5. MOHD. HASSANEIN ABUL ELA AND OTHERS Appellant and JOSEPH TABET …………………..…… Respondent

(COURT OF APPEAL)

MOHD. HASSANEIN ABUL ELA AND OTHERS Appellant

and

JOSEPH TABET …………………..…… Respondent

(AC-APP-12-1956)

Principles

· Partnership - existence of - construction of document - share of profit and Loss – property-inherent jurisdiction of court in winding up - method to be adopted — liability to account (*) Court Abu Rannat C.J.; Hassib J. and Osman el Tayeb P.J.

· Contract - alternate offers - acceptance - counter offer - lapse

· Practice and Procedure - res iudicata - valuation -final decree - right - duty - power Land Settlement and Registration Ord. 1925 — Section 85

By virtue of a deed entered into on the 25th April 1940 between the Appellants and the Respondent, .J.T., J.T. was to share in one-third the profits and losses to be made from the exploitation of certain lands as a building estate. The Court of Appeal had previously held AC-APP-10-1947 that J.T. was not entitled to any share in the land but was only to share in the profits and losses incurred from dealings therewith, although J.T. would have to assent to any disposition of the land. Throughout, no proper accounts had been kept by the Appellants and no accounts were presented to J.T. Disputes having arisen, J.T. again asked to be placed upon the Register of Land as an owner thereof. The Appellants resisted this claim and offered to dissolve the partnership by either having J.T.’s share assessed or by having the whole of the lands sold in one lot to determine what is due to J.T. J.T. objected to a sale of the land in this manner wishing to have the land sold in plots. In an action brought by J.T. he claimed rectification of the Land Register and an order by the Court winding up the partnership. The Appellants resisted this claim and asked that the Court order the formation of. a private company to continue the work of the partnership. The Judge of the High Court ordered the sale of the land and payment to the Respondent J.T. of one- third of the proceeds of sale HC-CS-25- 1955.
Held: (1) There was here a partnership between the Appellants and the Respondent as to the profits and losses only. The land itself was not partnership property. The Respondent was bound by AC-APP- 10-1947.
(2) The Respondent only had a power to refuse his assent to a sale but no right to demand a sale of the property.
(3)        The offer of the Appellants to have the Respondent’s share assessed or alternatively to have the land sold as a whole to assess the Respondent’s share, was a valid alternative offer which if accepted would have given rise to a binding contract and was not merely an invitation to treat. Lever v. Koffler [1901] 1 Ch.543 and Walker v. Walker1 Roll. Ab. 519 P1. 8 applied,
(4)        The Respondent’s reply to this alternate offer amounted to a counter offer and the reiterated offer of Appellants not having been accepted for a considerable time, had lapsed, silence not amounting to an acceptance. Bristol etc. Aerated Bread Co. v. Maggs [1890] 44 Ch. D. 616; Hyde v. Wrench (1840) 3 Beav. 334; and Felthouse v. Bindley (1862) ii C.B. (N.S.) 869; followed.
(5)        The appellants were clearly in breach of their obligation in failing to supply accounts.
(6)        In the circumstances of the case the Court should exercise its inherent jurisdiction and order the partnership to be wound up since the parties seem to have reached a deadlock. Re renidje Tobacco Co. Ltd.
[1916] 2 Ch. 426; followed.
(7) In the winding up the interests of the parties must be born in mind and the method most equitable to them applied. Dicta of Lord Hatherley in Syers v. Syers [1876] i App. Cas 174 at 190 applied.
Decision of Bedri J. reversed.

Appeal

The facts are fully set forth in the Judgment of M.A. Abu Rannat C.J.

Advocate: Mohd. Ibrahim Khallil…….. for Appellants

The Respondent appeared in Person

Mohd. Ahmed Abu Rannat C.J.: This is an appeal from the decision of the Honourable Mr. Justice Bedri given in HC/CS/25/1955.

On or about the 25th April 1940 the Respondent and a firm trading under the name of Younis Ahmed, Abdel. Moneim Mohd. &Co. entered into an agreement whereby certain lands were to be purchased in the name of the said firm and exploited as a building estate. The said agreement was in writing.

The said lands were purchased and the title thereto registered in the names of the members of the said firm as trading under its name.

In 1947 the Respondent attempted to have the Register rectified so-as to show that he entitled to one-third of the land The matter came before the Court of Appeal AC/APP/10/1947 which construed the said agreement and held that the Respondent was not entitled to rectification, because, on the construction of the agreement of 1940, the Respondent’s share was only a 1/3rd share in the profits and losses and not a share in the land. See page 2 of AC/APP/10/47. “On this “part of the clause we would make two points: first that the natural “deduction is. that the word ‘share’ refers to a share in the profits “mentioned above, and not to the land, the whole of which was to “registered to the Appellants : secondly that the Respondent's right to a share in the profits or losses arose from the date of the agreement “P. 4 and was not, at any rate for a year after registration to Appellants, “dependent on his paying the balance of £.27o, so Respondent’s contention that the only reason why he was not put on the register was “because he had not then paid up in full, is untenable. The Appellants’ “version, that, knowing the Respondent as they did, they were not “going to have him as registered co-owner in any circumstances is quite “consistent with the terms of Exh. P. .

“On the face of Exh. P. 4 it is clear therefore that even if Respondent “was, on payment of the £.27o, entitled to 1/3 share in the land, he

“was expressly excluded from being registered as such. Under Sec. “85 of the Land settlement & Registration Ordinance 1925 the Court “can only order rectification of the register by reason of any error or ,,omission, or for fraud or mistake. Here there were no such reasons, “so that even if the Court believed Respondent’s whole story, he was “not entitled to rectification of the register but, at best to a declaration “that he was a co-owner of a 1 /3rd share in the land. To that extent, “at least, the decree must be set aside.” -

The agreement of 1940 only showed, therefore, an agreement to share profits and losses from the development of certain lands belonging to the firm.

Subsequent to the said litigation, the Respondent and the said firm co-operated in the production of a map, the Respondent offering to bear his share of the cost. thereof. (See Exh. P. 13)

In the meantime since 1940 the said firm had been in touch with the various authorities so as to obtain the various planning permissions requisite before the land could be exploited as agreed. A delay had occurred during the war and process was rather slow thereafter. From 28th November 1948 however, steady progress has been made to develop the said lands. (See Appellants’ (Defendants) bundle of correspondence).

Shortly after the preparation of the map referred to above, some dispute again arose between the parties. As a result the Respondent wrote the letter dated April 17th, 1951, (Exh. P. I 4) wherein he stated: -

As already explained to you, I hereby confirm that I am neither “interested nor willing to be a partner in the building you intend to erect on the above land.

“It would be greatly appreciated if you would be good enough to “arrange for my share of the 1/3 in. the said land to be registered in my “name according to what we have agreed upon before.”

On the 15th June 1951 M.A. Mahgoub advocate for the firm wrote (Exh. P. 15) referring to the said letter of the 17th April 1951: -

“3. Your right under the judgment of the Court of Appeal is for “a 1 /3rd of the would-be profit as and when realized by sale of the land, “alienation or development.

“4. My clients are ready to accept assessment by a board of the “present value of the land and pay out your 1/3rd share of the profits “on that basis.

“5. In the alternative my clients are ready to offer the whole for ‘sale by public auction and my clients and you shall have the option “to bid at the auction. My clients shall then pay your 1/3rd share of

“profits on the basis of such price as the land would fetch in the auctions” In reply to this letter the Respondent through his then advocate

wrote .(Exh. P. 16) on the 27th September, 1951 : -

“1. It is admitted that the judgment of the Court of Appeal has “given my said client 1/3rd of the would-be profits as and when “realized by sale of the land.” Apparently therefore any claim to an agreement referred to in the letter of the 17th April 1951(Exh.P.14) is dropped. “But such realization will never be for an indefinite time and such prompt steps must be immediately taken.”

I am unable to see the reason for any such stops as being apparent from the letter Exh. P. 16, unless this relates to Exh. P. 14, i.e. the dispute as to the building to be erected.

The said letter Exh. P. 16 goes on : -

“2. Therefore my said client rejects your suggestion of assessing “the present value of the land by a board and paying my client 1/3rd “thereof of net profits.

“3. Nevertheless, my said client is prepared to agree to your alternative suggestion of putting up the whole land to auction at which your clients an mine shall have the option to bid. My client will be entitled to 1/3rd of the profits so realized.

“4. In order to properly carry out this suggestion, I see it inevitable “to insert in the map, filed with your clients as mine, the number and “area of each plot, so that full publication for the purpose of auction “will thereby be made to enable any prospective bidder to know what “he required before auction starts.”

This letter remained without reply for nine months, when Advocate M.A. Mahgoub replied on behalf of firm Exh. P. 20 : - “2. My “clients still insist that the whole land should be offered for sale by “public auction, as contained in Para 2 of my letter of 15th June 1951 “addressed to Mr. Joseph Tabet and shall proceed to offer the land for “sale in due course, irrespective of whether Mr. Tabet agrees or not, “as he has no right to dictate the method by which the land should be “disposed of.

“3. As you are doubtlessly aware, the offer for sale of the whole “land as one entity increases its value. If, on the other hand, the sale is carried out by plots the land will fetch much less, especially in view of the fact that it is undeveloped.”

Various letters by the Respondent reiterated the position, but add nothing to the case. Attempts were made to settle the matter out of

Court, which continued even after the issue of a plaint on the 10th February 1955. HC/CS/25/1955.

I now come to the pleadings in this case.: By Para 4 of the Statement of Plaint the Respondent claims that the decision of the Court of Appeal stated that “Plaintiff’s share was one-third in the profit and losses and “that he was not entitle to rectification of the Register, but at best “to a declaration that he was a co-owner of 1/3rd of the land and therefore dismissed the claim”. In their Statement of Defense, the Appellants admitted “that the plaintiff is entitled according to the judgment of the “Court of Appeal to 1/3rd share of the profits and is liable to 1/3rd’ “share of the losses, but is in no case a co-owner of 1/3rd share of the “land”. The learned counsel for the Respondent replied thereto “1. The “plaintiff does not claim in this case that the Register of the land in question should be rectified to include him as a co-owner of one-third in the land. His claim is that he is entitled and liable to one-third share of the profits and losses of land. Therefore, it is submitted that what defendants admit in Para 4 of the statement of defense is in effect what plaintiff pleads and there is no dispute in this respect. The importance of this pleading will become apparent later, as, in conformity with the decision of the Court of Appeal AC/APP/10/1947, it drops all claims to ownership of the land.

The rest of the pleading led to the framing of the Issues by the learned Judge as follows -

1. Was the offer of the defendants by letter of 15.6.1951 (i.e. Exh. P. 15)

(a) an offer to sell the whole land .in one lot

“OR onus on defendants

(b) the whole land in plots ?

(onus on plaintiff)

2. In any case was the reply of plaintiff to the letter of 15.6.1951 “referred to above

(a) an acceptance ?

(Onus on plaintiff)

OR

“(b) was it a counter-offer which was not accepted ?

(onus on defendants)

3. If yes to 2(a) is plaintiff entitled to an order for sale of the “whole land in plots ?

“4. If yes to 2(b) is plaintiff entitled to an order for sale of the “whole land in plots under the agreement of 1940

5. Did defendants submit accounts for the transactions made In “the land — if any ?

6. To what other relief or relief's is plaintiff entitled .

When the action came before the court for hearing attempt were still made to settle the said action. These being unsuccessful, witnesses were heard and the learned judge gave his judgment.

Very shortly this judgment decided that since the letter of the 15.6.1951 i.e. Exh. P. 15 did not contain an offer but was only an invitation to treat in that it stated : My clients are ready to offer the question of a binding contract did not arise and thus issue No. I must be answered in the negative as a whole. As a result issues 2, 3 and 4 did not arise. He then went on to decide issue No. 5 against the Appellants and considering the position one of a partnership, under the inherent jurisdiction of the-Court ordered a dissolution of partnership and a sale of the land plot by plot, as being a greater benefit to the parties as a whole.

The Appellants appealed against this decision on the ground that the learned Judge should not have exercised the inherent jurisdiction of the court in favour of the Respondent but rather in favour of the Appellants: -

a) because the issues were mainly decided in their favour;

b) because the equity of the case was in their favour;

c) because the Respondent did not come to Court with “clean hands”;

d) because the Appellants had admitted liability to submit accounts;

e) because to order a sale would be contrary to the decision of the Court of Appeal in AC/APP/10/1947 between the parties which entitled them to the title in the land Thus the Appellants claim that the learned Judge should have ordered the formation of a Limited Company to carry on the functions set out in the agreement of 25th April 1940.

There the matter stood before the Court of Appeal and was argued by M.A. Mahgoub, learned Advocate for the Appellants and by the Respondent in person. The Court is always lenient to a person appearing without counsel and will bear in mind the lack of legal assistance to such person.

The issues before the Court of Appeal are shortly, how far can the decision of the learned Judge in the court below be supported or would such judgment have to be reversed on any point ?

I fully agree with the learned Judge that Issue No.1 has to be

decided as a question of construction of the documents before the Court. But I regret that I am unable to agree with the learned Judge that Exh. P. 15 does not contain a valid offer but only an invitation to treat. The relevant passages run : -

4. My clients are ready to accept assessment ...“ and

5. In the alternative my clients are ready to offer the whole land for sale by public auction ...“

Authority exists that offers can be made in the alternative and provided that an acceptance clearly indicates which of the alternatives had been accepted, a binding contract will have come into existence e.g. Lever v. Koffler [1901] 1 Ch. 543 where the offer was either to sell or to let a house.

But the learned Judge held that the words “ready to offer” amounted not to an offer but to an invitation to treat. With all respect to the learned Judge I think that he misdirected himself on this point in not considering to whom the letter was addressed. This was not an offer to the world or to any particular person requesting him to buy the land, or offering the land to him. This was an offer to a person having power to refuse his consent to a sale of the land (See Exh. P.1 i.e. agreement of 25th April 1940 and the pleadings statement of defense’ Para 9) offering to him two alternative means of terminating the agreement of the 25th April 1940. Thus on the basis of Walker v. Walker 1, Roll. Ab. 519 P1.8 there is here, on construction, an offer to sell by auction. InWalker v. Walker the term used was “I will be ready to” and was held to be a covenant.

But is this an offer to sell the whole land in one lot or is it an offer to sell the land in plots ? An offer must be a definite one and the onus is on the plaintiff to prove that it is clear and unambiguous. Thus in Falke v. Williams [1900] A.C. 176 the J.C.P.C. held that he who puts forward a construction must prove it to be clear. it was the duty of the Appellant as Plaintiff to make out that the construction which he puts upon it was the true one. In that he must fail if the message was “ambiguous, as their Lordships hold it to be”. The case concerned the sending of a message in code.

Here we find the Respondent himself clearly stating in his evidence in chief (p. 2 of the record) “It is not logical that land should be “sold as a whole, but plot by plot is logical I understood from Exh P.15 “that the Advocate Mahgoub suggested that the land be sold as a whole.”

Thus any ambiguity which may have existed by reason of the use of the worth ‘ ready to offer the whole land for sale is cleared up

the Respondent’s (Plaintiff) own evidence that he understood the offer in the way in which the Appellants claimed it to have been made.

This leads me to the second issue. Is the letter Exh. P.16 (a) an acceptance of the offer in Exh. P.15 or (b) was it a counter-offer which was not accepted ? Clearly if the offer was for a sale of “the whole land” then the letter replying thereto and setting out new terms would be a counter-offer. This was not an acceptance forming a contract. Bristol etc. Aerated Bread Co. v. Maggs [1890] 44 Ch. D. 616. In that case a series of letters had passed between the parties. .Although the first two letters, if standing alone, seemed to indicate a contract having been concluded between the parties, the court held that it is necessary to have recourse to the whole correspondence to see whether there, was a contract between the parties. On the construction of this correspondence it was clear that all the terms were not settled in the said first two letters and thus no contract existed as there was no agreement on the terms. Here we have clause 5 in Exh. P. 15 and clause 3 in Exh. P.16. These, if taken alone, might indicate a contract, were it not for clause 5 in Exh. P.16 which indicates that the whole subject matter is not settled and that no agreement has been reached, but a counter offer is made. See further Hyde v. Wrench (1840) 3 Beav. 334.

Was this counter offer accepted ? Clearly not. Silence does not amount to an acceptance of an offer. Felthouse v. Bindley (1862) ii C.B. (N.S.) 869 where the offer expressly dispensed with a notification of acceptance. stating If I hear no more about him I shall consider “the horse is mine.” But the Court held that as the acceptance of the offer had never been communicated to the plaintiff there was no contract. Thus when the Appellants did not reply to the Respondent’s letter for nine months they cannot be held to have accepted the counter offer. The fact that the situation was still in “a stage of negotiation”, to use the term adopted in The Bristol Aerated Bread Case, is clear from the reply of Appellants Exh. P.20 — which ‘reiterated the offer made. This new offer was never accepted by the Respondent, and must be considered to have lapsed in view of the negotiations Which preceded the decision of the court below.

Thus issue No. 2 will have to be answered in favour of the Appellants as is issue No.1.

In view of my conclusions on issue No.1 and 2, issue No.3 does not arise. Before dealing with issue No.4, however, I think it would be convenient to dispose of issue No.5 first.

Did the Defendants submit accounts for the transactions made in

this land — if any ? The Appellants admitted their liability to submit accounts. This is however not in issue, but “did they do so” is the question before the court. They pleaded that they “are and have always been ready to submit to the plaintiff details of the transactions, “if any ... ” and this was denied by the plaintiff (Respondent) in. his reply. (See Para 3 (b) of Reply).

The problem really seems to be whether the Appellants should have submitted accounts or whether the Respondent would have to request the submission of such accounts. At best from the Appellants’ view the Respondent would have to make such requests, and would then have to be afforded an opportunity to inspect the accounts. The Respondent repeatedly had to ask that accounts be sent to him and the correspondence, admitted as evidence, shows that these requests went unanswered for long period Thus individual items were not submitted for some considerable time, see Exh. P.40 containing an item referable to the year 1951. There do not seem to have been any full accounts kept anywhere. At least none were submitted to the court for inspection and in repudiation of the Respondent’s allegations an account seems only to have been submitted after judgment. Thus I agree with the learned Judge in the court below that there has been a failure to keep proper accounts and to that extent there had been a breach of the agreement of 1940 — (Exh. P.1). Also the Appellants admitted that the land was mentioned in the Appellants’ balance sheet. They had full right to do so, but if any benefit accrued to them as a result, such would have to be accounted for. Thus the Appellants would have to submit proper audited accounts showing all dealings with the land. This leads me to issue No.4. If yes to 2 (b) is plaintiff entitled to an order for sale of the whole land in plots under the arrangement of 1940.

The answer to this issue depends on the construction of the document of the 25th April 1940. In so far as this document has been construed by the Court of Appeal, the said construction is res judicata between the parties and they are bound thereby. The said construction indicates that (a) The Respondent is not an owner of, nor owns a share in the land; (b) The Respondent’s only right is to 1/3rd share in the profits and losses realized from the exploitation of or sale of the said land.

It is however now necessary to consider this question further and to decide (a) what was the relationship between the Respondent and the said firm; (b) what was the position of the land in relation to (a): -

(a) We have here an agreement containing the following main terms : -

(i) an agreement to co-operate in the exploitation of certain lands.

(ii) an agreement to share the profits and losses realized from such co-operation.

(iii) an agreement between the parties to bring into account all profits derived from any transactions in the land “and no one “ of the parties shall have the right to make agreements, or “brokerage or any benefit other than the benefit to be derived “of the partnership” (see agreement of 25th April 1940).

(iv) an agreement not to sell the land without joint consent, and finally.

(v) an agreement that accounts be kept.

In Pooley v. Driver [1876] 5 Ch. D. 458 (471) Jessell M.R. stated that he was not going to define a partnership as many definitions have already been advanced. He went on however “If the partnership is “established as a fact, then the liability of creditors is a mere incident flowing from the establishment of the fact But it is a contract of some kind undoubtedly— a contract for the purpose of carrying on a commercial business — that is, a business bringing profit and dividing the profit in some shape or other between the partners. That certainly is “partnership”. In 1890 the English Parliament passed the Partnership Act 1890 in which a partnership is defined as “1 partnership is the relation “which subsists between persons carrying on business in common with “a view of profit.” The court held in British Homes Assurance Corporation Ltd. v. Paterson [1902] 2 Ch. 404 that the Act is merely declatory of the law as it existed before the passing of the Act and that therefore the law prior thereto is still in force unless expressly repealed by the Act. We can thus examine the document of 1940 — Exh: P.1 — in the light of Jessell’s M.R. dictum and of the Partnership Act 1890. On that basis it would appear that the relationship contemplated between the Respondent and the said firm is that of a Partnership. This is further emphasized by the use of the term ‘partnership’ in the said document and by the evidence of the Appellants (p.14 of the record), “It is partnership at will” i.e. the parties looked .upon it as such.

The purpose of the partnership has been set out in the said document and can be summarized as the exploitation of certain lands for the purpose of profit.

(b) This leads to the second question, i.e. is the land partnership property ? In law a partnership is not a separate legal person from those who comprise the partnership. In practice and for the sake of convenience it is possible to invest a partnership with some legal standing

however. Thus it is possible to sue the persons forming the partnership in their Firm name and it is not necessary to set out all the names of the members of the firm. Also in relation to debts as to those of the partners individually and as to those of the partnership as such, some distinction exists at law to keep the two apart and to make the property of the individual partners or of the partnership only liable after the primary debt has not been satisfied. Thus it is not possible to register land in the name of a partnership, but the land must be registered in the name of the individuals comprising the partnership, or of one or more as trustees for the remainder of the partners.

The decision of the Court of Appeal AC/APP/10/ 1947 is res judicata between the parties. By that decision the Respondent has no right to the land at all neither in law nor in equity. The Court stated “on the face of Exh P.4 (here Exh. P.1) the Respondent is entitled to 1/3rd “share in the profits and losses but to no share in the land”.

Cases exist in which it was held that land bought in the name of one partner was non-the-less partnership property especially when it was bought out of partnership funds e.g. Darby v. Darby (3Drew 495). Two brothers had been speculating in reality which they bought for conversion into building sites and sale at a profit. In the case of some of the land the “legal estate had been by arrangement conveyed to “Alfred” (i.e. one of the brothers). The court held however that the land was partnership property. See also Dale v. Hamilton (1846) 5 Hare 369, referred to by the learned Judge in the court below, which on appeal was decided on the basis of trust and not partnership.

Do these cases apply here, however, so as to make the land partnership property? In my view they do not. In Smith v. Watson 2 B & C 401 a broker, Mr. Gill, was requested to purchase merchandise on behalf of a merchant, a Mr. Sampson, and was to be paid by a share in the profits expected on the resale of the merchandise (wale bone). Bayley J. held - “Now the right to share in the profits of a particular adventure, may have the effect of rendering a person liable to a third person as “a partner, in respect of transactions arising out of the particular adventure in the profits of which he is to participate; but it does not give him any interest in the property itself, which was the subject of the adventure. Gill’s right to claim property in the wale-bone must arise out of the terms of the bargain with Sampson; and looking to “them it appears clearly that it was not joint property.”

Thus the only means by which we can ascertain what is partnership property is to refer to the agreement between the parties. From this it

is clear that the land is not partnership property. In fact this is admitted by the Respondent (plaintiff) in his reply Para 4.

The question thus arises, although the land is not partnership property, is there anything in the agreement of 1940 which would give to the Respondent the right to have the lands sold in plots ? The agreement provided and if the parties wish to sell, it shall be with their “joint consent”. This in my view, merely amounts to a “power” in the Respondent to refuse his consent to a sale which may be contrary to the purposes of the partnership. I do not think that it conveys any greater right than this, that it confers a right to demand a sale. Having a right to share in the profit and losses from the exploitation of the said lands, and being concerned in the work connected with such exploitation, the Respondent clearly had the right to refuse his consent to an un profitable undertaking with the said lands. Thus the Respondent had a “power” but not a “right”, with the result that there was no corresponding “duty” on the Appellants to comply with any requests by the Respondent for a sale, if such sale should be contrary to the purposes of the partnership as a whole.

Thus in my view, issue No.4 will also have to be answered against the Respondent. A claim to a sale can surely not be in the interest of the partnership as long as the land is still undeveloped, unless such sale be necessary (a) to raise some money for development or (b) to make some minor adjustments to the area of the estate. In my opinion there is nothing in the agreement of 1940 which confers such right upon the Respondent.

This leads me to the final issue in this case, to what other relief is the Respondent entitled ?

The learned Judge came to the conclusion that the agreement of 1940 indicated the existence of a partnership between the parties. He then went on to state This Court will go to any length to enforce the terms of the partnership and this includes the remedy of sale as well, as was observed by the Judge in Dale v. Hamilton itself”.

In Dale v. Hamilton the memorandum was deemed to be a declaration of trust. Can the same be said about the document of the 25th April 1940 ? The Court of Appeal has held that the Respondent has no right to a share in the land but only to the profits arising out of dealings therewith. Does that make the land trust property ? I think that before There can be a trust the intention must be certain that the property is to be trust property. The intention of the purchaser of this property was ascertained in the previous decision of the Court of Appeal AC/APP/10/1947

and by no stretch of construction can it be said that the property was to be held by them on behalf of or to the use of the Respondent. The only possible construction is that the lands were held for the purchasers who are prepared to agree to the participation in the profits by the Respondent in return for his payment of LE.400 as a premium and at his participation in the works to be carried out in connection with the lands. Thus there is a partnership as regards the profits from lands which themselves are not held on trust for the Respondent Partner. The Court will however protect the Respondent Partner from any transaction which will interfere with his right to such profits e.g. an injudicious exploitation which is liable to cause damage rather than profit. There has been no substantiation of any allegation by the Respondent that the Appellants have so acted. In fact this is not even seriously suggested anywhere (except maybe Exh. P. 14).

thus I cannot agree with the learned Judge in the Court below that the case of Dale v. Hamilton is applicable here.

This leads me to the second ground on which the learned Judge was prepared to apply the inherent jurisdiction of the Court so as to dispose of the matter completely. This seems to be based on the continued quarrelling and existence of such a state of animosity as would preclude all reasonable hope of reconciliation and friendly co-operation. But the rule has been stated by Lindley on Partnership page 691 (and cited with approval in Re renidge Tobacco Co. Ltd. [1916] 2 Ch. 426 “It is not necessary in order to induce the court to interfere, to show personal rudeness on the part of one partner to the other, or even any gross misconduct as a partner. All that is necessary is to satisfy the court that it is impossible for the partners to place that confidence in each other which each has a right to expect, and that such impossibility has not been caused by the person seeking to take advantage of it.

On examining the evidence we find that the only real objection which the Respondent could take is the failure of the Appellants to keep and submit proper accounts, when requested to do so. In addition the Appellants delayed for a considerable time in continuing with the negotiations for completion of the partnership business i.e. 1945-1948. The Respondent has however waited since 1948 to complain of this and the courts will not help a person who does not take prompt steps to protect his interest i.e. “delay defeats equities”. As regards the former i.e. delay in submitting accounts, this is a very serious matter in a partnership. Thus the situation would be very much in favour of the Respondent to have this partnership wound up were it not for a maxim

of equity which needs no further explanation. He who comes into “equity must come with clean hands”. Looking at the dealings between the parties, the Respondent certainly does not seem to come to the court with “clean hands” ... There is the earlier litigation which shows the advantages the Respondent is prepared to take in order to gain his own ends. The Court of Appeal described these as “fraud” and “trickery”. Even his own counsel in that case described the Respondent as a “cunning fellow”. Thus is it not really his own actions which have led to the present situation, i.e. the lack of mutual confidence between the partners ? There is an inherent jurisdiction in the court to terminate a partnership if it be just and equitable so to do. This jurisdiction ought clearly to be exercised in this case. Both parties do not seem to be prepared to go on with the present partnership and it seems clear that this relationship ought to be ended. The Appellants contend that the equities in their favour ought to be borne in mind by the Court. The Court will certainly consider the equities on both sides when decreeing the winding up of the partnership.

It is however not possible for the Court to accede to the request of the Appellants that a private company be for to continue the work of the partnership, and that to such company the respective shares of the partners be sold. In Re renidje Tobacco Co Ltd. [1916] 2 Ch. 426 the facts showed a complete deadlock between the parties, who were the members having voting rights in the company. But even so, the company was still continuing its commercial transactions and producing large profits. The Court held that in the case of a private company, where in fact it is only a partnership trading under the advantages of a limited company, the same rules apply as to a partnership. Thus the Court will exercise its' jurisdiction in ordering a winding up of such company on the same principles as it would order a winding up of a partnership where it is just and equitable to do so.

The general rule is that when a partnership is terminated each partner has the right to have the partnership assets sold and applied to the payment of partnership debts and thereafter applied for the benefits of the partners. This is not however an arbitrary and inflexible rule. Thus Lord Hatherley stated in Syers v. Syers [1876] 1 App. Cas. 174 at p. 190 : - “I do not think he (the plaintiff) is entitled to ask for a sale, “regard being had to the amount of his interest in it (one eighth) and to the nature and character of that concern, which of course the Court of Chancery is always bound to look to, and the, injury that might result from having a sale of a business of such a description as this.

Thus the House of Lords ordered a valuation and sale to other partners. Also where the assets though valuable are not readily saleable, here too, the Court will order a valuation and debit one of the partners there with. Ambler v. Boilon (14 Eq. 427) where the asset was an unassignable contract and Smith v. Mules (9 Hare 572) where the asset was an appointment to an office.

Swinfen Eady L.J. held in Hugh Stevenson v. Aktien Gesellschaft fur Cartonnagen Industrie [ K.B. 842 at p. 847 that these orders were made in “The undoubted jurisdiction of the Court in winding up a “partnership and controlling the realization of the assets and the “ascertainment of the shares of the partners”. Thus in that case when the partnership had come to an end by operation of law and not through order of Court, one partner having become an enemy alien, the Court refused the application of the remaining partner to have the assets valued so that he could buy them and continue the partnership business.

Thus what are the assets of the partnership ?

(a) the increase in the value of the lands since 1940;

(b) the right to develop the said lands.

From the above it was made clear that there is no right to the land itself which is therefore not a partnership asset. (Vide Court of Appeal AC/APP/10/1947 and the discussion under issue No. 4)

In this case, the choice is between an assessment of the assets, and a sale of such assets. Clearly a sale of the assets of this partnership at this .stage is not really possible. One asset is the increased value of the land. To realize this asset, would involve the sale of the land itself and the land has been held not to be an asset. Secondly there is the asset of the right to develop the said land and to the profits from such development. This right would be a bare right without the ability to deal with the land itself. Once the purposes of the partnership had been fulfilled i.e. land ready for building, houses built, etc., there would have been. a possibility to sell leaseholds etc. In my opinion we have here a partnership whose assets at the present stage of its development are unsaleable. As Lord Hatherly stated in Syers v. Syers, the Court will consider the “nature and character” of the concern and I think that the court should follow the method adopted in Ambler v. Bolton and in Burdon v. Barkus (cited in Lindley on Partnerships 11th edition) and order an inquiry into the values of these assets i.e. the increase in the value of the said lands since 1940. and the value of the power to develop The land. The Respondent will then have to be credited with 1/3rd

share. of such value after deduction of initial costs. This could clearly be in accordance with the principle that on dissolution the disposition of the assets should be in the method most beneficial to all the parties “Taylor v. Neate 39 Ch.D. 538. To leave these assets for sale in the open market would clearly not produce .their real value.

The appeal is allowed and the following decree shall be issued -

It is ordered that the decree of the judge of the High Court Khartoum, dated 15.3.1956, be set aside.

It is further ordered that a valuation of the assets of the partnership (i.e. the increased value of the land and the right to develop the land) which is shown on the schedule shall be made forthwith. In making such valuation each party shall nominate a person of experience and the Court shall appoint a chairman. When the valuation is made and accepted, by the Court, the Respondent (Joseph Tabet) shall be entitled to 1/3rd of such valuation after deduction of the initial costs of the land.

Then a final decree be made by the Court declaring the amount due to Respondent and date of payment to him.

Hassib J. :I concur

Osman cl Tayeb P.J. : I concur

(Appeal allowed)