Conlon & Another v Simms is a recent case that demonstrates that partners owe a duty of good faith not only to existing partners but to prospective partners who are negotiating entry into the partnership. Accordingly when a partner deliberately and dishonestly withheld material facts from a prospective partner this amounted to fraudulent misrepresentation and the innocent partner was entitled to damages.
Since a partnership is a relationship of good faith-despite what you may hear otherwise on the office grapevine-this duty requires full disclosure of all material facts whether favourable or not.
Prior to this case there was uncertainty as to whether the duty extended to prospective partners and whether any remedy included the remedy of damages or not.
The case answered affirmatively on both points.
The facts of the case here related to the failure by the incumbent partner to disclose that he was involved in a number of fraudulent schemes that were under the scrutiny of an Office for the Supervision of Solicitors (OSS) investigation. The newcomer knew of the investigation but not of the truth of the position whilst the incumbent did know but did not make full disclosure.
Comment:
Being offered to partnership is an ultimate goal you may covet to attain but do not let the lure of the prize cause you to neglect proper due diligence and professional advice.
