What then follows is a brief outline of the events

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					IN THE HIGH COURT OF SOUTH AFRICA

REPORTABLE

NATAL PROVINCIAL DIVISION

                                                           CASE NO:
5378/2006
In the matter between:
SHAUKAT ALLI MOOSA N.O.
AND 24 OTHERS

Applicants

and
MAHOMED ASLAM OSMAN AKOO
AND 16 OTHERS
Respondents


                            JUDGMENT


MSIMANG, J:

This is an application for an order declaring a partnership relationship

subsisting between the parties to have been lawfully dissolved with effect from

28 February 2006 and for an order appointing a liquidator with powers to

effect a final liquidation of the partnership and to make applicable distribution

to the partners according to the extent of their determined interests in the

partnership.



Only the first four respondents (respondents) have signified their intention to

oppose the application.     They are, however, not opposed to the granting of

an order declaring the partnership to have been dissolved on 28 February

2006 but are opposed to an order appointing a liquidator. They have, in turn,

filed a counter-application seeking an order declaring the Osman Family Trust

to have been equal partners with the applicants as at the date of the
dissolution of the partnership on 28 February 2006 and seeking an order

directing the said Trust to deliver a statement of account of the partnership as

at 28 February 2006, the said statement to be delivered within a period of

one (1) month from the date of the order, such an order to give the applicants

leave to set the matter down for debatement of the account and payment of

such amount as may be owing by the said Trust to the applicants or vice

versa.      In the event of any dispute as to whether the first and/or fourth

respondents accounted at a fair value for the assets of the partnership taken

over by the said respondents, an order is sought for the appointment of a

forensic auditing firm known as KPMG to determine a fair value of such

assets and to make such adjustment as may be necessary in the accounts of

the partnership and giving the parties leave to approach the Court to broaden

the powers of the said KPMG pursuant to the delivery of the said statement

and debatement of account.        Needless to say, the counter-application is

being opposed by the applicants who insist on the appointment of a liquidator

and who deny that, as at 28 February 2006, the Trust held a 50% share in the

partnership.     What then follows is a brief outline of the events leading up to

the existing dispute between the parties.



It is common cause between the parties that during or about 1986 the Osman

family commenced business as manufacturers of roof sheeting and

processors and suppliers of steel products in which business the family traded

as Rollco.     At the time the business was owned by the O S Akoo Family

Trust, the trustees of which were the first respondent’s father, mother and

brothers.      The business was managed by the first respondent, his two
brothers and by his father.   It was during 1987 that certain members of the

Moosa and Hassam families (Moosa family) came into the picture and the two

families entered into a verbal partnership agreement in terms of which they

would commence business as processors of steel and manufacturers of

corrugated iron sheeting as equal partners.    The arrangement was that the

Moosa and Hassam families would hold their 50% partnership interest in

various Moosa and Hassam Family Trusts and that the Osman Family,

holding the other 50% interest in the partnership, would comprise the first

respondent and various other members of the family and that their interest in

the partnership would be held in the O S Akoo Family Trust.          A dispute

exists as to who would be responsible for the management of the business,

the applicants contending that the business would, in terms of the agreement,

be managed by the first respondent in consultation with the first applicant

while first respondent’s version is that the management and the affairs of the

business were always carried on by the Osman family and that they would do

so as they saw fit and in their exclusive discretion without any input from the

Moosa family whose only role were financiers of the business.          Annual

statements as well as their profit share would be sent to them.       It would

appear that until the year 2002 the profits from the partnership business were,

at all times, shared equally between the Osman Family Trust on the one

hand and the ten Moosa Family Trusts on the other.



During 2003 (according to the applicants) or during 2002 (according to the

first respondent) the latter convened a meeting at the offices of the

partnership at which the Moosa family was represented by the first applicant
and other family members.      At the meeting the first respondent is alleged to

have    informed all present that his family members had ceased being

partners in the business and that the said respondent would step into their

shoes as a partner with equal shares as the 50% share held by the Moosa

family in the partnership.             The first respondent’s interest in the

partnership was therefore held in the name of the Osman Family Trust, in

which he and his wife were the sole trustees.



This allegation, is of course, denied by the applicants.       They contend that

the 50% partnership interest held by the Osman family had been structured

on the basis that the first respondent and the three remaining family members

each beneficially held a partnership interest of 12.5%.            With the first

respondent’s three family members leaving the partnership, the first

respondent sought to acquire 37.5% partnership interest collectively held by

these three family members.      The Moosa family took a view, the applicants

further contend, that if the partnership funds were used to acquire the

partnership interests of the resigning partners, then such partnership interests

would be distributed proportionately to the remaining partners, the effect of

which would have been that the Moosa family would collectively have held a

partnership benefit of 80% while the first respondent would hold a partnership

interest of 20%.      The allegations regarding the structuring of the interest of

the first respondent’s family as well as the redistribution of the interests of the

resigning partners are denied by the respondents.         This dispute, however,

bears no relevance to the relief sought in the main application and only bears

relevance to the part of the relief sought in the counter-application.
The partnership between the first respondent and the Moosa family, however,

subsequently started to disintegrate.     For purposes of determining the

issues in this application it is not necessary to traverse in any detail the

reasons for such disintegration save, perhaps, to state that the nature of

those reasons, as given by the partners, are such that those reasons must

have led to a complete lack of trust between the first respondent and the

Moosa family.    It was, no doubt, for that reason that on 24 February 2006

the first respondent addressed a letter to each of the Moosa Family Trusts, in

their capacities as partners in the partnership, giving them notice of the

dissolution of the partnership with effect as from 28 February 2006, citing a

deadlock and a complete breakdown in the trust and good faith between

himself and the trustees of the Trusts as a reason for such dissolution.    In

the letter the first respondent also informed the Trusts that the auditors had

been instructed to calculate the capital amount as at the end of February 2006

and that he would pay each partner his/her capital amount by way of a series

of cheques, adding that such payments would “bring an end to the partnership

as at 28 February 2006”.



Attached to each letter directed to each Trust were thirty six (36) post-dated

cheques, each in the sum of R50 000.00, which meant that the Moosa family

partnership interest had been valued at R18 million, being 36 x R50 000.00

equals R1.8 million paid to each Trust of the ten Trusts.    On 28 February

2006 the first respondent despatched a further letter to each of the Trusts

advising them that the amount tendered under cover of the letter of 24
February 2006 was in no way in full and final settlement, that the amount so

tendered took into account the financial status as at 28 February 2005, that

the current balance sheet was in the process of being prepared and that the

additional amounts due to each Trust would be forwarded under cover of a

separate correspondence.



In any event, though some of the Trusts did accept the first respondent’s offer,

seven Trusts never did.       This remained the position despite negotiations in

an attempt to resolve the impasse, all of which proved fruitless.



In the meantime the business of the partnership continued as usual.          The

first respondent had formed and caused to be incorporated a company in the

name of Rollco Roofing Systems (Pty) Ltd and became the sole director

thereof.     When the partnership was dissolved on 28 February 2006 he

continued to run the partnership business, substituting the name of the

partnership with that of his recently incorporated company, which is the fourth

respondent in the present proceedings.



It is evident from the case pleaded by the first and fourth respondents that, not

only are they opposed to an order appointing a liquidator but that they also

contend that when the partnership was dissolved on 28 February 2006 all the

affairs of the partnership came to an end.       The financial records to which

the applicants are entitled    are for the period until, and not beyond, the said

date.      The same applies to the share in any of the profits of the business.

They have made it clear that it would be grossly unjust were the applicants to
be entitled to share in any of the profits of the business beyond the admitted

date of the dissolution of the partnership, to wit, 28 February 2006.              The

position is fiercely resisted by the applicants who contend that the first

respondent’s conduct in conducting the partnership business for his own

benefit and through the vehicle of the fourth respondent constitutes a clear

violation of the first respondent’s fiduciary duties to his co-partners and

renders all the profits made by the fourth respondent partnership property in

which each of the partners (including the applicants) are entitled to participate.

The resolution of these divergent legal opinions held by the parties on the

facts will no doubt have a bearing on the nature of the relief sought by them in

the present proceedings.



The effect of a dissolution of a partnership is the termination of the authority of

a partner to bind the partnership and his co-partners.          All new transactions

concluded by a partner, not related to the liquidation of the partnership and

not consequential to transactions which occurred during the existence of the
                                                                                       1
partnership, do not bind his ex-partners but are for his own account alone.

In his Treatise on the Contract of Partnership Pothier puts the position as

follows :-

       “155 The effect of the dissolution of partnership is, that thenceforth and for
       the future, all contracts, which each of the former partners may enter into, will
       be on his own account only, unless they were necessary consequences of the
       affairs of the partnership.” 2


De Wet en Yeats confirm this legal position and pronounced themselves as

follows :-


1
     Lawsa, Second Edition, Vol 19 paragraph 313;
         “Ontbinding van ‘n vennootskap het nie alleen gevolge ten opsigte van die
         onderlinge verhouding tussen die vennote nie, maar ook ten opsigte van hulle
         verhouding met derdes.       Wat die verhouding tussen die vennote betref, is
         die belangrikste gevolg dat hulle onderlinge volmag wegval.    Na ontbinding
         kan die een nie meer die ander deur sy regshandelinge bind nie, behalwe vir
         sover die handeling nodig is vir die voltooiing van ‘n vennootskapstransaksie
         of vir die likwidasie van die vennootskap …..” 3



There are a number of exceptions to this general rule one of which was set
                                             4
out as follows in Ellery v Imhof :-

         “One partner, on a dissolution, is not entitled to take possession of the
         partnership assets and trade with them, and if he does he is liable to account”.



In casu the first and fourth respondents have admitted that, after the

dissolution of the partnership, its premises, assets and equipment continued

to be utilised by them to conduct the partnership business through the guise

of the fourth respondent.             It must accordingly follow that, on the authority

referred to above, they should account to the applicants for the profits made

by the fourth respondent during the conduct of the partnership business after

the date of the dissolution thereof.               I understood Mr. Hodes, who with Mr.

Farlam appeared for the respondents, to make an offer to this effect during

argument.



In resisting the appointment of a liquidator and preferring the relief sought in

the counter-application the respondents relied heavily on the then Appellate



2
         A Treatse on the Contract of Partnership by Pothier – translated from the French by Owen
Davies                    Tudor;
3
         Kontraktereg en Handelsreg 4th ed. At 412 – 413;
4
      1904 TH 170 at 175; see also Bamford’s The Law of Partnership and Voluntary Association in
South Africa 3rd ed. at 91 and the cases referred to therein; Hariharan v Baijhath 1990(2) SA 765 (N)
at 767 L – D;
                                             5
Division decision in Robson v Theron.            Mr. Hodes submitted that the

Appellate Division in that decision made it clear that, upon dissolution of a

partnership, the Court is not obliged to appoint a liquidator to realise the

partnership assets where the parties have not agreed on the manner in which

the partnership is to be liquidated and wound up.       Implicit in the decision,

the argument continues, is that a party is not entitled to the appointment of a

liquidator.   Instead, the Court has a wide equitable discretion in respect of

the mode of dissolution of partnership assets, having regard, inter alia, to the

particular circumstances, what is most to the advantage of the parties and

what they prefer.      Mr. Hodes referred to the following statement made by
                                                          6
Comrie J in van Onselen N.O. v Kgengwenyane :-

       “It seems to me that Robson v Theron (supra) introduced or
       re-introduced a greater measure of flexibility into our law in relation to
       the practicalities of partnership dissolution than was hitherto generally
       recognised.      Not that the Courts or receivers and liquidators were
       given carte blanche to do as they liked. But a greater latitude was
       allowed, a wider equitable discretion, to achieve a result which was
       both fair to the parties and sensible in the circumstances of a given
       case.     A priori rules such as that save in exceptional cases, the
       common property must be sold by public auction to the highest bidder,
       and may not be made over to one of the partners at valuation, can in
       my opinion no longer be regarded as good law.            They should be
       treated as being no more than useful guides in appropriate cases”.


Urging the Court to exercise its discretion in favour of the course of action

preferred by the four respondents Mr. Hodes contended that there is no

ongoing partnership business to manage, the partnership no longer has any

assets, the only previous asset it had being the Rollco business which has

since been transferred to the fourth respondent, there is no suggestion that

the partnership owed (or owes) any debts to third parties and therefore no


5
      1978(1) SA 841 (A);
need exists for the appointment of a liquidator to pay outstanding debts, let

alone to collect any assets to pay debts owed by the partnership to outsiders.

Furthermore, the first respondent has grown and managed the business and

been responsible for its success to the benefit of the applicants.               No

suggestion has been made that the applicants are desirous of managing the

Rollco business or to participate in any way therein or that it would be

appropriate for them to do so.             Indeed, all the indications are that they

neither want it nor need it.          There can accordingly be no objection to the

business continuing to be operated by the fourth respondent subject to the

applicants being properly compensated.                The only reason why the

applicants could conceivably want the business to be sold to someone other

than the fourth respondent would either be to prejudice the first respondent

financially and emotionally by depriving the fourth respondent of a business

which the first respondent and his family have built it up for over twenty years

or to undermine the Rollco business so as to allow their competing business

to prosper.    Neither of these are reasons which should carry any weight at

all with the Court in the exercise of its discretion, the argument concluded.



In the Robson case (supra) veterinary surgeons had been involved in a

partnership in a professional practice.         Upon dissolution of the partnership

the partners had agreed on the interest of the retiring partner in the

partnership.     However, the continuing partner de facto retained the goodwill

of the partnership for his own use and benefit and the partners could not

agree on the value of the goodwill at the date of dissolution of the partnership.


6
     1997(2) SA 423 (B) at 429 F-H;
That was the only issue outstanding after the dissolution of the partnership.

It was in that context that the Court did not opt for the appointment of a

liquidator holding that :-

       “The practical and equitable solution in the circumstances, according to the
       substantive principles of law governing the action pro socio or the utilis
       actio communi dividundo, is for the Court to place arbitrio judicis a
       valuation on the goodwill with due regard to the particular
       circumstances concerning its value at the date of dissolution of the
       partnership and to order Dr. Robson to pay Dr. Theron one-half
                      7
       thereof.”


In the van Onselen case (supra), another case upon which the respondents

rely for the proposition that a liquidator should not be appointed in the present

case, upon divorce the parties had agreed that a liquidator be appointed

whose duty would be to attend to the sale of a house belonging to the

joint-estate which, according to the agreement, would be sold and disposed of

by public auction or private treaty and could be purchased by either of the

parties if no buyer was available to take over the house to the advantage of

both parties.



The agreement had been made an order of court and the applicant had been

appointed receiver and liquidator in terms thereof.          He had obtained a

valuation of the house and invited the parties to place offers for the purchase

thereof.        The respondent (being the erstwhile husband) had been

unco-operative as he had been under a suspicion that the house should be

valued at an amount higher than the amount of valuation.             Mrs. K (the

erstwhile wife), however, had shown an interest and, when no other offers had

been forthcoming, the applicant had concluded an agreement of sale with her.
The respondent had, however, notwithstanding demand, refused to vacate the

house causing the applicant to launch eviction proceedings against him.



Referring to the requirement that liquidators must sell the assets of the joint

estate to the highest bidder Comrie J quoted authority and concluded that it is

not mandatory that partnership property should be sold by public auction.      It

was in this context that Comrie J made remarks to which I have been referred

by Mr. Hodes.



The facts in the present case are therefore clearly distinguishable from the

facts in the two cases relied upon by the respondents in this matter.


Besides, the reasons given by Mr. Hodes for urging this Court to exercise its

discretion in favour of the course of action preferred by the respondents

appeared to be based on a supposition that, in liquidating the affairs of the

partnership, all that needs to be done is to place a value on the assets of the

partnership as at 28 November 2006.             The argument does not seem to

have (and cannot have) taken into account the decision which has since been

made by this court, to wit, that the first and fourth respondents should also

account to the applicants for the profits made by the fourth respondent during

the conduct of partnership business under the name of the fourth respondent.

Those profits are as a result of trading by the fourth respondent for a period of

approximately one year.          The trading operations of the business appear to

be massive.        It is not disputed that the turnover as at 28 February 2005

was in excess of R420 million and that, as at that date, the partnership had

7
       Robson case (supra) at 858 F-G;
made a nett profit of approximately R13 million.          In rejecting a submission

that a liquidator be appointed Milne J motivated as follows in Schoeman v
                                            8
Rokeby Farming Co. (Pty) Ltd :-

       “In this case, however, there does not seem to be any practical purpose in
       doing so. In fact, all that has happened is that the plaintiff has carried on
       certain farming activities on the farm which he sold to the defendant and
       it seems that he has had sole control of the partnership. There are
       no difficulties with regard to capital contributions and it is simply a
       question of determining the expenses that have been incurred in the
       farming operations, the income received in respect of those farming
       operations and the payments, if any, made by the parties.                The
       farming activities do not appear to have been particularly complex nor
       to have extended over a long period.          In fact the partnership has
       been of a very restricted nature. In these circumstances, it appears
       to me to be unnecessary to go through the formality of having a
       liquidator appointed ………….”


Clearly, the partnership activities in casu are much more extensive and have

been transacted over a period of approximately five years.             Besides, the

element which is absent in the cases upon which the respondents rely is the

element of lack of trust.         It is important for the process of liquidation and

distribution of the assets of the partnership to be free from the perception of

impropriety and partiality.



As much as I agree with the submissions made by Mr. Hodes based on the

decision in the Robson case (supra), namely, that, upon dissolution of a

partnership, the Court is not obliged to appoint a liquidator to realise the

partnership assets, that no party is entitled to such an appointment and that

the Court has a wide equitable discretion on the issue, having considered all

the facts and circumstances of the present case, I have been driven to the

conclusion that it would be proper and equitable for me to exercise my

8
     1972(4) SA 201 (N) at 206;
discretion in favour of the relief sought by the applicants in this matter, and to

reject the course of action suggested by the respondents in their

counter-application.



Regarding the declaration sought in paragraph (b) of the counter-application it

is clear to me that there is such a dispute of fact between the parties on the

issues relating to the same that it will not be possible to resolve the issue on

the papers.     I have accordingly concluded that issues relating to the matter

be referred for the hearing of oral evidence and, in the exercise of my

discretion, I have decided that the costs of the counter-application be

reserved for determination by the Court hearing that oral evidence.



The order I therefore make is as follows :-

   1. I grant an order in terms of paragraphs 1 to 11 of the Notice of

          Motion save that paragraph 2 thereof is substituted with the

          following paragraph :-

              “The liquidator to be appointed in terms of this order shall
              be a chartered accountant agreed upon by the parties
              within five (5) days of this order or, failing that, one
              nominated by the Chairman for the time being of the South
              African Institute of Chartered Accountants”.


   2. The costs of the application must be borne by the first, second,

          third and fourth respondents, jointly and severally, the one

          paying the others to be absolved.         Such costs to include the

          costs occasioned by the employment of two counsel.



   3. In terms of Rule 6(5)(g) the issues in the counter-application set
          out in Annexure “A” of this order are referred for the hearing of

          oral evidence on a date to be arranged with the Registrar.



   4. The    costs     of   the   counter-application   are   reserved    for

          determination by the Court hearing that oral evidence.




For the Applicant:          Adv. N Singh SC with Adv. H S Gani (instructed by

                            Cajee Setsubi Chetty Inc)



For 1-4 Respondents:        Adv. Hodes SC with Adv. Farlam (instructed by

                            Abbas, Latib and Co.)



Matter argued:              22 August 2007



Judgment delivered:         15 October 2007
ANNEXURE “A”
                              1.
1.1   The terms of the partnership agreement concluded between the

      ten trusts represented by the applicants on the one hand, and the

      Mahomed Aslam Osman Family trust on the other hand, which

      agreement was concluded after the termination of the partnership

      relationship between the ten trusts represented by the applicants

      on the one hand, and the O S Akoo Family Trust on the other

      hand.

1.2    The percentage of each partner’s interest held by each of the ten
trusts represented by the applicants on the one hand, and the Mahomed
Aslam Osman Family Trust on the other hand, in the said partnership.


                                  2.
Any party intending to call a witness who has not deposed to an
affidavit shall be obliged to furnish to the other party a written and
signed summary of the evidence to be given in chief by such witness,
not less than 10 days before the date appointed for the hearing of the
oral evidence.


                               3.

Leave is hereby granted to the parties to subpoena any person to

appear at the hearing when oral evidence is led, who is able to give
evidence upon the issues referred to in paragraph 1 hereof, whether

such person has consented to furnish a statement or not.


                                 4.
The provisions of Rules 35, 36 and 37 shall apply to the hearing of such
oral evidence.

				
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