Question 4 (10 marks)

Don is a partner in a physiotherapy practise in Warrnambool. Paul and James are the other two partners. The practice is run from a leased property, which was acquired by the partnership when they started business. The lease had an option to renew that had to be exercised by all three partners.Although all three partners have worked in harmony for well over 10 years, recently their relationship has started to break down. The three partners decide to part ways, despite the long and successful relationship. Don has always felt that even if the partnership were to fail, that he would like to remain on the same premises, as he lived very close by and loved the area. He negotiates a new lease of the property with the landlord, and does not inform Paul and James, despite the fact that the partnership had yet to be wound up. Paul and James later become aware of the new lease, and feel that this should not have taken place, as the lease had been very profitable for the partnership and the option to renew should have been exercised.

Advise Paul and James if they have any recourse under the partnership law. Please use case law and statute to support your answer.