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[2014] ZAWCHC 153
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Lillie v Berry (17701/2013) [2014] ZAWCHC 153 (7 October 2014)
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
CASE
NO: 17701/2013
DATE:
07 OCTOBER 2014
Reportable
In the matter
between:
LUDWIG
LILLIE
...............................................
Plaintiff
And
PENELOPE ANN
BERRY
................................
Defendant
JUDGMENT: 07
October 2014
DAVIS J
Introduction
[1] Defendant
excepted to the plaintiff’s particulars of claim on the grounds
that they do not disclose a cause of action.
In his pleadings
plaintiff sought an order declaring that a partnership existed
between himself and the defendant in equal shares
in respect of
certain immovable property, which property was previously occupied by
the parties. In seeking this relief the plaintiff
has relied on an
oral agreement which he alleges was entered into between himself and
the defendant ‘at or about the end
of 2003 or the beginning of
2004’.
[2] The terms of the
agreement, as set out by plaintiff, inter alia, were that:
1. The defendant
would purchase the property for R 522 000.00 and be registered in her
name only.
2. The property
would be purchased for the joint benefit of the parties and would be
the only partnership asset.
3. The parties would
co-habit in the property
4. In the event of a
resale of the property, the parties would be entitled to share
equally in the proceeds and profit made thereon.
5. The parties would
share equally in the proceeds of and consequent profit made on the
sale of the property, should it be sold
after the dissolution of the
partnership.
[3] Plaintiff
further alleged that the partnership was dissolved during June 2012
and the parties decided to terminate their cohabitation
of the
property as ‘cohabitation was one of the principle purposes of
the partnership’. On this basis plaintiff has
sought an order
that, as the partnership existed, the defendant is now required to
account to him about the sale and the debatement
of the account. He
also seeks an order confirming the dissolution of the partnership and
the appointment of a liquidator to prepare
a final account and
payment of that which is owing to him.
[4] Defendant
contends in her notice of exception that:
‘One of the
essential terms required in order for an agreement to embody a
partnership is that the object of the partnership
business must be to
make a profit. A partnership cannot exist where the making of
profits is an incidental possibility and not
the main aim of the
venture.
The plaintiff and
the defendant were cohabitees for the duration of their personal
relationship. According to the plaintiff, the
partnership ceased when
the parties ceased to cohabit. Indeed, he alleges in paragraph 11 of
his particulars of claim that this
cessation of the parties’
cohabitation “brought an end to the partnership” –
this being “as cohabitation
was one of the principal purposes
of the partnership”.
The only element of
profit alleged by the plaintiff, in paragraphs 4.4 and 4.9 of his
particulars of claim, is that the parties
would share in the proceeds
of the sale of the property, should it be sold either during the
cohabitation or after their cohabitation
ceased. Such resale was
thus a future uncertain event.
Sharing in such
proceeds is a natural incident of the sale of any commonly owned
property. Common ownership is however not alleged
by the plaintiff.
In the absence of by
allegation of an intended or profit-making enterprise on the part of
himself and the defendant, the plaintiff
has failed properly to plead
a partnership.’
[5] The basis of
this exception taken by the defendant turns on the well-known
formulation of the essentialia of partnership set
out by Pothier
Treatise on the Contract of the Partnership, which was accepted as
reflective of our law in Joubert v Tarry and
Co
1915 TPD 277
; in
particular the requirement that each of the partners must bring
something into the partnership or bind himself or herself to
bring
something into it whether it be money, labour or skill. Further,
the business should be carried on for the joint benefit
of both
parties and the object should be to make a profit. Finally, the
contract between the parties should be a legitimate contract.
[6] Defendant
contends that, as it is essential that a partnership should have as
its objective the making of a gain or profit,
the very nature of the
parties’ relationship, being cohabitation on its own, precludes
the existence of this requirement.
According to defendant, the only
element of profit which is alleged by the plaintiff in his
particulars of claim is that the
parties should share in the proceeds
of the sale of the property, should the property be sold either
during their cohabitation
or after cohabitation ceased.
[7] Accordingly, in
the absence of any allegation of an intended profit making enterprise
on the part of himself and the defendant
as well as the further
absence of any allegation of the intention to place in common all
their property, both present and future,
the plaintiff had failed
property to plead a partnership.
Plaintiff’s
case
[8] Mr Verster, on
behalf of the plaintiff, submitted that a partnership can exist in a
single asset or a single transaction.
Bester v Van Niekerk
1960 (2)
SA 779
(A) at 784 B. In his view, it was clear from the pleadings,
which set out the terms of the agreement, that the parties foresaw
that the partnership would come to an end when their cohabitation
terminated and, further, they foresaw what would occur if they
made a
profit from the sale of the property. That the date of the event
which would end the cohabitation was uncertain did not
mean that this
date would not arrive. The uncertainty of the date of a certain
event did not detract from the fact that the partners
had agreed to
share in the profits of the dissolution of the partnership.
[9] Relying on
Purdon v Muller
1961 (2) SA 211
(A) Mr Verster submitted that as the
real intention of the parties had to be deduced from the whole
agreement, evidence was required
as to the true nature of the
agreement and, accordingly this dispute cannot be decided on
exception. He further based his argument
on a dictum in Ally v
Dinath
1984 (2) SA 451
(T) at 455 where the court decided, on
exception, that the requirement of Pothier that the object of the
enterprise must be to
make a profit did not require an averment of a
pure pecuniary profit motive. The achievement of another form of
material gain,
such as a joint exercise for the purpose of saving
costs, would suffice to justify the existence of a partnership.
Evaluation
[10] The decision in
Ally v Dinath, supra, for the purposes of this dispute, requires a
careful analysis. In this case, plaintiff
pleaded that she and the
defendant lived together as man and wife and,
‘they:
“(a) shared a
joint household as if they were legally married for their joint
benefit:
(b) pooled their
assets, income and labour for their joint benefit .”
The pleading
continues:
“In so acting,
the parties tacitly, alternatively by implication, entered into a
universal partnership in equal shares and
accumulated a joint estate,
including the premises where defended is presently residing, which is
registered in defendant’s
name, and which was the common home
of the parties.”’
The plaintiff
therefore claimed that a universal partnership existed between the
parties, in which they held equal shares ‘during
the existence
of the Islamic relationship’ and therefore sought an order
dissolving the relationship and the appointment
of a receiver to
wind-up the partnership.
[11] The exception
which was taken was that the particulars of claim did not disclose a
cause of action, in particular in that there
was no allegation that
the agreement of universal partnership was concluded expressly, there
was no allegation that the object
of the alleged universal
partnership was to make a profit, and there was no allegation that
the said universal partnership was
terminated. Of particular
relevance to the present dispute, was the second point raised on
exception, namely that there was a
lack of an averment that the
object of the enterprise was to make a profit. Eloff J (as he then
was) dealt with the averment
that the parties had entered into a
universal partnership to make a profit as follows:
‘It is at once
necessary to state what is meant by the requirement that the object
of a partnership should be to earn a profit.
What is required is not
pure pecuniary profit motive; the achievement of another material
gains, such as a joint exercise for the
purpose of saving costs will
suffice. De Groot 3.12.1 requires no more than that the aim should
be “gemene baat te trekken”.
And in Isaac’s case
supra at 956 an object “to provide for the livelihood and
comfort of the parties, and their children,
including the proper
education and upbringing of the latter” was held to be
equivalent to making a profit and thus sufficient
for partnership
purposes. In the present case the objective of the accumulation of
an appreciating joint estate is alleged, and,
at least for pleading
purposes, that is in my estimation sufficient.’ (at 455 A-D)
[12] In both Ally’s
case and Lee (also known as L) v De Wet
1953 (1) SA 612
(O) our
courts have recognised that couples, who are not married, can still,
expressly or by implication, create a universal partnership
(societas
universorum bonorum). Parties to this form of arrangement agree to
put in common all their property, both present
and future. See
Bamford On the Law of Partnership and Voluntary Association in South
Africa (3rd ed) at 18; See also Lee v De
Wet supra at 614 H.
[13] In general, it
would appear that the requirement of making a profit is seen as
critical to the existence of a partnership.
See in this connection
Van der Keesel Dictata 3.26.1
‘It is in the
nature of a partnership that it is not enough that two of more agree
to a community of goods, but it is necessary
that they enter into it
in that spirit, that through that community they seek a common
profit. Thus, two owners who pool together
liquid goods or mix
together dry goods do indeed consent to a community …
However they are not partners if they do not
seek profit from that
community. I said before that it is the foundation of partnership
that the property is common …
whence we understand that a
partnership is not valid in which it is understood that the two or
more persons will receive not profit.’
(In translation)
[14] This
requirement however has been dealt with somewhat differently in the
case of a universal partnership. Thus, in Butters
v Mncora
2012 (4)
SA 1
(SCA) the plaintiff instituted action against the defendant,
claiming half of the defendant’s assets on the basis that a
tacit universal partnership existed between the parties in which they
held equal shares. It appeared that for almost twenty years
the
parties lived together as husband and wife even though they were not
married.
[15] After setting
out the law of universal partnership, Brand JA noted ‘once it
is accepted that a partnership enterprise
may extend beyond
commercial undertakings, logic dictates, in my view, that the
contribution of both parties need not be confined
to a profit making
entity.’ (para 19) Brand JA went on to held, on the evidence,
that there was an ‘all embracing
venture pursued by the
parties’ which included both their home life and the business
conducted by the defendant was aimed
at a profit which, in my view,
they tacitly agreed to share. (para 31)
[16] What these
dicta appear to indicate is that the requirement that the object that
a partnership should be to make a profit has
not been jettisoned and
that the requirement extends beyond the strict confines of a
commercial undertaking, to ‘universal
partnerships in general
and universal partnerships between cohabitees in particular’.
Butters, supra at para 17
[17] Butters case
turned on whether the evidence established the exist of a tacit
universal partnership between the parties. In
Ally’s case the
agreement which was pleaded between the parties was that a universal
partnership existed between the parties.
By contrast, in the present
case what was pleaded was an oral agreement of partnership, of which
the only asset was a property
which, in turn, formed the basis of
cohabitation between the parties. This factual matrix appears to me
to be a different situation
from that pleading a universal
partnership as was the case in the decisions to which I have made
reference.
[18] In Volks NO v
Robinson and others
[2005] ZACC 2
;
2005 (5) BCLR 446
(CC) at para 58 Skweyiya J
noted: ‘To the extent that any obligations arise between
cohabitees during the subsistence of
a relationship these arise by
agreement and only to the extent of that agreement.’ The
agreement pleaded in this case was
not that of a universal
partnership but of one encompassing a domestic property which
constituted the sole basis of a partnership
between the parties.
[19] The averment in
relation to profit making was that once the parties ceased
cohabitation, they would enjoy what, in effect,
would be the capital
proceeds from the sale of the dwelling. Manifestly, what was not
pleaded was a tacit universal partnership.
That takes the
arrangement out of ambit of the kind of universal partnership which
Brand JA described as extending beyond commercial
undertakings which
‘need not be confined to a profit making entity’ (para
19) Accordingly, in my view, the plaintiff
failed properly to
plead an agreement of partnership. The reference to profit is, at
best, analogous to the proceeds of a capital
nature, which analogy
illustrates that the parties had not entered into a profit making
venture nor into a universal partnership.
If the property was sold,
this capital asset would hopefully fetch a profit. In the result,
the element of a profit making
enterprise was not properly alleged in
relation to a property which was considered to be the only
partnership asset.
[20] Accordingly,
the plaintiff’s particulars of claim do not disclose an
adequate cause of action. The exception is upheld
and the
plaintiff’s claim is dismissed with costs.
DAVIS J