Bishop v. Nicol's Trustees [1920] ScotLR 109 (08 December 1920)

Bishop v. Nicol's Trustees [1920] ScotLR 109 (08 December 1920)

Excess profits duty, being a business expense paid by the company before profits are divisible, must be deducted from the profits before calculating the sum payable for goodwill to the deceased partner's trustees under the partnership agreement.

Citation
[1920] ScotLR 109
Parties
First Parties (surviving Partners): Thomas George Bishop and Andrew Henderson Bishop; Second Parties (trustees of Deceased Partner): Mrs Margaret Graham Robertson or Nicol and others, testamentary trustees of Robert Nicol
Jurisdiction
Scotland
Judgment Date
08 December 1920
Procedural Posture
Special Case (partnership Dispute) / Judgment of the Inner House, Second Division, Court of Session
Outcome
Question of law answered in the affirmative; excess profits duty must be deducted before calculating goodwill payment.
Legal Topics
Goodwill Valuation, Excess Profits Duty, Interpretation of Partnership Agreements, Deductibility of Business Taxes
Partnership Law Taxation Law Contract Law Goodwill Valuation Excess Profits Duty Interpretation of Partnership Agreements Deductibility of Business Taxes

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Parties

Thomas George Bishop and Andrew Henderson Bishop

First Parties (surviving Partners)

Mrs Margaret Graham Robertson or Nicol and others, testamentary trustees of Robert Nicol

Second Parties (trustees of Deceased Partner)

Procedural Posture

Special Case (partnership Dispute) / Judgment of the Inner House, Second Division, Court of Session

Legal Issues

  1. 1 Whether excess profits duty should be deducted from profits before calculating the sum payable for goodwill to the deceased partner's trustees under the partnership agreement.

Ratio Decidendi

Excess profits duty, being a business expense paid by the company before profits are divisible, must be deducted from the profits before calculating the sum payable for goodwill to the deceased partner's trustees under the partnership agreement.

Court Disposition

Question of law answered in the affirmative; excess profits duty must be deducted before calculating goodwill payment.

Orders

  • The sum payable to the deceased partner's trustees in name of goodwill is to be calculated after deduction of excess profits duty from the profits of the business for the relevant period.