Partnership-Existence of-Money of ill/ant ward employed by guardian ill
business-Annual accounting to Sharia Court-u Guarantcc against loss 0/
capital=Whether (l partnership is thereby created

Defendant and Yunis Ahmed wert! partners. Upon death of the latter
the Sharia "Court appointed defendant guardian of the infant son, Arnir.
The Sharia Court allowed defendant to retain Amir's share in the business
upon the footing that the defendant should account annually for the same
and the profits derived therefrom. Amir shared in the profits and losses
while the defendant guaranteed the return of his original capital.

The plaintiff, being Amir's heir, claimed for account of an alleged part-
nership between Arnir and the respondent, hut his claim was dismissed.

Held: Defendant and Amir were not partners, for there was no ele-
ment of common risk. which is of the essence of partnership. The arrange-
ment contemplated by the Shari a Court, and in fact established, was one by

• Per Owen C.J. in Sarkis ltmirlian r. Heirs of Moha;nmed Orphi Pasha
AC·AP·19·IY31, I S.L.R. 511.

* Court: Creed C.1., Sondes and Cumings JI.

which the guardian was entrusted with the moneys of his ward to be em-
ployed by him upon certain terms.

Cox v. Hickman (1860) 8 H.L. Cas 268, II Eng. Rep. 431 followed.
English Partnership Act 1890, s. 2.

Appeal

Advocates: Mr. Francoudi ... for the appellant; Mr. Labib
Sorial . . . for the respondent.

September 2, 1940. Cumings J.: This is an appeal from the
decree of Flaxman J., dismissing the claim of the plaintiff, Ahmed
Abdel Aal against the defendant, Abdel Moneim Mohammed.

The claim was for a partnership account of an alleged partnership
between the defendant and Amir Yunis Ahmed from 1923, when the
latter's father died until his own death, when still a minor, in 1936.
The plaintiff sued as beir of Amir.

The question before the court-was this: Given that the defend-
ant was throughout this period a partner in the firm of Yunis Ahmed
& Abdel Moneim & Co., was there a sub-partnership between him
and Arnir? It was not alleged by the plaintiff that the defendant and
Amir as a firm were a partner in the firm of Yunis Ahmed & Abdel
Moneim & Co.; so far as the principal firm was concerned tbe defend-
ant was a partner by himself.

It is clear that on the death of Yunis, who was a partner with
defendant, the defendant was appointed by the Sharia Court as
guardian of Amir, and that the court was apprehensive of the wisdom
of leaving the share of Amir and the other minors in the business (1
deliberately use the neutral phrase "leave in the business" because the
question is exactly how the share of Amir was left in the business),
but agreed to do' so as the result of negotiations between itself and
the defendant, who accounted to the court for the result of this use
year by year, on the footing of being responsible for it, as guardian
for the moneys of his ward. 0f the defendant and Amir were partners,
that partnership was created by agreement in these negotiations be-
tween the Sharia Court and the defendant. Did the court and the
defendant agree not only that the defendant should be liable to ac-
count to the Sharia Court for moneys of the ward in his hands. but
also that he and Amir should be partners, so that he should be liable
to account to Amir in the civil courts as a partner?

To determine whether two parties have created a partnership
between them, it has been recognised since the case of Cox v. Hickman
(1860) 8 H.L. Cas. 268, 11 Eng. Rep. 431, that regard must be
paid to the true contract and intention of the parties, and that when,
as here, the agreement between them is not in writing, their intention
must be ascertained from their words and conduct. TIle learned judge
correctly applied his mind to this matter, and decided against the
plaintiff, upon whose advocate has therefore fallen the difficult task
of trying to persuade us to draw from the facts a different inference
from that drawn below, where an important part of the case was the
view taken of the defendant as a witness. Mr. Francoudi has argued
his case skillfully and with great tenacity, and we are also much in-
debted to Mr. Sorial, who appeared for the respondent. As a result,
all ot the many relevant considerations in this complex matter have
been before us. In the end I am not satisfied that the defendant is
liable to account to a civil court as a partner, as well as to the Sharia
Court as a trustee of his ward's money, for the following reasons:

The following part of section 2 of the Partnership Act 1890 of
England is relevant to this appeal:

"2. In determining whether a partnership does or does not exist
regard shall be had to the following rules:

(3) The receipt by a person of a share of the profits of a business
is prima facie evidence that he is a partner in the business,
but the receipt of such a share, or of a payment contingent on
or varying with the profits of a business, does not of itself
make him a partner in the business; and in particular:

(a) The receipt by a person of debt or other liquidated amount
by instalments or otherwise out of the accruing profits of
a business does not of itself make him a partner in the
business or liable as such:

(c) A person being the widow or child of a deceased partner,
and receiving by way of annuity a portion of the profits
made in the business in which the deceased person was a
partner, is not by reason only of such receipt a partner
in the business or liable as such:

(d) The advance of money by way of loan to a person en-
gaged or about to engage in any business on a contract
with that person that the lender shall receive a rate of
interest varying with the profits, or shall receive a share
of the profits arising from carrying on the business, does
not of itself make the lender a partner with the person or,
persons carrying on the business or liable as such. Pro-
vided that the contract is in writing, and signed by or
on behalf of all the parties thereto;"

The arrangement concluded between the Sharia Court and the
defendant was this. The money due to Amir was ascertained at the
death of Yunis; this was not withdrawn, but the defendant was made
to account each year for it to the court adding to it a share of the
year's profits. So far this is in .favour of the' plaintiff, for sharing
profits is prima facie evidence of partnership, but is not of itself
sufficient to constitute partnership. What as to losses? There were
no years of loss, so that no adjustment had to be made as to" losses,
but it is clear there was some arrangement as to them, and that by
it Amir had some guarantee against loss by the defendant. This is
admitted several times in writing by the plaintiff. The only clear and
detailed statement as to the arrangement as to losses is that given
by the defendant to 'Mr. Gerrard as Registrar of Partnerships in
1931 (before these proceedings were threatened), which is consistent
with the written guarantee of 1936. This is that Amir was to share
in profits and losses, except that the defendant guaranteed the return
of his original advances. According to Lindley; on Partnerships, 10th
ed., p. 48, such an agreement whereby one indemnifies another against
the loss of his advances is not a contract of partnership but a loan.
It.is a contract of loan because the only risk run is that of the insolvency
of the guarantor-s-there is no element of common risk at all, and
that is of. the essence of partnersmp. So, in my opinion, whatever
the parties may have intended, the agreement they made was one
which was not of partnership, but one whereby a guardian of a minor
was entrusted with moneys of his ward to be employed by him in
trade upon certain terms. That is enough to decide this appeal in
favour of the respondent.

And this relationship was, if I may call it so, the real, true
relationship of the little boy, Amir, and his guardian, the defendant,
and the one upon which the defendant accounted for some many
years. It seems to me to be very difficult to believe that it was in-