Case No.:

(HC-CS-2o2-1959).

Court:

The High Court

Issue No.:

1960

Principles

·  Partnership—Purported withdrawal of one partner, effect of on another partner not consenting to same.

·  Civil practice and procedure—Power to arrest witnesses—Conclusions to be drawn from failure to appear

(i) Where a partnership agreement is entered into in writing, between A, B and C. if. B orally agrees with C to withdraw from the partnership, without consulting A, this is res inter alios acta, and cannot affect the rights of A. whether as to questions of loss or of profit. He is entitled to treat the original agreement s still in force.

(ii) A court can arrest witnesses where justice so demands, but will not easily do so in civil litigation. Instead, it will treat their absence as an admission of the facts alleged by the other side

Judgment

(HIGH COURT)

EDWARD BENOU v. AHMED MOHAMED KARAZ

(HC-CS-2o2-1959).

.

Action

Advocates: Younis Nigm……….. for the plaintiff

                  Ahmed Suleiman ……for the defendant

May 25 .1960. Tewlik Cotran Acting I.: —B an agreement in writing, on April I, I9 and signed on April 25, I956 the plaintiff and defendant and a third party (the surety) entered into a partnership whereby the plaintiff would finance a scheme of which the defendant is the licence- holder, and the third party, one Mohamed Sharif Abdallah; would guaran tee one-half of the losses, if any were incurred, If the scheme was profitable, the profits were to be divided equally between the three partners. If there were any loss the defendant would not incur it; it would be divided equally between the plaintiff and the guarantor, the third party, Mohamed Sharif Abdallah (Exh. P.1). There is nothing in this agreement about the third party mortgaging any of his property as security in favour of the plaintiff.

By a separate agreement dated April 20, I956 of which the defendant is admitt not aware, the said Mohamed Sharif Abdallah covenanted to mortgage in favour of the plaintiff two plots known as 3022 and 3023/4/3 Omdurman as security for the advance which the plaintiff was making towards financing the scheme. It is stated in this agreement (Exh. p. 2) that Mohamed Sharif Abdallah “received” £S.4, 000 But it is admitted by the plaintiff that he did ncit pay this sum in cash to Mohamed Sharif. This mortgage was simply intended to be a security for the plaintiff. Mohamed Sharif Abdallah, however, failed to mortgage the plots jn plaintiff’s favourit is alleged by The plaintiff that on being pressed to fulfil his covenant  Mohamed Sharif orally told him that he no longer regarded himself a partner in the scheme as agreed in Exh. P. 1. However, the plaintiff took no steps to rectify the position or to have the contract (Exh. P. 1.) Can celled or rescinded; nor did he’even inform the other partner (defendant) that Mohamed Sharif had gone out of the partnership.

Fortunately for everybody the scheme did make some profit. Accounts were taken between the plaintiff and the defendant (Exh. P. 4 (a)), which showed that defendant owed plaintiff £S.5, 697.292 In this account the plaintiff conceded to the defendant an item in favour of one Mohamed Ali Mustafa which amounted to £S.432, so that according to the agreement, and there is no dispute about this, the sum outstanding in plaintiff’s favour was £S.5, 697.292. I have said that these accounts have been agreed to on December 7, I958 as is clear from Exh. P. 4 (a). The defendant, apart from the fact that he is contesting the plaintiff’s right to two-thirds of the prbfits, has brought in an item of £S.3oo which he wants to deduct from this sum, being his and Mohamed Sharif’s entitlement in the price of some machinery which the plaintiff took and did not account for in Exh. P. 4 (a). The plaintiff claims that the machinery has been used in the project and is not now worth more than £S.100, and that in consideration of that the plaintiff did not take into account a Frigidaire and other minor tools now in defendant’s hands. I believe that when plaintiff and defendant signed the accounts they had taken into consideration all matters outstanding between them. The machinery in my opinion is not new. It has been used, and if a part of it was not, it was l.ying in the scheme for so long (three or four years) that it cannot be really worth more than £S.100. I therefore hold that these items, which are now claimt and counterclaimed cancel themselves out.

The real dispute between the parties concerns the share of Mohamed Sharif Abdallah. The plaintiff claims that he is entitled to two-thirds share of the profits because Mohamed Sharif Abdallah had not fulfilled his covenant to mortgage his property in plaintiff’s favour. The defendant says, and I think quite rightly, that as far as he is conceri the contract Exh. P. 1 was still valid and Moharned Sharif Abdallah is entitled to one- third of the profits. The defendant says that he has already paid the said Mohamed Sharif Abdallah his profits and that the plaintiff is only entitled to £S.2, o72.o78. (It will be recalled that the court has refused to allow the defendant the sum of £S.3oo, so that the total sum owed by the defendant, if I hold for him, would be £S.2, 372.078 I find the position of the defendant completely unassailable. Learned advocate for the plaintiff has told the court in his submissions that the defendant had not really paid any money to Mohamed Sharif and that the receipt (Exh. D. 2) is fictitious. The said Mohamed Sharif Abdallah was called to give evidence for the defence. He failed to apppr and a warrant was issued. This witness then got in touch with Advocate Suleiman and told him he does not wish to give evidence and Advocate Suleiman has consented to release him. The court has the power to call a witness if justice so requires, but the court should rarely resort to this power. Advocate Suleiman has very properly conceded that the court can draw only one inference from Mohamed Sharif’s failure to come to the witness box. It is this: that what the plaintiff had said, viz., that he (Mohamed Sharif) orally waived his rights to one-third profit on his failure, to register the mortgage, was true. But surely this would not change the position of the defendant who had acted on Exh. P. 1. The remedy for the plaintiff must surely lie against Mohamed Sharif Abdallah and not with the defendant. The defendant is not a party to the agreement whereby Mohamed Sharif covenanted to mortgage pro perty in plaintiff’s favour. I am really sorry for the plaintiff because it appears on the face of it that he has a case l it is not against the defendant. It is against Mohamed Sharif Abdallah. When Mohamed Sharif failed to register the mortgage in accordance ‘with his Covenant embodied in Exh. P. 2, the first step that the plaintiff should have taken was to have the contract Exh. P. 1rescinded, or rectified or cancelled. As he did not do so the defendant was right in acting upon it. Therefore, as soon as the plaintiff knew that the defendant still admits the rights of the third partner, and had paid him his share of the profits, he should have sued the third partner or at least joined him as co-defendant in this action But the plaintiff cannot really have it both ways. Let us suppose, for the sake of argument, that the scheme lost money. Surely the plaintiff can sue Mohamed Sharif Ahdallah for half the losses in accordance with the agreement Exh. P. 1. If the plaintiff claims that he and Mohamed Sharjf had agreed that the latter should no longer be a member, and the said latter party dishonestly received money to which he is not entitled the remedy is to sue Mohamed Sharif for money had and received. If the plaintiff thinks that the defendant had not really paid any money to Mohamed Sharif he should sue both. But I cannot see how the plaintiff can recover from the defendant if the defendant does not know that the contract Exh. P. 1 has been already altered.

Learned counsel for the plaintiff has stated that what the defendant has done was to assign a debt or a liquidated sum to Mohamed Sharif and that that assignment did not conform to the provisions of section 8 of the Civil Justice Ordinance. I am sorry but I am unable to follow this argument. Here the defendant did not assign anything to Mohamed Sharif. Mohamed Sharif. According to the contract Exh. P. 1 is a partner in a scheme and he was paid his share of the profits in accordance with the contract.

For these reasons judgment will be given in favour of the plaintiff for one-third of £S.2, 372.078 which equals £S.790.694, which sum, in accord ance with the agreement of the parties (Exh. P. 4 (a) fell due in March 1959. The rest of his claim is dismissed. The defendant in his defence has admitted that he owed the plaintiff £S.69o.6 in March 1959 but he has never tendered this amount to the plaintiff or paid it into court. I therefore award plaintiff interest of 9 per cent, on £S.790.694 from March 1, 1959, until settlement. However, the plaintiff will bear five-sixths of the costs of this action and will pay defendant his advocate fees.

                                                                                     (Order accordingly)*

• An application for revision (AC/Revision/2969/1960) was summarily dismissed.