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IN THE HIGH COURT OF SOUTH AFRICA,

FREE STATE DIVISION, BLOEMFONTEIN

                                   

 

Case number:   5619/2019

 

In the matter between:

 

JOHANNES JACOBUS OOSTHUIZEN                                                    Plaintiff

 

and

 

ALEXANDER PAGEL VAN HEERDEN                                                          Defendant

                 

 

HEARD ON:                   31 AUGUST, 01 & 03 SEPTEMBER 2021

 

CORAM:                          MATHEBULA, J

 

JUDGMENT BY:          MATHEBULA, J

 

DELIVERED ON:        The judgment was handed down electronically by circulation to the parties’ legal representatives by email and release to SAFLII on 30 November 2021. The date and time for hand-down is deemed to be 30 November 2021 at 09H00.

 

 

Introduction

[1]       In this matter the plaintiff sued the defendant seeking an order that their joint ownership of the immovable property situated at 14 Dersley Street, Bayswater, Bloemfontein be terminated. Accordingly, that a liquidator be appointed with the powers to sell it, pay the debts and distribute the net proceeds of the sale equally between them. In essence this claim is not in dispute between the parties. Subject of course to the counterclaim filed by the defendant.

 

[2]       In the counterclaim the defendant is seeking a declaratory order that a universal partnership existed between them in respect of the business operated as a guesthouse under the name and style of Dersley Manor at 10 Dersley Street including the property mentioned in paragraph one (1) above. Also, an order dissolving the partnership and the appointment of a liquidator with authority to liquidate the assets and ensure that the net proceeds are distributed equally between them.

 

The only contentious issue between the parties

 

[3]       The only point in issue on the merits is whether a partnership existed between the parties in respect of the business operated as a guesthouse under the name and style of Dersley Manor. The parties concluded a joint minute and agreed that the plaintiff bears the onus to prove the existence of a partnership.

 

Background facts

 

[4]       The facts that emerged from the oral and documentary evidence put before me were the following. The parties met at a party towards the end of year 2010 and entered into a romantic relationship. After the plaintiff underwent an ocular surgery in April 2011, they decided to cohabit. The plaintiff confronted with serious eyesight issues, became more and more reliant on the defendant to advance his personal and business issues. Prior to this living arrangement the plaintiff was operating a guesthouse and the defendant was a tennis coach. Given his commitment to the plaintiff, the defendant ceased his tennis coaching job, dedicated his time and energy to assist him to manage the guesthouse. His activities of being a driver, marketer, booking agent and oversee daily operations needed him to be fulltime at the guesthouse and on the side of the plaintiff. There was neither oral nor written contract of employment entered into between them.

 

[5]       It is common cause that they lived off the income generated from the business. They also pulled resources to expand the business by purchasing the adjoining property to wit 14 Dersley Street for R1,300,000.00. The defendant sold his farm and contributed R600,000.00 with a further R100,000.00 utilised for renovations. The rest of the purchase price was covered by a mortgage bond. This property brought into the business extra rooms and a conference facility. There was no differentiation in the manner business was conducted between the two (2) properties as well as the income derived from them.

 

[6]       In their quest to improve the business, two (2) further mortgage bonds of R850,000.00 and R1,200,000.00 were registered over number 14 Dersley Street. The funds were utilised for renovations, pay First National Bank for the mortgage bond over number 10 Dersley Street as well as manage the cash flow of the business. Like most business ventures the business experienced cash flow issues and the defendant stepped in to bail it out by paying out of his credit card facilities and funds given to him as gifts by his family. There is no doubt that during their period together the parties accumulated a sizeable amount of debt. The defendant did raise concerns about the rising debt and was assured by the plaintiff that “it is one business”.

 

[7]       There is a factual dispute whether the plaintiff told the defendant that “what is mine is yours and what is yours is mine”. What is clear is that in his will the plaintiff bequeathed his entire estate to the defendant. The relationship between them soured in September of year 2019 after the plaintiff had attempted suicide. This affected their business relationship and they parted ways in a rather acrimonious manner. On 2 March 2020 the Commission for Conciliation, Mediation and Arbitration (CCMA) ordered that the defendant was dismissed in a manner that was procedurally and substantively unfair. Compensation in the sum of R360,000.00 was awarded in favour of the defendant. This in a nutshell are the facts that gave rise to litigation between them.

 

[8]       I am indebted to both counsel who submitted detailed heads of argument addressing pertinent issues from their different viewpoints. It is the defendant’s case that the plaintiff’s claim must be dismissed and an order prayed in his counterclaim be granted. On the other hand, the plaintiff prays that the counterclaim should be dismissed and consequently his claim be granted. The parties are ad idem that the costs must follow the result.

 

Arguments

 

[9]       The arguments on behalf of the defendant concentrated on the evidence led and concluded that the most plausible conclusion from all relevant proved facts and circumstances a contract came into existence. Counsel relied upon the judgment of Brand JA in Butters v Mncora[1] which reiterated the formulated requirements of a partnership. He pointed out that these requirements have been fulfilled in both the pleadings and evidence tendered by the defendant. He raised numerous points to demonstrate that the evidence tendered by the plaintiff deviated from the pleadings and his version contradicted the one that was put to the defendant during cross examination.

 

[10]     In the pleadings it is denied that they literally lived off the business.[2] This turned out to be common cause. It is also denied that they contributed labour, skill, money et cetera into the business. The contrary is true. It is clear that they were both bondholders and the explanation by the plaintiff that it is only in his name and seemingly mistake by the Deeds Office to register the immovable property in both their names does not make sense at all. What also stands out is that the parties stayed together because of the romantic relationship not as part of the employee benefits accruing to the defendant. He contended that a universal partnership existed and the parties had equal shares is respect of the business operated as a guesthouse under the name and style of Dersley Manor.

 

[11]     The contention on behalf of the plaintiff is that the defendant has failed to prove his case that the parties entered into a partnership. It was pointed out that the parties could not have commenced the business of the guesthouse in the year 2010 to 2011 because it was already in existence since the year 2008. In any event, the plaintiff was not the owner of the guesthouse. It was owned by a close corporation which was later converted into a company. The conversion was done with the full knowledge of and no objection from the defendant. Counsel argued that the company was not party to the proceedings before me and it is not the case for the defendant to pierce the corporate veil or that the company was the alter ego of the plaintiff.

 

[12]     Turning to the contribution made by the defendant, he argued that at best it could have been from the year 2013 onwards. The funds paid to acquire 14 Dersley Street made by the defendant, were not paid into the bank account of the close corporation but solely to acquire the property. He referred to the litigation that served before the CCMA whereby the defendant claimed compensation from his employment as a Senior General Manager.

 

[13]     Turning to the romantic relationship, he submitted that the defendant confuses it with a partnership. He also relied on Butters v Mncora supra that as a general rule cohabitation does not give rise to special legal consequences. Therefore, the counterclaim should be dismissed with costs.

 

Evaluation of evidence

 

[14]     I am confronted with two conflicting versions and the correct approach is to determine which of the two (2) is more probable.[3] I had the opportunity to listen to and observe witnesses as they gave evidence. The defendant impressed me in the manner he narrated his version, his ability to remember the details and state lucid explanations for every event. His oral evidence was corroborated to a large extent by reference to documents submitted per agreement in the defendants’ bundle. In particular, the myriad of financial transactions that over the period of time they were an item with the plaintiff. He did not deviate from his version and I found him to be an honest and credible witness. My view is that there were no falsehoods in his evidence and could not find any inherent improbabilities.

 

[15]     The plaintiff was a woeful and bad witness who contradicted himself and adapted his evidence. Clearly cross examination contributed to the undoing of his version as correctly pointed out by counsel for the defendant on a number of issues mentioned in preceding paragraph. In short his evidence is fraught with countless improbabilities and stand to be rejected. During the subsistence of the romantic relationship they literally lived off the business for all their expenses. That was their only source of income. The defendant invested or injected a substantial amount of his money into the business to alleviate its problems and improve its chances for success. It is highly improbable that if he was an employee he will do so. It makes no sense at all that the plaintiff will bequeath his entire estate to the defendant and not intend to share it with him while they are both alive. The plaintiff was less than frank that it was their intention right from the beginning to share everything with each other. What he termed financial lapses and that the defendant assisted freely and voluntarily was in fact his contribution to the realisation of their success story.

 

[16]     The parties spent approximately nine (9) years together as a couple. The evidence suggest rather strongly that they decided early after they met that they were in a universal partnership. That they had the requisite intention can be gleaned from their verbal interaction and conduct throughout their stay together. To say to another that “what is mine is yours and what is yours is mine”, is a single most significant act of the meeting of minds to form a universal partnership. The expression is an unequivocal act of intention that they are in a partnership. If I am wrong on the finding that the plaintiff uttered these words, his conduct of securing the financial security of the defendant after his demise led me to the conclusion that he had the requisite intention to be in a partnership with him.

 

Discussion

 

[17]     I now turn to consider whether the defendant has succeeded to establish the existence of the three (3) essential elements of a partnership which are part of our law. During the subsistence of the relationship the defendant brought substantial amount of money, his multifaceted skills into the business of the guesthouse. On the other hand, the plaintiff brought his shares in the business of the guesthouse to the partnership. It appears that they jointly took the decision to contribute money into it albeit loans to constantly refurbish it to the point that it was graded as a five-star accommodation. The business of the guesthouse was conducted on the two (2) properties.

 

[18]     The evidence shows that the parties enjoyed a comfortable life out of the profits of the business. The defendant could use the bank cards of the business according to his wishes. It was even for small personal items even the mortgage bond over 14 Dersley Street was serviced with the funds from the business. This property was not acquired for the sake of it but for residence and conduct business of a guesthouse. There is no cogent reason(s) why the deposit should have been paid to the account of the business. The attorneys were the ones tasked with the transfer of the immovable property there can be no talk that they did not conduct the business for their joint benefit and shared equally in its success as well.

 

[19]     The fact that the object of the business was to make profit does not require any elaborate discussion. The audited financial statements speak for themselves. I assume that any business in the economic system like ours is predicated on the maximisation of profit. Their partnership included their commercial undertaking and I find no merit in the arguments advanced on behalf of the plaintiff. The inescapable conclusion based on the overwhelming evidence before me, is that the defendant has established the existence of the essential principles of a partnership, entitling him to the relief sought.

 

Order

 

[20]     As a result of the aforegoing reasons, I make the following order: -

 

           20.1.         The plaintiff’s claim is dismissed with costs.

 

20.2.         It is declared that a partnership existed between the plaintiff and the defendant in equal shares in respect of the business operated as a guesthouse under the name and style of Dersley Manor;

 

20.3.         The partnership is dissolved with effect from 06 September 2019;

 

20.4.         A liquidator be appointed per agreement between the parties with authority to realize the whole of the partnership assets including the property situated at 14 Dersley Street, Bayswater, Bloemfontein with powers to liquidate the liabilities of the partnership, to prepare a final account and to pay to the plaintiff and the defendant half of the net profits made by the partnership each;

 

20.5.         In the event the parties do not agree in writing on the appointment of a liquidator, a liquidator shall be appointed at the request of either of the parties by the chairperson of the Free State Provincial Council: Legal Practice Council;

 

20.6.         The costs of the liquidator shall be borne equally by the parties;

20.5.         Costs of suit to be borne by the plaintiff.

 

M. A. MATHEBULA, J

 

 

 

On behalf of plaintiff:                    Adv. S.J. Reinders

Instructed by:                                 Honey Attorneys

                                                                BLOEMFONTEIN

          

On behalf of defendants:               Adv. J Els

Instructed by:                                 Phatshoane Henney Attorneys

                                                                BLOEMFONTEIN

 

 

/tkwapa

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