28 September 2020

International Cases

Zorah Banoo Khan vs. Salim Mohamed Shaik

South Africa



Prescription shall commence to run as soon as the debt is due

Present case is about whether or not a claim to divide the fruits of a universal partnership can prescribe in terms of the Prescription Act 68 of 1969. The Appellant, was the applicant a quo. She sought a declarator that, she and the Respondent, were in a universal partnership and that, because they had parted Company, upon that premise, a liquidator be appointed to value the fruits of the partnership and distribute the value in equal shares to the partners. The application was dismissed.

The application was dismissed. No finding was made that a universal partnership had actually come into being. The high Court did, however, make three critical findings: (1) the claim had been instituted six years after the consortium between the parties had terminated; (2) the universal partnership had terminated when the consortium had ended; and (3) that because such a claim fell within Sections 10(1) and 11(d) of the Prescription Act 68 of 1969, the claim had prescribed after an elapse of three years from the date upon which the consortium ended.

Section 12 of the Prescription Act provides that: ‘prescription shall commence to run as soon as the debt is due.’ Accordingly, a claim to share in a universal partnership prescribes after three years from the moment the claim arises, ie, the termination of the universal partnership. It is necessary to determine what significance to attach to the moment the consortium ends as an appropriate date to signal the end of the universal partnership.

The SCA held that, the essence of the concept of a universal partnership is an agreement about joint effort and the pooling of risk and reward. Accordingly, the contract is the foundation of the universal partnership. A claim based on a contract is a personal not a real right, and a claim by one partner against the other to account for a share in a universal partnership, was therefore a claim to enforce a personal right which is a debt as contemplated by the Prescription Act.

The date upon which prescription starts to run is a fact-specific determination. On the facts of this case the SCA held that, the universal partnership terminated at the same time as the consortium and more than three years elapsed before a claim was instituted; therefore, the Appellant’s claim had prescribed. The appeal was accordingly dismissed.

Tags : Universal partnership termination Prescription

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