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[2016] ZAGPPHC 380
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De Jager and Another v Nguni Grill-Ellisras Partnership and Others (10943/2015) [2016] ZAGPPHC 380 (31 May 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 10943/2015
DATE:
31 MAY 2016
In
the matter between:
HENNING
JEREMIAS PRINGLE DE
JAGER
.................................................
FIRST
APPLICANT
SILVERSTARS
TRADING 87
CC
..................................................................
SECOND
APPLICANT
And
THE
NGUNI GRILL -ELLISRAS
PARTNERSHIP
......................................
FIRST
RESPONDENT
ARVOCAP
(PTY)
LTD
.................................................................................
SECOND
RESPONDENT
(REG
NO: 2012/116377/07)
ETTIENE
GEORGE
VICTOR
.......................................................................
THIRD
RESPONDENT
HANNELIE
VICTOR
..................................................................................
FOURTH
RESPONDENT
JUDGMENT
RANCHOD
J:
[1]
The crisp issues to be
determined in this application are first, who are the two parties to
an admitted partnership and second,
whether the shareholding in the
partnership between them was on a 50-50 or 30-70 percentage basis.
Two
points-in-limine
raised by the respondents at the hearing without having raised them
substantially in the papers were dismissed with costs in the
cause.
Background
[2]
The first applicant (De
Jager) says he developed the concept of the Nguni Grill which is a
unique restaurant group in Limpopo with
a traditional tribal theme
against the background of the Nguni breed of cattle. The first of
these was developed in Polokwane in
about 2009. He had since sold his
shares in the Polokwane Nguni Grill. He has or soon will be opening
Nguni Grill restaurants in
Thabazimbi and in Musina. Mr De Jager says
he has also obtained provisional registration of the trade mark Nguni
Grill in the name
of the second applicant of which he is the sole
member.
[3]
Mr De Jager says in about
August 2012, the third respondent (Victor) approached him and
proposed that they form a partnership and
establish a Nguni Grill in
Lephalale. He says they formed an equal partnership for this purpose.
Mr Victor had told him that he
intended to purchase a corporate
entity which would reflect the equal shares. De Jager says the second
respondent (Arvocap) was
incorporated (apparently by Victor) but none
of its shares were transferred to him. He contributed about R550
000.00 to the partnership
for the costs of setting up the restaurant
in Lephalale while Victor contributed about R500 000.00. De Jager
would be the ‘silent
partner’ while Victor would manage
the business on a day-to-day basis for which he would be remunerated
monthly. Victor would
be entitled to 70% and he (De Jager) to 30% of
the net profit of the business. Furthermore, the second applicant
(Silverstar) would
be entitled to royalty payments of 3% of the
monthly turnover of Lephalale Nguni Grill for the use by the latter
of the Nguni Grill
trade mark. No royalties were to be paid for the
first 12 months in order for the restaurant to become a fully
operational and
successful enterprise.
[4]
Victor denies that the
partnership is between De Jager and himself. He avers that the
partnership is between De Jager and Arvocap
and is willing to
acknowledge that De Jager has a 30% shareholding in the first
respondent (The Nguni Grill - Ellisras partnership)
while Arvocap has
a 70% shareholding. Victor says Arvocap was represented by himself
when the partnership was ‘tacitly’
concluded.
The
Law
[5]
It is trite law that a
partnership is a consensual contract between two or more persons to
place their property, money, labour and
skill, or some other of these
into some lawful venture for the purpose of profit sharing resulting
therefrom in accordance with
their individual participation quotas.
It is further trite law that a contract of partnership can be express
or implied.
Discussion
[6]
It is common cause that the
parties did not enter into a written partnership agreement.
[7]
In a letter dated 13
October 2014 addressed to applicant’s attorneys, the
respondents’ attorneys initially denied the
existence of any
partnership at all. Nor did they allege that a partnership in fact
existed between De Jager and Arvocap. It was
alleged in the letter
that De Jager had lent monies to Arvocap. A material term of the loan
agreement, so it was alleged, was that
30% of the ‘uitgekeerde
rente/wins maandeliks aan u klient oorbetaal sou word na berekening
van die netto wins van die voorafgaande
maand.’
[8]
However, in the answering
affidavit Victor admits the existence of a partnership but that it
was between De Jager and Arvocap. The
respondents have failed to
submit any material evidence in support of this allegation. Victor
says he represented Arvocap so at
the very least he (or the other
respondents) should have provided proof of a resolution passed by the
board of directors authorising
Victor to act for and on behalf of
Arvocap in concluding the partnership agreement with De Jager and a
resolution of Arvocap’s
directors confirming the partnership
with De Jager. The respondents could have, but failed to provide any
audited financial statements
or management statements of Arvocap
reflecting the income generated by the partnership for the benefit of
Arvocap.
[9]
Instead, the respondent’s
rely on several documents purporting to show that the partnership was
between De Jager and Arvocap.
One is a Standard Bank Revolving Credit
Plan Agreement. However, this application makes no mention of any
partnership whatsoever
and appears to be an application for finance
in the name of Arvocap to acquire certain equipment. Another one is a
‘New Customer
Application’ by Arvocap to Ciro Beverage
Solutions. Once again this document relates to Arvocap alone; there
is no mention
made of any partnership at all. Yet another is an
affidavit by Mr JJ Willemse filed in support of the answering
affidavit. However,
in paragraph 4.4 thereto, Willemse says ‘During
or about December 2012 Mr De Jager opened a steakhouse together with
Mr Ettiene
Victor under the name Nguni Grill in Ellisras.’ None
of these documents show that De Jager was introduced to any third
party
as a partner of Arvocap. Mr Willemse’s affidavit seems to
reflect the contrary.
[10]
De Jager and Victor applied
for ‘keyman’ and ‘buy and sell’ insurance
policies in terms of which their respective
lives are covered.
Nowhere in these applications is reference made to Arvocap although
they each say in their respective applications
that they are ‘mede
direkteure’ (co-directors). In my view, it is highly improbable
that individuals would take out
buy and sell policies to the full
value of the business if they were not partners in the business. It
would be expected that the
company (Arvocap) would enter into such an
arrangement with its partner if that had been the case.
[11]
Arvocap was registered as
such on 5 July 2012. Victor and his wife (the fourth respondent) were
not the appointed directors of the
company at that stage. They were
appointed as directors only on 25 January 2013. On the respondents’
version Arvocap (represented
by Victor) and De Jager entered into a
partnership in November 2012. Yet Victor was appointed as a director,
as I said, only in
January 2013.
[12]
I find that the partnership
agreement was concluded between De Jager and Victor.
[13]
I turn then to the second
issue.
[14]
De Jager avers that he and
Victor were equal shareholders in the first respondent whereas Victor
avers that De Jager had only 30%
shareholding.
[15]
In
Bellingan
v Clive Ferreira <5 Associates CC and Others 1998(4) SA 382 WLD at
406 E-F it was held:
The
applicant cannot escape the contractual consequences of the
partnership agreement, which provided expressly for the proportions
in which the partners were to share profits and losses...’.
[16]
As I said, it is common
cause that there is no written agreement relating to the partnership.
In Law of South Africa (LAWSA) (Lexis
Nexis Butterworths, 2
nd
Edition) Volume 19, p242 at para 293 it is stated that:
‘
As
long as it is clear that each partner receives a share of the
profits, it does not matter if the formula which is used for the
determination of the respective shares is complex or unusual. In the
absence of an agreement in this respect, profits are shared
in
proportion to the partners’ respective contributions to the
firm.’ [Footnotes omitted],
[17]
It therefore follows that
the financial contributions made by each partner should determine the
percentage of participation. On
Victor’s own version he made a
contribution of approximately R500 000.00 and De Jager contributed
about R550 000.00. It is
therefore highly probable in my view, that
De Jager and Victor had agreed to a partnership in equal shares.
[18]
Victor’s allegation
that it was a 70-30 shareholding because the profit sharing by De
Jager on a monthly basis was 30% is
improbable. De Jager avers that
despite the almost equal financial contributions of R550 000.00 and
R500 000.00 it was agreed for
purposes of the monthly income sharing
that Victor would be entitled to 70% of the monthly profits as he was
actively involved
in the day to day running of the business whilst he
(De Jager) was a silent partner. I find De Jager’s version to
be the
more probable state of affairs.
[19]
The parties, as I said,
agreed at the commencement of the hearing that these were the only
two issues I had to determine. It was
also mentioned by applicant’s
counsel that the applicants were no longer pursuing prayers 2, 4.1.5,
4.1.10 and prayer 5.
[20]
An order is granted in
accordance with prayers 1; 3; 4 (including the sub-prayers except
4.1.5 and 4.1.10) and 6.
RANCHCOD
JUDGE
OF THE HIGH COURT
Appearances:
Counsel
on behalf of Applicants : Adv J.A Klopper
Instructed
by :Thomas Grobler
Attorneys
Counsel
on behalf of Respondents : Adv B. Bergenthuin
Instructed
by : Lewies and Associates
Date
heard : 22 March 2016
Date
delivered : 31 May 2016