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[2019] ZAGPPHC 227
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Liebman v Liebman and Others (22282/19) [2019] ZAGPPHC 227 (6 June 2019)
IN THE HIGH COURT OF SOUTH
AFRICA
GAUTENG DIVISION, PRETORIA
CASE
NUMBER: 22282/19
DATE:
6 June 2019
ATHOLL
DAVID VICTOR LIEBMAN
Applicant
V
BRADLEY
BRETT LIEBMAN
First Respondent
BRADLEY
BREIT LIEBMAN N.O.
Second Respondent
ALFREDO
FIGUEIREDO PEREIRA CAMPOS
Third Respondent
ALFREDO
FIGUEIREDO PEREIRA CAMPOS N.O.
Fourth Respondent
CAMPOS
ATIORNEYS
Sixth Respondent
POLLlCK
PROPERTIES (PTY) LTD
Seventh Respondent
GOLDEN
WEDGE PROPERTIES (PTY) LTD
Eighth Respondent
KEN
LIEBMAN PROPERTIES (PTY) LTD
Ninth Respondent
ATHERB
INVESTMENTS (PTY) LTD
Tenth Respondent
VILLA
RIVAGE (PTY) LTD
Eleventh Respondent
NYAKAZA PROPERTY DEVELOPMENT
(PTY) LTD
Twelfth Respondent
PANAWAY PROPERTY DEVELOPMENT
(PTY) LTD
Thirteenth
Respondent
GREAT SPACE TRADING (PTY) LTD
Fourteenth Respondent
OUR GARDEN PROPERTIES (PTY) LTD
Fifteenth
Respondent
SWEET LOFT PROPERTIES (PTY) LTD
Sixteenth
Respondent
GOLD ALIAS INVESTMENTS (PTY)
LTD
Seventeenth
Respondent
ABSA BANK LIMITED
Eighteenth Respondent
STANDARD BANK LIMITED
Nineteenth
Respondent
NEDBANK LIMITED
Twentieth
Respondent
MERCANTILE BANK
LIMITED
Twenty First Respondent
INVESTEC
BANK LIMITED
a division of FIRST RAND BANK
LIMITED
Twenty Second
Respondent
JUDGMENT
MABUSE
J:
[1]
In this matter the Court is required to
decide the following issues:
1.1
whether a partnership, as alleged by the
applicant, does exist between the applicant and the first respondent;
1.2
whether the applicant has shown that he
is entitled to an order dissolving the partnership;
1.3
whether the relief ancillary to the
dissolution as formulated is appropriate.
On the basis of the principle of
the law as set out in Pillay v Krishna and Another 1946
AD 946,
that:
''He who asserts, proves and
not he who denies since a denial of a fact cannot naturally be proved
provided that it is a fact that
is denied and that a denial is
absolute."
[p.
952], the duty rests on the Applicant to prove the existence of a
Partnership.
[2]
Having
obtained an interim order against the Respondents on 8 March 2019 the
Applicant, in this matter, Mr Atholl David Victor Liebman,
a major
male businessman who resides at 207 Walton Heith, 20 Jacobs, lllovo,
Johannesburg, seeks the following relief against,
in particular, the
First Respondent, Bradley Brett Liebman, a major male businessman who
resides at 17 Windsor-On-Vaal, Lock Vaal,
Van Der Bijl Park:
2.1
''(a) an order that the
partnership between the Applicant and the First Respondent in
relation to the purchase, holding, selling
and/or letting of
immovable property (as more fully described in the founding
affidavit) (the partnership) be dissolved,·
(b)
that the liquidator be
appointed with authority
(i)
to realise the assets of the
partnership·,
(ii)
to liquidate the liabilities of
the partnership;
(iii)
to prepare a final account of the
partnership business·, and,
(iv)
to pay to the Applicant half the
net assets of the partnership."
[3]
To
crystallise the issues in dispute it is the Applicant's case that
there exists between him and the First Respondent a Partnership.
On
the other hand the First Respondent denies that there is any
Partnership between him and the Applicant.
[4]
The
affray in this application is, strictly speaking and despite the
citation of numerous Respondents, between the Applicant and
the First
Respondent. Sad as it is, it is between a father and his son. The
Applicant is the First Respondent's father.
[5]
The
major reason for seeking the current relief is, according to the
Applicant, that the relationship between him and the First
Respondent
has deteriorated to such an extent that they are unable to cooperate
with each other in any meaningful way. Because
of the fraught
relationship between them, they are unable to advance the affairs of
the partnership.
[6]
The
Applicant has one serious grievance against the First Respondent.
That grievance is, as he puts it, that the First Respondent,
who is
his partner, transferred millions of rand out of various business
bank accounts in the circumstances where this was against
his, the
Applicant's, wishes and against his legal interests. These transfers
took place shortly before 8 March 2019.
[7]
The
Applicant calls the relationship between him and the First
Respondent, the relationship that has deteriorated, a partnership.
He
claims that he has, since 1996 or 1997, when he gave the First
Respondent a full half share in the business known as Liebman
Group
and its constituent parts, and made him his partner. He claims
furthermore that since then, he and the First Respondent have
been
having a tacit partnership. It is common cause between the Applicant
and the First Respondent that they did not conclude any
written
agreement of partnership.
[8]
The
Applicant testified that to the best of his knowledge the Joking
Trust, the JRSM Trust, the Libvic Trust, the Randace Trust,
the
Renaissance Trust, the Seajon Trust, the Spilvic Trust, the Vicmail
Trust and the K&RL Trust, as well as the Sixth to the
Sixteenth
Respondents ("the companies"), all of them private
companies with limited liabilities, are still among the
business
entities that comprise the Liebman Group. He testified furthermore
that he does not presently know exactly what business
entities
comprise the Liebman Group and whether there are also other such
business entities or not. He says the persons who know
what entities
comprise the Liebman Group are the First Respondent and the Third
Respondent.
[9]
According
to him some of the companies that form part of the business entities
that comprise the Liebman Group are the owners of
immovable
properties. These immovable properties are let to the tenants. It is
through letting of these immovable properties to
tenants that a
profit is generated. The Eighth Respondent functions as the operating
company which exercises control and administration
over the letting
of these immovable properties. A major part of the partnership
consists of the business of fulfilling leasing
tenders that are
advertised in the Government Gazette. In that manner, quite a number
of commercial properties are occupied by
State entities such as the
Department of Home Affairs and the Municipality.
[10]
According to the Applicant the business entities that comprise the
Liebman Group are also the owners
of the bank accounts with various
commercial banks in the Republic. These commercial banks are the
Seventeenth to Twenty Second
Respondents herein. As indicated above,
the Applicant does not presently know exactly what other bank
accounts may exist. According
to him the persons who know what bank
accounts exist are the First Respondent and the Second Respondent.
[11]
The
First Respondent disputes the Applicant's version. He denies that any
partnership exists between him and the Applicant. He testifies
that
he and the Applicant have chosen to regulate their business affairs
by electing corporate structures of the same and the manner
in which
such corporate structures would be controlled. According to the First
Respondent he and the Applicant elected to become
directors of the
companies, and for such companies' shareholding to be held in equal
shares by the following trusts:
11.1
50%
of the shareholdingin the companies, (save for Atherb and Nyakaza)
are held by K&RL Trust. The trustees of the K&RL
Trust are
the Applicant, Jaqueline and Dianne Jennifer Prager. The
beneficiaries of this trust are the Applicant, Jaqueline, Dianne;
11.2
The
other 50% shareholding in the companies, (save for Atherb and
Nyakaza) are held by the Brett Bradley Liebman Trust ("the
BBL
Trust"). The trustees of this trust are the First Respondent,
his wife and Andrea Liebman and the Third Respondent, attorney
AFP
Campos. The beneficiaries of this trust are the First Respondent, his
wife and the children.
The Applicant does not deny this
statement by the First Respondent. He actually makes it even clearer.
According to him, the corporate
structure that the First Respondent
referred to is a loose grouping of property holding companies,
shareholding trusts and operating
companies. He confirms that the
business entities constitute the business entities that comprise the
partnership between him and
the First Respondent. He contends
furthermore that the only thing that binds this loose grouping of
property holding companies,
shareholding trusts and the operating
company is the partnership between him and the First Respondent.
[12]
According to the First Respondent, in respect of Nyakaza, both the
K&RL Trust and the BBL Trust
own 19% of the shares each. The
remainder of the shares are held by two BEE partners, a Mr J Ndwandwe
and a Mr JH Mkhabela. The
shareholding of Atherb is owned by a close
corporation, OVH Unit 12 CC. The members' interests of the close
corporation are held
by the Applicant and the First Respondent in
equal shares in their personal capacities.
[13] The
Applicant has not attempted to dispute the First Respondent's
evidence relating to the structures
of the companies and trusts. In
the premises it is inevitable that this Court will, and does, accept
that the Applicant admits
the evidence of the First Respondent in
regard to the shareholding, the companies and the trusts structures.
[14] The
Applicant states that notwithstanding the corporate structures
involved he insists that the First
Respondent and him have been
de
facto
equal partners in the Liebman Group, since the First
Respondent joined him as his partner. He relies, in this regard, on,
inter alia,
a copy of an email dated 26 November 2007 annexed
as Annexure 'ADVL4' to his founding affidavit. This is an email that
the First
Respondent wrote to the Applicant in which he stated:
''Mom is not my business
partner, you are, and she will not accept this.
"
Furthermore he relies on the
following circumstances:
14.1
he
and the First Respondent have never concluded a formal written
partnership agreement with each other and have not considered
it
necessary to do so;
14.2
he
and the First Respondent have over the years conducted all
partnership business with each other orally and on handshakes and
never reduced their partnership decisions to writing;
14.3
he
and the First Respondent have always acknowledged each other in the
conduct of the partnership business and looked after each
other's
interests therein;
14.4
the
business of the partnership, according to him, was always conducted
in concert between the First Respondent and him to the benefit
of
both of them as partners and with each one of them sharing equally in
the profits and/or losses;
14.5
as
they are family and as they had a strong trust relationship they
never checked up on each other. They both trusted that what
the other
was doing was in the best interests of the partnership;
14.6
as
partners the First Respondent and him always acknowledged each
other's right to take part in all management decisions concerning
the
partnership;
14.7
both
the First Respondent and him were always signatories on all the
relevant bank accounts of the business entities that comprise
the
Liebman Group. Either of them could conduct a banking transaction
without express approval or authorisation of the other.
[15]
He
submits, on the strength of the aforegoing, that a tacit partnership
agreement came into existence during or about 1996 or 1997
between
him and the First Respondent with the following material terms:
15.1
the
First Respondent and him would be equal partners in the Liebman
Group;
15.2
the
First Respondent and him would contribute equally to the management
of the business of the partnership which entails the purchasing,
holding, selling and/or letting of property;
15.3
the
purpose of the partnership would be to carry on a business for the
joint benefit of both parties, with joint object of making
profit;
and
15.4
the
First Respondent and him would be entitled to an equal share of the
profits generated by the partnership and an equal share
of the net
assets of the partnership upon dissolution.
[16]
He
testified furthermore that the entity that holds his half share of
the Partnership is the K&RL Trust. He acknowledges furthermore
that the entity that holds the First Respondent's half share of the
Partnership is the BBL Trust.
[17]
It
is quite clear that the Applicant relies on a tacit contract of
partnership. Relying on the case of Minister of Human Settlements,
Western Cape Provincial Government v Penhill Residents Small Farmers
Cooperative Ltd and Others
[2016] JOL 36052
(SCA) paras [25] to [27],
counsel for the Applicant argued that:
''A
Court may hold that a tacit
contract is established where, by a process of inference, it
concludes that the most plausible probable
conclusion from all the
relevant proved facts and circumstances is that a contract came into
existence.
"
[18]
Now what are those facts and
circumstances, according to the Applicant, upon which an inference
falls to be drawn that a tacit Partnership
was concluded between the
Applicant and the First Respondent? These facts and circumstances
are, as argued by counsel for the Applicant,
inter
alia,
that:
18.1
a failure to deny the Partnership in a
letter emanating from the Respondent's attorneys;
18.2
the First Respondent's own statement
that he is the Applicant's partner;
18.3
the First Respondent's continued
reference to the business entities comprising the partnership
collectively a group or the Liebman
Group or simply "the
business" and not individually;
18.4
the absence of a formal corporate
structure overarching the business entities comprising the
partnership other than the partnership;
18.5
the absence of holding and subsidiary
companies which with cross shareholding and group financial
reporting, as one would ordinary
find in a company groupings;
18.6
the fact that all control was exercised
by the Applicant and the First Respondent;
18.7
the fact that the Applicant's and the
First Respondent's decisions as directors and trustees of the
business entities comprising
the partnership were always guided by,
and determined by, their decisions as partners;
18.8
the fact that the Applicant and the
First Respondent did not conduct the affairs of the business entities
comprising the partnership
in a strictly formal manner, it was rather
with a lax attitude towards the separate corporate personalities or
identities of these
entities;
18.9
the First Respondent's own conduct
towards the partnership bank accounts;
18.10
the opinion of attorney David Kotze who
was the group attorney for more than ten years and who had ample
opportunity to observe
the workings between the Applicant and the
First Respondent that formed what he observed the Applicant and the
First Respondent
to behave towards each other in relation to the
business as if they were partners;
18.11
the First Respondent disputes the
testimony of the Applicant that the First Respondent and him have
been
de facto
equal
partners in the Liebman Group since the First Respondent joined him
as a partner; that the First Respondent joined the Liebman
Group
because he, the Applicant, had invited him to join and furthermore
that the interest that the First Respondent obtained in
the Liebman
Group was given to him by the Applicant when he joined. Firstly, he
testified that the Applicant's quotation of the
word "partner"
in the email dated 26 November 2007 is out of context and shows signs
of desperation on the part of the
Applicant to establish a
partnership. In particular the First Respondent testified that these
allegations by the Applicant are
not true. He says that prior to
consolidating the efforts with the Applicant he owned a number of
properties in his own name. He
was,
inter
alia,
the sole shareholder of or
member of Larney Town CC and Brandy Properties (Pty) Ltd. Furthermore
he had a 50% share in OVH Unit
4 CC and OVH Unit 11 CC with one lvo
Kaye. He was the sole trustee of Bradley Trust, another property
owning trust. Accordingly
the Applicant contends that the Respondent
cannot simply ignore the corporate structure of the companies and the
trusts put in
place since 1999. He reiterates once more that no
partnership exists between him and the Applicant;
18.12
the First Respondent admits that it is
correct that both the Applicant and him retained the power to do
banking independently from
each other until the order of 8 March
2019.
[19]
The
First Respondent states that during his years at university he worked
part tim e for KLP. In 1983 he was employed by the company
on a
full-time basis. In 1985 the Applicant left to the USA and only
returned to South Africa in 1992. In 1986 he left to the USA
to study
but returned to South Africa in 1987. During the period 1987 and 1992
the Applicant had asked him to manage the affairs
of KLP and his
other business interests. During the period 1987 until 1992 he
conducted his own business specialising in property
development. By
1992 he had a number of own separate property owning companies, close
corporations and trusts. After 1992 the Applicant
and him went into a
series of new developments through various companies and trusts. In
or around 1999 both the Applicant and him
sold a few of these
properties. He also sold many of his own separate interests. On this
basis he is convinced that the Applicant's
version regarding an
alleged partnership between the two of them is contrived. He is
adamant that the Applicant and him are not
partners and never have
been.
[20]
He admits that it is correct that he
provided the Applicant with the powers of attorney to act in his name
with regard to the aforesaid
juristic entities in which he was
involved with the Applicant at the time, as well as his own separate
interests as aforementioned,
while he was away in San Diego, USA.
When he returned to South Africa he once again became involved in the
aforesaid businesses
but not as the Applicant's partner. It is
correct that he revoked the said powers of attorney that he had given
to the Applicant
in 2007. He relies also on a copy of a letter dated
3 August 2007 Annexure 'ADVL3' and contends that it confirms that no
partnership
existed as alleged or at all. That letter reads,
inter
alia ,
as follows:
"3. A
revocation of all powers of all trust companies, close corporations
that were granted in the past by
Bradley Brett Liebman.
I wish to thank you for taking
care of my affairs to date since I was in the United States. Since I
am now back in South Africa
I will assume full control of all my own
affairs and in the business trusts and companies of which we are
involved ...
"
In the said letter no mention is
made whatsoever of any alleged partnership between the Applicant and
the First Respondent.
[21]
In regard to the structure that the
First Respondent has mentioned relating to the companies and trusts,
he concluded that it is
clear that the Applicant and him are either
directors and/or trustees of the relevant juristic entities and are
not partners. The
First Respondent complains that the Applicant
omitted to include a reference to K&RL Trust and BBL Trust when
he referred to
''business entities
that comprise the partnership''.
He
submits that this is significant as the shareholdings of the
companies are owned by the K&RL Trust and BBL Trust, as already
indicated.
[22]
Adv A Bester SC, counsel for the First
Respondent pointed out, quite correctly so, that it is common cause
between the parties that
the Applicant has to prove a contract of
partnership which means that he has to prove a contract in terms of
which:
22.1
each of the parties undertook to bring
into the partnership money, labour or skill;
22.2
the parties agreed to carry on a
business for the joint benefit of the partners and;
22.3
the common object on carrying on such
business is to make a profit.
Then he quoted the following
paragraph from Cooke v Morrison and Another (131912017)
[2019] ZASCA
08
(8 March 2019):
"I accept that a
replication may be unnecessary where the facts given rise to the
delay in completion of prescription are sufficiently
alleged in the
creditors' particulars of claim. That was not the case here. In the
light of the a/legations in his particulars
of claim I do not think
Cooke could have filed a non-excipiable replication based on s
13(1)(d). In order for that provision to
apply the relationship
between the creditor and the debtor must be one of "partners"
and the debt must be one arising
of the partnership relationship. The
words ''partners" and ''partnership" have their ordinary
common law meaning. The
legal relationship of partnership arises from
a contract between two or more persons by which each agrees to make a
contribution
"whether in money, property or service" to a
venture to be carried on Jointly by them
with
a view to making a profit and on a basis of sharing the profits and
losses
."
In other words,
it is for a party claiming partnership to prove the existence of such
partnership.
[23]
In support of the First Respondent's
statement that he and the Applicant were either directors and/or
trustees of the relevant juristic
entities and are not partners and
in addition in support of the statement that before the Applicant
obtained the order of 8 March
2019 the Applicant and the First
Respondent were working together, Mr Bester quoted the following
paragraph [20] from the same
case of Cooke:
"Where persons agree to
conduct a venture through a company and become co shareholders
the company is not a partnership
and the shareholders are not
partners.
"
See in this regard also Ebrahim v West Bond Galleries Ltd
[1973] AC
360
(HL) at 379 H- 3808. APCO Africa (Pty) Ltd and Another v APCO Red
White Inc
[2008] ZASCA 64
;
2008 (5) SA 615
(C) paras 17 to 18.
[24] It
will be recalled that the Applicant stated that the business of the
partnership consists of at least
the business of the Sixth to
Sixteenth Respondents as well as a number of trusts. Arguing that the
application cannot succeed Mr
Bester relied, in this regard, again on
Cooke paragraphs (21) and (22) where the Court had the following to
say:
"[21] Cooke's
pleaded allegations concerning the Joined venture agreement'
concluded in February 2003 and implemented
over the period 2003 to
2007 do not cover the essentialia of partnership. These a/legations
are in fact irreconcilable with such
essentialia. He alleges that the
line comprising of the reserve continue to belong to the three
existing registered owners·,
that the game, vehicles, and
equipment were owned by Salisbury; and the Eco Tourism business by
SGRL. The expenses and profits
of the Eco Tourism business were those
of SGRL. The expenses and profits of the game farming business were
those of Salisbury.
To the extent that there were expenses and
profits from landownership, they were incurred and made by the
individual landowning
companies. Cooke, Morrison and the Fox parties
might have benefited indirectly through the dividends received as
shareholders in
one or more of the companies but there is no pleaded
arrangement in terms of which the companies and/or shareholders inter
se were
to conduct a single venture in which they would share profits
and losses.
[22] The Joint
venture' was thus a mixture of relationships. Save in relation to the
land, the parties were associated
as shareholders of companies. The
particulars of claim make no allegations regarding the relationship
between SGRL,· Salisbury
and the various persons who own the
portions of land making up a reserve. Patties may cooperate with each
other to advance their
individual businesses. Such cooperation does
not mean they are partners.
,,
[25] That
there is no partnership in this current case is as clear as crystal.
The shareholders of the various
companies are trusts. The Applicant
and First Respondent are not shareholders of such companies. The
"Daniel in a lion's cage
statement" by the Applicant that
the parties could choose to hold their partnership business in one or
more companies, close
corporations or business trusts for whatever
reasons but notwithstanding this they remain partners towards each
other, does not
enjoy the support of the facts stated in evidence or
the law. This is so for the following reasons. The trusts to which
the Applicant
has referred are all registered in terms of the Trust
Property Act 57 of 1988. They are therefore trusts within the meaning
of
the Act:
'"'Trusts" means the arrangements through
which the ownership and property of one person is by virtue of a
trust instrument
made over or bequeathed
-
(a)
to another person, the trustee in
whole or in part, to be administered or disposed of according to the
provisions of the trust instrument
for the benefit of the person or
class of persons designated in the trust instrument or for the
achievement of the object stated
in the trust instrument,· or
(b)
to the beneficiaries designated
in the trust instrument, which property is placed under the control
of another person, the trustee,
to be administered or disposed of
according to the provisions of the trust instrument for the benefit
of the person or the class
of persons designated in the trust
instrument or for the achievement of the object stated in the trust
instrument·
(c)
but does not include the case
where the property of another is to be administered by any person as
executor, tutor or curator in
terms of the provisions of the
Administration of Estates Act, 1965 (Act No. 36 of 1965)."
[26]
Mr Wesley contended that the companies
and the trusts were the assets of the partnership in other words, the
companies in which
the Applicant and the First Respondent were
directors and the trust in which they were trustees, were, according
to his argument,
assets of the partnership which started in 1996 when
the Applicant gave the First Respondent his shares. This argument, in
my view,
is skewed. As proof that the companies and trust could not
in law be the assets of the partnership, Adv Bester SC referred this
Court to the case of Braun v Blann and Botha NNO
[1984] ZASCA 19
;
1984 (2) SA 850
A at
859 F-H where Joubert JA, as he then was, stated the following:
'[t]he trustee is the owner of
the trust company for purposes of administration of the Trust but qua
trustee he has no beneficialy
interest therein .. . in a private
trust, i.e., a trust not for an impersonal purpose, the beneficial
interest pertain to the trust
beneficiaries either as income
beneficiaries or as capital beneficiaries.
"
On the basis of the aforegoing
paragraph the partnership could not in law be the owner of the trusts
referred to in this matter.
Trustees are bound to deal with the trust
property and any income generated thereby in terms of the Trust
Property Control Act,
the common law principles regarding their
conduct and the terms of the Trust Deed. Section 12 of the Trust
Property Act expressly
provides that:
"Trust property shall not
form part of the personal estate of the trustee except insofar as he,
as trust beneficiary, is entitled
to the trust property.
"
[27]
Mr
Wesley's contention that the partnership is the owner of the
companies involved in this matter is also without merit. A company
is
a legal entity distinct from its shareholders. It owns its assets.
See in this regard
City Capital SA
Property Holdings
(Pty) Ltd v
Chavonnes Badenhorst St Claire Cooper N.O. 98512017)
[2017] ZA SCA
177
(1 December 2017) at paragraph 27 where the Court had the
following to say:
"It is trite that a
company is a legal entity distinct from its shareholders. It has
rights and liabilities of its own, separate
from those of its
shareholders. Its property is its own and not that of its
shareholders. See in this regard Salomon v A Salomon
and Co[1891] AC
22 at 51 which was followed in Dadoo Ltd and Others v Krugersdorp
Municipal Council
1920 AD 530
at 550. This follows from the separate
legal existence with which a company is by statutes endowed. Thus, in
The Shipping Corporation
of India Ltd v Evdomon Corporation and
Another
[1993] ZA SCA 167
,·
1994 (1) SA 55
0 A at paragraphs
566 C
-
F
Cobert CJ, as he then was, had the following to say:
"It seems to me that,
generally, it is of cardinal importance to keep distinct the property
rights of a company and those by
its shareholders, even where the
latter is a single entity, and that the only permissible deviation
from this rule known to our
law or occurs in those (in practice) rare
cases where the circumstances justify ''piercing" or ''lifting"
the corporate
veil. And in this regard it should not make any
difference whether the shares be held by a holding company or by a
Government.
I don't find it necessary to consider, or attempt to
define, the circumstances under which the Court will pierce the
corporate
veil. Suffice to say that they would generally have to
include an element of broad or other improper conduct in the
establishment
or use of the company or the conduct of its affairs. In
this connection the words "device': ''stratagem': ''cloak': and
"sham
" have been used "
On the other hand, under common
law a partnership is not a
persona
or a separate
legal entity distinct from the individuals who constitute the
partnership. See in this regard Ehrig and Weyer v Trust
Atlantic
Insurance Co
1905 TS 560
in which Innes CJ had the following to say:
"Clearly the two persons
were making the proposal as a firm,· and the policy was
subsequently issued in favour of the
firm. I do not mean to say that
a firm has a separate persona. Both by English law and our own a firm
has no separate persona apart
from the partners. Although a firm may
for some purposes be treated as having a separate identity, the fact
that a firm has no
persona cannot be disputed.
"
The partnership cannot therefore
own property. If property is owned jointly by the partners, they
become co-owners. It is quite
clear that a company has rights and
liabilities of its own separate from those of its shareholders. Its
property is its own and
not that of its shareholders. Accordingly,
the argument by Mr Wesley that the assets of the partnership are the
companies and trusts
cannot hold any water. Furthermore in view of
the fact that the Applicant has not brought any application for an
order in terms
of which to pierce the corporate veil I will not be
detained by this aspect.
[28]
Finally, it was argued by Mr Bester that
the absence of a formal corporate structure overarching the business
entities and the absence
of holding or subsidiary companies with
cross shareholding and group financial reporting is not indicative of
the existence of
a partnership. According to him, and I agree with
him, there are no requirements in the Companies Act that indicate
that such an
overarching business entity or subsidiary companies must
be established.
[29] In
his heads of argument Mr Bester stated that the Applicant does not
envisage a liquidation of the
alleged partnership which, he alleges
to be “
the only thing that binds these loose grouping of
property holding companies, shareholding trust and operating company
together”
but, in fact a liquidation of the companies and a
sequestration of the trust, as the Applicant states:
"If the application should
succeed then the duly appointed liquidators will have access to the
funds of the various entities
and trusts.
"
The aforegoing statement stands in
direct contradiction to a statement by the Applicant who in his
replying affidavit states that
he is not trying to liquidate any of
the companies. In paragraph 27 of his replying affidavit the
applicant states as follows:
"The prescripts of the old
Companies Act and the new Companies Act regarding the winding-up of
companies do not apply because
I am not trying to liquidate any of
the companies."
According to Mr Bester, this
statement illustrates the difficulty with which the Applicant is
faced. The Applicant concedes that,
through an order dissolving the
partnership, he will inevitably require the undoing of several
corporate entities and trusts. The
Applicant will therefore not
achieve the results of liquidating the companies by dissolving a
partnership. In terms of the provisions
of s 79, 80 and 81 of the
Companies Act 71 of 2005, there are recognised grounds in terms of
which companies may in law be wound
up. It is not anyone of such
grounds that a company may be wound-up by dissolving a partnership.
The relief that the Applicant
seeks of wounding-up the companies in
this matter is not possible in law. Equally, one cannot terminate a
trust by dissolving a
partnership. A trust, like a company, exists on
its own. Its lifespan does not depend on the lifespan of a
partnership.
[30]
Mr
Bester concluded that in the circumstances relied upon by the
Applicant a partnership does not exist. Looked at from a different
angle, given the pre-eminence given to the separate legal entity of
companies and the peculiar and specific rules relating to trusts,
the
inference sought by the Applicant cannot be drawn because it quite
patently contradicts such legal positions with which he
has not shown
could be or have been unseated.
[31]
Now,
in the final analysis, there is no evidence by the Applicant to show
that:
31.1
the
aforesaid partnership has any name. The Court asked Mr Wesley what
the name of the partnership was and he expressly stated that
the
partnership has no name;
31.2
the
partnership has any assets or liabilities. I have pointed out in the
judgment that the assets of the company belong to it and
that the
assets of the trust belong to such trust. The assets of a trust
cannot in law be the assets of a partnership nor can the
assets of a
company be the assets of a partnership;
31.3
the
partnership carries on legal business or undertaking. The word
"business" means any activity which occupies the time,
attention and labour of the partners for the purpose of making
profit. It is consequently wrong for the Applicant to state that
the
purpose of the partnership would be to carry on a business for the
joint benefit of both parties with joint objects of making
profit.
The said partnership carried on no lawful business or undertaking.
31.4
the
Applicant is unable to produce any tender document or any document
filled in and submitted to a government department e.g. tax
returns
filed with the Receiver of Revenue or lease agreements or agreements
of purchase and sale of any landed property or documents
reflecting
any commercial transaction which reflects the existence of a
partnership between him and the Applicant.
It is correct that a partnership
may be formed, without any agreement, by the facts and conduct of the
persons in carrying out transactions
together and sharing on profit
and loss. In Standard Bank of South Africa Ltd and Another v Ocean
Commodities Inc and Others
1983 (1) SA 276
A the Court in dealing
with tacit contracts in general had the following to say at 292 8-C:
"In order to establish a
tacit contract it is necessary to show, by preponderance of
probabilities, an unequivocal conduct
which is capable of no other
reasonable interpretation than that the parties intended two, and did
in fact, contract on the terms
alleged. It must be proved that there
was in fact consensus ad idem.
"
It is consequently of paramount
importance for the Applicant to prove, among others, that he and the
First Respondent carried out
some transactions together and more
importantly that he and the First Respondent shared profits and
losses. Apart from alleging
that
''the
business of the partnership, according to him, was always conducted
in consent between the First Respondent and him to the
benefit of
both of them as partners and with one of them sharing equally in the
profits and/or losses';
the
Applicant has failed to satisfy the Court that he and the First
Respondent carried out transactions together and secondly, that
he
and the First Respondent shared the profit and loss together.
[32] In
conclusion I am satisfied that the Applicant has failed to satisfy
this Court that any partnership
between him and the First Respondent
exists as claimed. Accordingly the following order is made:
1.
The interim order obtained by the Applicant on 8 March 2019 is hereby
discharged.
2.
The Applicant’s application is hereby dismissed with costs,
which costs
shall include the costs consequent upon the employment of
two counsel.
PM MABUSE
JUDGE OF THE HIGH COURT
Appearances:
Counsel
for the Applicant:
Adv CP Wesley
Adv K van Zyl
Instructed
by:
JHS Attorneys
c/o Paul Du Plessis
Attorneys
Counsel
for the First Respondent: Adv A Bester (SC)
Adv L Franck
Instructed
by:
Aaron Stanger & Associates
c/o Jacques Classen
Attorneys
Date
heard:
30 May 2019
Date
of Judgment:
6 June 2019