Partnership-Existence of relationship-Participation in the net profits from
land-Necessity of existence of a joint business

Plaintiffs' father and defendants' father agreed to plant fruit trees on
the former's land. The plaintiffs' father was. to plant the trees and the
defendants' father was to do the tending, watering etc., as well as paying
for the labour. The remaining expenses were to be charged against the
revenue and the net profit was to be equally divided between them. Plain-
tiffs' father reserved the right to terminate the agreemnt and eject dllfend-
ants' father at any time without compensation should the latter's work
prove unsatisfactory. The question arose whether this was a partnership
agreement or a mere landlord and tenant relationship.

Held: Participation in the profits is not prima facie evidence of the
existence of a partnership. There has to be a joint business carried on in
behalf of the two parties. In this case the payments amounted to rent and
there was merely a landlord and tenant relationship. Plaintiffs were en-
titled to ejectment on the facts and defendants were not entitled to an ac-
counting.

Badeley v. Consolidated Bank (1888) 38 Ch. 0.238 followed.
Ex parte Delhasse (1878) 7 Ch.D. 511 cited.

Ross v. Parkyns (1875) Eq.Cas. 331 cited.

Action

July 4, 1935. Fleming-Sandes J.: The plaintiffs are the owners
of sagia No. 28 in Gereif West Village and have brought this suit
against the defendants to recover possession of that land. The defend-
ants do not deny the claim, but by way of counterclaim contend that
they are partners with the plaintiffs in the trees planted on the land
and that their ejectment therefrom should be conditional on the taking
of an account of what is due to them by virtue of that relationship.

• Court: Fleming-Sandes 1.

In defense to this counterclaim the plaintiffs deny the existence of
any partnership. and in any event claim by set-off the sum of
£E.223.178 m/rns as being due to them under an agreement referred
to hereafter.

The main facts leading up to the case are not in dispute. In
1905 the plaintiffs' father, Ibrahim Bey Khalil, entered into a written
agreement with the defendants' father, Mohammed Abu Yousef, in
regard to a fruit garden to be planted on sagia No. 28 Geren West.
Prior to this agreement Mohammed Abu Yousef had been cultivating
this land as a vegetable garden under a verbal agreement with the
Bey, which provided for the distribution of the net profit between
the parties in equal shares. It was then decided to plant in addition
a number of fruit trees. The trees were to be planted by the Bey,
but Mohammed Abu Yousef was to do the tending, watering etc.,
and, until the trees commenced bearing fruit, he was to take for
himself all the profits arising from the cultivation of vegetables. Once
the trees started bearing, the revenue was to be dealt with as follows:
the labour was to be paid for entirely by Mohammed Abu Yousef,
and certain of the major repairs to the sagia were to be borne by
the Bey; subject to this the remaining expenses were to be charged
to the general fund and were to be deducted from the total revenue
for the purpose of ascertaining the net profit; this net profit was to
be divided equally between the Bey as owner of the land and trees
and Mohammed Abu Yousef as a reward for his labour. A right
was reserved to the Bey to eject Mohammed Abu Y Qu;f from the
land and to terminate the agreement without compensation should
the latter's work at any time prove unsatisfactory.

In accordance with this agreement the garden was duly planted
and the terms of the agreement, with little variation have been car-
ried out till this day. The Bey died in 1917 and his sons continued
to deal with Mohammed Abu Yousef, receiving their father's balf
share of the net profits. Mohammed Abu Yousef died in the summer
of 1934 and the plaintiffs, the Bey's descendants, shortly afterwards
claimed to recover possession of the land. The reason for this action
is not far to seek, for the .books show that the profits had by that
time fallen very considerably. The refusal of the defendants to give
possession has led to these proceedings.

The plaintiffs base their claim on the original written agreement
of 1905. This, they say, was merely an agreement between their
father and Mohammed Abu Yousef for the tending, watering etc.,

of the fruit garden which the Bey had decided to set up on sagia 28.
They say that the Bey provided the land and planted the trees and
that all that Mohammed Abu Yousef had to do was to tend and
water them and to sell the produce as it became available. In
consideration of this the Bey was to receive, and did in fact receiye,
a half share in the net profit by way of rent for the garden; there
never was any suggestion of a partnership.

The defendants, on the other hand, claim that there was a
partnership in the trees which they contend that they planted-a
partnership to be inferred from the fact that there was a sharing of
the net profit and from the fact that not only Mohammed Abu Yousef,
but also his sons, the present defendants, are shown in the books
as participators in those profits. They say therefore that an account
must be taken as to what is due to them as arising from this alleged
interest in the garden.

The whole point at issue is thus the nature of the defendants'
occupation of the garden in question. Does a partnership exist in
the trees, or are the defendants merely tenants of the garden under
an agreement liable to be terminated in the event of certain conditions
arising?

But before proceeding to a consideration of this, the main issue,
it would be as well to clear up one or two points on which the parties
are at variance. The defendants suggest that Mohammed Abu Y ousef,
their father, planted the bulk of the trees. In support of this, beyond
their own statements, there is little evidence. What does, however,
clearly emerge is the fact that the Bey bore the expense of trans-
planting some, if not all, of the seedlings which now fill the garden.
There is clear evidence of this in the personal accounts of the Bey
round about the period in question. In my view the defendants
have failed to make their point that they had anything to do with
the planting of the trees on the land. They tended and watered
them, but I do not believe that they planted them.

There is one other matter before we pass on and that is the
state of the accounts between the parties. These have been remark-
ably well kept and it is quite possible, certainly for the period from
1916 to 1933, to make an accurate account between the parties. The
defendants have denied that they owe any sum to the plaintiffs,
but sufficient evidence has been brought from these books to show
that they are in fact indebted to the plaintiffs in the sum of no less
than £E.223.178.

We now return to a consideration of the 1905 agreement. Does
this constitute as between the parties thereto a partnership agreement
or merely an agreement in regard to the cultivation of the land?
Towards the end of his argument learned counsel for the plaintiffs
cited the case of Badeley v. Consolidated Bank (1888) 36 Ch. D.
238. There are other cases, Ross v. Parkyns (1875) Eq. Cas. 331,
and Ex parte Delhasse (1878) 7 Ch.D. 511,. which also deal with
the point. The principle underlying aU these decisions is that participa-
tion in profits, while an important item in deciding whether there is
a partnership, is not in itself decisive. In Badeley v. Consolidated
Bank, at page 250, Cotton L.l. is reported as follows:

"If they participate in the profits as being jointly entitled
to the profits, that unless explained would lead to the conclusion
that the business is the joint business of the two, and this would
be partnership. But then when the. participation of profits
arises from a clause in an agreement entered into between the
parties, it is wrong to say that this is prima facie evidence of a
partnership, because you must look not only to that stipulation,
but to all the other stipulations in the contract, and determine
whether on the stipulations of the contract taken as a whole you
can come to the conclusion that there is a partnership--that
there is a ioint business carried on on behalf of the two-s-or
whether the transaction Is one of loan "between debtor and cred-
tor, a loan secured by giving a certain interest in the profits."

Here then I have to decide whether there was a i_oim 9t!sfiiess

carried on by the Bey and Mohammed Abu -Yousef (and after -tbe
Bey's death by his heirs) or whether the relation was some other such
as landlord and tenant.

Looking at the 1905 agreement in the light of this dictum what
do we find? It is really divided into two parts; regulated by the
paragraphs numbered 2 and 3. Until the trees bore fruit Mohammed
Abu Yousef was to be responsible for all expenses with the exception
of major repairs to the sagia, which were to be borne by the Bey,
and of additional fodder which was to be shared equally by both
parties. The Bey was to receive nothing, but Mohammed Abu Yousef
was to receive all the profits from the vegetable cultivation. Once
the trees were in bearing Mohammed Abu Y ousef was still to bear
aU labour costs, but all other expenses were to be a general charge
against the revenue of the garden, the excess of revenue over
expenditure being divided equally between the Bey and Mohammed