Twomey on Partnership, Michael Twomey, Maedhbh Clancy (ed) (2nd edn, Bloomsbury Professional 2019), 1200pp., hardback, ISBN: 9781526504852. Due to be available in various e-book formats from early April.
The long anticipated second edition of this text, published 19 years after the first, continues to be the only book on Irish partnership law. That alone would make it significant but, more importantly, the author (currently a High Court judge) brings to bear his extensive experience as a solicitor practising solely in partnership law, and also as an academic, to produce a comprehensive, detailed and authoritative text. The new edition also benefits from the editorship of a senior solicitor with expertise in partnership law.
Irish partnership law is based on the UK’s Partnership Act 1890 and Limited Partnerships Act 1907 (without the later changes to these Acts made by the UK, particularly the introduction of private fund limited partnerships (PFLPs)), but with the addition of investment limited partnerships (ILPs) under the Investment Limited Partnerships Act 1994 and now limited liability partnerships (LLPs), ‘legal partnerships’ and multi-disciplinary partnerships (MDPs) under the Legal Services Regulation Act 2015. Unsurprisingly, therefore, this book contains ample reference to UK jurisprudence, which will assist those familiar with UK law to draw comparisons. Further, the text notes that ‘there is arguably no other branch of law which is so similar north and south of the border’ and therefore that decisions of the Northern Irish courts should be treated as being of ‘a strongly persuasive nature’ in Ireland and vice versa, and so the book will be of interest not only to partnership lawyers and academics in Ireland, but to those in Northern Ireland and the rest of the UK. That said, it must be remembered that there are differences; for example the twenty-partner limit (subject to exceptions for some professions) which was abolished in the UK in 2002 still applies in Ireland, and Irish partnerships can only be wound up under the companies legislation if there are eight or more partners (whereas this apparently arbitrary limit only affects UK partnerships to the extent that leave of the court is required for smaller partnerships to petition for winding up without concurrent petitions against the partners).
The basic structure of the second edition is the same as the first. It is divided into five broad thematic parts, each containing chapters on one of those themes. The Nature of a Partnership includes a detailed account of the definition and characteristics of a partnership, including a useful examination of the circumstances in which a partnership is treated in law or commercially as a separate entity, the capacity to be a partner, and types of partners and partnerships (including a section on ‘quasi-partnership’ companies). Relations Between Partners and Third Parties explains both liability issues and litigation, and Relations between Partners Inter Se discusses management and financial rights, fiduciary duties, property, capital, goodwill and litigation (though not alternative dispute resolution), and includes an interesting chapter on the difficult issues concerning the nature of shares in a partnership and dealing with them. It also includes a detailed chapter explaining the recommended contents of a partnership agreement and – unusually – a chapter on competition law as it applies in particular to a partnership agreement or on the sale of a partnership. Dissolution of Partnerships includes chapters on judicial and non-judicial dissolution and winding up, and a chapter on bankruptcy (which also includes the winding up of certain partnerships under the companies legislation. Finally, Limited Partnerships includes chapters on limited partnerships and ILPs. It also includes a new chapter on the three new types of partnership: LLPs, ‘legal partnerships’ and MDPs. However, this edition no longer includes appendices containing the key pieces of partnership legislation, which were included in the first edition.
This edition has been fully updated to include key Irish cases since 2000 including McAleenan v AIG, Quigley v Harris, and Cronin v Kehoe as well as cases from the UK.
McAleenan v AIG [2010] IEHC 128 concerned the disputed partner/employee status of the claimant, who worked for a firm of solicitors which had a sole principal. In holding that she was not a partner, despite her having indicated that she was a partner to the Law Society of Ireland and on her practising certificate applications, the insurance proposal referring to two partners, and her name being included on the firm’s notepaper, the court approved the UK authority of Stekel v Ellice that it was the substance of the relationship rather than the label which was important. The court was influenced by the fact that she had joined the firm as an employee and had remained subject to PAYE (the ‘pay as you earn’ method of taxation applicable to employees), the parties had discussed but never reached agreement on the terms of a partnership between them, when the business name of the firm was changed it was registered to the principal not a partnership, the claimant was given a P45 (a tax document issued by employers to employees when the employment ends) when she left the firm, and the firm’s bank account remained in the sole name of its principal.
In Quigley v Harris [2008] IEHC 43 the question arose whether a partner in a limited partnership formed under the law of the Cook Islands was entitled to the tax relief which Irish legislation awarded to a limited partner, defined as including ‘a person who carries on the trade as a general partner in the partnership otherwise than as an active partner’. The court held that since his liability was not unlimited under the law of the Cook Islands, he could not be a ‘general partner’, as the defining feature of that status was unlimited liability. He was therefore not entitled to the tax relief in question.
Cronin v Kehoe [2012] IEHC 373 concerned the winding up of a partnership which had dissolved prior to the expiry of its five-year fixed term, on the death of one of the two partners, Cronin. Section 42(1) of the Partnership Act 1890 provided that in the absence of a settlement, a partner’s estate was entitled to the share of post-dissolution profits attributable to the use of his share of the partnerships assets, or to 5% interest on that share. The court held that since Cronin had brought no assets into the partnership, his estate’s claim under s42 failed. However, Cronin had agreed to pay Kehoe in instalments for the goodwill which Kehoe had brought into the partnership, and the court held that the balance unpaid at Cronin’s death remained payable by his estate to Kehoe’s estate (Kehoe himself having died by the time these proceedings arose) because Cronin had agreed to pay the full premium in return for admission to the partnership, and Kehoe had not agreed to forego any part of it in the event of early dissolution caused by Cronin’s death. The court also noted that although s40 of the Partnership Act 1890 did not apply here, because it only enabled the court to order repayment of a premium where the partnership was dissolved before expiration of its fixed term otherwise than by the death of the paying partner, the result of s40 was that a deceased partner’s estate could not claim repayment of the premium, and it was therefore logical that any unpaid premium remained due from such an estate.
This edition also reflects the enactment of the Companies Act 2014, under which certain partnerships can be wound up, and the Legal Services Regulation Act 2015, as well as discussing the proposed changes to the Investment Limited Partnerships Act 1994.
The Legal Services Regulation Act 2015 provides for the introduction of an Irish LLP which is very different to a UK or US LLP, because its members must all be solicitors or barristers. Readers may recall that although the UK LLP was originally intended to be available only to members of the professions - though never only to lawyers, the legislation as enacted made it available for the carrying on of any lawful business. The 2015 Act also provides for a ‘legal partnership’, which is a partnership between barristers, or between barristers and solicitors; and for an MDP, which is a partnership between lawyers (barristers or solicitors) and non-lawyers. These provisions have not yet come into force.
The ILP, a limited partnership whose business is the investment of its funds in property and which is supervised by the Central Bank of Ireland as an alternative investment fund (AIF) within the Irish legal framework for AIFs as derived from EU law, has not been particularly successful, with only seven ILPs currently registered. However, the Irish government has drafted the Investment Limited Partnership and Irish Collective Asset-management Vehicle (Amendment) Bill 2017 to align the ILP with EU Directive 2011/61 on alternative investment fund managers and to enhance Ireland’s attractiveness to funds. As yet this has been drafted only in principle rather in detail.
This edition also contains a brief explanation of registered family partnerships and registered family succession partnerships, which were introduced in 2015. These enable general partnerships which are used for farming businesses and meet certain other criteria to be registered with the Ministry of Agriculture, Food and Marine, and they then receive various financial incentives.
The book is highly readable, being clearly written throughout. The frequent use of chapter subheadings is very helpful, as is the clarity of those subheadings (for example ‘Salaried Partners Have the Worst of Both Worlds’, ‘Goodwill can be Partnership Property if Excluded from Accounts’, and ‘Most of the 2015 Act has not yet been Commenced’). Together with the detailed contents list and index, these aid the location of particular material by the reader. There are comprehensive footnotes directing the reader to relevant primary sources, and often providing further information, although greater use of cross references to discussion of material elsewhere in the book would be useful. There are some references to academic commentary, and although it would be helpful for an academic audience if there were more, in fairness this is a text aimed primarily at legal practitioners.
In summary, this is not only an essential reference text for all Irish partnership practitioners and academics, but a valuable and recommended resource for their counterparts in the UK.