Paruk N.O and Others v Commercial Properties (Pty) Ltd (10679/2012) [2021] ZAKZDHC 19 (18 June 2021)

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[2021] ZAKZDHC 19
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Paruk N.O and Others v Commercial Properties (Pty) Ltd (10679/2012) [2021] ZAKZDHC 19 (18 June 2021)

NOT
REPORTABLE
IN THE HIGH COURT
OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 10679/2012
YAKUB EBRAHIM
PARUK, N.O.
&
OTHERS
FIRST to SEVENTY THIRD
PLAINTIFFS
and
THE COMMERCIAL
PROPERTIES (PTY) LTD

DEFENDANT
Order
The
following order is made:
The
defendant’s exception to the plaintiffs’ replication is dismissed
with costs, including the costs of two counsel.
JUDGMENT
OLSEN J
[1]
This case has a long history in more than one sense.  The
factual matrix which
brings the plaintiffs to court has as its
foundation a contract concluded in 1924.  The action instituted
by the plaintiffs
commenced in 2012.  This is the third time
that this court has been asked to deliver a judgment in this case.
The trial
in the action has yet to commence.
[2]
At issue at present is an exception taken to the plaintiffs’
replication.  The
two judgments which preceded this one
concerned
(a)
an opposed application for the joinder of
additional plaintiffs, which was granted; and
(b)
a subsequent exception to the particulars
of claim which was not upheld.
[3]
A full account of the identity of the parties is more likely to
obfuscate than  elucidate
the issues which must be decided now.
It is enough to say that the plaintiffs in this matter constitute the
Paruk family.
The defendant may be a company, but it is one
under the
de facto
control of the Lockhat family.  In essence this case is about a
dispute between the Paruk family and the Lockhat family.
[4]
In brief, the plaintiffs present their case as follows in their
amended particulars
of claim.
(a)
In about 1924 the late E M Paruk and the
late A M Lockhat concluded an agreement of partnership or joint
venture (which has been referred
to as the “Newlands Partnership”)
for the purpose of their joint investment for profit in immovable
properties.  It was
agreed that they would jointly contribute to
the purchase price of property and would profit equally from the
development or resale
of property.  (A number of pieces of
property in the Sea Cow Lake area were involved.).
(b)
The purchased property would be registered
in the name of the defendant, a company of which A M Lockhat was the
sole shareholder and
director, but the accounting and administrative
functions of the Newlands Partnership would be performed in the
offices of  E
M Paruk.
(c)
The properties were purchased and the two
men complied with their obligations in terms of their partnership
agreement.
(d)
During about 1942 E M Paruk and A M Lockhat
died within three days of each other.  Following that the
Newlands Partnership was
in effect reconstituted between their
respective estates (with the defendant as a party to that
arrangement).
(e)
In August 1953 the Newland Partnership was
again reconstituted so that a Mr M M Paruk would have a 12.5% share,
resulting in a reduction
in the shareholding of the estate late E M
Paruk to 37.5%.
(f)
In June 1960 Mr M M Paruk died.  Again
the partnership was reconstituted, so that it was held by three
deceased estates, namely
that of A M Lockhat as to 50%, that of E M
Paruk as to 37.5%, and that of N M Paruk as to 12.5%.
(g)
The affairs of the Newlands Partnership
continued to be administered as contemplated by the agreement until
2006, up to which year
the administrative and accounting functions
had been performed in the offices of the late E M Paruk.  At
that stage the defendant
took over the administrative functions.
Until that time profits and losses were shared amongst the partners
according to their
proportionate shareholdings.
(h)
There has been no accounting to the
plaintiffs by the defendant for its management of the properties
and/or the proceeds thereof since
2006.  The link between that
conduct and the alleged decision made or disclosed in June 2012 by
the defendant to refuse to acknowledge
the existence of the contract,
is not spelt out in the pleadings.
[5]
On that basis the plaintiffs seek an order declaring the existence of
the Newlands Partnership
and that the properties which remain
registered in the name of the defendant vest in the partnership.
An account from the defendant
is also a claimed.
[6]
An alternative basis for the claim, and other and alternative
prayers, are not material
to the issues to be dealt with at this
stage.
[7]
The first 54 paragraphs of the defendant’s amended plea to the
plaintiffs’ particulars
of claim raise six so-called special
pleas.  Two paragraphs of the plea comprise the defendant’s
answer to what the defendant
calls the “individual paragraphs in
the particulars of claim”.  One contains four admissions and
the other states that everything
else is denied.
[8]
The principal of purpose of the replication is to address the first
special plea made
by the defendant.  The essence of the first
special plea is contained in paragraphs 5 and 6 of the plea which
read as follows.
‘
5.
The plaintiffs’ main claim is based upon two foundational premises:
(1) that the death
of a partner/joint venturer does not automatically
terminate the partnership/joint venture; and (2) that executors of
deceased estates
may conduct long-term partnerships/joint ventures
(the plaintiffs refer to the partnerships/joint ventures as “
the
Newlands Partnership
”).
6.
Both of these premises are wrong, as a matter of law, which means
that there is
no lawful foundation for the main claim.’
The
plea goes on to point out that an alternative claim, which I have not
described above, rests upon the second of these allegedly
false
propositions of law.  On that basis the defendant pleads that
the plaintiffs can have no relief in the action.
[9]
The correctness or otherwise of the two foundational premises
identified by the defendant
has already been debated in the
proceedings culminating in the two judgments of this court to which I
referred earlier.  The
effect of those judgments is as follows.
(a)
These issues of law raised by the defendant
have not been decided.
(b)
However, what has been decided is that the
action should go to trial for the purpose of establishing the facts
before determining
whether, on those facts, the (contested) legal
principles determine the outcome of the case.
During
the course of argument before me I put it to Mr
Harpur
SC,
who represented the
defendant/excipient, that it was not open to him to argue that in
these proceedings, an exception to the replication,
I could now
decide the legal principles raised in paragraphs 5 and 6 of the plea;
and thereby overturn the decisions already made
in the earlier
judgments that a decision on those legal principles must await the
trial.  As I understood it Mr
Harpur
SC
accepted that I had a correct
understanding of the position.
[10]
Only the bare bones of the facts of this case are revealed in the
pleadings.  The defendant’s
approach is that the conduct of
trade in partnership by an executor in his or her representative
capacity is absolutely forbidden
in our law; as a result of which
there is no need to go to trial in order to establish exactly what
happened over the long history
of the business relationship between
the Paruk and Lockhat families in order to apply the law to the
facts.  However, I take
the view that the common law applicable
to partnerships involving deceased estates is not necessarily as
clear as the defendant would
have it.  (See, for instance,
Torbet v Executors of Attwell
(1879) 9 Buch 195.)  As
pointed out by Mngadi J in the first of the two judgments I have
referred to earlier, the parties in
this matter “have had a unique
relationship based on trust which has endured for close to a
century”.  The learned Judge
went on to point to the fact that
the legal issues are complex.  I do not regard myself as
compromised in any way as a result
of being bound, in effect, by the
earlier rulings, to hold that the legal issues which are the
cornerstone of the defendant’s case
must be decided at trial.
[11]
For present purposes the plaintiffs’ replication may conveniently
be regarded as comprising two parts,
bearing the headings identified
by the defendant in its notice of exception.  The first part is
a plea of estoppel and the second
a plea for the development of the
common law.  These must be dealt with separately.
Estoppel
[12]
In brief, the plea of estoppel rests upon allegations of fact
detailed in the replication, to the effect
that at all material times
from 1942 to 2012 the defendant recognised and was actively involved
in what the replication calls the
“
de
facto
partnership or joint venture”
described in the particulars of claim, and thereby represented to the
plaintiffs that the relationship
of partnership relied upon the
plaintiffs existed throughout that period.  It is said that the
plaintiffs acted on the correctness
of that representation and in
doing so acted to their detriment if in fact, as it now contends, the
defendant can repudiate the existence
of that partnership
relationship.  As a result, say the plaintiffs, the defendant is
estopped from asserting as against the
plaintiffs either that the
de
facto
partnership did not exist, or
that, if it did in
de facto
form, that it did not exist because its existence was contrary to
law.  (In describing the replication of estoppel I have chosen
my own language to simplify matters, and confine the account to what
is relevant to the exception taken to the replication of estoppel.)
[13]
The notice of exception on the estoppel question is brief.  It
reads as follows.
‘
1.
The plaintiffs cannot invoke estoppel to create a cause of action
where none existed
before, as they seek to do in their replication.
“
Estoppel may only be used as a shield
and not a sword.
”  Hence it
cannot be used to establish a partnership or joint venture where none
existed.
2.
Even if estoppel could be used for this purpose (which is denied) the
replication
introduces estoppel as a fresh cause of action which is a
departure, is bad, and is excipiable.”
[14]
A succinct answer to this exception is to be found in the text under
the heading “Estoppel raised by
a plaintiff” in Amler’s
Precedents of Pleadings, 8 ed, ( LTC Harms).  Omitting
references to authorities it reads as follows.
‘
Estoppel
is not a cause of action.  Therefore, a plaintiff may not rely
on it in the claim, nor may a defendant rely on it in
a
counterclaim.  A plaintiff wishing to rely on estoppel must
plead it in the replication in reply to the defendant’s plea
where
reliance is placed on the true facts.
If
the plaintiff is aware at the inception of the litigation of the true
facts he or she must base the case in the particulars of
claim on the
facts as represented to him or her.  If the defendant pleads the
true facts, the plaintiff may rely on estoppel
in the replication.’
That
is what has happened here, certainly in so far as the defendant seeks
to deny the factual averments that the Newlands Partnership
was in
operation at least until 2012.
[15]
In their heads of argument counsel for the defendant sought to expand
somewhat on the grounds of exception
by contending that estoppel may
not be used “to make legal what would otherwise be illegal, or to
give effect to what was not permitted
or recognised by law”.
That argument does not fall within the ambit of the exception taken.
Entertaining it would involve
deciding the very legal questions which
I have identified above, and which are to be decided not now, but at
trial.
Development
of the Common Law
[16]
The second and alternative reply made by the plaintiffs to the
defendant’s plea rests upon the proposition
that the contracts
relied upon in the particulars of claim are found to be unlawful and
invalid under existing law.  On that
premise the plaintiffs
plead that the applicable law offends the spirit, purport and
objectives of the Bill of Rights and that the
common law should be
developed to permit and recognise the lawfulness and validity of the
contracts upon which the plaintiffs’
claim is based.  It is
pleaded that the law sought to be applied by the defendant is unfair,
unreasonable and unduly harsh.
The plaintiffs plead that where
a partnership relationship is continued after the death of a partner
through the estate of the deceased
partner, and the parties, being
unaware of the common law principle that such a partnership
relationship is not recognised, continue
with the partnership
enterprise, and the remaining partner or partners remain in
possession of the partnership assets, the common
law should in fact
recognise the validity of the partnership following the death of one
or more partners.  Not to recognise
the validity of such an
arrangement, plead the plaintiffs, is to offend the right to equality
and equal protection and benefit of
the law, the right to dignity of
the heirs and beneficiaries of the estates, property rights and the
right of access to court to
have any disputes arising from the
partnership resolved by application of law.
[17]
The exception under this heading reads as follows.
‘
3.
The plaintiffs have failed to meet the requirements for the
development of the common
law, in particular, those set out in
Mighty
Solutions [CC v Engen Petroleum Limited and Another
2016 (1) SA 621
(CC)] for at least the following reasons:
(a)
The plaintiffs do not specify adequately or
at all the common law position that the plaintiffs contend needs to
be “developed”,
and as to why it is bad or deficient and needs
development;
(b)
There is no analysis in respect of the
underlying reasons for the common law position;
(c)
There is no allegation that the common law
principle in question offends the spirit, purpose and object of the
Bill of Rights and
thus requires development;
(d)
The plaintiffs fail adequately or at all to
plead as [to] how the common law could and/or should be developed and
amended; and
(e)
There is no engagement with wider
consequences of the proposed change on that area of law.
(4)
Even if the replication does meet the requirements for development of
the common law
(which is denied) the replication introduces the
development of the common law as a fresh cause of action which is a
departure, is
bad, and is excipiable.’
[18]
Dealing with paragraph 4 of the exception first, I am in respectful
disagreement with the submissions
made in support of it.  There
is no new cause of action introduced by the replication.  The
cause of action is the original
one.  The replication is
designed merely to advance the proposition that the common law could
and should be developed in order
to recognise the legal validity of
the original claim.  There is no new debt or cause of action
involved.
[19]
As to paragraph 3 of the exception, I make the general comment that
the defendant is looking for more
in the pleadings than it is
entitled to expect.
[20]
The wording of paragraph 3 of the exception seems to be derived from
paragraph 39 of the judgment in
Mighty
Solutions
.  That paragraph reads
as follows.
‘
Before
a court proceeds to develop the common law, it must (a) determine
exactly what the common law position is; (b) then consider
the
underlying reasons for it; and (c) enquire whether the rule offends
the spirit, purport and object of the Bill of Rights and
thus
requires development.  Furthermore, it must (d) consider
precisely how the common law could be amended; and (e) take into
account the wider consequences of the proposed change on that area of
law.’
[21]
Taking the five grounds of complaint contained in paragraph 3 of the
exception in turn, my view of the
matter is as follows.
(a)
The common law position has been properly
identified by the plaintiffs.  It is the alleged invalidity of
contracts of the type
they contend for.  As to why it is bad or
deficient and needs development, the plaintiffs could have been more
explicit.
But everything is there.  The parties dealt with
one another, according to the plaintiffs, on trust and apparently
bona fide
for about 70 years before the foundation of their relationship was
challenged with a contention that at common law it was all invalid.
That challenges the underlying notion of good faith in contract law.
(b)
It is correct that the pleadings do not
canvass the subject of the rationale for the rule relied upon by the
defendant.  That
subject will clearly have to be considered by
the trial court, but it will nevertheless remain a legal question.
There was
no need to raise it in the pleading.
(c)
There clearly is an allegation that the
common law principle in question offends the spirit, purpose and
object of the Bill of Rights
and that it requires development for
that reason.
(d)
Here the complaint is that the plaintiffs
fail adequately to plead how the common law could or should be
developed.  There is
some merit in that, but I think it requires
too much of the pleader.  It is enough, in my view, that the
pleading asserts the
proposition that the common law should recognise
the validity of transactions of the type which have given rise to
this litigation,
and which are clearly identified in both the
particulars of claim and the replication.
(e)
It is correct that there is no “engagement”
with the wider consequences of the proposed change in that area of
law.  Again
that is a matter to be considered in legal
argument.  It has no place in a pleading such as the replication
in question.
[22]
I of course express no view on the quality of the claim to a
development of the common law.  That
is to be decided at trial,
once the scenario the plaintiffs contend for has been adequately
defined.  In my view the pleading
is adequate and not
susceptible to exception as contended for by the defendant.
[23]
In approaching the issues as I have above, I have considered and
applied the following principles extracted
from paragraphs 31 to 34
inclusive of the judgment in
Wilkinson
and Another v Crawford N.O. and Others
(CCT
130/19)
[2021] ZACC 8
(16 April 2021).
(a)
The development of the common law is
manifestly a legal issue as opposed to a factual one.
(b)
What needs to be considered is whether the
point (ie the development of the common law) is foreshadowed in the
pleaded case.
(c)
Is sufficient said so that it cannot be
contended that the question of the development of the common law will
be raised for the first
time in argument?  Put otherwise, is
there sufficient notice to the party of the case it will have to meet
so that it has the
opportunity to “present facts and material and
legal argument to meet that case”?
In
my view the replication on the issue of the development of the common
law does not fall at any of the hurdles set out above.
It
should not be overlooked, either, that when the issue between the
parties is a legal one, the mere assertion of the legal principle
relied upon is normally sufficient.  The argument in support of
the principle follows later.
I
make the following order.
The
defendant’s exception to the plaintiffs’ replication is dismissed
with costs, including the costs of two counsel.
OLSEN
J
Date
of Hearing:

Wednesday, 21 April 2021
Date
of Judgment:

Friday, 18 June 2021
For
the Plaintiffs:
Mr
VI Gajoo SC with Mr GD Goddard SC
Instructed
by:

Woodhead, Bigby Incorporated
Plaintiffs
Attorneys
92
Armstrong Avenue
La
Lucia
Durban
(Ref:
BJHI/tn/02P0105A2)
(Tel:
031 – 360 9700)
(Email:
thareshinin@woodhead.co.za
)
For
the Defendant:
Mr G Harpur SC with Ms C V Du Toit
Instructed
by:

Shaukat Karim & Co
Defendant’s
Attorneys
Suite
2B, 2
nd
Floor
Lincoln
House
30
Dullah Omar Road
Durban
(Ref:
MAYAT/nk/03C1000/115)
(Tel:
021 – 301 0285)
(Email:
shaukat@shaukat.co.za