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[2020] ZASCA 108
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Khan v Shaik (641/2019) [2020] ZASCA 108; 2020 (6) SA 375 (SCA) (21 September 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 641/2019
In
the matter between:
ZORAH
BANOO
KHAN APPELLANT
and
SALIM MOHAMED
SHAIK RESPONDENT
Neutral
citation:
Khan
v Shaik
(641/2019)
[2020] ZASCA 108
(21 September 2020)
Coram:
CACHALIA,
SALDULKER and NICHOLLS JJA and MATOJANE and SUTHERLAND AJJA
Heard
:
4 September 2020
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the
Supreme
Court of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be 10h00 on 21 September 2020.
Summary
:
Division of fruits of a universal partnership – claim to
division is based on a personal right and not a real right –
claim in respect of a universal partnership prescribes after three
years from the termination of the universal partnership in terms
of
s
11
(d)
of the
Prescription Act 68 of 1969
– termination date of
universal partnership is a fact-specific issue; sometimes it may
coincide with the termination of the
consortium but not necessarily –
claim prescribed as it was instituted more than three years after the
universal partnership
terminated.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Johannesburg (Weiner J sitting as court
of first instance):
The
appeal is dismissed with costs.
JUDGMENT
Sutherland
AJA
(Cachalia,
Saldulker and Nicholls JJA and Matojane AJA concurring):
Introduction
[1]
This case is about whether or not a claim to divide the fruits of a
universal partnership can prescribe in terms of the
Prescription Act
68 of 1969
.
[2]
Ms Khan, the appellant, was the applicant a quo
.
She sought a declarator that she and Mr Shaik, the respondent, were
in a universal partnership and that, because they had parted
company,
upon that premise, a liquidator be appointed to value the fruits of
the partnership and distribute the value in equal
shares to the
partners. The application was dismissed. The basis for the dismissal
was that her claim, if she had one, had prescribed.
No finding was
made that a universal partnership had actually come into being.
[1]
The existence of the universal partnership was assumed purely for the
purpose of deciding the prescription issue.
[3]
Three critical findings were made by the court a quo. First, that the
claim had been instituted six years after the consortium
between the
parties had terminated.
[2]
Second, that concomitantly, the universal partnership had terminated
at the moment the consortium had ended. Third, that because
such a
claim fell within the provisions of
ss 10(1)
and
11
(d)
of the
Prescription Act, the
claim had prescribed after an elapse of
three years from the date upon which the consortium ended.
[4]
The counter proffered to these findings, as advanced on behalf of the
appellant is twofold: first, that her claim was based
on a real right
which would not have prescribed within three years, and, second: in
any event, even if a personal right, prescription
of a claim in
respect of a universal partnership cannot begin to run until a court
pronounces a dissolution.
[5]
Accordingly, the controversy requires these questions to be
addressed:
(1)
What
is the character of the rights in a universal partnership possessed
by a partner?
(2)
Is a
claim to divide the fruits of a universal partnership based on a real
or a personal right?
(3)
Is the
share claimed in a universal partnership a debt as contemplated by
the
Prescription Act?
(4
)
How is
the date upon which prescription commences to run to be determined in
respect of a claim to share in a universal partnership?
(5)
Is a
court order necessary to terminate a universal partnership?
The
character of a partner’s rights in a universal partnership
[6]
The label ‘universal partnership’ in our law, refers to
the
societas
universorum bonorum
of the Roman-Dutch Law.
[3]
The elements of a relationship between two persons that evidences the
existence of this species of partnership were most recently
affirmed
by this Court in
Butters
v Mncora
:
[4]
‘
I
now turn to the relevant legal principles. As rightly pointed out
by June Sinclair (assisted by Jaqueline Heaton),
The
Law of Marriage
vol
1 274, the general rule of our law is that cohabitation does not give
rise to special legal consequences. More particularly,
the supportive
and protective measures established by family law are generally not
available to those who remain unmarried, despite
their cohabitation,
even for a lengthy period (see eg
Volks
NO v Robinson
[2005] ZACC 2
;
2005
(5) BCLR 446
(CC)). Yet a cohabitee can invoke one or more of the
remedies available in private law, provided, of course, that he or
she can
establish the requirements for that remedy. What the
plaintiff sought to rely on in this case was a remedy derived from
the law
of partnership. Hence she had to establish that she and
the defendant were not only living together as husband and wife, but
that they were partners. As to the essential elements of a
partnership, our courts have over the years accepted the formulation
by Pothier (RJ Pothier
A
Treatise on the Law of Partnership
(Tudor's
Translation 1.3.8)) as a correct statement of our law (see eg
Bester
v Van Niekerk
1960
(2) SA 779
(A)
at
783H-784A;
Mühlmann
v Mühlmann
1981
(4) SA 632
(W)
at
634C-F;
Pezzutto
v Dreyer
[1992] ZASCA 46
;
1992
(3) SA 379
(A)
at
390A-C). The three essentials are, firstly, that each of the parties
brings something into the partnership or binds themselves
to bring
something into it, whether it be money or labour or skill. The second
element is that the partnership business should
be carried on for the
joint benefit of both parties. The third is that the object should be
to make a profit. A fourth element
proposed by Pothier, namely, that
the partnership contract should be legitimate, has been discounted by
our courts for being common
to all contracts (see eg
Bester
v Van Niekerk
supra
at 784A).
’
[5]
[7]
In practical terms, a controversy about the existence of a universal
partnership arises only when it ends, whether by death
or by the
parting of ways by the partners. To prosecute a claim to share in the
fruits of a disputed partnership, the claimant
must thus, for
practical purposes, obtain a declarator that the partnership existed.
[8]
Plainly, the essence of the concept of a universal partnership is an
agreement about joint effort and the pooling of risk and
reward. Upon
termination of the universal partnership, what follows is an
accounting to one another; the poorer partner becomes
the richer
partner’s creditor. Accordingly, it is the contract that is the
foundation of the universal partnership, not the
mere fact of the
consortium and the mere contributory efforts to building wealth.
[6]
A tacit agreement suffices.
[7]
Is
a claim to share in a universal partnership a real or a personal
right?
[9]
In
Absa Bank Limited v Keet
, Zondi JA held:
‘
.
. . the solution to the problem of the prescription is to be found in
the basic distinction in our law between a real right (
jus
in re
)
and a personal right (
jus
in personam
).
Real rights are primarily concerned with the relationship between a
person and a thing and personal rights are concerned with
a
relationship between two persons. The person who is entitled to
a real right over a thing can, by way of vindicatory action,
claim
that thing from any individual who interferes with his right. Such a
right is the right of ownership. If, however, the right
is not
absolute, but a relative right to a thing, so that it can only be
enforced against a determined individual or a class of
individuals,
then it is a personal right.
’
[8]
[10]
A claim based on a contract is, plainly, a personal not a real right.
Because, as indicated, a claim to one’s share in
a universal
partnership is, in truth, a demand that the partners account to one
another and that one pay the other a portion, such
a claim is
inconsistent with asserting a real right.
[11]
Accordingly, a partner in a universal partnership cannot have a
direct claim to an asset owned by the other partner. This attribute
distinguishes joint ownership of assets from a universal partnership.
The clearest contrast is a marriage in community of property.
In such
an example, the marriage is the juristic foundation for joint
ownership of everything the spouses jointly own. A universal
partnership, unlike a marriage in community of property does not
cause the partners to be joint owners of assets.
[12]
The contention advanced on behalf the appellant that the concept of a
universal partnership and the concept of community of
property are
indistinguishable is untenable. Reliance is place on a passage in
Booysen
v Stander
[9]
.
That Court was called upon to decide whether a universal partnership
had come into being. It cited the passage
in
Butters v Mncora
at paras 11 and 18, part of which is cited above in this judgment, as
setting out the applicable legal principles. Thereupon the
Court
stated that:
‘
[75]
As previously stated,
a
universal partnership is similar to a marriage in community of
property.
It
is trite that the nature of the relief which parties can claim
when married in community of property is either an order
for division
of the joint estate or an order for forfeiture of the benefits of the
marriage in community of property. It is furthermore
trite that each
spouse automatically shares in the assets that are accumulated during
the subsistence of the marriage. The moment
spouses enter into a
marriage in community of property they become co-owners of
everything that either of them owned prior
to the marriage.
Furthermore, a marriage in community of property not only results
in community of assets, but also in community
of liabilities.
[76]
These fundamental legal principles therefore reinforce my view that
the plaintiff's claim based on
actio communi dividundo
cannot
be sustained as it is near impossible to untangle the threads of
interwoven narratives of life partners, which have
layered
complexities akin thereto, in the advancement of a joint household.’
(Underlining supplied)
On
the basis of the underlined sentence it is contended on behalf of the
appellant that this case is authority for the proposition
that
partners in a universal partnership are co-owners of property. It is
unlikely that this was the meaning which the Judge sought
to express
in that passage because such a meaning would directly contradict the
passages cited from
Butters
v Mncora
.
A better reading of this passage is that a comparison was drawn
between a universal partnership and community of property in order
to
remark that in both instances there was a need to divide up the
assets upon a termination, rather than to state that a joint
ownership of the assets existed. If the Judge did intend to
state that partners in a universal partnership are joint owners
of
assets that statement of the law would be incorrect.
[13]
In addition, a number of cases were cited of behalf of the appellant
to offer purported further support for the contention
that the
appellant was asserting a real right. However, all the cases cited
are examples of joint ownership of assets. Therefore,
reliance on
them avails the appellant not at all.
[10]
In any event, in this case, the appellant has not purported to
formulate a vindicatory claim; rather, the relief sought is a
declaratory
order that the universal partnership existed, an order
dissolving it, and the appointment of a liquidator to determine the
assets
in the ‘joint estate of each party’
[11]
,
liquidate them and distribute equal shares to the partners.
[12]
Lastly, as held, in this Court, in
Carmel
Trading Co Ltd Commissioner, South African Revenue Services &
Others
,
‘a former partner has no
proprietary
claim in respect of the property of the dissolved partnership’.
[13]
Is
the share claimed by a partner in a universal partnership a debt as
contemplated by the
Prescription Act?
[14
]
The provisions in the
Prescription Act relevant
to a contractual
claim are these:
‘
10.
Extension of debts by prescription
(1)
.
. . a debt shall be extinguished by prescription after the lapse of
the period which in terms of the relevant law applies in respect
of
the prescription of such debt.
.
. .
11.
Periods of prescription of debts
The
periods of prescription of debts shall be the following:
.
. .
(d)
save where an Act of Parliament provides otherwise, three years in
respect of any other debt.’
[15]
Thus, a claim by one partner against the other to account for a share
in a universal partnership, which claim is based on a
contract, is
therefore a claim to enforce a personal right which is a debt as
contemplated by the
Prescription Act.
[16
]
The scope of the term ‘debt’ in the
Prescription Act has
been the subject of clarification. Most recently, in
Off
Beat Holiday Club & another v Sanbonani Holiday Spa Shareblock
Ltd
[14]
,
the
Constitutional Court affirmed the dictum in
Makate
v Vodacom Ltd
[15]
that the scope of a ‘debt’ is that as formulated by
Holmes JA in
Escom
v Stewarts and Lloyds of South Africa
[16]
:
‘ …
a
debt is
-
that
which is owed or due; anything (as money, goods or services) which
one person is under an obligation to pay or render to another’
A claim founded on contract is such an obligation, of which, a
universal partnership is an example.
[17]
It was argued that there is a similarity between the claim to share
in a universal partnership and the circumstances in
Makate
v Vodacom Ltd.
This idea is untenable. In
Makate
v
Vodacom
Ltd
,
it was recognised that a contract had not yet come into being and
thus a debt had not yet arisen. A claim to share in a universal
partnership is squarely founded on a contractual debt which has
fallen due and payable.
How
is the date upon which prescription starts to run to be determined in
respect of a claim to share in a universal partnership?
[17]
Section 12
of the
Prescription Act provides
that: ‘prescription
shall commence to run as soon as the debt is due.’ Accordingly,
a claim to share in a universal
partnership prescribes after three
years from the moment the claim arises, ie, the termination of the
universal partnership.
[18]
It is necessary to determine what significance to attach to the
moment the consortium ends as an appropriate date to signal
the end
of the universal partnership.
[19]
Before the court a quo it was common cause that the claim had been
instituted six years after the termination of the consortium.
The
consortium ended when the respondent left the common home never to
return, whereupon he took up with another woman whom he
later
married. The affidavits are quite explicit about this event. The
appellant alleged that the respondent left the common home
in 2009
and the respondent confirmed this, adding that: ‘…I took
all my moveable assets with me and the [appellant]
kept all her
moveable assets. When we separated in 2009, we divided the assets and
the relationship was finalised and terminated.’
The appellant
in a replying affidavit, agreed with that assertion adding the
allegation that the respondent ‘…intended
to leave me
with the immovable property to be my sole and exclusive property’.
[20]
Thereafter the partners had no dealings with one another either
intimately or in the business to which the appellant says she
contributed. Save for the conflict that flowed from the respondent’s
endeavours to evict the appellant from the former common
home which
had been, by then, registered in the name of his wife, they had no
further contact.
[21]
The court a quo concluded that the claim arose upon the termination
of the consortium. On that premise, the prescriptive period
of three
years had elapsed before summons was issued.
[22]
In reaching this result, the Court a quo relied on the decision of
the Western Cape High Court in
Schrepfer
v Ponelat.
[18]
In that case the conclusion was reached that the consortium and the
universal partnership ended simultaneously. This dictum in
Schrepfer
v
Ponelat
is baldly stated and it is not entirely clear that it was intended to
equate
the end of the consortium with the end of the universal
partnership.
[19]
The matter went on appeal to this Court where the finding as to the
date upon which the universal partnership ended was neither
disturbed
nor commented upon. However, what was noted was that after the
termination of the consortium, the defendant made payment
to the
plaintiff of a monthly sum of R1500 for the next 22 months.
[20]
This fact was not considered pertinent to the determination of the
date of the termination of the universal partnership in either
judgment.
[23]
The decision of the Western Cape High Court in
Schrepfer
v Ponelat
was
also relied on in argument on behalf of the appellant to excuse the
six-year delay because the plaintiff in that case had instituted
her
claim four years after the claim arose. However, this aspect of the
case is unhelpful to the argument because in that case
the Court was
not called upon to address a question of prescription
.
A court has
no competence to raise the issue of prescription mero motu.
[21]
[24]
The decision in
Schrepfer
v Ponelat
can be contrasted with the decision in
Cloete
v Maritz II,
[22]
where the date the consortium ended was found not to be the effective
date for the end of the universal partnership. In this case
the
parties ended a long-standing romantic relationship but continued for
several months to collaborate in several business ventures,
in which
they had both previously participated, and they deliberated on how to
extract value therefrom. This course of conduct
eventually ended. It
was held that the latter date, when their commercial dealings ended,
was the date the universal partnership
ended.
[23]
[25] What follows
from a consideration of these examples is that there is no magic in
the date the consortium ends for the purposes
of determining the
ending of the universal partnership nor, axiomatically, the date for
computing the beginning of the running
of prescription of a claim in
respect of a universal partnership. On appeal in
Ponelat v
Schrepfer,
Meer AJA had this to say:
‘
A
universal partnership exists if the necessary requirements for its
existence are met, and this is regardless of whether the parties
are
married, engaged or cohabiting.’
[24]
[26]
Therefore, the findings in
Schepfer
v
Ponelat,
in
Cloete
v Maritz II
and in the court a quo, must be understood to be findings of fact,
not statements of principle.
[27]
In the court a quo, the circumstances described by the appellant
showed that the joint enterprise between her and the respondent
indeed ended at the same time the consortium ended. In
Cloete
v Maritz
the opposite was evidenced. In
Schrepfer v Ponelat
,
the payment of what was in effect a miserly maintenance allowance did
not give rise to an inference of a continuation of any joint
enterprise; their joint efforts had been extensive and related to
successive enterprises, which activity ceased simultaneously
with the
ending of the consortium.
[28]
Accordingly, as alluded to earlier, because the substance of a
universal partnership is a pooling of risk and reward, although
the
commonplace rationale to engage in such a joint effort may be rooted
in a romantic relationship and indeed sustained by it,
the consortium
is not the substratum of the legal relationship of a universal
partnership nor its alter ego. As ever, the date
when prescription
starts to run is a fact-specific determination.
Is
a Court order of dissolution required to terminate a universal
partnership?
[29]
A further contention was advanced on behalf the appellant that a
partnership is extinguished only at the time a court so orders.
It
was conceded that an agreement between the partners could also
dissolve a partnership. Moreover, the argument runs on to posit
that
even an order of dissolution is not the actual moment of dissolution
because that can only occur when the assets are distributed
– a
proposition which seems inconsistent with the earlier contention. The
supposed force of this thesis is that prescription
cannot run until
the liquidation of the partnership and because, as in this case, a
liquidation has not yet happened, albeit many
years later,
prescription has yet to begin to run. Such a proposition is
tantamount to saying that a claim to share in a universal
partnership
is not susceptible to prescription at all. This proposition is
advanced on the premise that the claim is based on a
personal right.
[30]
The thesis is unsustainable even on its own terms. The executory acts
required to identify assets, determine value for the
purposes of the
partners accounting to one another and effecting a physical
distribution have no bearing on the date that the partnership
terminated. Such happenings are, by definition, possible only after
the date of dissolution of the partnership has been determined.
The
allusion to
s 13(1)
(d)
of
the
Prescription Act,
[25]
which inhibits a debt owed by one partner to another during the
existence of the partnership, cannot have any bearing on the running
of prescription after the partnership has ended. The example
proffered in support of the argument on behalf of the appellant is
that in
Van
der Merwe v Sekretaris van Binnelandse Inkomste
[26]
where the remark was made that for the purposes of the liquidation
the partnership continued to exist. The case is plainly unhelpful
to
the argument. The circumstances there were that a partner in a
commercial partnership had died. Axiomatically, there had to
an
accounting of what was due to his estate at the moment of death.
Revenue from work–in–progress was calculated and
paid to
the estate. That exercise took time. Plainly for the purposes of that
calculation, the
corpus
of the partnership remained
in
esse
.
Conclusions
[31]
Accordingly:
(1)
A
claim to share in a universal partnership is based on a personal, not
a real right.
(2)
Such
a claim prescribes after three years from the termination of the
universal partnership in terms of
s 11
(d)
of the
Prescription Act.
(3
)
The
termination of the consortium is often simultaneous with the
termination of the universal partnership, but whether or not this
is
so, in each case, is a question of fact.
(4)
In
this case, the universal partnership did terminate at the same time
as the consortium and more than three years elapsed before
a claim
was instituted; therefore, the appellant’s claim had
prescribed.
The
Order
The
appeal is dismissed with costs.
_________________________
ROLAND
SUTHERLAND
ACTING
JUDGE OF APPEAL
APPEARANCES:
For
the appellant: Attorney Y Omar,
Instructed
by: Zehir Omar Attorneys, Johannesburg,
Maree
& Partners, Bloemfontein.
For
the respondent: Adv L van Gass,
Instructed
by: Stopforth Swanepoel & Brewis Attorneys, Johannesburg,
Phatshoane
Henney Attorneys, Bloemfontein.
[1]
It was, in any event, not open to the court a quo to have made a
firm decision on the existence of a universal partnership because
the facts averred to found such a claim were hotly disputed and
therefore, had it been necessary to make such a firm decision,
the
matter was inevitably bound for referral to oral evidence or to
trial. The appellant averred that they spent 20 years together
as
man and wife and that she was materially instrumental in building up
a business owned by the respondent. He denied these averments.
[2]
It was not part of the appellant’s case that she and the
respondent were married, whether in terms of a
Nikah
or otherwise. This was the case despite an allegation made by the
respondent under oath that he and the appellant were ‘common
law spouses’ and an admission by the respondent that he made
that affidavit under pressure from the appellant.
[3]
Lawsa
vol
19 2 ed para 259ff.
[4]
Butters
v Mncora
[2012]
ZASCA 29
;
2012 (4) SA 1
(SCA);
[2012] 2 All SA 485
(SCA) para 11;
see too:
Ponelat
v Schrepfer
[2011]
ZASCA 167
;
2012 (1) SA 206
(SCA);
[2012] 1 All SA 532
(SCA) paras
19-20.
[5]
The third element has been qualified in our law so that the
objective may reach beyond profit making:
Butters
v Mncora
para
18.
[6]
Butters
v Mncora
paras
11 and 18;
Mühlmann
v
Mühlmann
1984
(3) SA 102 (AD).
[7]
Butters
v Mncora
para 18.
[8]
ABSA
Bank Limited v Keet
[2015]
ZASCA 81
;
2015 (4) SA 474
(SCA);
[2015] 4 All SA 1
(SCA) para 20.
[9]
Booysen
v Stander
2018(6)
SA 528 (WCC) at paras 75-76.
[10]
Staegeman
v Langenhoven
[2011]
ZAWCHC 302
;
2011 (5) SA 648
(WCC);
Mbalo
v Makhosonke
[2015]
ZAWCHC 91
;
Salaman
v Salaman
[2008]
ZAKZHC 61.
[11]
The articulation of each partner having a ‘joint estate’
is of course a misnomer; it is however correct that the
estate of
each
partner would be a contributor to the universal partnership.
[12]
Notice of Motion: Record, page 1-2, prayers1-4. See
Staegeman
v Langenhoven
where
it was held that the
rei
vindicatio
(a claim based on a real right) was not a ‘debt’
contemplated by
s 10
of the
Prescription Act
>.
[13]
Carmel
Trading Co Ltd v South African Revenue Services & Another
2008
(2) SA 433
(SCA) at para 15.
[14]
2017(5) SA 9 (CC) at para 44
[15]
2016 (4) SA 121
(CC) at para 93
[16]
1981(3) SA 340 at p344E- G
[17]
See too, eg:
Robson
v Theron
1978
(1) SA 841
(AD) at pp 848Hff and esp at p 849D: ‘The
actio
pro socio
was a personal action which arose from the partnership agreement (
ex
contractu societatis
)’
[18]
Schrepfer
v Ponelat
[2010]
ZAWCHC 193
para 31.
[19]
Ibid.
[20]
Ponelat
v Schrepfer
para
15.
[21]
See:
Section 17
(1)
A court shall not of its own motion take notice of prescription.(2)
A party to litigation who invokes prescription, shall
do so in the
relevant document filed of record in the proceedings: Provided that
a court may allow prescription to be raised
at any stage of the
proceedings.
[22]
Cloete
v Maritz
(2014)
ZAWCHC 108
(
Cloete
v Maritz II
).
A related dispute is the subject matter of a separate judgment:
Cloete
v Maritz
[2013]
ZAWCHC 69
;
2013 (5) SA 448
(WCC) (
Cloete
v Maritz I
).
[23]
Cloete
v Maritz II
paras
11, 18 and 100.
[24]
Ponelat
v Schrepfer
para
22; see too
Butters
v Mncora
para
11: ‘cohabitation does not give rise to special legal
consequences
.’
[25]
“
Section
13
(1) If-
(a)….(c)
(d)
the creditor and debtor are partners and the debt is a debt which
arose out of the partnership relationship;….
(e)
….(h)
(i)
and, the relevant period of
prescription would, but for the provisions of this subsection, be
completed before or on, or within
one year after, the day on which
the relevant impediment referred to in
paragraph
(a)
,
(b)
,
(c)
,
(d)
,
(e)
,
(f)
,
(g)
or
(h)
has
ceased to exist,
the
period of prescription shall not be completed before a year has
elapsed after the day
referred
to in paragraph
(i)
.
[26]
1977 (1) SA 472(AD)
esp at p 473F