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[2013] ZAKZDHC 3
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Cook and Another v Bolton and Others (685/13) [2013] ZAKZDHC 3 (14 February 2013)
In
the KwaZulu-Natal High Court, Durban
Republic
of South Africa
Case
No :685/13
In
the matter between :
Brandon
Edward Cook
..............................................................................
First
Applicant
Mark
Peter Edwards
.............................................................................
Second
Applicant
and
Dean
Richard Bolton
.............................................................................
First
Respondent
Jason
Bruwer
...................................................................................
Second
Respondent
The
Lazy Boy Trust
.............................................................................
Third
Respondent
Shiniade
Mary Kenworthy
.................................................................
Fourth
Respondent
Judgment
Lopes J
[1] This is an application in which
the applicants seek the dissolution of a partnership agreement and an
order that the sole asset
of the partnership be sold in accordance
with an offer to purchase annexed to the founding papers.
[2] It is common cause that during
2007 the applicants and the first and second respondents concluded an
oral partnership agreement.
In terms of the partnership agreement :
(a) they were to acquire an immovable
property described as 3 Brettonwood Lakes, Brettonwood Coastal
Estate, (in extent 2 hectares),
(‘the property’), as an
income generating asset and capital investment;
(b) the parties agreed to share
equally in all the profits and losses of the partnership;
(c) the partners agreed to use the
Lazy Boy Trust (‘the trust’), the third respondent in
this application, as a vehicle
for owning the property on behalf of
the partners. It was intended that the trust deed of the trust would
be amended to reflect
each of the four partners as equal income and
capital beneficiaries of the trust;
(d) the purpose of the partnership was
to purchase the property and thereafter sell it for a profit.
[3] Pursuant to the aforegoing and on
the 4
th
September 2007 the trust acting on behalf of the
partners purchased the property for R2 050 000. The property was
transferred to
the trust on the 5
th
May 2008. In
accordance with the partnership agreement the property was rented out
from the 5
th
May 2008. However, on the 28
th
October 2010 the tenant vacated the property and a tenant could not
be found for approximately two years. In due course the applicants
were made trustees of the trust. The fourth respondent was at the
time already a trustee. The second respondent was not made a
trustee
because his estate had been sequestrated at the time. Although it was
the clear intention of the parties to the partnership
that the four
of them be beneficiaries of the trust, due to an oversight the trust
deed was not amended in that regard.
[4] Towards the latter half of 2011
the partnership began to experience difficulties because of the lack
of a tenant and arrears
accumulated on the bond, the levies payable
in respect of the development and rates in respect of the property.
The applicants
then agreed that the property would be sold, and
although the first respondent initially resisted the idea he
eventually agreed
that the property should be put up for sale. The
property was accordingly put on the market at the end of 2011 or
early in 2012
with a view to selling it, paying off the outstanding
amounts and distributing the profits among the partners.
[5] On the 15
th
December
2012 an offer was eventually received for R2,2 million including a
cash deposit of R500 000 and the proceeds of a mortgage
bond of R1,7
million. Various disputes then arose with the first respondent who
did not wish to have the property sold. His stance
ultimately
precipitated this application with the applicants seeking a
declaratory order that the partnership is dissolved and
making
provision for the sale of the property and the distribution of the
proceeds to the partnership’s various creditors.
[6] The first respondent resists the
dissolution of the partnership and the sale of the partnership asset
on the basis that the
offer which has been made is too low, and that
he will be prejudiced as a result of the sale of the property.
[7] In the matter of
Drummond v
Dreyer
1954 (1) SA 306
(NPD) the court was faced with the problem
where the parties wished to terminate the joint ownership of a
property but were unable
to agree on a method. The court eventually
decided that an order would be granted permitting one of them to sell
the property by
public auction. The court, having considered all the
objections of the party opposed to the sale of the property stated at
page
308 A :
‘
Now
I am by no means unmindful of the weight of these contentions, both
those of the applicant and the respondent. But it is obvious
that the
Court cannot perform miracles, and it seems to me that the points the
parties raise in this regard reflect risks which
must of necessity be
taken by joint owners of the property who desire a dissolution of the
joint ownership and are not able to
agree on the terms of the
dissolution. It is, I think, accepted law that no owner of property
can normally be compelled to remain
such against his will, and it
follows that an owner desiring to terminate his ownership is entitled
to do so. The ideal way of
doing it is, of course, by agreement, and
it is a matter of astonishment to me that these parties, who are
presumably business
people, or at least are advised by business
people, should have been unable, in the time which has elapsed, to
arrive at a solution
of their difficulties acceptable to both of
them. However, that is what has happened, and it seems that there
remains now only
the last resort, namely a sale by public auction,
which is, by and large, the most satisfactory way of arriving at the
market value
of a property such as this.’
[8] As was the case in the
Drummond
matter, the first respondent in this matter has put forth numerous
other possible solutions to the problem, for example, that he
buys
the property himself, that he has other creditworthy persons to
replace the applicants as guarantees to the bond on the property,
etc. I find myself in the unenviable position in which Selke J found
himself in having to cut the Gordian knot in such a way as
to cause
the least prejudice to either party.
[9] The most obvious solution is
simply to follow what was done by Selke J and to order that the
property be sold by public auction
without reserve. However, it is
notorious that sales in execution do not always fetch the best value
of the property being sold.
In the current depressed property market
this effect may even be exaggerated. The first respondent has
impressed upon me a recent
newspaper article extolling the virtues of
the estate in which the property is situated. He has also pointed out
the fact that
the municipal valuation of the property is R3 000 000,
well in excess of the offer which has been made on the property. The
newspaper
article refers to the estate as being an exception to the
downtrend in the South African property market, and as having
phenomenal
sales during 2012. The article reports that the sales team
at the estate as ‘
being
inundated with requests to view plots and already established homes
on the estate
’. If all this were true, it is strange
that the agent who secured the proposed purchaser for the property
was unable to secure
a better deal, particularly when she has a
mandate to sell with the sales office of the estate.
[10] As matters stand the partnership
has been dissolved. The only partnership asset is the property. Only
one offer has been made
in the last approximately 11 months during
which active steps have been taken to market the property. The first
respondent having
consented to the sale of the property (albeit at
what he refers to as a market related value), one would have expected
him to have,
by now, attempted to implement the various solutions he
now presses upon me as being reasonable, and as constituting a reason
why
I should not authorise the sale of the partnership asset.
[11] I am mindful of all these
considerations and particularly mindful of the potential prejudice to
the erstwhile partners if the
sale is not to proceed. The prospective
buyer has already expressed concern at the delays occasioned by the
first respondent’s
refusal to agree to the sale, and there is
an imminent danger that the sale could fall through because of the
first respondent’s
refusal to sign the necessary papers.
[12] In all the circumstances I grant
the following order :
It is declared that the partnership
which formerly existed between the first and second applicants and
the first and second respondents
(’the partners’) is
dissolved;
the partnership asset, namely the
immovable property described at 3 Brettonwood Lakes, Brettonwood
Coastal Estate, in extent 2
hectares (‘the property’) is
to be sold in accordance with the offer to purchase annexed to the
applicants’
founding affidavit in this application as annexure
‘A’
the partners are required to sign all
documents and do whatever is necessary to facilitate the sale and
transfer of the property
in accordance with the offer to purchase,
including but not limited to facilitating :
the cancellation of the mortgage
bond;
the completion of the sale agreement;
the transfer of the immovable
property to the purchaser.
in the event of any of the partners
failing or refusing to comply with the order in paragraph 3 above
within seven days of the
service of this order upon them, the
Sheriff of this Court is authorised and directed to sign all
documents and do whatsoever
is necessary to facilitate the sale and
transfer of the property on behalf of that partner in accordance
with the offer of purchase,
including but not limited to
facilitating the matters set out in paragraph 3 above;
the proceeds of the sale are to be
used to discharge the partnership liabilities in respect of :
the mortgage bond with Standard Bank;
the management accounts with
Brettonwood Estates;
any outstanding amounts in respect of
rates, levies and utilities.
once the bondholder, management
accounts, rates, levies and utilities have been paid, the remainder
of the proceeds of the sale
are to be held in the applicants’
attorney’s (Shepstone & Wylie) account, pending a
debatement of the partnership
account, alternatively, in the absence
of agreement on such debatement, pending appropriate legal
proceedings for a debatement
and payment out to the parties of what
is due to them;
the first respondent is directed to
pay the applicants’ costs of this application.
Date of hearing : 12
th
February 2013
Date of judgment : 14
th
February 2013
For the Applicants : Ms Pudifin-Jones
(instructed by Shepstone& Wylie)
For the First Respondent : In person