that effect and order it to be wound up. The remaining issues included whether the Court should permit settled accounts to be reopened, whether the accounts contained errors that justified reopening or surcharging/falsifying them, and the effect of documents drawn up when the partnership was being dissolved.
The Court found that the accounts were settled. Even if the brother had not signed accounts for earlier years, those accounts were implicitly settled by his having signed the 2016 and 2018 accounts. However, they could nonetheless be reopened if the alleged errors were proved.
The Court accepted that an entry in the 2008 accounts showing drawings of nearly £147,000 by the brother was an error. Rejecting the contention that it should not be corrected because it had stood for more than 15 years, the Court concluded that the claimant partner had arranged the preparation of the accounts and his brother would not have been aware of the error. The Court ruled that it should be corrected by deleting the entry rather than reopening the accounts generally. A number of alleged errors in subsequent years' accounts were also found to be proved.
With regard to the documents drawn up in 2018, the Court considered that the parties had not intended them to be legally binding, and their proposed terms did not govern the winding up of the partnership.