Similarities Between Australian and Malaysian Partnership

Partnership in Malaysia is governed by the Partnership Act 1961 which provides for the regulation, administration and dissolution of partnership. The Act basically outlines the rights and obligations of the parties in a contractual relationship along with the framework for the formation of partnership agreements.

Under this statute of Malaysia, a partnership is defined as a company that is run by two or more people with the intention of making profits from business operations as per section 3(1) of the Act. This was clarified in the case of Martin Mairin Idang v Rakanan Jaya Sdn Bhd & Anor (High Court of Borneo at Sandakan) and Chooi Siew Cheong v Lucky Heights Development Sdn Bhd where the court held that there cannot be a partnership if there is no intention of making profit together. Under this Act, partnership can be written as well as be created without a written document. Partners must divide business profits and losses equally and have joint and several liability for the partnership's obligations, unless otherwise agreed. Each partner also has the authority to bind the partnership in contracts and business dealings with outside parties. The rules are intended to ensure that partnerships function truthfully and transparently and that partners understand their obligations to third parties as well as to one another. The Act and its rules are reviewed and updated on a regular basis to ensure they remain effective in accomplishing their objectives. The case of Tra Mining (Malaysia) SDN BHD v Thien Hong Teck & Ors and Another Appeal decided that the partners have an agency relationship with the partnership which makes all the partners liable for the partnership business and to each other.

Similarly, in Australia, there are multiple legislations that govern partnership. For example, the Partnership Act 1892 governs partnership in New South Wales, whereas the Partnership Act 1963 governs partnership in Australian Capital territory and in Victoria, Partnership Act 1958 governs partnership businesses and provides for the regulations to administer partnership relations. It sets out the rights and obligations of the partners. To be specific, section 2 of the Partnership Act 1892 provides for the rules which determines the nature and existence of the partnership. Section 5 and 6 of the Act bind the partners to the partnership firm. Further, it provides for liability of the partners and dissolution of partnership under sections 9 and Division 4 respectively. Since Australia is a common law country, there are various cases that shaped the partnership laws. For example, the recent decision of the High Court of Australia in Commissioner of State Revenue v Rojoda Pty Ltd clarified the position of the partners in relation to exercising rights over partnership assets. The court held that even though the partners have equitable interest over the partnership properties, however, that interest cannot be apportioned or ascertained and hence a separate declaration to hold partnership assets is contrary to the equitable rights that arise under the partnership agreement. Further, the decision of Cameron v Murdoch clarified that the application of Partnership Act 1895 for Western Australia was to regulate law of partnership where both rules of common law and equity are applicable. This is very similar to the approach taken by Malaysian courts following common law principles along with the statutory laws.    

So it can be seen that the purpose and scope of Australian partnership law and Malaysian partnership law are quite similar. The wordings of the provisions may seem different, however, considering a purposive interpretation approach, the words of Malaysian statute and Australian statute essentially mean and provide for the same things. In short, the purpose of every partnership legislations is to govern the relationship between the partners and the partnership business itself. The purpose is to regulate the operation, conduct, accountability and duty of the partners so that partnership businesses function lawfully and with due regards to the rights of all other related parties like, customers, vendors, suppliers etc. This is mostly because of the fact that all these factors revolving around partnership are based on fundamental business norms and general human prudence. In short, even though there are some minute differences between the partnership law of Malaysia and Australia, the legislative intent and jurisprudence behind the regulations is similar.  

Reply to the Post of Jessica Eskrigge

Hi Jessica, it was great reading your post on partnership, especially the comparison between Australia and Austria. Australia being a common law country has many similarities with Austria in terms of regulating partnership businesses. It can be seen that Austria is not a common law country like Australia and is rather governed by civil and private laws. However, it must be noted that the basic principles and jurisprudence behind the partnership laws and regulations in Austria are similar to Australia. The Strategic Cooperation Arrangement entered into in 2021 between Australia and Austria deepened the relationship between these two countries in terms of trade, investment and commerce. This is helping both the countries to align their objectives and also assist the businesses from these two countries to have constructive cooperation to obtain mutual benefit. The arrangement is expected to boost foreign policy development, economic diplomacy and support bilateral relations. The post on Partnership of Australia and Austria clearly shows that the way laws have been drafted in Australia and Austria are very close to each other in terms of partnership formation, governing, dissolution and operation. Similar to this, I have compared the position of partnership in Australia and Malaysia. Their statutes are similar and both are common law countries. The literal wordings of some provision might seem different, however, the purpose and legislative intent behind the provisions are the same. 

Hope I was able to add on to your thoughts. Let me know what you think and visit my post if you like. Thanks     

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