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[2015] ZAGPJHC 174
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C v V (2012/36328) [2015] ZAGPJHC 174 (21 August 2015)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
Number : 2012/36328
In
the matter between:
C.:
S.
Plaintiff
And
V.:
C.
Defendant
DELETE
WHICH IS NOT APPLICABLE
(1)
REPORTABLE:
YES
/NO
(2)
OF INTEREST TO OTHER JUDGES:
YES
/NO
(3)
REVISED
_____________
_____________________
Date
Signature
JUDGMENT
BEKKER
AJ
:
[1]
The main issue
to be decided in this matter is whether a universal partnership
existed between the Plaintiff and the Defendant
and, if so, when it
terminated, which assets formed part thereof, what the parties’
respective shares in the partnership
were, and what form of
relief should granted. By agreement between the parties, the
issues relating to merits were separated
from those dealing with
quantum
,
and the matter proceeded on the former issues only.
BACKGROUND
[2]
The Plaintiff
in this matter (“
Sanet”
)
was employed as a debtor’s controller at
Sasco
during 1996.
During 1996, when Sanet was in her late 20’s, she formed a love
relationship with the Defendant (“
Villet”
),
who was operating a delivery services business styled “
Rapidel
Deliveries”
at the time, pursuant to a contract he held with
Sasco
for the transportation of bread rolls.
[3]
During May
1996 Sanet and Villet moved into a residential house situated at
[........], Florida, where they started living as a
couple. The
house was bought by Villet, and it was registered in his name.
According to Sanet, Villet first showed
her the house and they then
jointly decided on purchasing it. This was disputed by Villet,
who testified that he had already
made an offer to purchase the house
before showing her the house, but he was unable to substantiate this
statement.
[4]
Sanet fell
pregnant about three months after the parties moved in together.
Whilst she was pregnant, Sanet had to drive about
70 km to
Midrand every day, where she was seconded to since taking up a more
senior position than what she previously held
at
Sasco’s
Erriton Branch. The laborious travelling for hours every day
posed a risk of miscarriage to her.
[5]
Sanet
testified that she discussed her risk of a miscarriage with Villet,
and that they jointly took the decision that she should
quit her
employment at
Sasco.
Villet denied
knowing about the threat of a miscarriage, but does admit that he
then undertook to look after her. Sanet resigned
from
Sasco
during or about October 1996. The proceeds of her provident
fund, amounting to R22 138, was paid into her bank account.
Sanet closed this account as soon as these funds ran out, having been
utilised towards the maintenance of the joint household.
[6]
Also during
the latter half of 1996,
Sasco
terminated Villet’s contract.
Sasco
having been his main, if not his only customer at the time, this
effectively ended Villet’s business, leaving him with a
4-ton
truck and two bakkies, and without any income. Whether anything
was owed on any of these vehicles is unknown.
Villet also had a
BMW motor vehicle at the time.
FIRST
DAIRY
[7]
As a result,
neither of the parties had an income during the latter part of 1996.
During a visit to Sanet’s parents’
farm at Randfontein,
Sanet’s father (Mr Coetzee) realised their financial
predicament, and decided to help his daughter
get back on her feet.
Mr Coetzee proposed to Villet and Sanet that they could move in with
Mr Coetzee and his wife at
their home on the farm, and that he
would help the two of them to start their own dairy business, all at
no cost to them.
Mr Coetzee thus offered to share his
house and his dairy facility and equipment for no consideration at
all with Villet and
Sanet, and that he would train Villet in the
skills necessary to operate a dairy business.
[8]
During the
course of these discussions held between Mr Coetzee, Villet and
Sanet, Mr Coetzee also told Villet about a
plot of approximately
8,5 hectares, immediately adjacent to Mr Coetzee’s farm in
Randfontein which was for sale, and
which would provide additional
land for the milk cows to be kept and to graze on. He also gave
Villet advice about, and assisted
him with, the buying of milk cows.
He stressed in his evidence that he did this for his daughter (Sanet)
so that the couple
could establish a business and earn an income
therefrom.
[9]
At the end of
1996 or the beginning of [....] the parties moved into Sanet’s
parents’ home on the farm, where they stayed
free of charge.
The house that they previously lived in at [........] was rented out
during this time, thereby providing
a passive income for the
parties. The adjacent plot was purchased for approximately
R20 000, which was apparently financed
either by taking a
drawing against the access bond facility of the bond over [........]
property, or by the sale of Villet’s
delivery vehicles,
although there was no proof thereof. The cows were evidently
bought with Villet’s personal funds,
whilst the parties had
applied Sanet’s funds towards the joint household
[10]
During May
[....] C. Jr. was born, and obviously immediately became a priority
to Sanet. Living with Villet and their baby
in her parents’
home, Sanet attended to the baby and also handled the financial side
of the new dairy business. She
also generally assisted with
other aspects of the dairy, including at times buying, and driving to
collect, feed for the cows.
Sanet also raised lay hens, and
sold their eggs for a few extra rands.
[11]
Mr Coetzee
duly contributed his efforts and shared his dairy facilities and
equipment with this start-up venture, and trained
Villet as he
promised he would. Mr Coetzee testified that he did this
for his daughter, as Villet was “
niks
van my nie”
.
During this time, Villet was in charge of the milking of the cows and
the processing of the milk in the stables, prior to
it being sold.
The milk produced by these cows was sold daily, together with Mr
Coetzee’s milk production, by Coetzee
Dairy to milk
distributors. On a day to day basis, Sanet’s mother,
Mrs Coetzee (who handled the financial side
of Mr Coetzee’s
dairy business) worked out with Villet what the production of the
cows milked by Mr Villet was,
and then paid the corresponding
amount of the money received over, often in cash.
[12]
Mr Coetzee
testified that had it not been for the contribution that he made on
behalf of Sanet, it would have been impossible
for the parties to
start and to build their business. The assets which Mr Coetzee
contributed included the use of his
land, his milking stable, a
pasteuriser, a homogeniser, a sachet fill-machine, a cold room, his
tractors and even his Ford Ranger
bakkie. He estimated that, if
the machinery and equipment in the business had to be purchased, it
would have cost approximately
R200 000 (being ten times the
value of the plot).
[13]
During their
time on the farm, whilst conducting the first dairy, neither Villet
nor Sanet received a salary. Apart from the
income received
from the sale of milk, they received the rental from the [........]
property, and a small additional income from
the sale of eggs from
Sanet’s lay hens. Some of their income was received in
the form of cash, whilst other moneys
were paid into the bank account
held in Villet’s name, as this was the only account which the
parties had. The parties
both conducted and utilised this
account for their household expenses and for the dairy business, in
developing and expanding it.
THE
NEWLANDS SHOP
[14]
During 1998
the first dairy had grown to the extent that, when an opportunity
presented to hire a shop in Newlands (which was better
located than
the existing milk depot in Newlands which they supplied), the parties
rented the shop, in order to sell their milk
directly to the public.
The purchase of the shop itself was financed by means of a second
bond taken on the [........] property,
the instalments of which were
always paid from the joint bank account. The parties therefore
moved back from the farm into
their house at [........].
[15]
The day-today
running and all the duties at the Newlands milk shop fell mainly on
Sanet, who worked there seven days a week.
She would start her
day by first collecting milk from farmers’ dairies in the small
hours of the morning, and would then
drive from Randfontein to
Newlands to open the shop early in the morning. Not being able
to look properly after her son (who
was then about three years old)
whilst fully occupied with the running of the shop, the boy
frequently stayed with his grandparents
on the farm. There his
grandparents raised him and taught him farm life – Mr Coetzee
summed it up saying that
the boy practically grew up sitting on his
lap on the tractor.
[16]
Whilst Sanet
regretted not having more time to spend with her son, she testified
that she and Villet were busy building their lives,
and they wanted
to make a success of their business. They made many sacrifices
in their lives in their endeavour to achieve
something with their
business. During this period, Sanet also attended a yoghurt
making course, and subsequently a feta cheese
making course, which
knowledge and skills she applied personally in the dairy business,
also transferring these skills to the employees.
[17]
Villet
remained concerned with the performing the milking operations on the
farm and delivering it to the Newlands shop, for about
a year after
the Newlands shop was opened. The parties then decided to sell
the cows that were kept on the farm to henceforth
concentrate on
buying milk in and selling it directly to the public. The money
received from the sale of the cows was invested
back into the
business – a bakkie was
inter
alia
purchased for the Newlands shop from these proceeds.
[18]
Villet
generally assisted Sanet in the running of the Newlands shop,
although it is not too clear what role exactly he played therein.
What is clear, however, is that Villet was, throughout the
parties’ relationship, passionately involved with the sport
of
wrestling in South Africa. He very often left Sanet to run the
business whilst he went off to attend wrestling conventions,
meetings
and other events. This often occurred over weekends, but
sometimes extended to more than a week at a time, both
nationally and
internationally. Villet failed to disclose documents and
particulars relating to his wrestling schedule over
the relevant
years, despite being challenged to do so.
[19]
The income
that was earned from the sale of milk through the Newlands shop was
paid into the common bank account held in Villet’s
name, which
was utilised freely by the parties. Neither of the parties ever
drew a salary from the business, but both of
them took cash out of
the business and out of the common bank account as and when they
needed money.
[20]
The Newlands
shop, and accordingly the business as it presented at that time,
traded under the name “
Chanet
Dairy”
,
being a combination of the first part of Villet’s name and the
last part of Sanet’s name. For what it may be
worth, this
trade name was probably the only outward indication given that the
business conducted by the parties might be a partnership.
The
business has traded ever since as Chanet Dairy, and does so to this
day.
SALE
OF THE NEWLANDS SHOP
[21]
During 2002
the parties accepted an offer for the sale of the Newlands shop, and
decided to sell the shop. The purchase price
received therefor
(R620 000 to R640 000, according to Villet) was paid into
the access bond over [........]. Having
sold the shop, they
lived off the proceeds of the sale, enjoying the fruits of their
labour of the previous few years, until the
funds in the account were
depleted.
[22]
After about a
year Sanet managed to obtain employment at Creative Stationery
(trading as Cardies) at a salary of approximately R5 000
per
month, which was paid into the common bank account. This salary
was sufficient to maintain herself, Villet and their
child. For
his part, Villet started doing some vehicle repossession work
together with friends of his. Villet’s
share of the
income received from the financial institutions varied between about
R4 000 per month to about R18 000 per
month.
THE
SECOND DAIRY
[23]
Having used up
the money which they received from the sale of the Newlands shop and
having no income, the parties resolved to start
a dairy business
afresh (“
the
second dairy”
).
During a visit to the farm, they asked Mr Coetzee whether
they could return to the farm to start the dairy business
again, and
he obliged, undertaking to again assist them to do so. As the
parties had no money left to pay for milk cows,
Mr Coetzee
agreed to stand surety for the loan which they needed to take out in
order to finance the purchase price for the
cows. Mr Coetzee
therefore signed as a surety, putting up his own cows up as security
for the loan to the bank.
Mr Coetzee stated that, had it
not been for his assistance, Sanet and Villet could not have
commenced the second dairy business.
[24]
At the
commencement of the second dairy, Villet attended to the milking of
the cows on the farm whilst Sanet remained employed by
Cardies.
Approximately a year later (during 2005) the second dairy had
grown to such an extent that Sanet could afford to
resign from
Cardies, which she did to enable her to work in the second dairy.
The milk which was produced during the second
dairy period was sold
and distributed by the parties under the trade name Chanet Dairy, and
was handled separately from the milk
sold by Mr Coetzee under
his trade name, Coetzee Melkery.
[25]
Sanet’s
duties in the second dairy essentially entailed obtaining orders from
clients and processing invoices, on a full-time
basis. In
addition, she often assisted with the filling of bottles and
sachets. She also learnt, during this time,
to pasteurise and
homogenise the milk, with which she assisted Villet. To enable
the collection and distribution of milk,
the business purchased and
financed a 4-ton Isuzu truck and a Kia bakkie. The vehicles
were registered in Villet’s
name, as the bank account was in
his name. Both Sanet and Villet at times drove around
collecting milk from other farmers
on buy-ins, before this job which
was given to a driver.
[26]
The business
did very well, and parties earned good money. Mr Coetzee’s
evidence was that the parties started the
second dairy business
together and that they conducted and operated their business
together. He testified that Sanet was at all
times part of the
discussions regarding the business, and that he certainly saw Sanet
as a partner in the business.
THE
FACTORY
[27]
The second
dairy business kept growing to the extent that Mr Coetzee’s
machinery and equipment no longer had the capacity
to handle the
volume of milk which was produced by Chanet Dairy. The parties
therefore decided to look for larger premises
in order to accommodate
and develop their milk processing activities. They decided to
stop milking, and instead to focus
on processing milk and supplying
it from the factory. They would therefore sell their cows and
apply the proceeds thereof
in the factory.
[28]
Having found
certain factory premises in Florida, which included the stand on
which it was built, they moved the business from the
farm to Florida
during or about 2007. When Sanet’s Liberty Life policy,
which was paid from the common account, was
cancelled during 2006,
the proceeds thereof in the sum of R23 946,89 was paid into the
account, and used for the parties’
living expenses and for the
business conducted at the factory.
[29]
Sanet, for all
intents and purposes, managed the factory. She started daily at
05h00, checking that the drivers had loaded
the correct product for
delivery. She would then open the factory at 09h00 and would
start phoning clients to take orders,
which she processed by drawing
invoices and loading sheets - often she would also contact
suppliers. As the orders came in,
Sanet would instruct the
employees at the factory about what quantities and types of product
have to be packed. The factory
ran for seven days a week –
this meant that Sanet never took any weekend off, nor did she take
any holiday, apart from the
few days that the factory closed over
Christmas and New Year.
[30]
This was
Sanet’s lot for some five years, which obviously made it very
difficult for her to spend meaningful time with her
son. But
she and Villet were building up the business, and she was quite
prepared to make these sacrifices. She kept
a record of the
cash sales of milk at the factory, which exceeded R1,1 million for
the 2010 year, which income was not reflected
on, and did not form
part of, the financial statements prepared for the business by
its accountant, Mr Basson.
[31]
Villet was not
as involved as Sanet in the day-to-day running of the factory, and
his duties mainly entailed attending to the mechanical
side of the
business, fixing machines and trucks whenever the need arose, and
generally lending a hand. He was, however,
still very often
away on wrestling events which was indisputably a priority to him.
If help was required whenever a problem
arose at the business in
Villet’s absence, Sanet would simply call a technician out to
fix it.
TERMINATION
OF THE RELATIONSHIP
[32]
At the
beginning of 2010 Sanet learned that Villet was having a personal
relationship with another woman, Mrs O. Sanet
came to
realise that Villet would not give this up, and contemplated
terminating her personal relationship with him.
Sanet
nevertheless continued staying with Villet and working full-time in
the business because, according to her, they had the
business
together. An opportunity arose during the beginning of
2012, when a prospective purchaser showed an interest
in purchasing
the factory as a going concern. The parties thereupon jointly
prepared a written offer for the sale of the
whole of the Chanet
Dairy business, the offer to be held open for acceptance until the
end of February 2012.
[33]
Sanet
testified that she and Villet jointly agreed on the assets which
belonged to the business and which would form part of the
sale,
together with the agreed values, which appear on this list of assets
(Bundle A, pages 230-231). Villet agreed
that all the
assets appearing on the list
(“the
assets list”)
were all assets of the dairy, but contended that some of these values
were inflated, although he was unable to indicate any item
of which
the value was allegedly inflated, and his evidence to this effect had
no substance.
[34]
As appears
from the assets list, the business was possessed at the time of
various assets, which included the immovable property
from which the
factory was conducted, to the value of slightly over R6 million.
The draft sale agreement reflects that the
total consideration sought
for the business as a going concern was R11,5 million. Sanet
testified that the list of assets
was carefully drawn and considered
by Villet and herself, and that they both considered the value of
some R6 million to comprise
a fair reflection of what the assets
alone were in fact worth.
[35]
In this
regard, she fairly volunteered that the total consideration sought
for the business as a going concern of R11,5 million
may have been
too high. Importantly, Sanet testified that at the time
that the sale of the business was contemplated
and discussed by her
and Villet, they agreed that all creditors would first be paid and
that the surplus of the sale proceeds would
then be divided equally
between them.
[36]
The offer was
however not accepted, and absent any counter-offer the proposed sale
fell through. That is when Sanet decided
to walk out. At
the end of March 2012 Sanet left the common home and discontinued her
involvement at the factory, from which
she was promptly banned, for
no apparent reason - Villet confirmed that he refused Sanet access to
the factory. When she
left, Villet agreed to pay Sanet R15 000
per month for a period of three years, to give her the Toyota Prado
vehicle and to
transfer the plot in Randfontein to her.
[37]
However, he
never complied with any part of this undertaking. Instead, he
adjusted his undertaking downwards, promising to
pay her R8 000
per month for a period of three years. This he did only for six
months, and then stopped paying.
He has also not paid her
anything else since. Sanet did not originally, in the early
correspondence addressed by her attorneys
of record, claim that a
universal partnership existed; such a claim was made only later.
Villet sought to make much of this
point in his evidence.
THE
PLAINTIFF’S CLAIM
[38]
At the
beginning of October 2012, Sanet instituted this action against
Villet, in which she claims for an order declaring that a
partnership
existed between them in equal shares in respect of the partnership’s
business and assets, an order dissolving
the partnership as from
31 March 2012, an order for the appointment of a liquidator
and for ancillary relief.
[39]
Villet alleged
in his Plea that the parties had never agreed that the dairy business
would be for their joint benefit, and that
at all material times the
business was operated and managed by himself, for his own account.
He amplified that Sanet “
would
on occasion render services to the dairy business, for which the
Plaintiff received consideration for her services”
.
By denying the existence of a universal partnership, he accordingly
denied that the partnership contended for had any assets,
and claimed
that all the assets were his exclusive personal assets.
EVALUATION
[40]
When the
respective contributions made the parties to the business is
considered, the evidence is overwhelming that they both contributed
all their efforts, funds and income in order to commence and further
the dairy business jointly. Nevertheless, they
never had
an express discussion about their position as partners in the
partnership. Not only was Sanet Villet’s life
partner in
their personal relationship and the mother of their child, she made a
major contribution to the business. For
years on end she
started very early in the morning, working long hours every single
day of the week, seven days a week. I
have already referred
above to the functions which she fulfilled at each of the stages of
the business, from which her managing,
administrative and bookkeeping
contribution to the business is plainly evident.
[41]
Sanet was not
challenged during cross-examination on the basis that she failed to
contribute to the business; instead Villet contended
that he realised
afterwards that her contribution to the business was in fact a
negative one, in that she had mismanaged her bookkeeping
functions.
In this regard, it was put to her that the financial records
which she kept were incomplete, that not all moneys
were accounted
for and that not all creditors were recorded. However, neither
Villet nor the accountant Basson was able to
adduce any
substantiation therefore, and ultimately this whole challenge proved
to be completely unfounded.
[42]
As Villet
himself evidently had no real clue throughout the course of all these
years what the financials of the business comprised
(all of it having
been handled by Sanet), he was not in a position to testify about the
status, cogency or completeness of the
records kept by Sanet.
To fill this void, Villet adduced the evidence of the accountant of
the business, being Mr Basson.
Basson, however, showed
himself in court to be completely inept at proper bookkeeping, and he
was necessitated to concede that
there were various major errors in
the financials which he drew for the business. In short, the
financial statements he drew were
a mess.
[43]
His evidence
that Chanet Dairy was, at times, not profitable, was without any
basis or foundation, particularly in so far as he
conceded that his
financials did not include the cash received from the milk sales that
Sanet testified about. He also conceded
that whenever he asked
Sanet to provide financial and other business information, she would
always provide it to him. Taking
everything into account, I am
completely unpersuaded by Villet’s purported attack on the
quality of the financial records
kept by Sanet.
[44]
When
originally Sanet resigned from
Sasco,
her provident
fund moneys which were paid out was used to contribute to the
household and to the new venture, being the first dairy.
This
was common cause. After the provident fund moneys were depleted
in Sanet’s bank account (probably at the end of
1996), she
discontinued using the account and eventually closed it. From
then onwards, in other words from the time of commencing
the first
dairy, the parties both utilised Villet’s bank account on which
Sanet had signing powers, and from which they both
drew moneys as and
when required.
[45]
All further
amounts which were subsequently paid to Sanet, including the
insurance pay-out for Sanet’s car and the salary
which she
earned whilst working at Cardies, was paid into the common bank
account. To amplify, Mr Coetzee testified
that he received
R14 000 from the insurance company for Sanet’s car, and
that he and his wife contributed a few thousand
rand of their own
funds thereto, paying the amount of R30 000 to Sanet by paying
it into the common bank account during 2008.
Also, Sanet had
taken out an insurance policy during 1993, the premiums of which were
paid from at least [....] out of the common
bank account. Upon
the policy being cancelled in 2006, the proceeds of R22 138 was
paid into the common bank account
and, like all other money paid into
this account, was subsequently utilised by the parties towards the
business and for their living
expenses.
[46]
The only
indirect reference to Sanet in the documentation of the business is
to be found in the name of the business, Chanet Dairy.
Whilst
she was described as an employee of the business in a CCMA matter,
Sanet was never paid a salary and was never reflected
as an employee
for purposes of Workmen’s Compensation. It is further
evident that Sanet never had a specific job description
or title,
despite being described by Villet in certain formal documentation as
his “
personal
assistant”
and also as an “
office
administrator"
.
Villet kept stressing this aspect, and he showed that she was never
reflected as a partner on any writing.
[47]
Sanet was
however never concerned with how her position was described in the
venture; her attitude was always that it was their
venture, which
they had jointly built up. She was quite happy that all of the
accounts and assets were in Villet’s
name (as the common bank
account was in his name) and that he was described on some
documentation as the “
owner”
.
Like Villet, she never drew a salary, but both of them at all
times had free access to the common bank account which she,
Villet
and the business utilised.
[48]
Villet called
three witnesses, namely Basson the accountant, one Ms van Schalkwyk
who Villet dealt with at the bank, and
Villet’s friend,
Mr Larkin, an attorney. The purpose of calling them was
apparently for them to testify, as they
did, that they had known
Villet during this time, and that they did not know, were never told,
and never formed the impression,
that Sanet was a partner in the
business. But not one of these witnesses had ever specifically
enquired about the position,
they were simply not interested.
The most that can be made of this evidence is that Villet himself
never discussed with any
of these witnesses whether Sanet was a
partner, or not.
[49]
Sanet also
testified that she was consulted by Villet on all major financial
decisions, such as the borrowing of money. This
was denied by
Villet, who testified that these decisions were always only his own.
I find this highly improbable, as Villet
never dealt with the
financial side of the business and therefore had no proper grasp of
its financial position. On the probabilities,
I find that
Villet would have needed to, and that he did, consult with Sanet on
all of the major business decisions. The
decision to sell the
business at the beginning of 2012 was, in my view, similarly jointly
taken, and I accept Sanet’s evidence
to the effect that the
parties had reached an agreement to sell the business, that all
creditors would be paid from the proceeds,
and then to divide the
balance of the proceeds between them equally.
[50]
Sanet made a
very good impression as a witness on the Court. She gave her
evidence in an unemotional and calm manner, and
answered all the
questions put to her fairly, without ever creating the impression
that she was not being open, honest and frank,
or that she was
evasive. After testifying, she sat quietly and impassively in
Court for the duration of the trial, appearing
rather forlorn.
But when Villet testified that he never intended marrying her (this
despite having been engaged to Sanet),
her eyes shot full of tears,
her mouth fell open and she shook her head in disbelief. It
appeared to me that this was the
first time ever that she heard this
being said.
[51]
It must be
emphasised that Sanet worked extremely hard at building up the dairy
business. For most of the 16 years that her
personal and
business relationship with Villet endured, she did what very few
other women would be prepared to do – driving
out to farmers’
dairies around Randfontein before sunrise to collect milk for the
shop, or at the time of the factory, arriving
at 05h00 to check that
the drivers had loaded the correct product for delivery. In all
those years, she worked seven days
a week, not taking a weekend off
or going on holiday (except for the few days between Christmas and
over New Year, when the factory
closed).
[52]
She had always
taken proper charge of the administration and bookkeeping of the
business and handled all the cash and other payments
that were made.
The question marks that Villet tried to raise against the manner in
which these functions were performed
lacked any substance and did not
amount to anything. The evidence did not disclose anything
other than that all the bankable
income of the dairy business was
paid into the common bank account, and that it was commonly utilised
by the parties for their
joint household and for all the expenses of
the business.
[53]
Sanet’s
personal funds having merged with Villet’s funds in his bank
account at a very early stage of their relationship,
there was no
distinction to be drawn between Sanet’s personal funds in the
common bank account, and that of Villet.
I am fully persuaded
that Sanet had always, and for good reason, accepted that the
business which they were building up over the
years was hers as much
as it was Villet’s, and that they shared in it equally.
[54]
Mr Coetzee,
similarly, made a very good impression on the Court. He
presented as an honest and hard-working man, who
twice made his
house, his farm and his dairy facility available to his daughter when
she was in a predicament, in order to help
her get back on her feet.
Whilst he never specifically enquired what exactly the arrangement
between Sanet and Villet was,
as he felt that this was their
business, he certainly understood that they were starting and
building up the business for their
joint benefit. He also
testified that he always intended that the contribution that he made
was in order to assist and support
his daughter.
[55]
Villet, on the
other hand, did not make a good impression on the Court. He was
initially very confident and glib in giving
his evidence, but this
soon waned during cross-examination. The documentary evidence and
records which he produced and sought to
rely on were notably
incomplete, questionable and deficient, and did not stand up to any
degree of scrutiny. He was often
embarrassed by the documents
which he sought to rely on, notably by the financial statements which
he sought to introduce through
Mr Basson and the list of alleged
current creditors of the business which he produced (which,
incidentally, reflects a loan
from Mrs O in an amount of just
over R300 000). Various other relevant documents he
refused to produce.
[56]
Villet was
often evasive in giving evidence, giving irrelevant and confusing
answers, and even refusing to answer a number of questions.
He
also often behaved awkwardly in the witness box - once complaining
quite emotionally to the Court that copies were taken of
certain bank
accounts and other documents (which he was requested to produce) by
the Plaintiff’s representatives over lunch
time, and pleading
with the Court for these documents to be returned to him. A
number of documents and records that he was
required to produce were
never produced, and he refused to answer questions on some of the
other documents. On another occasion,
he started crying under
cross-examination when he was in a corner, pressed for an
explanation.
[57]
Throughout his
evidence, Villet was at pains to try and demonstrate that it was
always just his own business, and that Sanet allegedly
always simply
understood it that way. The gist of his evidence was that he
allowed Sanet to work for him in his business
during all these years
(despite never intending to marry her) and that she was completely
happy with this situation. Despite
describing Sanet as an
employee on some official documents, he never paid her any salary
during this whole period, and according
to him she was satisfied
simply being able to draw money out of the common bank account, to
order to meet the household expenses
and her few personal expenses.
[58]
Villet was
unmoved by the very long hours that Sanet worked, the difficult
nature of the work, particularly for a woman, or by the
fact that she
had to work seven days a week. To him, she was his “
fiancé”
,
his “
meisie”,
and he stated that this is simply what a wife is expected to do.
His involvement in the sport of wrestling, including the
numerous
times that he spent time away from the farm, the Newlands shop and
the factory whilst pursuing his involvement in wrestling
nationally
and internationally, whilst Sanet was working away in their business,
did and does not appear to concern him.
As mentioned, his case
at the trial was that Sanet’s contribution to the partnership
was in fact a negative contribution,
but all his attempts at finding
fault with Sanet’s bookkeeping and other functions were
unfounded.
[59]
Villet’s
version is even more improbable if one considers that, according to
the evidence that he gave in Court, he never
intended marrying Sanet.
It is noteworthy in this regard that, after Sanet ended her
personal relationship with Villet, she
nevertheless stayed on and
continued working in the business, which demonstrates that her
interest in the business continued even
after her personal
relationship with Villet ended. It is difficult to draw any
other inference therefrom than that Sanet
had an interest in the
business which she wished to protect. However, when the
proposed sale of the business failed to materialise
during February
2012, and with her personal relationship with Villet at an end, she
moved out of their common home and stopped
working at the factory.
That is when Villet responded by refusing her access to the factory
premises.
[60]
Having regard
to all of the above evidence, I accept the Sanet’s version of
the events on a balance of probabilities and I
reject the Villet’s
version to the extent that it is conflict with her version. I
further find that Villet has not
been truthful in his evidence, and
that he was not a credible witness in these proceedings.
FINDINGS
ON A PARTNERSHIP
[61]
It
is trite law that the
essentialia
of a partnership comprises that each party should contribute
something to the partnership, whether it be money, labour or skill,
and that the business should be carried on for the joint benefit of
the parties, with the object of making a profit. It is
in the
essence of a partnership that two or more parties have the
intention to share in the profits generated by their joint
activity.
The same principles apply with equal force to a universal partnership
[1]
.
[62]
The type of
partnership that the Plaintiff contends for is a
societas
universorum quae ex quaestu veniunt
.
Such a partnership will be found to exist where the parties expressly
or tacitly agree that all which they acquired during
the existence of
the partnership from every kind of commercial undertaking would
constitute partnership property. This characteristic
distinguishes it from a
societas
universorum bonorum
,
in terms of which parties typically agree to contribute all their
property, present and future, in common.
[63]
It
is further trite law that a universal partnership does not require,
for its formation, an express agreement. It may be
found to
have come into existence by tacit agreement, by having regard to the
manner in which the parties conducted themselves,
and by employing
the usual civil standard of a balance of probabilities. It was
clearly stated in the
Mühlmann
v Mühlmann
decision
[2]
that the true enquiry is simply whether it is more probable than not
that a tacit agreement had been reached - the Appellate Division
held
that it was not correct that such an agreement should be consistent
with no other reasonable interpretation of the parties’
conduct. The Court also held that whilst it is well-known that
many wives work in the businesses of their husbands, unless
a wife
has rendered services manifestly surpassing those ordinarily expected
of a wife in her situation, a Court will not easily
be persuaded to
infer a tacit agreement of partnership between the spouses
[3]
.
[64]
The
facts of the present matter have some aspects in common with the
well-known decision in
Fink
v Fink
[4]
.
The
Fink
case also arose from a dairy business which was commenced and
conducted jointly between the parties, except that the Finks were
married, albeit out of community of property, without accrual.
The Court considered that the parties contributed their money,
property, labour, services and skill to the joint venture or
partnership and that they pooled their joint efforts and resources,
and that at the time of their divorce it constituted a substantial
milk producing dairy business.
[65]
I
have also considered the decision in
Butters
v Mncora
[5]
,
in which matter the parties were also engaged but unmarried, having
lived together as husband and wife for some 20 years, and
had also
never expressly discussed the issue of a partnership between them.
In contra
-
distinction
to the facts in the present matter, Ms Mncora did not actively assist
in the business, but remained at home looking
after the children and
paying the household expenses with money provided by Mr Butters.
Nevertheless, the Supreme Court of
Appeal considered that on the
facts to have been her contribution. The SCA further held that
where the partnership enterprise
extends beyond commercial
undertakings, the contribution of both parties need not be confined
to a profit-making entity.
[66]
Taking all of
the aforegoing into account, I conclude that a universal partnership
did in fact exist between Sanet and Villet, and
that it constituted a
societas
universorum quae ex quaestu veniunt
.
From the evidence before me of the manner in which the parties
conducted themselves, I find that this partnership was entered
into
tacitly. I find that the partnership commenced when the parties
accepted Mr Coetzee’s offer to start a dairy
business on
his farm during the latter part of 1996. The partnership
terminated and dissolved when Sanet left the common
home at the end
of March 2012 and discontinued her involvement at the factory.
[67]
Regarding the
percentage share held by each party in the partnership, I considered
the contribution that each party made in terms
of finances, skill,
effort and time. As I mentioned above, I accept that the
substantial contribution which Mr Coetzee
made to assist his
daughter, without which none of this would have been possible, is to
be regarded as Sanet’s contribution.
Whilst she, in my
assessment, contributed more than Villet did towards the partnership,
I would fix their respective contributions
at 50% each, in accordance
with Sanet’s evidence that this was always the understanding.
I will now turn to a consideration
of the assets which comprised
assets of the partnership, and how these should be dealt with.
ASSETS
[68]
The house at
[........] was purchased by Villet at the commencement of the
parties’ cohabitation by means of 100% bond taken
over the
property in the amount of R249 000. The bond was
thereafter paid off whilst the parties were living and working
together, and from the income earned by the business that they
conducted. By virtue of Villet having drawn against the access
facility on this bond, and having taken out further bonds on the
[........] property during the various stages of the business,
the
amount of the bond liability increased over time to in excess of
R1 million.
[69]
Mainly because
the bond on this house was always paid from the income of the
business, and because they used the house as their
residential home,
(save for a period of approximately one year when they went to live
on the farm in order to conduct the first
dairy) I find that
this house formed part of the partnership assets. Over time, the
parties furnished, decorated and generally
improved the house.
It was their main residential home.
[70]
The purchase
of the cows for the first dairy may have been purchased with Villet’s
funds, although Villet did not disclose
any documentary evidence in
support thereof. She contributed what was left of her salary,
as well as the proceeds from the
Sasco
Provident Fund towards meeting various expenses of both the household
and the first dairy. In addition, it may be regarded
as her
contribution that the parties were able to stay for free with Sanet’s
parents and that Mr Coetzee made his whole
farm, his dairy
facilities and his skill and experience available to them.
[71]
The
Randfontein plot, which was purchased at the commencement of the
first dairy, deserves special mention. The Randfontein
plot was
clearly an asset of the partnership, and it enabled the cows kept by
both Mr Coetzee and by the partnership to graze
on the adjoining
land. The parties’ son, C. Jr., grew up on the farm
and learnt about dairy farming from his grandfather.
By all
accounts, dairy farming is the only occupational skill that he
possesses, largely being the result of the circumstances
under which
he grew up. He currently still lives with his grandparents, and
works on the farm and in the dairy with Mr Coetzee.
The
additional grazing provided by the Randfontein plot has been
incorporated into the dairy operation.
[72]
In order to
finance the purchase of the equipment for the Newlands shop, a
further bond was taken on [........], whilst the income
of the shop
was utilised towards the payment of rental for the premises.
Irrespective of what was spent by the parties on
the Newlands shop,
what they eventually earned from the sale thereof was paid into the
common bank account held in Villet’s
name. Both parties
thereupon lived off the proceeds of the sale until it was depleted.
The parties were then left with
the bonded property at [........] and
the amount of about R40 000 which they obtained by refinancing
the BMW vehicle, which
was registered in Villet’s name, to
Sanet. As far as the parties’ initial financial
contributions are therefore
concerned, at this point in time (before
the second dairy was commenced) this was cancelled out.
[73]
Bearing these
considerations in mind, I am of the few that fairness dictates that
the Randfontein plot, whilst being an asset of
the partnership,
should not be liquidated together with the other partnership assets,
but that a 50% interest therein should be
transferred by Villet into
Sanet’s name. This should provide some safeguard to C.
Jr’s interests, in that Sanet’s
consent would be required
for any sale thereof.
[74]
Apart from the
aforementioned assets, two luxury vehicles, a 2004 model Mercedes
Benz CLK Cab and a 2008 model Toyota Prado
VX AT vehicle were
purchased during 2008 by Villet, of which Sanet utilised the Prado
and Villet the Mercedes. Regardless
of the fact that these
vehicles were registered in Villet’s name, as the other assets
of the partnership were, the instalments
on these vehicles were
always paid from the partnership’s income. As Sanet
always drove the Prado vehicle whilst Villet
drove the Mercedes, I
consider it to be fair that Villet be ordered to register the Prado
in Sanet’s name, and to keep the
Mercedes.
[75]
During 2008,
the parties purchased another house in Goldman Street, situated at
[....], for the purpose of renting it out for a
profit during the
2010 Soccer World Cup, which was typically registered in Villet’s
name. The bond on the [....] property
was, similarly, always
serviced by the income of the partnership, which was, at that stage,
conducting the factory. Because
the partnership paid fully for
the [....] property as a result of the personal contribution of both
parties through the partnership,
and because it was bought to earn a
profit therefrom for the parties, I consider it also to comprise an
asset of the partnership.
[76]
There is no
doubt that the dairy business conducted by the partnership eventually
culminated in their purchasing of the factory.
The purchase of
the factory, which is situated at 25 Fourth Avenue, Florida,
included the land on which the factory was built,
as well as the
machinery, equipment and facilities from which the parties processed,
packaged and marketed their dairy products.
As mentioned above,
the assets of the factory are correctly recorded on the assets list
(at Bundle A, pp. 230-231), to which
should be added the profits
earned by the business for the year ending on 31 March 2012.
Whilst the purchase of
the factory was financed by means of a
personal loan in Villet’s name, the house at [........] was put
up as security for
the loan.
[77]
Having taken
everything into account, I find that Sanet had proved the existence
of the universal partnership that she claimed existed,
on a balance
of probabilities. She also proved that the partnership had
assets, which assets formed part thereof, and that
the
parties had an equal share therein. I therefore find that she
successful in this action, and in accordance with the normal
principle of costs following the result, I hold that Villet should
pay her costs. Having regard to Villet’s dishonourable
conduct towards Sanet, I would certainly have considered granting
costs against him on the attorney-and-client scale, had that
been
requested by the Plaintiff.
ORDER
[78]
In the result,
I make the following order:
1.
It is declared
that a universal partnership existed between the Plaintiff and the
Defendant, and that each of the parties held a
50% interest in such
partnership.
2.
It is declared
that the partnership was dissolved with effect from 31 March
2012 (“
the
date of dissolution”
).
3.
It is declared
that the following assets formed part of the partnership as at
the date of dissolution thereof:
3.1
the Randfontein plot;
3.2
the dairy business of the partnership styled Chanet Dairy, as
conducted at 25, 4
th
Avenue, Florida, inclusive of:
3.2.1
the movable and immovable assets of the diary business which appear
on the list of assets (on pp. 230-231 of the
Plaintiff’s
discovery bundle ‘A’);
3.2.2
the profits earned by the dairy business for a period of twelve
months preceding the date of dissolution;
3.2.3
the goodwill of the dairy business as at the date of
dissolution;
3.3
the immovable property situated at [........], Florida;
3.4
the immovable property situated at [....], Florida;
3.5
the Toyota Prado VX AT motor vehicle; and
3.6
the Mercedes Benz CLK 500 Cab vehicle.
4.
The said partnership assets are to be dealt with as follows:
4.1
The Defendant is ordered to take all steps necessary to transfer a
50% share in the Randfontein
plot into the Plaintiff’s name, in
order to procure that the Plaintiff is duly reflected as the co-owner
thereof, holding
an undivided 50% interest therein.
4.2
The Defendant is ordered to pay 50% of the value of the dairy
business, calculated as at 31 March 2012,
to the
Plaintiff. In this regard, the value of the dairy business is
to be determined by having regard
inter alia
to:
4.2.1
all the assets listed on the assets list (Bundle
‘
A’,
pp. 230-231); and
4.2.2 t
he
actual profit earned by the dairy business for the year ended
31 March 2012 of R550 239,79 as reflected on the
financial statements of Chanet Dairy, plus the cash received from
milk sales for the 2012 financial year which were not taken into
account in the said financial statements, and which are recorded on
the ‘
Winkelverkope
’
list (Bundle “A”, p.181);
4.2.3 the
goodwill of the dairy business, as a going concern, calculated as at
date of dissolution.
4.3
The Defendant is ordered to take all steps necessary to effect
transfer to the Plaintiff or her
nominee of the property situated at
[........], Florida, against and subject to the Plaintiff or her
nominee obtaining a bond on
the property for 50% of the amount which
was owing on the bond as at the date of dissolution. In the
event of the Plaintiff
or her nominee failing to obtain such a bond
within one month from date of this order, the Defendant is ordered to
pay to the Plaintiff
50% of the reasonable market value of the
said property, calculated as at the date of dissolution;
4.4
The Defendant is ordered to pay to the Plaintiff 50% of the
reasonable market value of the
property situated at [....],
Florida, calculated as at the date of dissolution;
4.5
The Defendant is ordered to deliver, and to transfer possession and
control of, the Toyota Prado
vehicle to the Plaintiff within one week
from the date of this order, and to effect transfer of ownership of
the said vehicle to
the Plaintiff within three weeks of the date of
this order.
4.6
The Defendant will be entitled to retain the Mercedes Benz vehicle as
his own, without reference
to the Plaintiff.
5.
It is further declared that the Plaintiff is entitled to payment of
25% of the profits of the diary
business, which were earned by the
dairy business as from the date of dissolution to the date of this
order. For purposes
of calculating such 25% share of the
profits:
5.1
any amounts which were expended by the Defendant in relation to this
action do not constitute
debts of the partnership, and are to be
disregarded for purposes of calculating the partnership's
profits;
5.2
the Defendant is ordered to make full and disclosure to the
Plaintiff, within one week of the
date of this of this order, of all
financial information and records, bank statements and other relevant
documentation relating
to the dairy business, from the date of
dissolution to the date of this order, supported by all underlying
documentation and records,
and accompanied by a calculation of what
he contends the profits of the dairy business comprised since the
date of dissolution.
6.
The respective values of:
6.1
the dairy business (in 3.2 and 4.2 above);
6.2
the [........] property (in 3.3 and 4.3 above);
6.3
the [....] property (in 3.4 and 4.4 above); and
6.4
the profits and goodwill of the dairy business (in 3.2.2, 3.2.3 and 5
above);
will
be determined either by agreement between the parties, to be reached
within one month of the date of this order, or failing
agreement
being reached, by a valuer to be appointed by the parties within a
period of two weeks thereafter. Should the parties
fail to
reach agreement on the appointment of a valuer within such two week
period, either of them may approach the South African
Council for the
Property Valuers Profession to appoint a suitable valuer in order to
perform a valuation of such assets.
The Defendant will make
payment to the Plaintiff of the amounts as determined within two
weeks of the date of determination.
7.
Pending effect being given to the aforegoing, the Defendant may not
encumber, dissipate or sell
any of the assets of the partnership, nor
may he deal with them in any manner which would expose them to the
risk of loss or damage.
8.
The Defendant is ordered to pay the Plaintiff’s costs of the
action.
__________________________
S.J.
BEKKER
Acting
Judge of the Gauteng Local
Division
of the High Court,
Johannesburg
Counsel
for the Plaintiff:
Adv. D. H. Wijnbeek
Instructed
by:
Wim Krynauw Attorneys
Counsel
for the Defendant:
Adv. D. Milne
Instructed
by:
C Bekker and Associates
Dates
of trial:
25 to 29 November 2013
8
to 10 April 2015
29
May 2015
Date
of judgment:
21 August 2015
[1]
1981(4)
SA 632 (W)
[2]
supra
,
at 634G
[3]
at
635B
[4]
1945
WLD 226
[5]
2012(4)
SA 1 (SCA)