Paul McCartney won his lawsuit to have The Beatles’ business partnership dissolved on 12 March 1971.
The suit had been filed on 31 December 1970, and the case hearing began in London’s High Court on 19 February, with Mr Justice Stamp presiding.
On this day almost all of McCartney’s complaints were upheld. Justice Stamp found that the appointment of Allen Klein as The Beatles’ business manager had been “a breach in the terms of the partnership deed”, and that Klein’s company ABKCO had several times taken fees beyond those to which he was entitled.
ABKCO has made grossly excessive claims for commission and has received commission grossly in excess of that specified.
The judge also said that business decisions had been made without McCartney’s knowledge, and gave short shrift to the idea that the musician was hard to contact. He stated that The Beatles and Apple Corps had “acted in bad faith” by making what he called “a covert oral agreement increasing ABKCO’s commission” without informing McCartney, which he considered a “grave breach of duties”.
He also said that Klein’s statements to the court “read to me like the irresponsible patter of a second-rate salesman,” and expressed disdain towards Klein’s attempted justification of his recent tax conviction in New York.
Turning to the issue of the former Beatles’ solo careers, he said that each was “exercising their art separately, with inevitably varying degrees of skill and success.” He agreed with McCartney’s claim that the income from solo releases should not be considered “partnership property,” and that the four men could effectively be competing with one another commercially.
He then stated that the best resolution was for the business partnership to be brought to an end.
The squabblings which are described in detail in the affidavit evidence may in truth be attributable primarily to the management situation but also to the situation in which the Beatles find themselves in the respects which I just mentioned. Confidence is gone; and although the discontinuance of joint recordings – and I am satisfied on the evidence the possibility of their being resumed is negligible – is not in theory destructive of the partnership, it may be thought as a practical matter that it would be inequitable to do otherwise than dissolve it.
After ordering the partnership dissolved, Mr Justice Stamp then discussed McCartney’s request for the appointment of a receiver. He appointed James Douglas Spooner, a London-based chartered accountant, to the role of receiver and manager.
John Lennon, George Harrison, and Ringo Starr were given one week to file an appeal. They did so on 19 March, but dropped it on 26 April in favour of negotiating McCartney’s exit from the partnership.