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[2017] ZAWCHC 162
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Durr v Noe and Others (6802/2013) [2017] ZAWCHC 162 (8 September 2017)
IN THE HIGH
COURT OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
Reportable
Case
no. 6802/2013
In
the matter between:
JOHAN
DURR
Excipient
/Plaintiff
and
LE
NOE
First Respondent / Defendant
NEELS
BARNARDT
Second
Respondent / Defendant
CHARLES
DICKINSON
Third Respondent / Defendant
JUDGMENT
DELIVERED 08 SEPTEMBER 2017
Andrews
AJ
Introduction
[1]
This is an
opposed exception brought Plaintiff in relation to Second and Third
Defendant’s conditional counterclaim. The exception
was argued
on 22 August 2017. Adv JL van Dorsten appeared on behalf of
Plaintiff/ Excipient and Adv P MacKenzie appeared on behalf
of the
Defendants.
Background
Facts
[2]
Plaintiff’s
claim against the Defendants is based on a verbal agreement entered
into in or about July 2011. It is averred
that the essential terms of
the agreement between Plaintiff, Second and Third Defendants were
that a partnership business would
be conducted under the name and
style of First Defendant, pursuant whereto the parties co-operated to
establish and develop a business
venture to sell and/or distribute
wine. Plaintiff seeks declaratory relief as to the existence of a
partnership (alternatively
joint venture agreement alternatively
commercial agreement); termination of the agreement and / or
statement and debatement of
the agreement. Plaintiff’s claim is
therefore, insofar as he alleges the existence of a partnership, at
least partly founded
upon the
actio
pro socio
.
[3]
Defendants
contend that in the event that the court finds that the partnership
agreement existed and is terminated, that Plaintiff
is liable to
Defendants, also on the basis of the
actio
pro socio
,
for damages flowing from the former’s breach of the partnership
agreement in the amount of R2 799 363.60 being the amount
specified
in their conditional claim in reconvention against Plaintiff.
Grounds
of Exception
[4]
Plaintiff
took exception to the Defendants’ conditional claim in
reconvention on the ground that it does not disclose a cause
of
action and / or lack averments necessary to sustain a cause of
action.
[5]
The grounds
of exception include that:
(a)
the
partnership is deemed to remain in existence as far as the partners
are concerned for purposed of the liquidation and distribution
of the
partnership assets;
(b)
partners
are not, as regard partnership dealings, considered as debtor and
creditor
inter
se
until the partnership has been wound up or until the partners have
agreed on a binding settlement of the accounts;
(c)
damages for
loss allegedly caused by a partner to the partnership cannot be
claimed before the partnership accounts have been settled
between the
partners and the partnership have been wound up;
(d)
in this
case, the Defendants are not entitled to claim damages from the
Plaintiff for the alleged loss caused to the partnership
as:
(i)
the
partnership account have not been settled by the partners; and
(ii)
the
partnership has not been wound up or liquidated
(e)
the
Defendants do not allege a winding up or a settlement of accounts in
their conditional claim in reconvention.
Excipient’s
Principal Submissions
[6]
Plaintiff
raised an exception to Defendants Counterclaim on the basis that it
is without legal merit. Plaintiff submits that Defendants
are not
entitled, on the facts pleaded, to claim damage
s
from
Plaintiff for the alleged loss caused to the partnership as there is
no allegation that the partnership accounts have been
settled by the
partners and/ or the partnership has been wound up. It is further
submitted that Defendant’s conditional claim
in reconvention
does not disclose a cause of action and / or lacks averments
necessary to sustain a cause of action for the relief
claimed.
[7]
It is also
submitted that Defendants cannot rely on the
action
pro socio
to claim payment directly to themselves of any amount due to the
partnership as they my only avail themselves of this action against
their co-partners after the partnership claims and assets have been
realised. It was contended that Defendants should first request
the
rendering and debatement of an account and as such, the amount owing,
that could be claimed because it is easily determinable,
is the
amount due to a partner after the partnership has been wound up and
liquidated.
[1]
[8]
Plaintiff
also submits that the effect of the order sought by the Defendants
for payment of the sum of R2 799 363.60 constitutes
damages payable
directly to the Defendants and not to the partnership; payments
cannot be made directly to individual partners
while the partnership
is still in existence; the partnership has to be wound up first. It
was therefore contended that the amount
of damages remains a
partnership asset and as a result would be funds due to the
partnership.
[9]
Plaintiffs
submit that the three partners would be entitled to share equally in
the distribution of the partnership assets, which
would include the
alleged damages claim purportedly caused by the Plaintiff’s
breach of the partnership agreement. It was
argued that there is no
legal basis for the Defendants’ contention that the Plaintiff
is liable to pay the full sum of R2
799 363.60 and consequently the
counterclaim is open to exception. It is on these grounds that the
Plaintiff prays that the Court
upholds the exception with costs.
Defendants
Principle Submissions
[10]
Defendants
contend that, in the event that the court makes a finding that s
partnership agreement existed and is subsequently terminated,
the
Plaintiff is liable to the Defendants on the basis of the
actio
pro socio
,
for damages flowing from the breach of the partnership agreement in a
specified amount.
[11]
It was
submitted that a claim against a partner
in
lieu
of
statement and debatement is still possible in instances where the
claim is readily ascertainable. In this regard, Defendants
avers that
the counterclaim pertains to a single transaction in relation to the
sale of wine. Defendants aver that the counterclaim
is specific to a
single transaction and is conditional upon Plaintiff proving the
existence and termination of a partnership agreement.
Because it is
implicit in the counterclaim, Defendants aver that the counterclaim
does disclose a cause of action. Furthermore,
was that the effect of
the order sought by Plaintiff is in any event to confirm the
existence of a partnership agreement and amount
claimed. Once a
finding in this regard is made, such amount would still need to be
included in the rendering of accounts; this
is on the premise that
Plaintiff is successful in its claim for statement and debatement.
[12]
Defendants
submit that the counterclaim is premised on the finding of the court
to the effect that the partnership agreement has
terminated and
accordingly argued that the exception stands to be dismissed with
costs.
Legal
Principles
Exception
[13]
It is trite
that an exception provides a useful mechanism for weeding out cases
without legal merit.
[2]
Exceptions are raised in an attempt to avoid the leading of
unnecessary evidence at the hearing of the action. It is well
established
that an exception can be taken where pleadings are vague
and embarrassing or lacks averments which are necessary to sustain an
action or defence.
[3]
In
Baliso v FirstRand
Bank Ltd t/a Wesbank
[4]
,
it was held that ‘
[w]here
and exception is taken a court looks only to the pleadings excepted
to as it stands, not to facts outside those stated in
it’.
Therefore,
based on the general principles the veracity of the allegations made
in the impugned pleading is to be accepted.
Partnerships
[14]
A
partnership is established by means of a vaild agreement which
embodies a basic
essentialia
of a
partnership and which is entered into with the true intention of
creating a partnership.
[5]
It is
trite that a partnership remains in existence after its dissolution
until it is finally liquidated.
[6]
Partners, as a matter of law are not considered as debtor or creditor
inter se
until such time as the partnership is would up.
[7]
[15]
It is trite
that a partner is not entitled to claim payment in his personal
capacity for damages caused to the partnership and that
such claims
are excipiable. The matter of
Pataka
v Keefe and Another
[8]
is instructive on this point, where Tindall JA stated: ‘…
Here
the defendant counter-claims for payment to himself of damages
suffered by him through loss caused to the partnership. This
he is
not entitled to do….On this view of the matter the
counter-claim, so far as it relates to claims for damages arising
out
of the alleged acts of the plaintiff in breach of the terms of the
original partnership agreement and the supplementary agreement
in
regard to the water supply, is open to exception.’
[9]
[16]
Defendants
submit that
Pataka
is distinguishable for the following reasons:
(a)
The
Defendant had counterclaimed against the Plaintiff for prospective
damages that the partnership would suffer as a result of
the
Plaintiff’s repudiation (anticipatory breach) of the
partnership agreement;
(b)
The
Defendant had denied that the partnership agreement had been
cancelled. The counterclaim was premised on the continued existence
of the partnership agreement.
(c)
The court
held that the Defendant was precluded from counterclaiming in the
absence of alleging either a winding-up or settlement
of accounts as
between partners.
[10]
Actio
Pro Socio
[17]
In
Robson
v Theron
[11]
the principles of the common law underlying the
actio
pro socio
are succinctly summarised as follows:
(a)
This
action may be instituted by a partner against a co-partner during the
existence of the partnership for specific performance
in terms of the
partnership agreement and / or fulfilment of personal obligations
(praestationes personales) arising out of the
partnership agreement
and business.
(b)
Where
the partnership agreement provides for (or the parties subsequently
agree upon) the dissolution of the partnership and the
manner in
which the partnership is to be liquidated and wound-up specific
performance thereof may be claimed by means of this action.
(c)
Where
neither the partnership agreement nor a subsequent agreement between
the parties provides for the dissolution of the partnership
and the
manner in which the partnership is to be liquidated and wound-up this
action may in general (subject to any stipulation
for the duration of
the partnership or any other relevant stipulations) be brought by a
partner to have the partnership liquidated
and wound-up. The
Court in the exercise of its wide equitable discretion may appoint a
liquidator to realise the partnership
assets for the purpose of
liquidating partnership debts and to distribute the balance of the
partnership assets or their proceeds
among the partners…
(d)
Where
a partnership has been dissolved a partner may avail himself of this
action against his co-partners to claim distribution
of any
undistributed partnership asset or assets…
(e)
A
court has a wide equitable discretion in respect of the mode of
distribution of partnership assets, having regard inter alia,
to the
particular circumstances, what is most to the advantage of the
partners and what they prefer…’
[12]
[18]
It is trite
that any claim brought by one partner against another pursuant to the
actio
pro socio
is only enforceable when there is either a winding-up of a
partnership; or rendering of financial statements.
[13]
I therefore agree with the Defendants contention that the rights and
duties of the partners
inter
se
are
determined in the first instance by the terms of their partnership
agreement. In the absence of express terms, their relationship
is
regulated by terms implied by law. Their rights inter se are enforced
by the action pro socio.
[14]
Conclusion
[19]
In
applying the general principles to the present matter it is clear
that one partner has no right of action against another for
the
balance owing to him or her until after final settlement of accounts.
A partner must therefore allege a winding up or a settlement
of
accounts before suing for money due.
[20]
Although
it is accepted that Defendants are not entitled to claim damages for
the alleged loss caused to the partnership until the
partnership
accounts have been settled and the partnership wound up, I am of the
view that the a finding is still to be made that
a partnership
agreement has been concluded between the parties. The relief which
Plaintiff seeks is for the court to declare the
existence of a
partnership, alternatively joint venture alternatively commercial
agreement. The Plaintiff further claims termination
of the agreement
as well as a statement and debatement of the agreement. It must be
borne in mind that the Defendants have raised
a conditional
counter-claim. The counter-claim is conditional upon the court
finding that a partnership agreement exists. Defendants
are alleging
that no partnership agreement, tacit or express, between the
Plaintiff, the Second Defendant and / or Third Defendant
was ever
concluded or existed. It is further evident from the averments in the
pleadings that the cause of the joint venture agreement
was limited
to a certain transaction.
[21]
In the
circumstances, it would be premature for this court to make a finding
as to the existence or termination or terms of the
partnership
agreement, joint venture or commercial agreement. These are issues
that should be ventilated in the main action. It
is trite that an
excipient must convince a court that upon every interpretation which
the pleading in question, in particular the
document on which it is
based, can reasonably bear, no cause of action is disclosed; failing
which the exception ought not to be
upheld.
[15]
Based on the averments of the Defendants, I cannot, at this stage,
find that there is no cause of action as same would depend on
the
pronouncement which the trial court will make regarding the agreement
concluded between the parties. In this regard, it should
be further
borne in mind that this exception lies against a
conditional
counterclaim
(my emphasis) on the premise of Plaintiff succeeding in proving the
existence and termination of a partnership agreement.
It is
trite that a dismissal of an exception does not finally dispose of
the issue raised by the exception.
[16]
The point can be re-argued at the trial in the event of the exception
being dismissed.
Order
[22]
In the
result the following order is made:
1.
The
exception is dismissed with costs.
____________________________
P
ANDREWS, AJ
Exception
–conditional counterclaim –
actio pro socio
JUDGE
:
Andrews AJ
JUDGMENT DELIVERED
BY
:
Andrews AJ
FOR
APPLICANT
:
Adv. JL Dorsten
INSTRUCTED
BY
:
Michalowsky, Geldenhuys & Humphries
Attorneys
FOR
RESPONDENT
:
Adv. P MacKenzie
INSTRUCTED BY
:
Raymond McCreath Inc.
DATES
OF HEARING
:
22 August
2017
DATE
OF JUDGMENT
:
08 September 2017
[1]
Loots v Nieuwenhuizen en ‘n Ander
1997 (1) SA 361 (T).
[2]
Erasmus Superior Court Practice
,
Second Edition (Juta), D1-294 [SERVICE 4, 2017],
H
v Fetal Assessment Centre
2015 (2) SA
193
at 1998B.
[3]
Rule 23 of Uniform Rules of Court, See also
Children’s Resource Centre Trus and Others v Pioneer Food Pty
Ltd and Others
2013 (2) SA 213
(SCA) at para 36.
[4]
Baliso v FirstRand Bank Ltd t/a Wesbank
2017 (1) SA 292
(CC) at para 33, See also Van
Loggerenberg ‘
Erasmus Superior
Court Practice
’ Volume 2 (Juta),
D1-293 [SERVICE 4, 2017],
H v Fetal
Assessment Centre
2015 (2) SA 193
(CC) at 199.
[5]
Joubert WA ‘
The
Law of South Africa’
Establishment
of Partnership (vol19) 268 at p203.
[6]
See Ferreira v Fouche
1949 (1) SA 67
(T) at para 70
, Van Der
Merwe v Sekretaris van Binnelandse Inkomste
1977 (1) SA 462
(A) at 472H and 473F and
Beira
v Raphaely-Weiner and Others
[1997] ZASCA 59
;
1997 (4)
SA 332
(SCA) at para 337.
[7]
Nair v Chandler
2007 (1) SA 44 (T).
[8]
1947 (2) SA 962
(A) at 968-969.
[9]
See also
Beira v
Raphaely-Weiner and Others
[1997] ZASCA 59
;
1997 (4) SA
332
(SCA) at 337.
[10]
Defendant’s Heads of Argument pages 5-6
para 17.
[11]
1978 (1) SA 855H-856G.
[12]
See also
Brighton v Clift
(2)
1971 (2) SA 191
(R) at 193B-D;
Morar NO v
Akoo
(
498/10
)
[
2011] ZASCA 130
(15 September 2011).
[13]
Nair v Chandler
2007 (1) SA 44 (T).
[14]
Wille’s Principles of South African Law,
Ninth Edition, p 1010.
[15]
Erasmus Superior Court Practice Vol 2 at
D1-293-294;
H Fetal Assessment Centre
(Supra)
at 199.
[16]
Baliso v FirstRand Bank Ltd t/a Wesbank
2017 (1) SA 292
(CC) at para 31
‘
Even
if the exception is upheld, the respondent will have the opportunity
to amend its particulars of claim.’