The Requirements for a Universal Partnership

In South African law, there is no such thing as a common-law marriage, no matter how long a couple may live together. This is a common misunderstanding.

A widely-used definition describes “domestic partners” as “two adults who share an emotional, physical and financial relationship like that of a married couple but who either choose not to marry or cannot legally marry. They share a mutual obligation of support for the necessities of life.”

Cohabiting couples do not have the same automatic rights as married couples under the law. If parties live together but don’t conclude any form of agreement regulating their respective legal rights and obligations, on dissolution of the cohabitation, a party that feels he or she is entitled to something from the other party (who disagrees), must go to court, at some expense, to prove that entitlement. To do so, the party must prove they were in a ‘Universal Partnership’, so that one party is entitled to certain property and assets of the other party, on separation.

The requirements for a Universal Partnership were canvassed at length in Le Roux v Jakovljevic (14-05429) 2019 ZAGPJHC 322 (5 September 2019)

The Plaintiff sought a declaratory order that a universal partnership existed between the parties. The Defendant denied the existence of a partnership, universal or otherwise.

Having regard to all the facts and circumstances of this case the court concluded that was more probable than not that a tacit agreement [universal partnership] had been reached. Their partnership enterprise included both the business and their family life. The plaintiff’s impression as to the core of their relationship was borne out by the conduct of the parties.

“Where a court finds it impossible, impracticable or inequitable to physically divide a particular asset between the parties or to cause it to be auctioned and to have the proceeds divided between them it can place a valuation on that asset with due regard to the particular circumstances concerning its value at date of dissolution of the partnership. The court may then award the assets to a partner and order him to pay the other her share”.

This was the court’s analysis:

In Paixao v Road Accident Fund2 Cachalia JA held that:

“Proving the existence of a life partnership entails more than showing that the parties cohabited and jointly contributed to the upkeep of the common home. It entails, in my view, demonstrating that the partnership was akin to and had similar characteristics – particularly a reciprocal duty of support - to a marriage.”

[17] The requirements for the existence of a universal partnership are summarised in the matter of Pezutto v Dreyer and others 3 which was also confirmed in Butters v Mncora4 at par 17:

“Our courts have accepted Pothier’s formulation of such essentiala as a correct statement of the law. (Joubert v Tarry & Co 1915 TPD 277 at 280 -1; Bester v Van Niekerk 1960 (2) SA 779 (A) at 783H – 784A; Purdon v Muller 1961 (2) SA 211 (A) at 218B – D). The three essentials are (1) that each of the partners bring something into the partnership whether it be money, labour or skills; (2) that the business should be carried on for the joint benefit of the parties and (3) that the object should be to make a profit. (Pothier: A Treatise on the contract of Partnership (Tudor’s translation) A fourth requirement mentioned by Pothier is that the contract should be a legitimate one.”

In Butters the history of the different types of partnerships as well as their applicability to cohabitants was discussed. It was held at par [18] that such partnerships can extend beyond commercial undertakings and that:

‘(a) Universal partnerships of all property which extend beyond commercial undertakings were part of Roman Dutch law and still form part of our law.

(b) A universal partnership of all property does not require an express agreement. Like any other contract it can also come into existence by tacit agreement, that is, by an agreement derived from the conduct of the parties.

(c) The requirements for a universal partnership of all property, including universal partnerships between cohabitees, are the same as those formulated by Pothier for partnerships in general.

(d) Where the conduct of the parties is capable of more than one inference, the test for when a tacit universal partnership can be held to exist is whether it is more probable than not that a tacit agreement had been reached. “6 (emphasis provided).

In the majority decision of Butters, it was held at par [19] that:

“Once it is accepted that a partnership enterprise may extend beyond commercial undertakings, logic dictates, in my view, that the contribution of both parties need not be confined to a profit-making entity….It can be accepted that the plaintiff’s contribution to the commercial undertaking conducted by the defendant was insignificant. Yet she spent all her time, effort and energy in promoting the interests of both parties in their communal enterprise by maintaining their common home and raising their children. On the premise that the partnership enterprise between them could notionally include both the commercial undertaking and the non-profit making part of their family life, for which the plaintiff took responsibility, her contribution to that notional partnership enterprise can hardly be denied.”

The Requirements for a tacit agreement

In the minority judgment in Butters, penned by Heher JA with whom Cachalia JA concurred, he summarised the approach to establishing whether a tacit agreement exists, as follows:

‘[34] This appeal is about an alleged tacit agreement. As in all such cases the court searches the evidence for manifestations of conduct by the parties that are unequivocally consistent with consensus on the issue that is the crux of the agreement and, per contram, any indication which cannot be reconciled with it. At the end of the exercise, if the party placing reliance on such an agreement is to succeed, the court must be satisfied, on a conspectus of all the evidence, that it is more probable than not that the parties were in agreement, and that a contract between them came into being in consequence of their agreement. Despite the different formulations of the onus that exist: see the discussion in Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd 1984 (3) SA 155 (A) at 164G-165G; Christie’s The Law of Contract in South Africa, 6ed 88-89, this is the essence of the matter.’

ANALYSIS OF THE EVIDENCE

This Court is to approach the factual disputes which exist between the evidence adduced on behalf of the Plaintiff7, and the evidence presented on behalf of the Defendant, by applying the principles enunciated in the decision of Stellenbosch Farmers Winery Group Ltd and Another v Martell et Cie and Others9, Nienaber JA held as follows:

"To come to a conclusion on the disputed issues a court must make findings on (a) the credibility of the various factual witnesses; (b) their reliability; and (c) the probabilities. As to (a), the court's finding on the credibility of a particular witness will depend on its impression about the veracity of the witness. That in turn will depend on a variety of subsidiary factors, not necessarily in order of importance, such as (i) the witness' candour and demeanour in the witness-box, (ii) his bias, latent and blatant, (iii) internal contradictions in his evidence, (iv) external contradictions with