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[2015] ZAKZPHC 31
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Cypress Entertainment CC and Another v Interactive Trading 269 (Proprietary) Limited and Another (AR 204/2013) [2015] ZAKZPHC 31 (19 June 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL DIVISION,
PIETERMARITZBURG
Case No.: AR 204/2013
DATE: 19 JUNE 2015
In the matter between:
CYPRESS ENTERTAINMENT
CC
...............................................................................
First
Appellant
SHAUN CRAIG
RUSSOUW
.......................................................................................
Second
Appellant
And
INTERACTIVE TRADING 269
(PROPRIETARY)
LIMITED
......................................................................................
First
Respondent
TEAZERS COMEDY AND REVUE
CC
...............................................................
Second
Respondent
J U D G M E N T
VAN ZŸL, J: (VAHED, J and
NZIMANDE, AJ concurring)
1. This is an appeal, with leave from
the Court a quo (Pillemer, AJ), against an order for eviction and
other relief. The appeal
concerns two matters. The first and what may
conveniently be referred to as the main matter, was an application
under case number
9919/2011 brought by the first respondent
(applicant in the court below) for the eviction of the first
appellant (respondent in
the court below).
2. The secondary application,
effectively brought in response and as an alternative in the light of
the opposition raised to the
main matter, was brought by the first
and second respondents (as first and second applicants in the court
below) against the first
and second appellants (respectively as first
and second respondents in the court below) for an accounting and
debatement, alternatively
the appointment of a liquidator to the
partnership contended for by the appellants.
3. It will be convenient to refer to
the parties herein as they were in the court of first instance.
However, in order to avoid
confusion in the light of the fact that
the main application comprised only two parties, whereas the
secondary application comprised
four parties, the parties will be
referred to as in the secondary application.
4. The main application was based upon
the rei vindicatio, the first applicant alleging registered ownership
of the property occupied
by the first respondent. In support it put
up a copy of the title deed to the property reflecting that ownership
thereof was transferred
into its name on 23 January 2008 for a
purchase consideration of R3.9 million.
5. The first applicant further alleged
that during or about February 2008 it and the first respondent had
concluded an oral agreement
of lease at a rental of R20 000-00 per
month, VAT inclusive, that the first respondent failed to maintain
its rental payments and
that in consequence the lease was cancelled,
so that the first respondent’s continued occupation of the
property became unlawful.
6. Neither the first applicant’s
ownership of the property, nor the first respondent’s
occupation thereof, were in dispute.
The first respondent contended
that it was entitled to remain in occupation of the property by
virtue of an agreement of partnership
concluded between the first
applicant and the first respondent on or about 14 September 2009 and
which continued in existence.
It was further alleged that this
agreement of partnership replaced a previous partnership agreement
which existed between the first
applicant and the second respondent.
The significance of the date (14 September 2009) was that it
represented the date of registration
of the first respondent and that
effectively the latter replaced the second respondent as partner, but
otherwise the partnership
remained unaffected.
7. The alleged partnership comprised
the business known as “Teazer’s – Durban”.
The first applicant’s
contribution thereto was to make its
property available and the partnership business was thereafter
conducted thereon by the second
and later by the first respondent who
successively controlled and managed the operation of the business and
assumed “interim
liability” for all expenses incurred in
improving the premises. These expenses, so it was alleged,
constituted a loan to
the partnership which would be repayable in the
event of the dissolution thereof. The right to repayment was
allegedly transferred
from the second to the first respondent at the
time of the substitution of the latter for the former as a partner in
the business
partnership. Profits, “when available” were
shared between the alleged partners.
8. In the circumstances referred to
above the respondents claimed a continuing right to occupation of the
premises by virtue of
the alleged agreement of partnership between
the first applicant and the first respondent and in the alternative
relied upon an
alleged improvement lien in favour of the first
respondent to resist eviction from the property. They denied the
conclusion of
any lease at any stage and disputed the ability of Mrs
Demi Megan Jackson, the deponent to the founding affidavit on behalf
of
the first applicant, to attest to the existence thereof. This was
by reason of the fact that the affairs of the first applicant
had
been conducted solely by her late husband Emmanuel Jackson as its
sole director until the time of his death on 3 May 2010.
9. To cater for the possibility of the
court sustaining the defence of partnership, the applicants then
launched the secondary application
on the basis that any partnership
could only have been between the second applicant and either one, the
other or both respondents.
This was because the second applicant was
alleged to have been paying on a monthly basis costs associated with
the operation of
the business known as “Teazers Durban”.
The applicants claimed in any event to have terminated any such
partnership
by letter dated 12 January 2012, hence the claims for a
debatement or failing that the appointment of a liquidator.
10. The court below noted of the fact
that neither side to the disputes wished to resolve any of the
factual conflicts by way of
a referral to oral evidence. In the light
thereof the court was thus constrained to deal with all the issues
upon the papers before
it.
11. Pillemer AJ held that the crucial
question in the circumstances was whether there was a partnership
between the two corporate
entities, namely the first applicant
(Interactive Trading) and the first respondent (Cypress
Entertainment), as opposed to some
other arrangement, contractual or
otherwise, involving different parties.
12. In order to answer that question
the court below embarked upon an extensive and detailed analysis of
the evidential material
before concluding that the defence of the
partnership existing between the first applicant and the first
respondent was fanciful
and not sustainable on the papers before the
court. It held that the present matter was one of those rare cases
where the first
respondent’s version was so clearly untenable
that the court was justified in rejecting its version merely upon the
papers
before it. It is this conclusion which was the focus of the
attack on appeal.
13. In the appeal before us counsel for
the appellants submitted that the court below failed to heed the
warning, to be cautious
about deciding probabilities on affidavits in
the face of conflicts of fact, as contained in Buffalo Freight
Systems (Pty) Ltd
v Crestleigh Trading (Pty) Ltd
2011 (1) SA 8
(SCA)
at paragraph 20. But the Court of Appeal extended that warning
against the background of the remarks in the preceding paragraph
of
the same judgment.
14. There and in paragraph 19 of the
judgment Shongwe JA noted that the court a quo had approached the
matter on the basis that
the facts were in dispute and that there had
been no request by the appellant for the matter to be referred for
evidence or to
trial. The court a quo had then applied the principles
in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3)
SA 623
(A) at 634E – F where it was held that the court must
deal with the matter on the basis of the respondent's version,
coupled
with the admitted facts in applicant's papers. But the
learned Judge of Appeal proceeded to approve of the remarks by Eloff
AJ
in Truth Verification Testing Centre CC v PSE Truth Detection CC
and Others
1998 (2) SA 689
(W) at 698H – J to the effect that
the so-called robust common-sense approach in relation to the
resolution of disputed issues
on paper, whilst usually relating to
situations of bald and hollow denials of factual matters, should also
apply when assessing
a detailed version of events which is wholly
fanciful and untenable and that a court should then be prepared to
undertake an objective
analysis of such disputes, when required to do
so.
15. In Wightman t/a JW Construction v
Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA), to which
Shongwe JA referred with approval in Buffalo Freight Systems (supra)
at page 14D, the court of appeal held in paragraph
13 that a real,
genuine and bona fide dispute of fact can generally only exist where
the court is satisfied that the party raising
the dispute has
seriously and unambiguously addressed the facts so disputed. This was
because factual averments seldom stand apart
from the broader matrix
of circumstances which need to be borne in mind when arriving at a
decision. Thus, where the answering
affidavit fails to ascertain and
engage adequately with the disputed facts and to reflect these fully
and accurately, the court
may take a robust view of the matter.
16. The Wightman decision was also
referred to with approval in Malan v City of Cape Town
2014 (6) SA
315
(CC) in the majority judgment of Majiedt AJ at paragraph 73 where
the court remarked at page 335 H that a litigant is required to
engage fully and seriously with disputed allegations in an affidavit,
particularly in circumstances where the relevant facts are
peculiarly
within the litigant's knowledge.
17. In the present appeal it is evident
that the court below indeed embarked upon a detailed evaluation of
the disputed partnership
agreement contended for by the first
respondent. But this was done against the background of the fact that
the then sole director
of the first applicant had died and was unable
to respond with first hand knowledge to the first respondent’s
claims regarding
the conclusion of a partnership agreement and its
exposition of the alleged terms thereof.
18. In my respectful view the court a
quo analysed the position thoroughly and correctly and I am unable to
say that it arrived
at an incorrect conclusion in all the
circumstances.
19. But it seems to me that there is in
any event a further answer to the first respondent’s claim of a
right to continued
occupation of the premises dependent upon the
continued existence of the alleged partnership agreement. It is
common cause that
the first and second applicants gave notice of the
cancellation of any form of partnership which may be held to have
come into
existence, including inter alia with the first respondent,
by way of the letter of 12 January 2012 which was delivered on that
date to the respondents’ attorneys.
20. In Harinarain v Baijnath
1990 (2)
SA 765
(N), Booysen J held at page 766H to 767B that –
“As to the date of dissolution it
seems to me that there is no doubt whatsoever that it was indeed on 7
June 1982 when the
defendant advised the plaintiff that he had closed
the banking account, had opened a new banking account, and that the
partnership
was dissolved. Whether he was entitled to do so at that
stage is of course not a matter which can be decided upon the agreed
statement
of facts placed before me. Nevertheless partnership, unlike
other types of contracts, is determined in circumstances such as
these
and the date of dissolution, as is apparent from cases such as
Brighton v Clift
1970 (4) SA 247
(R) at 248H, Wiehahn and Others v
Marais
1965 (1) SA 398
(T) at 401C, occurs at the date when the
partner actually either repudiates or gives notice to the effect that
he no longer is
prepared to continue with the partnership. It is not
required, as the particulars of claim in this matter seem to suppose,
that
there must be an acceptance of such repudiation before the
partnership is in fact dissolved. It is so, though, that, if the
partner
has unlawfully repudiated the partnership agreement, the
other party may have a claim for damages.”
21. In Loots v Niewenhuizen
1997 (1) SA
361
(T) the relationship of the parties was held to be one of
partnership. In terms of an oral agreement between them the
respondent
was to operate the appellant's shop and to provide time,
labour and capital to acquire trading stock for the business and in
return
was entitled to half of any profits. Navsa J (as he then was)
held at page 368B that –
“Toe die appellant die besigheid
weer oorneem, is die vennootskap ontbind. Dit maak nie saak of daar
behoorlik kennis deur
die appellant gegee was of nie. Sien Herbst en
'n Ander v Solo Boumateriaal
1993 (1) SA 397
(T) te 399G-400C;
Harinarain v Baijnath
1990 (2) SA 765
(N).”
22. In the present matter it therefore
follows that the letter of notice to the first respondent’s
attorneys summarily terminated,
with effect from 12 February 2012,
any partnership with the first applicant and upon which the first
respondent could have relied.
Assuming, but without deciding that the
notice contained in the letter amounted to an unjustified repudiation
of the alleged partnership
agreement by the first applicant, then it
nevertheless still had the effect of summarily terminating the
partnership agreement
and that such termination occurred without the
need for acceptance thereof by the first respondent.
23. In the first and second
respondents’ answering affidavit in the secondary application
the applicants are reproached for
“cherry-picking” from
amongst the respondents’ defences by “simply cancelling
the partnership agreement”
and not addressing the consequences
of such cancellation. But it was held in Espag and Another v Hattingh
2010 (3) SA 22
(SCA) by Leach AJA (as he then was) in para 11 that
the fact that partners invoked their right to cancel a partnership
agreement
could not amount to a breach of good faith, even if in so
doing they contemplated gaining an advantage for themselves. Such
cancellation
did not affect the lawfulness or legitimacy of their
conduct. Even if it were to be held that the first applicant was
being opportunistic
in cancelling any alleged partnership agreement
relied upon by the first respondent, that would still not invalidate
the cancellation.
24. Since, upon the first respondent’s
version, there was and had never been any lease of the property in
terms of which its
occupation could be justified, any right to
continued occupation would have lapsed upon the termination of the
partnership agreement
upon which it relied for its continued
entitlement to occupy. It follows that on this approach and in any
event no right to continued
occupation had been shown by the first
respondent.
25. However, insofar as it may be
argued that despite such cancellation the terms of dissolution of the
alleged partnership nevertheless
entitled the first respondent to
continued possession and occupation of the first applicant’s
property, there is in my judgment
a further reason why such a claim
is without merit.
26. The essence of the first
respondent’s opposition to the eviction claim is that it was a
term of the alleged partnership
agreement that upon dissolution
thereof, its business would remain trading at and in possession of
the property, pending finalisation
of its liquidation. In my view and
even if the court a quo were to have accepted the existence of the
partnership as alleged by
the first respondent, the alleged term
governing dissolution of the partnership appears to be unworkable,
too vague for implementation
and thus unenforceable.
27. The first respondent set out the
alleged nature and extent of the term in paragraph 6(h)(iv) of the
answering affidavit to the
main matter, as follows –
“(iv) In the event that the
partnership were to be dissolved then, prior to such dissolution, a
proper accounting and debatement
would take place in which the costs
of improvement would be deducted from the profits as well as any
drawings made by the parties
during the currency of the partnership.
Thereafter a 50% division would take place. As it was anticipated
that such process would
take time due to the complexity thereof it
was a term of the partnership agreement that until the accounting and
debatement was
finalised and the partnership liquidated it would
continue to trade while it was viable and of financial benefit to do
so.”
28. In terms of its requirements, but
prior to dissolution, the accounting process would have to be
satisfactorily completed. This
pre-supposes consensus between the
partners because no provision is made should the parties be unable to
agree. Whilst all this
is going on the partnership would continue to
trade “while it was viable” and of financial benefit to
do so. What is
meant by viable and of financial benefit and to whom,
were unspecified.
29. In my view the “term”
for the dissolution formula as contended for by the first respondent
is a transparent attempt
at preserving the status quo, with the first
respondent in continued and potentially indefinite possession of the
“partnership
business”, as well as its premises, at the
expense of the first respondent. It would have been unenforceable
even had the
court a quo held that a partnership existed between the
first applicant and the first respondent.
30. There remains the issue of the
alleged improvement lien and whether, all else failing, the first
respondent was entitled to
rely upon such a lien in order to avoid
eviction. This was not persisted in during the appeal, in my view
correctly so. But in
the view I take regarding the outcome of the
appeal I consider it preferable also to deal briefly with this issue.
31. According to the answering
affidavit of the first respondent in the main matter it was contended
in the penultimate paragraph
that in any event it would have a right
of retention over the property “as a result of the improvements
effected to it”.
Details of how the alleged lien originated are
to be found in the first respondent’s explanation for the “new”
partnership where the first respondent allegedly replaced the second
respondent as the first applicant’s partner.
32. The second respondent, who deposed
to the first respondent’s answering affidavit, explained that
he had initially and
as part of his contribution to the partnership
business, assumed interim liability for all expenses incurred in
improving the premises
and that as a material term of the partnership
agreement these expenses would constitute a loan to the partnership,
repayable upon
dissolution thereof. The effect of the new partnership
was simply for the first respondent to replace the second respondent
as
partner and that it was specifically agreed that the new
partnership would assume liability for the monies so advanced by the
second
respondent.
33. Thus, on the respondents’
version the partnership business and not the individual partner(s)
effected whatever improvements
were made to the premises with funds
advanced by the second respondent and later by the first respondent.
It follows that no foundational
facts have been alleged which would
entitle the first respondent itself to claim an improvement lien over
the property.
34. In the final analysis the question
upon appeal is whether we are at liberty to interfere with the
conclusions of the court a
quo. In this context the remarks of Brand
JA in Fourie v Firstrand Bank Ltd and Another NO
2013 (1) SA 204
(SCA) at page 210 A-C are apposite –
“The time honoured approach by
this court is, in sum, that, absent any misdirections on the part of
the trial court, a court
of appeal is not permitted to interfere with
findings of fact (see, for example, R v Dhlumayo and Another
1948
(2) SA 677
(A) at 705 – 706). In the event I find it
unnecessary to restate the detailed reasons given by the court a quo
for its factual
findings ….. , which should, in my view, be
endorsed by this court.”
35. In my respectful view there is no
merit in the appeal and I would dismiss the appeal, with costs.
VAN ZYL, J
VAHED, J
NZIMANDE, AJ
Appellant’s Counsel: Adv. R G
Ungerer
Instructed by Weber Attorneys
c/o Randles Inc
Respondents Counsel: Adv. J W Kloek
Instructed by Beaukes and Sonja Nel
c/o Hay and Scott Attorneys
Date of Hearing: 5 February 2014
Date of Judgment: 19 June 2015