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[2011] ZASCA 130
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Morar NO v Akoo and Another (498/10) [2011] ZASCA 130; 2011 (6) SA 311 (SCA); [2011] 4 All SA 617 (SCA) (15 September 2011)
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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 498/10
In the matter between:
ROSHAN MORAR NO
…..................................................................
Appellant
and
MAHOMED ASLAM OSMAN AKOO
….............................
First Respondent
THE TRUSTEES OF THE MAHOMED
ASLAM AKOO FAMILY TRUST
…................................
Second
Respondent
Neutral citation:
Morar NO v Akoo
(
498/10
)
[
2011] ZASCA 130
(15 September 2011)
Coram:
BRAND, MHLANTLA, MAJIEDT and WALLIS JJA
and MEER AJA.
Heard
:
26 August 2011
Delivered
:
15 September 2011
Summary:
Partnership – liquidator appointed by the court – powers
to be conferred on liquidator – whether court
may amplify
powers originally given to liquidator.
ORDER
On appeal from:
KwaZulu-Natal
High Court, Pietermaritzburg (K Pillay J, sitting as court
of first instance):
The appeal is dismissed with costs.
JUDGMENT
WALLIS JA (BRAND, MHLANTLA and MAJIEDT JJA and MEER AJA
concurring)
[1] Ordinarily when a partnership is dissolved the partners
themselves liquidate it, or cause it to be liquidated by one of their
number or by a third party chosen by them. The basis upon which the
liquidation is undertaken is agreed upon, whether in advance
in a
formal partnership agreement or at the time of dissolution. Sometimes
it is not possible for the partners to reach such an
agreement and
one or more of the partners seek the intervention of a court to
procure the appointment of a liquidator.
1
That happened in the present case and it resulted in Mr Morar’s
appointment as the liquidator of the partnership operating
a business
called Rollco. The order appointing him gave him detailed powers.
Mr Morar’s task has not been straightforward
and
accordingly he approached the high court asking for further powers to
be given to him. The application was heard by K Pillay J
and was dismissed. Mr Morar appeals with her leave to this
court. The issues raised by the appeal are whether it is competent
for the initial order to be varied and whether the relief Mr Morar
now seeks should be granted to him.
[2] In about 1986 the Osman family established the business known as
Rollco, as manufacturers of roof sheeting and processors and
suppliers of steel products. Mr Mohamed Aslam Osman Akoo, the
first respondent, was actively engaged in the management of
the
business, ownership of which lay with a family trust. During 1987 the
Moosa family became equal partners with the Osman family
in the
business, holding their 50 percent share through ten family
trusts. There is a dispute whether the Moosa family’s
involvement was purely as financiers of the business or whether they
were also to play an active role in managing the business.
Be that as
it may the business operated reasonably successfully and generated
profits, which were shared equally between the Osman
family trust and
the Moosa family trusts.
[3] Problems started to emerge in
2002 or 2003 when Mr Akoo’s brothers and father withdrew
from the business. There is
a dispute whether their interests in the
business were taken over by Mr Akoo, either personally or
through the medium of the
second respondent, the Mohamed Aslam Osman
Akoo Family Trust (the Akoo family trust), or whether a significant
portion of their
shares accrued to the various Moosa family trusts.
2
This appears to have marked the
beginning of a breakdown in relations between Mr Akoo, on the
one hand, and the representatives
of the Moosa family on the other.
It culminated on 24 February 2006 with Mr Akoo addressing a
letter to each of the Moosa
family trusts giving them notice of the
dissolution of the partnership with effect from 28 February 2006.
In a case beset
by disagreement the one point on which all the
parties agree is that this notice was effective to terminate the
Rollco partnership,
however constituted, with effect from
28 February 2006.
[4] On 15 October 2007, on the application of certain of
the Moosa family trusts, Msimang J made an order declaring
that
the partnership relationship subsisting between ten Moosa family
trusts and either Mr Akoo personally, or the Akoo family
trust,
under the name and style of Rollco Roofing Systems, to have been
lawfully dissolved with effect from 28 February 2006.
He
ordered the appointment of Mr Morar as liquidator and that from
the date of the order:
‘…
all
partnership property and assets, of whatsoever form or nature, and
regardless of the date of acquisition of such property or
asset by
the partnership or any of its partners, shall vest in the
liquidator.’
[5] Mr Akoo was directed to furnish the liquidator
and all the partners with a full and proper account of the
partnership business
and its assets and liabilities as at
28 February 2006 with supporting documents and vouchers. He
and a company, Rollco
Roofing Systems (Pty) Ltd, through
which Mr Akoo had been conducting the business since
28 February 2006,
were ordered to furnish the liquidator
with an account of the income and expenditure arising from the
operation of that business
‘alternatively arising from the use
of the assets of the partnership from 1 March 2006 to the date
of account’
including all supporting documents and vouchers, as
well as an accounting of the assets and liabilities of the company.
The liquidator
was directed to effect a final liquidation of the
partnership and make any distribution to the partners according to
the extent
of their determined interests in the partnership.
[6] Mr Morar has endeavoured to carry out his task
but has met with little success. Neither Mr Akoo nor Rollco
Roofing
Systems (Pty) Ltd have rendered a proper account as
required by the order. There remains no clarity as to the whereabouts
of the assets of the business or whether the business is still in the
hands of the company or has in effect been transferred to
another
company. In those circumstances Mr Morar sought and obtained an
order for the liquidation of Rollco Roofing Systems (Pty) Ltd.
Thereafter an enquiry in terms of the provisions of s 417 of the
Companies Act 61 of 1973 (the old Companies Act)) was convened
before
a retired judge. For reasons that are immaterial he raised a query
whether such an enquiry was competent. That resulted
in protracted
litigation between the liquidator and the present respondents that
was only resolved after the appeal before us had
been lodged. There
have been other legal proceedings involving the liquidator but with
little advantage in terms of achieving finality
with the liquidation.
[7] In the result Mr Morar ran short of the sinews
of war. He accordingly wrote letters to the different potential
partners
of the Rollco partnership asking for contributions. An
amount of R500 000 was forthcoming from the various Moosa family
trusts
but Mr Akoo and the Akoo family trust, without
expressly refusing to do so, provided nothing. Their refusal is the
subject of the first order sought by Mr Morar. In it he asks
that they be ordered to pay him an amount of R500 000 ‘for
the purposes of administering the estate of the partnership which
conducted trade under the name and style of Rollco Roofing Systems’.
To fortify the order in case of non-compliance he asks that if the
money is not paid to him within ten days of the order the sheriff
should be authorised to attach property sufficient, once sold, to
realise R500 000 and to pay that amount to him. Realising
also
that this may not prove to be sufficient if Mr Akoo and the
Akoo family trust continue to resist his attempts
to pursue
the liquidation, he also asks for an order that he may in the future
call upon the partners to make contributions to
him as required in
order to fund his work as liquidator and that they will be required
to comply with those calls for additional
funds.
[8] Together with the claim for that financial relief
Mr Morar sought an order for a detailed account from Mr Akoo
relating
to the partnership’s dealings with its major supplier.
He also asked for more extensive powers of interrogation in relation
to Mr Akoo and certain other individuals. The latter were said
by his counsel to be the most important aspect of the order
that he
sought. What he seeks is the power to appoint a senior advocate to
conduct an enquiry as if in terms of s 417 of the
old Companies
Act. Lastly he asked for authority to take out professional indemnity
insurance as an expense of the liquidation.
[9] Counsel for Mr Morar did not point
to any authority specifically supporting this relief. Instead he
submitted that it is
relief that can be granted by virtue of the
general principles of the
actio pro socio
‘
and “the wide equitable discretion”
given to a liquidator of a partnership’. Reliance was placed
upon the exposition
of the
actio pro socio
by Joubert JA in
Robson v Theron
3
and upon the judgment in
Brighton
v Clift
(2)
4
.
It is helpful to consider what was decided in these cases.
[10] Joubert JA surveyed the development of
the law from Roman times in regard to the
actio
pro socio
and summarised his conclusions in
the following terms:
‘
The
principles of the common law underlying the
actio
pro socio
may be conveniently summarised as follows:
1. 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.
2. 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.
3. Where neither the partnership agreement nor a
subsequent agreement between the partners 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.
Pothier,
op. cit.,
sec. 136.
4. 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.
Pothier, op. cit.
, sec. 162:
"Each of the former partners can alone demand a
distribution of the effects which remain in common after the
dissolution of
the partnership."
This obviously covers the situation where, after
dissolution of a partnership, a continuing partner retains possession
of a partnership
asset which has not been included in a distribution
of the partnership assets. Hence a retiring partner may institute
this action
against the continuing partner to claim a distribution of
the partnership asset in question.
5. 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.
6 The various modes of distribution of partnership
assets are fully dealt with by
Pothier, op. cit.
, secs. 161 -
178.’
[11] Two points are noteworthy about this
exposition of the general principles of the
actio
pro socio
. The first is that according to the
authorities the action is one that lies at the instance of one of the
partners for relief against
another partner, either during the
subsistence of the partnership or after its dissolution. A detailed
discussion is to be found
in
Voet
17.2.9
and 17.2.10
5
where it is said that the action is one in terms of
which one partner may claim against another:
(a) an account and a debatement thereof, either during
the subsistence of the partnership or after it has been terminated;
(b) delivery of a partnership asset to the partnership;
(c) the appointment of a liquidator to the partnership.
Other writers describe the
actio
in similar terms.
6
Pothier
7
says that:
‘
From
the obligations which arise out of the contract of partnership arises
the action
pro
socio
,
which each of the partners can maintain against his copartners, in
order to compel their fulfilment.
This is a personal action: it passes to the heirs and
other universal successors of each of the partners, who can maintain
that
action; and it may be brought against the heirs and other
universal successors of the partners, who are bound by it.’
None of the writers suggest that the
actio
is available to a liquidator once appointed to liquidate
a partnership. It is always available to the erstwhile partners, but
that
does not mean that the liquidator can invoke it. This undermines
the attempt by Mr Morar to rely on it for the relief he seeks.
[12] The second point is that the
references by Joubert JA to ‘a wide discretion’ are
not references to a discretion
vested in the liquidator nor are they
references to a discretion enjoyed by the court to invest the
liquidator with broad-ranging
powers. They refer to the discretion
enjoyed by a court either to appoint a liquidator or to order a
distribution of the partnership
property among the partners in some
other fashion. The discussion in the passage that follows of the
actio communi dividundo
refers
to a similar discretion. The learned judge said only that, when
former partners approach the court for relief under either
of these
actiones
,
the
court has a wide discretion to determine whether to appoint a
liquidator, or to order a division of the partnership property,
or to
order one partner to take over that property at a valuation with
payment of the appropriate share to the other or others.
That is
something very different from saying that the liquidator appointed by
the court has a wide discretion in regard to the
manner in which the
liquidation is carried out or from saying that the court has a wide
discretion to afford extensive powers to
the liquidator of a
partnership.
[13] The other authority on which reliance
is placed in support of the proposition that a liquidator has a ‘wide
equitable
discretion’ is the decision in
Brighton
v Clift
(2), supra. That concerned the
dissolution and winding-up of a firm of attorneys and the issue
before the court was whether a liquidator
should be appointed in the
face of opposition from the one partner. The judgment was accordingly
not concerned with the powers
to be granted to the liquidator, if
appointed, save in a passing fashion. Having decided that a
liquidator should be appointed
Macauley J dealt with his powers
in these terms:
‘
With
regard to the powers to be conferred on the liquidator, it seems to
me that it is not this Court's function to act as a liquidator
and to
anticipate problems which may present themselves to the liquidator at
a later stage. Doubtless, these will arise in any
liquidation, but
they are matters for the liquidator to decide and, in doing so, he
may seek the parties' concurrence in any course
he takes. Failing
their agreement, his decisions are open to objection by either party
with recourse to the Courts.
I
decline, therefore, to direct the liquidator in the manner sought in
paras. 2-6 inclusive of the amended draft order
.’
8
(Emphasis added.)
In the result the order the court made was confined to
one appointing the liquidator to wind up the partnership, realise its
assets,
collect the debts due to it, prepare a final account and
divide the assets between the partners after paying the debts and the
costs of liquidation.
[14] That judgment does not assist Mr Morar. The
judge was asked to make an order in very detailed terms, the
particulars of
which do not emerge from his judgment. He refused to
grant that order and instead granted an order appointing the
liquidator and
leaving it to the liquidator to determine how to go
about his task. He did so on the basis that it would be sensible for
the liquidator
to seek the concurrence of the parties to any
particular course of action in the knowledge that if they did not
agree with any
particular decision they might have recourse to the
court to challenge it. He did not suggest that a liquidator could
come back
to the court to seek additional powers of the type claimed
in these proceedings.
[15] In
Robson v
Theron
Joubert JA did not address in
detail the situation of a liquidator, no doubt because he decided
that such an appointment would
not be appropriate. His concern was
whether the
actio pro socio
or
the
actio communi dividundo
is
the appropriate remedy to resolve issues around the liquidation of a
partnership, or whether either one could be used.
9
The only passage in his judgment dealing with
liquidators reads:
‘
Van
der Linden
,
2.4.1.14, deals in some detail with the liquidation or winding-up of
a partnership. In doing so he relies heavily on the authority
of the
great French jurist,
Pothier
,
whose treatise on the law of partnership was regarded towards the end
of the eighteenth century as an authority of great weight
in the
Netherlands. This is not surprising since the French and Roman-Dutch
law of partnership are both founded on Roman law. See
Wessels,
History
of the Roman-Dutch Law
,
p. 652. His treatise was translated by
Van
der Linden
into Dutch:
Verhandeling
van het Recht omtrent Sociëteiten of Compagnieschappen
and has been regarded by our Courts as an important authority in this
branch of the law. In order to obviate repetition I intend
to follow
up what
Pothier
has to say on the subject.
Pothier
in his
Treatise on the Contract of
Partnership
(translated by
Owen Davies Tudor
) affirms the
twofold purpose of the
actio pro socio
, viz. to implement the
terms of the partnership agreement and to dissolve it.’
10
This only deals in passing with the process of
liquidation and provides no support for the contentions on behalf of
Mr Morar.
The learned judge was simply not concerned with the
powers to be afforded a liquidator appointed to liquidate the
partnership.
[16] I have found nothing in the old
authorities to justify the notion that the court has a discretion to
grant wide-ranging powers
of administration to the liquidator of a
partnership to be exercised in the course of liquidating the
partnership. The leading
writers on the topic of partnership among
the old authorities barely mention the topic of the appointment of
liquidators and their
powers. The reason appears to be that in many
places local ordinances provided that disputes about liquidation
should be referred
to arbitrators. By way of example, in the passage
cited by Joubert JA in support of paragraph 3 of his summary of
the elements
of the
actio pro socio
,
Pothier
refers to the
applicable French ordinance when he says;
‘
For
this end, the Ordonnance of 1673,
tit
4. art 9., provides that all contracts of partnership should contain
the clause of submission to arbitration upon all disputes
which may
arise amongst partners on account of the partnership, and that where
that clause has been omitted, it should be supplied.’
[17] It would be unwise, in the absence of full argument
on the source of the court’s power to appoint a liquidator to a
partnership,
to make a definitive finding as to the full extent of
the powers that a court may vest in the liquidator of a partnership.
It is
sufficient to deal with certain basic principles and in the
light of those to assess the specific powers that the liquidator
seeks
in this case and determine whether they can or should be
granted.
[18] When the court appoints a liquidator for a
partnership it is remedying the failure of the partners to attend to
the liquidation
of the partnership by agreement. Such failure may
arise from disagreement over the need to appoint a liquidator, or
over the identity
of the liquidator or the powers that the liquidator
should enjoy. That being so it is logical to take as one’s
starting point
the powers that the partners could themselves confer
by agreement, if they were not in a state of hostilities. The court
is then
asked to do no more than resolve a dispute between the
partners over the appointment of the liquidator or over the
liquidator’s
powers. It does so in a way that the parties
themselves could have done. The disagreement arises in consequence of
the one partner
refusing to agree to the liquidator being appointed
or the liquidator having a particular power and that can be
characterised as
a breach of the obligations of co-operation and good
faith that are central to all partnerships. The court is then merely
enforcing
the contractual obligations of the partners themselves.
[19] Once the court is asked to go beyond this it is
necessary to identify a source of its power to do so. That is central
to the
rule of law that underpins our constitutional order. Courts
are not free to do whatever they wish to resolve the cases that come
before them. The boundary between judicial exposition and
interpretation of legal sources, which is the judicial function, and
legislation, which is not, must be observed and respected. In this
case no such source was identified.
[20] In argument it was submitted that the
appointment and functions of the liquidator of a partnership are
largely equivalent to
those of the liquidator of a company under the
old Companies Act. However the analogy is false. Unlike partnerships,
companies
only exist under the legislation under which they are
constituted, which governs their creation, operation and liquidation.
Although
in some jurisdictions partnerships are regulated by statute
11
that is not the case in South Africa. In our law the
general approach to partnerships is that their creation, operation
and dissolution
depends upon the terms of the agreement concluded by
the partners. If there are disputes at any stage of the relationship
those
are resolved by the courts under the general rules governing
contracts and in terms of the
actio pro socio
.
Whatever policy reasons might exist for bringing about some degree of
equivalence between partnerships and companies, the legislature
has
not done so.
[21] Turning specifically to the relief
claimed by Mr Morar, in para 7.19 of the original order
granted by Msimang J,
he had been authorised to direct any of
the partners to attend on him at his offices in order to answer such
questions as he might
raise in relation to any of the affairs and
assets of the partnership.
12
In these proceedings he seeks an order authorising him
to employ attorneys and counsel for the purpose of examining any of
the partners,
their servants or representatives suspected of being in
possession of property of the partnership or of being indebted to the
partnership
or who is deemed capable of giving information concerning
the trade, dealings, affairs or property of the partnership. To that
end he also sought an order authorising him to engage the services of
a senior advocate to preside over ‘such examination
or
interrogation’ with the same powers
mutatis
mutandis
as a person appointed to conduct an
enquiry in terms of s 417 of the old Companies Act. Some of
those powers were spelled out
in the draft order and they included
the power to summon witnesses, compel discovery, administer an oath
and both question and
allow such person to be interrogated. There are
legal difficulties in regard to the power of the court to grant such
orders and,
if granted, there would be practical difficulties in
enforcing them.
[22] The legal difficulties arise because
it is debatable whether and to what extent it is competent
contractually to invest an
individual with certain of the powers
conferred upon a functionary by statute.
13
The practice of conferring upon receivers under offers
of compromise in terms of s 311 of the Companies Act 61 of 1973
the powers of a liquidator
mutatis mutandis
was described by Milne JA as ‘indiscriminate
borrowing
mutatis mutandis
of
a liquidator’s general armoury’ which led to “unforeseen
problems and disputes’.
14
In
Gunn & another NNO v
Victory Upholsters (Pty) Ltd
15
Didcott J dealt with a similar clause and said that it
could not mean that literally all the powers of a liquidator were
included.
Among those he specifically said were excluded
16
was the power to interrogate the directors of the
company about their management of it prior to liquidation.
[23] The practical difficulties reinforce
the legal ones. They are illustrated by certain questions posed to
counsel in the course
of argument. What if a person does not attend
in response to a summons to appear at such an interrogation? What
happens if they
decline to take an oath or make an affirmation? Can
they refuse to answer questions? What are the consequences if they do
so? If
they lie in the course of such an interrogation does that make
them liable for the penalties attaching to the crime of statutory
perjury? No satisfactory answer was forthcoming. In the case of
companies the answers are reasonably clear and flow from the terms
of
the statute. The questions are important because the successful
conduct of an interrogation depends upon there being answers
that
govern these situations. It is also necessary that there be answers
to them because the conduct of such an interrogation raises
constitutional issues in view of its potential to infringe
constitutionally protected rights such as the right to dignity and
the right to privacy.
17
In my view there is no satisfactory answer to these
questions and that poses insuperable practical problems to the grant
of these
powers.
[24] If the court were to give these powers to the
liquidator a curious and untenable situation would result. It is
illustrated
by the following example. Assume that a partnership
business has closed because of financial difficulties without any
rift between
the partners. They believe that the source of their
financial difficulties was the dishonesty or negligence of a former
employee.
They wish to interrogate the employee in order to confirm
their suspicions. They cannot by agreement appoint a liquidator with
the power to conduct an interrogation and if they do the employee can
disregard such an appointment. Nor can they ask the court
to conduct
an interrogation on their behalf. Courts in this country do not have
a general power to interrogate people. Yet, if
the proposition on
behalf of Mr Morar is correct, the partners can overcome these
difficulties by applying to the court for
the appointment of a
liquidator and asking the court to vest the liquidator with the power
to conduct an interrogation. That cannot
be correct. It would mean
that although neither the court nor the partners are entitled to
conduct an interrogation, they are able
to bring one about by the
simple expedient of the court appointing the liquidator and granting
an order such as that sought in
this case.
[25] For those reasons K Pillay J
was correct to refuse to grant Mr Morar the powers of
interrogation that he
seeks. The power to order an interrogation is
an exceptional power
18
and I can find no basis upon which it is one that courts
can confer upon liquidators of partnerships. If that is a shortcoming
the
remedy must lie in legislation.
[26] The second aspect of the application is the prayer for a
contribution to the costs of administration of the liquidation of
the
partnership in an amount of R500 000, together with the power to
call upon the partners in future to make further contributions
if
that is needed. The primary reason for seeking these funds is that
Mr Morar contemplates litigation that will be both ‘complex
and controversial’ and ‘time consuming and expensive’.
It is apparent from the founding affidavit that the primary
target of
this litigation will be Mr Akoo or entities controlled by him,
such as the Akoo family trust.
[27] Once again no authority was proffered
for this order beyond the suggested wide equitable discretion, the
existence of which
I have already rejected. Apart from the provisions
in rule 43 for the court to order a contribution towards costs in
relation to
pending matrimonial proceedings, I am not aware of any
circumstance in which our law permits a party to proposed litigation
to
obtain from the intended other party a contribution towards the
costs of that litigation.
19
[28] This case illustrates how inappropriate it would be
for such an order to be granted. The liquidator seeks a contribution
on
the basis that Mr Akoo and the Akoo family trust are partners
to the extent of 50 per cent in Rollco. However that
is
disputed by the Moosa trusts, which claim that the Akoo family trust
is not a partner at all and that Mr Akoo’s share
is
limited to an approximately 20 per cent share, whilst they hold the
balance. Plainly some at least of the intended litigation
will be
directed at this issue. If the assertion by the Moosa trusts is
rejected then Mr Akoo and the Akoo family trust will
have had to
pay half the costs of running litigation against themselves in which
they have been successful. What is more there
is then little
likelihood that they will be able to recover their costs from
Mr Morar. If it transpires that the Moosa trusts
are correct and
Mr Akoo’s interest is only 20 per cent, on what basis will
he have had to provide half the costs of
establishing that?
[29] At this point the analogy between the
liquidator of a partnership and the liquidator of a company is
abandoned. In the case
of a company the liquidator must go to the
creditors if financial assistance is needed in order to pursue
litigation and obtain
contributions from them. Here the beneficiaries
of the proposed litigation would be the Moosa family trusts. Why then
should they
not be required to provide the finances for litigation if
they wish to assert rights against their erstwhile partner? Indeed
one
wonders why they do not institute the proceedings themselves
instead of leaving it to Mr Morar. The question of the identity
of the partners and the extent of their respective interests in the
partnership is pre-eminently an issue to be resolved among
the
partners by way of proceedings under the
actio
pro socio
.
[30] To multiply examples of the problems with this
claim would be to heap Pelion upon Ossa. The court does not have the
power to
make such an order and it was rightly refused by K Pillay J.
[31] The next issue relates to the prayer for a detailed account in
respect of Rollco’s dealings with its principal supplier.
It
can be disposed of simply. Firstly such an obligation already exists
under the order granted by Msimang J. Secondly a corresponding
order was made against the supplier without opposition and there is
no reason to believe that it will not be complied with. Such
an order
is accordingly unnecessary.
[32] That leaves only the prayer in relation to procuring
professional indemnity insurance. There is no need for such an order
to be made. If Mr Morar reasonably requires professional
indemnity insurance in order to carry out the liquidation of the
Rollco partnership then he is entitled to take out such insurance and
in due course recover the premium as a cost of administration.
If he
does not reasonably require such insurance for the purposes of
administration then the costs of his taking out such insurance
are a
personal expense and cannot be debited to the partnership or its
members. The court cannot alter that situation. Mr Morar
must
make up his own mind on this question and act accordingly. He does
not need an order of court to do so.
[33] For those reasons the high court was correct to
dismiss the application and the appeal must be dismissed. Although
two counsel
appeared in the appeal the costs of two counsel were not
sought in the heads of argument and only one counsel appeared in the
high
court. The matter was not so complicated as to warrant the
employment of two counsel. The appeal is dismissed with costs.
M
J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant: A J Dickson SC
Instructed by
Schoerie & Sewgoolam Inc, Pietermaritzburg
McIntyre & Van der Post, Bloemfontein
For respondent: N A Cassim SC (with him D Rhamdani)
Instructed by
Abbas Latib & Co, Pietermaritzburg
Honey Attorneys Inc, Bloemfontein.
1
Invoking
for that purpose the
actio pro socio
the nature of which was
described by Joubert JA in
Robson v Theron
1978 (1) SA 841
(A) at 855H-856G.
2
This
dispute may be affected by a further judgment by Msimang JP handed
down on 22 June 2010 in which he held that the Akoo family
trust
could not legally have entered into the partnership agreement as on
the relevant date its trustees (Mr Akoo and his wife)
had not been
issued with letters of authority to act as trustees of the trust in
terms of s 6 of the Trust Property Control
Act 57 of 1988.
There is other litigation pending that may also have a material
impact upon whether any such partnership ever
existed, the identity
of the partners and the effect of the order referred to in para 4.
The present proceedings were brought
and decided prior to the second
order by Msimang JP and prior to the commencement of the other
litigation and will be decided
without reference to them.
3
At
855H-856G
4
Brighton
v Clift
(2)
1971 (2) SA 191
(R) at 193B-D.
5
The
Selective Voet being the Commentary on the Pandects of Johannes Voet
(Gane’s translation), Vol 3.
6
Van
der Linden
, Institutes of Holland
(Juta’s translation)
2.4.1.11; Van der Keesel
, Select Theses on the Laws of Holland
and Zeeland
(Lorenz’s translation)
,
700 and 701;
Van Oven’s
Leerboek van Romeinsch Privaatrecht
(3
rd
ed)(1948) at 280
et seq
.
7
Pothier,
A Treatise on the Law of Partnership
(translated by Owen
Davies Tudor, 1854) section 134.
8
At
193B-D.
9
See
the discussion at 850C-854D. His conclusion following
Pothier
,
was that both remedies are available to be invoked in appropriate
circumstances.
10
At
852D-G.
11
As
in the United Kingdom.
12
I
leave aside any consideration of whether this order was itself
competent or how it would operate if all the partners were trusts,
as might have been the case on one of the factual scenarios before
the learned judge.
13
South
African Fabrics Limited v Millman NO & another
1972 (4) SA
592
(A) at 600E-G, citing
South African Board of Executors &
Trust Co. (In Liquidation) v Gluckman
1967 (1) SA 534
(A) at
541F-H.
14
Morris
NO v Airomatic (Pty) Ltd t/a Barlows Airconditioning Co.
1990
(4) SA 376
(A) at 401F-G. This was a slight alteration of what
Didcott J had said in
Ex parte Trakman NO: In re Dumbe Motel
(Pty) Ltd
1978 (1) SA 1082
(N) at 1084 C-D.
15
Gunn
& another NNO v Victory Upholsters (Pty) Ltd
1976 (1) SA 127
(D) at 135B-D
16
Approving
counsel’s concession to this effect.
17
Ferreira
v Levin NO & others; Vryenhoek & others v Powell NO &
others
[1996] ZACC 27
;
1996 (2) SA 621
(CC);
Bernstein & others v Bester
& others NNO
[1996] ZACC 2
;
1996 (2) SA 751
(CC).
18
In
re North Australian Territory Company
(1890) 45 Ch D 87
at 93
per Bowen LJ.
19
Cases
where security for costs may be ordered are different because they
are merely cases of providing security against the possibility
of
the party furnishing such security having an adverse costs order
made against it.