Bezuidenhout v Otto and Others

• Jurisdiction: South Africa
• Judgment Date: 25 August 1995
• Citation: 1996 (3) SA 339 (W)

Bezuidenhout v Otto and Others
1996 (3) SA 339 (W)

1996 (3) SA p339

Citation	1996 (3) SA 339 (W)
Case No	11887/95
Court	Witwatersrand Local Division
Judge	Wunsh J
Heard	August 24, 1995
Judgment	August 25, 1995
Counsel	J I du Toit for the applicant.; J Both for the respondents.

Flynote : Sleutelwoorde B

Practice — Applications and motions — Application taking place not only of declaration in action, but also of essential evidence to be led at trial — Objection that application failing to support relief claimed succeeding where application failing to include facts necessary for determination of issue in applicant's favour.

Practice — Applications and motions — Necessary averments — Application for C order declaring existence of agreement not in writing — Requirements for summarised.

Headnote : Kopnota

What might be sufficient in the particulars of claim in an action to foil an exception would not necessarily be sufficient in an application to resist an objection that a case D has not adequately been made out: the application takes the place not only of a declaration, but also of the essential evidence which would be led at a trial. If there are absent from the application such facts as would be necessary for the determination of the issue in the applicant's favour, an objection that the application does not support the relief claimed would be sound. (At 345B-C/D.)

The dictum in Radebe and Others v Eastern Transvaal Development Board 1988 (2) SA 785 (A) E at 793C-G applied.

An applicant for an order declaring the existence of an agreement (not in writing) therefore has to meet the following requirements in order to establish his case: (1) He has to state whether he relies on an express oral agreement, or on a tacit agreement (that is an actual agreement, not an implied agreement), or on an express agreement F and, as an alternative, a tacit agreement. (2) If it is his case that an express oral agreement had been concluded, then (a) he has to allege an express oral agreement; (b) set out the terms of the agreement; and (c) in his affidavit furnish evidence of the nature of the agreement and its terms, prove actions - including words - which gave rise to the agreement, and the date on which, the place at which and the parties to the agreement. (3) If it is his case that a tacit agreement had been concluded, then (a) he has to allege it; and (b) he has to allege and prove conduct which is not only consistent with the making of the alleged agreement, but which establishes, on a balance of G probabilities, that an agreement in the terms alleged had been reached. (At 344F/G-I/J.)

Cases Considered

Annotations

Reported cases

The following decided cases were referred to in the judgment of the Court:

Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA 506 (A)

Durity Alpha (Pty) Ltd v Vagg 1991 (2) SA 840 (A)

Mühlmann v Mühlmann 1984 (3) SA 102 (A)

H Plum v Mazista Ltd 1981 (3) SA 152 (A)

Radebe and Others v Eastern Transvaal Development Board 1988 (2) SA 785 (A)

Spes Bona Bank Ltd v Portlands Water Treatment South Africa (Pty) Ltd 1983 (1) SA 978 (A)

Wilkens NO v Voges 1994 (3) SA 130 (A).

Case Information

Application for an order declaring that a partnership between the applicant and the I respondents existed. The nature of the issues appears from the reasons for judgment.

J I du Toit for the applicant.

J Both for the respondents.

Cur adv vult. J

1996 (3) SA p340

A Postea (August 25).

Judgment

Wunsh J:

While the affidavits were mainly in Afrikaans, counsel conducted the case in English and I shall, therefore, give this judgment in that language.

B In this judgment the following expressions have the following meanings respectively:

'the first partnership' means the partnership which was constituted by a letter agreement between the applicant, MCI, and the fourth respondent;

C 'the individual respondents' are the first, second, third and fourth respondents, who are natural persons;

'the letter of undertaking' is an agreement between the applicant and the individual respondents relating to the so-called 'Checkers transaction';

D 'MCI' is the fifth respondent, Money and Capital Market Investments Ltd; and

'the second partnership' is a partnership alleged by the applicant to have been entered into between him and the individual respondents, which is disputed.

The applicant and the fourth respondent were business partners. The fifth respondent is a public company with only three beneficial shareholders, being the first, second and E third respondents, which carries on business in, inter alia, money and capital market instruments.

On 29 June 1994 a letter agreement was signed by the applicant and the fourth respondent, on the one hand, and MCI, on the other hand, in terms of which they entered into a partnership, the salient features of which were: F

1.

It was to endure for 12 months with a provision for continuation, termination or amendment thereafter.

2.

Its activities were described as follows:

'Aktiwiteite

G Enige besigheid wat verband hou met primêre uitgiftes van die openbare sektor in die plaaslike geld- en kapitaalmark. Enige ander besigheid wat uit bostaande aktiwiteite mag voortspruit en waaruit inkomste verdien word sal die verdeling van enige sodanige inkomste op 'n ad hoc basis hanteer word (sic).

H Kostes

Alle direkte en indirekte kostes sal deur die afdeling self gedra word, dit sal beteken dat vir kostes voorsien sal word voor enige verdeling plaasvind. Die afdeling sal voorts verantwoordelik wees vir 'n 1/3 van MCI se huidige administratiewe uitgawes wat tans ongeveer R30 000 per maand beloop.'

I 'Die afdeling' referred to there appears to be the first partnership.

'Verdeling

Na kostes hierbo vermeld sal die verdeling as gevolg geskied:

2/3 na die afdeling en 1/3 na MCI. Enige uitbreiding van bedryfspersoneel sal uit die afdeling se 2/3 deel vergoed word.' J

1996 (3) SA p341

Wunsh J

A Here it would seem that 'die afdeling' means the applicant and the fourth respondent.

I call this partnership the 'first' partnership. The shareholders of the fifth respondent, that is to say the first, second and third respondents, were not direct participants in the first partnership.

For the first three months, that is from 1 July to 30 September 1994, the applicant and B the fourth respondent contributed R10 000 per month towards MCI's administrative costs in terms of the third provision of the agreement to which I have referred. It will be observed that the business of the first partnership was restricted to primary issues of money and capital instruments in the public sector.

Before the conclusion of the first partnership agreement the applicant and the fourth C respondent had been engaged in negotiating a transaction which fell outside the ambit of the first partnership's business because it involved an issue which was not in the public sector. It will be recalled that the first partnership agreement provided that if there was any other activity, presumably in the money or capital market business, the sharing of the income was to be determined ad hoc. D

It seems fair to infer that the letter of undertaking to which I am about to refer, signed by the applicant and the individual respondents, therefore excluding MCI, was signed and agreed to pursuant to this provision. The letter of undertaking was signed by the parties to it on 27 September 1994. The terms of the letter of undertaking, being E recorded in writing, are not in dispute, nor are the obligations of the parties thereto to implement it.

The essential terms of this agreement were as follows:

1.

It related to the so-called Checkers transaction.

2.

The profit-sharing was to be 60% to the shareholders of MCI (that is the first to third respondents) and 20% to each of the applicant and the fourth F respondent, ie 20% to each of the natural parties to these proceedings.

3.

Each of the first and second respondents, each of whom owned 40% of the issued share capital of MCI, undertook to transfer one half of his holding to the applicant and the fourth respondent, that is to say one half to G each of them. The result would have been that the five natural persons who are parties to these proceedings would have owned the share capital of MCI in equal shares. It follows from the next item to which I refer that this transaction also covered claims on loan accounts against MCI. H

4.

The R200 000 to accrue to the first three respondents pursuant to the letter of undertaking out of the Checkers deal would be accepted as the purchase price for the shares and loan accounts. After the transfer of the portion of the loan accounts covered by this payment, there would have been amounts still owing to the five parties on loan accounts. That appears from the letter of undertaking. I

Details were given of MCI's liabilities and its financial statements were annexed.

The letter of undertaking was, it seems from what has been set out, more than an ad hoc profit-sharing agreement. What it really amounted J

1996 (3) SA p342

Wunsh J

A to was a sale of shares in and claims against MCI by two of the respondents to the applicant and the fourth respondent, the quid pro quo for which was MCI's 3/5 participation in the profits of the Checkers deal. In fact, the agreement may have been one of exchange.

What appeared to be the prospect of an expanded business relationship between the applicant and the individual...