Thom’s Executrix v Russel and Aitken: 1983

The court was asked as to how the value of the interest of a deceased partner was to be calculated.
Held: There had been prior dealings at book value as between the partners, and the payment of the deceased partner’s share was restricted to book value of the capital. The court considered the case law and ‘That is sufficient for the disposal of the case but there is another and equally cogent reason for reaching the same conclusion namely, the actings of the parties under the contract. It was clearly recognised in the three cases to which I have referred that even if the contract is silent as to the accounting principles to be applied fair market valuations of assets will not be required to appear in the accounts if it can reasonably be inferred from the actings of the partners that they intended otherwise. ‘ and ‘Taking all the foregoing factors into account I conclude that even if the correct position were that the contract of co-partnery were silent on the matter nevertheless the actings of the partners thereunder and under the two preceding contracts demonstrate clearly that there was no intention on their part that a partner leaving the partnership either by retiral or by death should receive his share calculated other than by reference to book value.’
Lord Jauncey
1983 SLT 335
CitedCruikshank v Sutherland HL 1923
The executors of a deceased partner of the respondents sought relief. The assets had been taken over from an earlier partnership between the parties and had been brought into the accounts of the new partnership at the values at which they had stood . .
CitedNoble v Noble OHCS 1965
A father took his son into a farming partnership. The agreement recited that they agreed that ‘the heritable property should be taken as of the value of eight thousand pounds, but which is burdened with a heritable security for three thousand five . .
CitedShaw v Shaw OHCS 1968
‘The authorities to which I was referred, including, in particular, Noble v Noble; Inner House, 28th January 1966 (unreported), and Cruickshank’s Trustees v Sutherland, satisfy me that, as a general principle, where in a partnership it is necessary . .

Cited by:
CitedIn Re White (Dennis) Deceased; White v Minnis and Another CA 25-May-2000
A family partnership had carried freehold property at its historic cost value in the books, rather than at a market value. After the death of one partner the share came to be valued.
Held: Being a family partnership there was presumption that . .

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Updated: 31 January 2021; Ref: scu.238864