(COURT OF APPEAL)*
MOUSTAKOUDIS AND GINIS vs. CONSTANTATOS BROTHERS
AC-Appeal-16-57

Principles
Partnership—Evidence of partnership—Doctrine of laches in relation to partnerships— Specific performance
The appellants (defendants) agreed with the respondents (plaintiffs) to enter into a partnership for the exploitation of a bakery on plot which at the time of the agreement belonged to the Sudan Government but was ultimately leased

Judgment
* Court: M. I. El Nur J., R. C. Soni J., Babikir Awadalla J.
by the appellants in the name of the partnership and became partnership property. The partnership was evidenced by an informal document but was not registered under the Partnership Registration Ordinance. The respondents showed no interest in the project and refused to co-operate in the building of the bakery. The appellants thereupon completed the buildings and started business on their own.
Held: (1) For the purpose of proving the existence of a partnership even an informal document, such as an unsigned draft agreement, is enough. Registration is not required for the proof of the existence of a partnership; for equity looks on that as done which ought to have been done.
(2) That the respondents were not guilty of laches for not having shown any interest in the partnership business until it was set in motion, for the doctrine only applies to partnerships of a highly speculative nature.
(3) That specific performance cannot be granted as a remedy in such a case.
(4) That the appellants should submit an account within one month of all receipts and outgoings so as to enable the Court to make a final decree of registration of the partnership, if the parties so agreed, or the dissolution of the partnership. Buxton vs. Lister (1746) Atk. 385 distinguished.
Appeal

Advocates: Ahmed Gumaa ………………….for appellants
Albert Bidjikian ………………..for respondents
3rd March 1959 Babikir Awadulla J : —The appellants in this case are Messrs. Moustakoudis and Ginis, Contractors, Juba Town, and the respondents are Messrs. Constantatos Brothers, General Merchants, Juba. The 31stMarch 1956 under which the Appellants agreed with the respondents to enter into a partnership on a fifty to fifty basis for the exploitation of a bakery on Plot No. 7 Bk C.V. Juba Town.
At the time the said agreement was entered into, that plot was owned— as it still is—by the Sudan Government, but it was known that it was soon to be put up for lease under the premium bidding Scheme. The agreement itself was in Greek, but a translation of Clause 3 thereof reads as follows; “To whoever of the partners of this agreement the above-mentioned plot falls is obliged to put it immediately at the disposal of the partnership and the payment for the value of the plot must be done by the partnership and the receipt must show the name of the partnership “. On 2nd April 1956 the plot in question was auctioned and appellants were the successful bidders at £S.791.500m/ms A few days later the respondents paid half the premium value by cheque and on 10th April 1956 the appellants sent their receipt couched in the following terms: “Received from Messrs. Constantatos Brothers the sum of three hundred and ninety-five pounds and seven hundred and fifty milliemes in payment of half cost of plot No. 7 BK C.V. ‘Bakery a/c’ by cheque No. B4/742617 on Barclays Bank, Juba”.
The appellants immediately embarked on construction of the bakery, which was finished early last year. The respondents repeatedly approached them to co-operate in the registration of the partnership under the Partner ship Registration Ordinance, but the appellants refused and—it is alleged— started business on their own. The respondents started this action in the Court below, in which they claimed —
(i) enforcement of the partnership agreement;
(ii) an order calling on appellants to comply with the Partnership Registration Ordinance;
(iii) an account; and
(iv) an order restraining the appellants from carrying on business save in compliance with the agreement.
In answer to this claim, the appellants pleaded as follows —
(i) that although the agreement in question was written in March 1956 it was not signed by the respondents at all at the time and was only returned to the appellants in February 1957 signed
by one and only one of the respondents;
(ii) that the respondents were guilty of laches in that they have shown no interest whatsoever in the construction of the bakery
until it was finished and therefore were in equity precluded from deriving any benefit under the partnership agreement, and lastly
(iii) that specific performance is not a relief which can be granted in an agreement of this sort.
On 12th July 1957 the Court passed its decree in favor of respondents for specific performance of the agreement in question and registration of Plot No. 7 Bk C.V. Juba Town in the name of the partnership. It also ordered appellants to submit accounts, and—until they complied with that order—not to carry on business separately in the bakery. Hence this application in which the grounds of appeal—so far as in our opinion they are worthy of consideration—are as follows: —
(a) that His Honor the Province Judge was wrong in law in considering the agreement signed by one of the respondents as a “partnership agreement” when in fact it is only a “preliminary” agreement which ought to have been reduced into a partnership deed and registered;
(b) that His Honor the Province Judge disregarded the appellants’ submissions as to the applicability of the doctrine of “laches” to the case; and finally
(c) That although he admitted the normal remedy in these cases to be one of damages, His Honor the Province Judge allowed relief by way of specific performance.
Before us, appellants were represented by Advocate Gumaa, and despite the long time it took us to understand his argument on the first point, we regret we were unable to follow what he says. It appears he means to argue that a person who enters into a preliminary agreement of partnership is never bound by the terms thereof until the articles of the agreement are incorporated into a deed. This is certainly not the law, for equity always considered that as done which ought to have been done. For this purpose— i.e., proof of the existence of the partnership—even an informal document such as an unsigned draft agreement is enough.
As regards the second point, there is no doubt that the principle of “laches” is not applicable to the type of case in question. Lindley on Partnership at p. 574 says that the principle of “laches” is of great importance where persons have agreed to become partners and one of them has unfairly left the other to do all the work and then, there being a profit, comes forward and claims a share of it. In such cases as these the plaintiff’s conduct lays him open to the remark that nothing would have been heard of him had the joint adventure ended in loss instead of gain and a Court will not aid those who can be shown to have remained quiet in the hope of being able to evade responsibility in case of loss but of being able to claim a share of gains in case of ultimate success. Again at p. 575 the same authority says “the doctrine is especially applicable to mining and other partnerships of a highly speculative character “.
In our view the rejection of this argument by His Honor the Province Judge was in order, for equity cannot allow a person to benefit by his own fraud and no doubt here the appellants, finding themselves in a better position through the confidence reposed in them by the respondents, are trying to oust the latter in order to have all the gains for themselves.
As regards the third ground, we find we are unable to agree with the Province Judge on the point. In granting the remedy, he is relying on the authority of Buxton v. Lister (1746) 3 Atk. 385, but in our view he seems to have misunderstood the effect of that case. The case (as cited by Lindley at p. 583) does not say that partners can be forced to carry on business together, but it simply says that if the parties have agreed to execute some formal instrument which would have the effect of conferring rights which do not exist so long as the agreement is not carried out, in such a case and for the purpose of putting the parties into the position agreed upon, the execution of that formal instrument may be immediately decreed.
In this case there is no doubt that the parties intended the agreement dated 3 IST March 1956 to be the constitution of the Firm. It is true that it did not mention the capital of the business, but naturally at the time the agreement was made the capital was indeterminable. For one thing, the premium to be paid was not known, the exact cost of buildings and equipment was not known and over and above that, it was too early
to tell what the demands of the business would be. The intention of the parties was no doubt to wait until everything was known and then to contribute equally towards assets and other business outgoings. In the interval, the partner who acquires the property in his name will no doubt be doing so as a trustee of the firm in accordance with the rule in Forster vs. Hale (1800) g Ves. 308. It was agreed by the learned counsel for the appellants that the agreement is headed “pre-agreement” and there is viva voce evidence to that effect, but whatever the heading of the agreement might say, we do not think that a formal deed would have been able to confer upon any of the parties any right which the agreement in question does not confer and therefore the rule in Buxton vs. Lister finds no place.
If it is not possible for the Court to order specific performance, what is the remedy which the respondents are entitled to in this case? There was no doubt an agreement of partnership and there was no doubt a breach of it by the appellants; is the normal remedy of dissolution equitable in the circumstances? We have given this point our careful consideration, and we have come to the conclusion that if the appellant is made to know that if he persists in his attitude of disregarding the agreement, the whole property (i.e., the bakery) would be sold in dissolution proceedings, his behavior would certainly be entirely different. Dissolution can always of course be deferred unless the Court is of opinion that it is not reasonably practicable for the partners to continue together. In the circumstances we believe that what is required at this juncture is to declare the existence of the partnership and to order the appellants to submit within one month an account of all receipts and outgoings including of course the building expenses. On these accounts being approved by the Court, the Court shall pass a final decree ordering registration of the property in the name of the partnership subject to payment by plaintiff of his share in the building expenses. If the Court finds that such a course of action is not acceptable to the parties, then the final decree will be one for dissolution.
No order as to costs.
M. I. El Nur J.: —I concur.
R. C. Soni J.: —I concur.
(Order accordingly)

(COURT OF APPEAL) *
MOHAMED OSMAN EL HAG MAGZOUB vs. HASSAN EL BASHIR AHMED GALAL EL DIN
AC-Appeal-35-58

Equity—Equitable remedies—Specific performance-—No decree of specific performance where requiring breach of covenant
Landlord and tenant—Lease—Assignment
Specific performance of an agreement will not be decreed where to do so would be to order the breach of a previous covenant. So where a lessee covenants with a proposed assignee to obtain the consent of another person to the assignment, such consent not being a mere formality, but refuses to apply therefore or otherwise to complete the contract for assignment, the Court will not order completion without the requisite consent being obtained.
Appeal
Advocates: Abdel Wahab Mohamed……………….for respondent
The applicant appeared in person
15 March M. A. Abu Rannat C.J.: —The facts of this case are short and simple and they are clearly set out in the judgment of the Province Judge, Northern Province. Shops Nos. 36, 37, 38, 39, 201 and 202 in Block 5 Damer Town are owned by the Sudan Government, but they were registered as leasehold in equal undivided shares iii the name of Hag Magzoub Ahmed (father of the plaintiff) and Hassan El Feki El Bashir, the defendant.
On 22nd December i the defendant through his agent Abdulla El Basher agreed to assign to the plaintiff all his shares in the six shops for £S.300 On the same day £S.100 was paid in cash to plaintiff’s agent and the remaining amount was settled by installments the last of which was paid on 22nd February 1958.
On 23rd February 1958 both parties agreed to register the transaction as a gift in order to pay less registration fee. The Kadi then applied to the Governor for his consent, but before the Kadi’s letter was dispatched to the Governor the defendant refused to complete the transaction.
The plaintiff applied to the Court below for a decree of specific performance, but the Court refused to give him this remedy on the ground that the Governor’s consent under the lease was not obtained and awarded the plaintiff £S.300 by way of damages. The plaintiff is appealing against the decree of the Province Judge and is now applying to this Court to order specific performance of the agreement for assignment.
* Court: M. A. Abu Rannat C.J., M. I. El Nur J., Abdel Rahman El Nur J.
The defendant is a Government lessee, and the lease specifically provides that the Governor’s consent in writing must be obtained before assignment of the lease to the plaintiff, i.e., that before an assignment the consent must be obtained.
The point at issue is this, can the plaintiff demand specific performance of the agreement of 22nd December 1957? In my view he cannot. It is a clear rule of equity that specific performance, which is an equitable, and therefore discretionary, remedy, will not be decreed where to do so would be to order the breach of a previous covenant. In this case it amounts to such a breach in face of the covenant contained in the lease that the Governor’s consent in writing was a condition precedent to such a transaction. I do not want to burden this judgment with the authorities in support of this point such as Willmott vs. Barber (1880) 15 Ch.D. 96, because I am satisfied that in this particular case the Governor’s consent was no mere formality.
I should like to make it clear that I am distinguishing this case from those cases where the assignor agrees to the assignment when there was no building on the land or the building was not complete in accordance with the building obligations under the lease, and that the agreement provides for the building or completion of the building by the assignee. In such cases, if the assignor unreasonably withholds his consent, when the assignee makes the building or completes it, the assignment could be completed without the assignor’s consent.
As specific performance cannot be granted in this case, the plaintiff is entitled to damages. The defendant having failed to apply for the Governor’s consent or complete the transaction, he should normally be made to pay damages beyond the amount he had received as consideration for the assignment, but the plaintiff did not ask for more than the £S.300 he had paid to the defendant. However this Court asked the plaintiff if he suffered any loss by the failure of defendant to complete the transaction. His agent told us at first that if the six shops were put up for sale, they would not produce more than £S.600, which means that there has been no increase in their value since the date of agreement for assignment. Later on the plaintiff’s agent stated that they might fetch £S.800 if a willing purchaser is found. We are not impressed by the latter statement, since plaintiff’s agent admits that the total monthly rent for the six shops is only £S.6. This shows that if the plaintiff claimed damages, he may be entitled to nominal damages, but the plaintiff did not include in his suit any claim for damages, and thus he is barred from making such a claim before this Court in accordance with section 51 (3) of the Civil Justice Ordinance.
The appeal is dismissed and no order is made as to costs.
(Appeal dismissed)