The applicants, Dikokola Puoetsile Mosinyi (first applicant) and Amos Morwe (second applicant) moved the court by notice of motion, for an order in the following terms: F
"(a) Declaring that mutual confidence has been lost between 1st and 2nd Applicants [sic.] on the one side and Respondent on the other and that the Syndicate Agreement encompassing the membership of the Respondent should be terminated.
(b) That the Respondent should be evicted from the borehole belonging to Xamakae Syndicate." G
Although paragraph (a) of the order sought is somewhat inelegantly drafted, the essence is, by and large, to be found in paragraph (b) and more particularly the testimony of the persons who were called to give evidence in relation to what is referred to in the prayer as "the syndicate agreement". It is, however, always safe to exercise H caution in drafting orders in motion proceedings otherwise there will be no meaning to be derived from what the applicant seeks. In any case what the applicants must prove in their affidavits depends on what they have prayed for in the notice of motion.
On 9 May 1997 I made an order in terms of which the application was referred to trial and the papers filed in support of the application were to
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stand as pleadings. It had then occurred to me that one of the parties to the application may not have told the A truth on affidavit evidence. Having now heard and seen the parties give evidence I am satisfied that the truth has come out and a composite picture of what the dispute is all about has emerged.
Material to this application is a document entitled: "Xhamakee Borehole Syndicate Agreement-Deed of B Partnership." The said document was attached to the application papers and marked annexure "DP.1". On 28 April 1987 three elderly men signed the document. By then the relationship between the three gentlemen, I must say, was very cosy. Five years later the relationship between the three was no longer what it used to be. By 1991 two of them (the first and second applicants) started to feel that the other one was not dealing with them in good C faith. They thought he was reneging on the terms and conditions of the said document. That other gentleman is Patrick Sello Kaote. He is the respondent in this cause.
Mr. Morwe (the second applicant) is, unfortunately, now dead. He died just before this matter was entered for trial.
For purposes of what I will say hereunder, it is important and convenient to reproduce the contents of the said D document. I have so far referred to what the three gentlemen signed as "a document" because it has to be first classified under the rubric of the law of contract. It seems to me that the relationship constituted by and between the parties was and is sui generis.
The Syndicate Agreement
The document, which was signed by the parties to this dispute, is couched in the following terms: E
"MEMORANDUM OF AGREEMENT made and entered into at Phikwe this 1st day of May 1987 by and between P.S. Kaote, D.P. Mosinyi and A. Morwe all of Serowe Village in the Central District Council. This agreement is subject to the following conditions: F
The name of the syndicate shall be XHAMAKEE SYNDICATE.
Each member will share equally all the liabilities of the Syndicate. In the event of one of them having incurred an expense G on behalf of the Syndicate, the other members shall pay to him a fraction of what will have been paid by each one of them had a contribution been made for the total sum of the expensed incurred [sic.].
Members of the Syndicate will contribute equally to the drilling, equipping and all other expenses that are incidental and H necessary for the good operation of the borehole of the Syndicate. In the event of any one of the members of the Syndicate having paid for the drilling equipment or any expense relative to the good management of the Borehole of the Syndicate, the others will be bound to compensate or reimburse him to the fullest extent of their share thereof. This will include any legal costs that may have been incurred in the drawing of the agreement.
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Each member of the Syndicate shall contribute the sum of P2,886.67 for drilling of the Borehole, and the sum of P1,804.67 for equipment and a further sum of P100.00 for legal costs of drawing the Syndicate partnership deed.
In the event of any member of the Syndicate dying during the continuance of the Syndicate partnership his share of the B partnership thereof shall be inherited by any person of his choice mentioned in the member's will or indicated to the other members by the dead in writing.
In the event of a member of the Syndicate dying without having made a will or indicated in writing to the other members as C to who his successor in the syndicate should be, the surviving members of the Syndicate shall have the right to take over the business on payment of the Net value of the deceased's share to his estate without good will. If the surviving partners shall fail within 6 months to make such payment, the assets of the partnership shall be sold and the proceeds divided equally between the estate of the deceased member and the surviving members. D
No member of the Syndicate shall allow or bring any person to water his animals at the borehole of the Syndicate without knowledge and consent of other members of the Syndicate.
Each partner of the Syndicate shall settle his indebted [sic.] to the Syndicate or its members within two years, failure to pay shall have the effect of terminating the membership of that member to the Syndicate, and his share thereof shall be taken over by the other members without pay.
ATED AT SEROWE this 28th day of March 1987. F
D.P. Mosinyi -------------------------[signed]
P.S. Kaote ------------------------[signed]
A. Morwe ------------------------[signed] G
The difficulty in placing what the parties agreed upon under a partnership agreement, arises in so far as this H particular agreement is concerned, out of the fact that the third essentialia, i.e. the sharing of profits, does not appear to be what the parties contemplated. A partnership has been defined as a legal relationship arising out of an agreement between two or more persons not exceeding 20 each to contribute to an enterprise with the object of making profits and to share or divide such profits.
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In this particular case the first requirements appear to present no real difficulty. There indeed was created a A legal relationship which arose from the agreement signed on 28 March 1987 between the applicants and the respondent or for that matter between the parties. By clause 4 of the agreement each of the parties to the agreement was to contribute in equal shares a specified amount of money. What is singularly absent is the B object of making and sharing profits. The agreement does have some of the features of a partnership. However it has been said that the object of making and sharing profits is essential to partnership. The fact that the parties contract jointly is not sufficient to establish a partnership. Thus in the case of Henwood & Co. v. Westlake and Coles (1887) 5 S.C. 341 at p. 346 where each of the pair of parties to a joint transaction received a separate C invoice, the parties were held to be joint contractors and not partners. In the case of Novick v. Benjamin 1972 (2) S.A. 842 at p. 851C, Jansen J.A. said of a transaction by two parties to introduce a property to a company and that they would secure themselves certain shares in the company, that:
"It does not appear at all that the learned trial Judge was wrong in considering the agreement, alleged in para. 4, as D separate from the preceding partnership agreement, and as not of itself constituting a partnership."
Reference was made to the position in English law and the learned Judge of Appeal said at p. 851G:
"where persons jointly purchase property, which is not to be sold for their common benefit, but to be allotted to them in E distinct shares, such community of interest will not constitute a partnership."
And earlier the learned judge said at p. 851D: F
Applying Pothier's statement it would seem that the agreement in question lacks the third essential, the intention 'thereby to make a gain or profit in which each of the contracting parties may expect to have a share, in proportion to what he has brought into the partnership'."
The category of a transaction which I am here concerned with, seems to fall under what is referred to as a joint G transaction, in which the parties join in the purchase of goods or property, not for the purposes of selling them again and dividing the profits, but for the purpose of dividing the goods or enjoying the fruits derived therefrom themselves and are not liable to third parties.
In the Law of Partnership and Voluntary Associations in South Africa , (2nd ed.), Bamford refers to another H category falling under the third essential, i.e. sharing of profits. Referring to Joint Ventures and Syndicates the learned author said at p.11:
"The question arises as to the relationship created by a 'joint venture'. This has been used to describe an enterprise jointly embarked upon
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with the object of making a profit, this last element distinguishing it from a joint transaction. There have been at least three A different views as to the nature of such a venture. First, the term has been used synonymously with partnership. Second, it has been assumed, stated or held that a joint venture is a legal category distinct from partnership. Third, it has been stated that although the categories are different, '. . . the same consideration must apply to the dealings of the B several parties [in a joint venture] as would be applied in the case of an ordinary partnership'."
The learned author stated in conclusion and on the basis of the above observations, that there is no value in treating a joint venture as a category different from partnership. C
In the case of Guardian Insurance & Trust Co. v. Lovemore's Executors (1887) 5 S.C. 205 Buchanan J. said at p. 214:
"It will be sufficient for me to remark that the effect of the evidence upon my mind is, that in this case no partnership has been proved to have existed; and further, that, as a question of fact. . . . I think that the agreement entered into between D Kirkwood, Lovemore and the others, would better be described as one for a joint venture, than for a partnership."
Bamford on the other hand, seems to derive his arguments from the case of Bester v. Van Niekerk 1960 (2) S.A. 779 (A.D.) and concludes thus: "It is submitted that a syndicate is a partnership." That in my respectful view E appears to me to be a sweeping statement. Each case must be decided on the particular transaction (written or oral) which may have given rise to a dispute between the parties and which the court is asked to unravel. The learned author seems to have been persuaded by a statement of Solomon J. in the case of Langermann v. Carper 1905 T.H. 251 quoted with approval by Holmes J.A. in the case of Bester (supra). In that case Solomon J. F said at p. 261:
"Now whatever may be the appropriate name to apply to such a transaction - whether it be called a partnership or a joint venture - I am clearly of opinion that the same consideration must apply to the dealings of the several parties amongst G themselves as would be applied in the case of ordinary partnership."
In that case three persons became interested in 300 mining claims which were to be disposed of in their joint interests, with a sharing of profits. I do not think however, that the above statement was meant to be applicable to each and every transaction or venture, which has the likes of a syndicate. I think the extent to which parties to H any form of commercial intercourse can be considered partners or to have formed a partnership depends entirely on the agreement into which they may have entered into and in the way they conduct themselves or their transactions. It is only after this that the nomenclature of the transaction could be given. If some of the relevant
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essentialia for establishing a partnership are not met, I cannot see how an association of persons for whatever A commercial or social purpose they may have intended could be said to be partnership. It is only when in that venture the first three essential elements of a partnership mentioned by Pothier on Contracts are present that a partnership would be deemed to have been established. It is a sound practical guide that where Pothier's four requirements are shown to be present the court will find a partnership established unless such a conclusion is B negatived by a contrary intention disclosed on a correct construction of the agreement between the parties. See Purdon v. Muller 1961 (2) S.A. 211 (A). Reference can also be made to the cases of: Greenhills Producers (Pty.) Ltd. v. Benjamin 1960 (4) S.A. 188; Anderson v. Gordik Organisation 1962 (2) S.A. 68; Koornklip Beleggings Bpk v. Allied Minerals Ltd. 1970 (1) S.A. 674; Sandell & Others v. Jacobs 1970 (4) S.A. 630. In some C cases the court have referred to joint venture, joint contractors and joint transactions - compare Joubert, The Law of South Africa, vol. 19 at p. 269.
Against that background, the question that arises is what the parties to the agreement that was signed on 28 March 1987 intended. The agreement is styled and entitled "Xhamakee Borehole Syndicate Agreement". D
Clause 1 of the agreement talks of the name of the syndicate. Clauses 2, 3,4,5,6,7 and 8 make reference to "a syndicate". In clause 8 reference is made to "a partner of the syndicate". I will assume that inspite of the present disagreement between the members or parties to this dispute, the venture which they contemplated is still in existence. If the members intended forming a partnership then one thing that is singularly lacking is the E requirement of a business to be carried on for the joint benefit of all the parties with an object of sharing profits. There is in fact a contrary intention disclosed on the agreement (DP.1). On a proper construction of the document (DP.1) read in the light of the evidence by the parties the intention to create a partnership is clearly not established.
In the circumstances of this case therefore, the answer must lie, as Fieldsen J. said in R. v. Bowen, N.O. & Others 1967 (3) S.A. 236 at 239B: F
"in a proper analysis of the whole arrangement between the five accused, and in making this analysis the Court cannot be bound by, though it must not disregard, what the parties to the agreement have chosen to call it." G
In my view the true and real intention of the parties is not what the parties to the arrangement have chosen to call it as in this case - "Deed of Partnership".
The transaction with which I am concerned here was, I regret to say, a very loose way of doing business as a partnership, if indeed that is what was intended by the parties or in the contemplation of the draftsman who H recorded the contents of the document. It was a very loose method of draftsmanship exacerbated by the fact that the order sought was itself couched in a confused manner, not to mention the unsatisfactory manner with which the evidence was presented. The evidence in fact, taken as a whole, did not at all reveal an intention to form a partnership. It seems to
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me that a partnership is not what the parties contemplated. As a matter of fact the evidence, both of Mr. Mosinyi A and that of Mr. Kaote, point to something more like a joint venture or that the parties could be regarded as joint contractors. For this reason I shall now refer to the signed document as an agreement. It is more in line with an ordinary contractual agreement between parties and reduced to writing. It cannot be a contract of partnership. I will accordingly treat this as just a contract which has been reduced to writing. See Guardian Insurance Trust Co. v. Lovemore's Executors (supra) and Henwood & Co. v. West Lake Coles (1887) 5 S.C. 341. B
Professor J.J. Henning-Joubert, The Law of South Africa, vol. 19 at p. 269 said of syndicates and joint ventures that:
" In order to determine whether a given contract is a partnership, the name which the parties have given to the contract is C not conclusive. Thus a syndicate and a joint venture can be a partnership, provided the requirements in respect of a partnership are complied with. Where these requirements are not fulfilled, however, a partnership is not created. In this sense syndicates, joint ventures and joint contractors are forms of commercial association distinct from partnership." (The D emphasis is mine.)
See R.v. Bowen (supra) and compare Bamford (2nd ed.) (supra)
It is stated in clause 2 of the Xhamakee Borehole Syndicate Agreement (annexure DP.1) that:
"Each member of the syndicate will share equally all the liabilities of the syndicate." E
There is no mention made in the subsequent clauses of the agreement to share the profits. It is clear that there can be no sharing of losses if the transaction was not meant for the running of a business with a joint purpose or F for the joint benefit of all parties. The sharing of net losses or liabilities is not an essentialia for a valid partnership. Dickinson & Brown v. Fisher's Executors 1916 A.D. 374 at p. 394 and Blumberg & Sulski v. Brown & Freitas 1922 T.P.D. 130 at p. 138:
"The sharing of profits and losses therefore implies that a partner must at all events share in the losses 'so far, at least, as G they constitute a charge upon, and a diminution or deduction from the profit'."
See Joubert, The Law of South Africa, vol. 19 at p. 264.
Having said all these I come now to evaluate the evidence in order to decipher, as far as it may be possible, the parties' real intention. H
The evidence of both Mr. Mosinyi and Mr. Kaote was that in 1987 or thereabouts, they, together with the late Mr. Morwe, agreed to contribute equally to the equipping and maintenance of a borehole situate at a place known as Xhamakee. Mr. Kaote who had been allocated a borehole site by the Ngwato Land Board was personally unable to equip the said borehole. The drilling services were rendered by Shoshong Drillers. He did not pay
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Shoshong Drillers for services rendered and so he sought assistance from his friends, Mr. Mosinyi and Mr. A Morwe. Mr. Mosinyi and Mr. Morwe did pay the drillers and specifically on 21 January 1986. The amount paid was P8,660.00. The payment of the said amount is supported by a receipt, which is attached to the papers as annexure DP4. Subsequently, by agreement between the parties which was reduced to writing each of the parties to the agreement was to pay a specified amount of money. Mr. Kaote, it was contemplated, would pay his B share at a later stage and hence the written agreement referred to as annexure DP1. In his evidence Mr. Kaote did not dispute or deny the arrangement by which both Mosinyi and Morwe paid for the drilling and equipping of the borehole.
I should perhaps mention that under his own hand Mr. Kaote wrote a letter to Ngwato Land Board in which he informed the Land Board officials that Mr. Mosinyi and Mr. Morwe's names be endorsed in the certificate of C customary land grant. The land board complied and so a certificate was issued out in the name of "Xhamakee Borehole Syndicate". Thus the arrangement in which the three gentlemen had a joint interest in the borehole was sealed. However unbeknown to Mosinyi and Morwe, Mr. Kaote had retained the original certificate of customary grant which was in his name and which ought to have been surrendered to the Ngwato Land Board by virtue of D the subsequent arrangement of 4 January 1986 between him and the other two gentlemen. He sought to lodge an application for a water right certificate in his name, surreptitiously leaving the others out of it. Mr. Mosinyi objected to this. A court case ensued and on 25 September 1992, by a settlement out of court, Mr. Kaote agreed that: E
"1. The syndicate exists
2. That the first respondent (Mr. Kaote) will surrender the certificate."
The settlement agreement was tendered in evidence as exhibit DP.8.
Mr. Kaote in his affidavit said that there was procedural impropriety on the part of the land board concerning the F certificate of customary land grant. In fact he said the land board should not have cancelled the original certificate which was in his name and endorsed in a new certificate, the name, "Xhamakee Borehole Syndicate". In his viva-voce evidence Mr. Kaote found it difficult to maintain this position. And that is the value of viva-voce evidence in court. He lied on affidavit evidence. He found it difficult to lie in court. He seemed to be a man oblivious of the G value of giving evidence on oath. A liar in deeds and actions and a man who does not care about what is morally and legally wrong as he said in court that he corruptly influenced a director of Shoshong Drillers to drill for him by way of a "back to back arrangement" and that the amount charged for the drilling of the borehole was not to be reflected in the books of Shoshong Drillers. However, this evidence was conspicuously false and he found it H difficult, albeit his protestations about his illegal dealings with a certain Mr. Motseta of Shoshong Drillers, to maintain it under cross-examination. The alleged payment by him of the sum of P35,000.00 for drilling purposes was undoubtedly a creation in his mind. He admitted, both in his evidence in court and at the pre-trial conference held on 20 June 1997, that he did not
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receive any receipts for any payments he made towards borehole drilling services. See in this respect the A following cases: Pillay v. Krishna & Another 1946 A.D. 946 at p. 958, Merchand & Another v. Butler's Furniture Factory 1963 (1) S.A. 885; G. North & Sons (Pty.) Ltd. t/a North's Intermec v. G.K. Morule, High Court Civil Cause No. 399 of 1991), unreported .The respondent has failed to satisfy the court that there is a sufficiently strong balance of probabilities in his favour that he might have paid any money towards the drilling of the borehole. In the circumstances I find as a fact that the applicants paid the amount of P8,660.00 appearing in B annexure DP4 towards the drilling of the borehole. The respondent did not pay anything and he admitted that he had no money to pay Shoshong Drillers as a result of which when representatives of Shoshong Drillers called on him in Kasane he sought assistance from Mr. Mosinyi who was readily prepared to assist on the understanding C that a joint venture in so far as the use and maintenance of the borehole is concerned would be entered into.
There is no doubt that the parties entered into an arrangement which they called it "Syndicate Agreement - Deed of Partnership". And so Mr. Kaote did not deny this. He also confirmed that he signed the agreement on 28 March D 1987 at Serowe and in the presence of the other two men including a witness who also signed.
At the conclusion of his evidence in court, Mr. Kaote admitted without any qualms that the certificate of customary land grant that was issued by the land board in the name of "Xhamakee Syndicate" was properly issued. The alleged impropriety by the land board and appearing in paragraph 11 of his affidavit evidence and in E parts of his evidence in court was simply a subterfuge to enjoy the benefits of watering his cattle at the borehole without paying.
In conclusion I find as a fact, and this was admitted by the respondent (Mr. Kaote) that he has not paid his contribution to the continuance of the joint venture in the form of a syndicate that he entered into with Mr. Mosinyi F and Mr. Morwe and as contemplated by all the parties to that agreement.
By that agreement each member of the syndicate, was in terms of clause 4 of the agreement, obliged to contribute the sum of P2,886.67 for borehole drilling purposes, the sum of Pl,804.67 for equipping the borehole and P100.00 for legal costs. Admittedly that is not what Mr. Kaote paid. He has failed for nearly 10 years to pay the said amounts as agreed between him and Messrs. Mosinyi and Morwe. By clause 8 of the agreement: G
"Each partner of the Syndicate shall settle his indebted [sic.] to the Syndicate or its members within two years, failure to pay shall have the effect of terminating the membership of that member to the syndicate, and his share thereof shall be taken by the other members without pay." H
By a careful reading of clause 8 (supra) and clause 3 and having regard to the evidence it seems to me that what was contemplated by the parties was that the amount paid by them towards the drilling and equipping of the borehole was to be paid to them in their individual capacities and not to the coffers of what they regarded as a syndicate. There is evidence by
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Mr. Mosinyi, for instance, that he personally bought a reservoir and that Mr. Morwe reimbursed him P990.00 A being half of the purchase costs of the reservoir. By their arrangement it is clear that the other members to the venture had advanced money upon the basis that the full amount or a pro-rata amount thereof must be returned to him or them at a later stage and as contemplated in clauses 3, 4 and 8 of the agreement. The arrangement appears to be that of a loan. B
In the light of the evidence before court and having regard to the construction that I place in the document evidencing an agreement by three elderly gentlemen, Mr. Kaote has dismally failed to convince me that he has any, or better still, any contractual right, to continue enjoying the benefits of the borehole at Xhamakee.
In the circumstances the ordinary rules of construction of a contract must apply. The applicants' claim is that C mutual confidence between them and the respondent has been lost and that the agreement must be cancelled or terminated. They therefore want this court to give effect to clause 8 of the agreement, i.e. terminate his membership and declare that his share therein be forfeited to the others. It is in evidence that the applicants wrote a letter to the respondent informing him about the consequences of clause 8. He ignored the letter and I D cannot help him because he ignored it to his detriment. The respondent has personally said in evidence that the parties to the agreement cannot work together and that mutual trust and confidence has been lost because of their disagreements. Short of cancelling the agreement, I am convinced that clause 8 must in view of the agreement itself and evidence given in court become operational. It had long become operational, but only E because the respondent is stubborn, I will order that the respondent be evicted from the borehole belonging to Xhamakee Syndicate and it is so ordered.
For convenience, and if only because the order of eviction involves the movement of livestock, the respondent is ordered to vacate the area within 30 days of the date of this judgment. For completeness I further order that a F deputy sheriff of this court be and is hereby directed and to put the terms of this order into effect with or without the assistance of the police. I make this further caveat because the respondent boldly announced in court that nobody, even this court, would evict him from the borehole site. The applicants therefore succeed in this application.
In the result it is ordered that: G
(a) The respondent be and is hereby evicted from the borehole belonging to Xhamakee Syndicate.
(b) The respondent is ordered to have vacated the borehole or its environs within 30 days of this order.
(c) The Deputy Sheriff of this court is hereby ordered and empowered to give effect to the terms of clauses H (a) and (b) of this order with or without the assistance of the police.
(d) Costs to the applicants.