Marty, Tom and Quincy enter a partnership agreement in 2019 to run a business

called "Healthcare IT Consultants" (HIC). Marty and Tom are both IT consultants,

while Quincy has many years of experience in the healthcare sector. To establish the

business, Marty contributes $750,000, Tom $250,000 and Quincy $150,000. The

partnership agreement states that all major expenditure requires unanimous

agreement.

Together, the partners rent premises at Noosa. Since its inception three years ago,

HIC has been very successful, making a significant profit. However, a few clients have

been lost last year due to COVID-19, resulting in the business suffering a 25%

downturn.

Marty, Tom and Quincy all have their own clients. Because Tom has been absent due

to illness and Quincy is quite often away on business in Singapore, however, they

have given verbal authority to Marty to handle all purchases for the business, such as

IT software, computer equipment and office supplies. Marty also has a business card

and email logo stating that he is the Purchasing Manager for HIC. Although Marty is

the purchasing manager, Marty must secure permission from Tom and Quincy before

he commits to any purchases over $20,000.

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In January 2021, Marty purchases a new software package and some office

equipment for HIC. The software package is offered by "GSK Computer Specialists"

(GSK). HIC had not dealt with GSK previously. Marty chose GSK because his cousin

Rebecca is the owner of GSK and she offered Marty a fully paid five-night holiday at

Hamilton Island, Queensland (valued at $5,000). Marty does not inform Tom and

Quincy about the Hamilton Island holiday. The price Marty agreed with GSK for the

package is $35,000. However, the market value of the GSK package is only $18,000.

In June 2021, GSK demand the $35,000 owed to them for the IT package purchased

by Marty. Tom and Quincy have no prior knowledge of Marty's purchase.

Subsequently, Tom and Quincy inform GSK that Marty has no authority to purchase

goods or services over $20,000. Tom and Quincy now want to return the computer

package to GSK for a credit.

Meanwhile, in April 2021, Quincy's daughter has lavish wedding on the Gold Coast.

While attending Quincy's daughter's wedding, a colleague informs Marty and Tom

about Quincy's former involvement in a firm known as IT Tax Consultants (ITC). After

some further investigation, Marty and Tom can confirm that Quincy has continued to

run ITC on the Gold Coast after January 2019. ITC has proved to be very profitable,

and Marty and Tom were not aware of Quincy's involvement in ITC. Tom confronts

Quincy about his IT business on the Gold Coast and shouts: "You're useless!" In

retaliation, Quincy picks up an empty glass on his desk and throws it at Tom, hitting

him in the head. Tom then orders two security guards to escort Quincy from their

office. Quincy is refused entry back into the premises.

(a) Advise the partners of HIC whether they are liable to pay for GSK and whether Marty has breached any fiduciary duties to HIC. (15 marks)

(b) Advise the partners of HIC whether Quincy has breached any section of the

Partnership Act and what remedies are available to other partners, if any. (7

marks)