THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 792/19
In the matter between:
MUNICIPAL EMPLOYEES’
PENSION FUND

FIRST APPELLANT
AKANI RETIREMENT FUND
ADMINISTRATORS (PTY) LTD
SECOND APPELLANT
AKANI PROPERTIES (PTY) LTD
THIRD APPELLANT
and
CHRISAL INVESTMENTS (PTY) LTD       FIRST RESPONDENT
TAKOU INVESTMENTS (PTY) LTD       SECOND RESPONDENT
PROCPROPS 60 (PTY) LTD

THIRD RESPONDENT
ADAMAX PROPERTY PROJECTS
MENLYN (PTY) LTD

FOURTH RESPONDENT

Neutral citation: Municipal Employees’ Pension Fund and Others v
Chrisal Investments (Pty) Ltd and Others (792/19)
[2020] ZASCA 116 (1 October 2020)
Coram:
CACHALIA, WALLIS and MBHA JJA and EKSTEEN and
WEINER AJJA.
Heard:
20 August 2020
Delivered: This judgment was handed down electronically by
circulation to the parties' representatives via email,

publication on the Supreme Court of Appeal website and
release to SAFLII. The date and time for hand-down is
deemed to be 9.45 am on 1 October 2020.
Summary:  Actio Communi Dividundo – Contract providing for co--
ownership of property in undivided shares and letting enterprise –
whether co-ownership an instance of bound or free co-ownership –
whether resort to actio competent.

___________________________________________________
ORDER
___________________________________________________
On appeal from:  Gauteng Division of the High Court, Pretoria (De
Villiers AJ sitting as court of first instance):
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the high court is set aside and replaced by the
following order:
'The application is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.'

JUDGMENT

Wallis JA (Cachalia and Mbha JJA and Eksteen and Weiner AJJA
concurring)
[1] Three companies (the Adamax co-owners), which owned a
business operating three shopping centres, disposed of a 55 percent share
in that business to the first appellant, the Municipal Employees' Pension
Fund (the MEPF), for a total price of R550 million. Simultaneously with
that disposal their holding company, the fourth respondent, Adamax
Property Projects Menlyn (Pty) Ltd (Adamax), concluded a detailed
co-ownership agreement (the COA) with the MEPF. This agreement
encompassed the distribution of income from the business; the incurrence
of costs and other obligations; the constitution of an executive committee;
property and financial management of the business; and the costs of

managing the shopping centres. The COA was firmly tied to the sale
agreement by way of a condition precedent that made the sale agreement
dependent on the conclusion of the COA. It contained detailed provisions
in regard to its duration and the manner in which either party might
dispose of their interest in the business.

[2] Was it open to the sellers, the day after these agreements had been
concluded and implemented and at all times thereafter, to ignore all those
detailed contractual arrangements and bring proceedings under the actio
communi dividundo to terminate the joint ownership of the business and
cause the properties on which the shopping centres stand to be sold? The
high court's judgment answers that question in the affirmative. I do not.

The agreements
[3] The first, second and third respondents are the Adamax co-owners.
They owned the shopping centre business and the immovable properties
on which the Parkview, Glen Village South and Glen Village North
shopping centres are constructed. The precise relationship between them
and even whether each one owns the properties on which one shopping
centre stands does not emerge from the papers. What is clear is that they
are merely corporate vehicles through which Adamax conducted the
shopping centre business. The other appellants are the administrator of
the MEPF and an associated company. They play no role in the legal
issues in this case.

[4] The two agreements that are relevant to this case are the sale
agreement and the COA. There was also a Property Management
Agreement governing the management of the shopping centres, but that

was itself a by-product of the other two agreements. The subject of the
sale agreement was 'the Enterprise', which was defined in clause 2.6.4 as:
'the letting enterprise carried on by the Sellers as a going concern on the Properties
consisting of the Properties and all right, title and interest in and to the Leases.'
Clause 2.6.12 defined the 'Properties' as a '55% undivided share in the
properties owned by the Sellers', that is, the first to third respondents.
Clause 2.6.6 defined the 'Leases' as the written agreements of lease in
respect of the letting and hiring of the premises forming part of the
Properties.

[5] In terms of clause 4.1 the Sellers sold the Enterprise to the MEPF
for a price of R550 million. Clause 4.3.8 said that the Properties and the
Leases were an 'enterprise' as defined in section 1 of the Value-Added
Tax Act 89 of 19911 and clause 4.3.9 provided that:
'such enterprise is being disposed of as a "going concern" within the meaning of
Section 11(1)(e)(i) of the VAT Act.'
The significance of an enterprise being disposed of as a going concern is
that it then attracts a zero rating for VAT purposes.2 In order to qualify

1 The relevant portion of the definition of an 'enterprise' is sub-sec (a), which reads:
' in the case of any vendor, any enterprise or activity which is carried on continuously or regularly by
any person in the Republic or partly in the Republic and in the course or furtherance of which goods or
services are supplied to any other person for a consideration, whether or not for profit, including any
enterprise or activity carried on in the form of a commercial, financial, industrial, mining, farming,
fishing, municipal or professional concern or any other concern of a continuing nature or in the form of
an association or club'.
2 Section 11(1)(e)(i) of the VAT Act reads:
' the supply is to a registered vendor of an enterprise or of a part of an enterprise which is capable of
separate operation, where the supplier and the recipient have agreed in writing that such enterprise or
part, as the case may be, is disposed of as a going concern: Provided that—
(i)
such enterprise or part, as the case may be, shall not be disposed of as a going concern
unless—
(aa)
such supplier and such recipient have, at the time of the conclusion of the agreement for the
disposal of the enterprise or part, as the case may be, agreed in writing that such enterprise or part, as
the case may be, will be an income-earning activity on the date of transfer thereof; and
(bb)
the assets which are necessary for carrying on such enterprise or part, as the case may be, are
disposed of by such supplier to such recipient; and

for this in terms of the VAT Act the enterprise must be an
income-earning activity. A business operating three shopping centres
qualifies as such.

[6] Furthermore, clause 3 recorded that the sale constituted a merger
between the MEPF and the first to third respondents for the purposes of
the Competition Act 89 of 1998 and required the approval of the
Competition Commission. In terms of the definition in s 12 of the
Competition Act a merger arises where one firm directly or indirectly
acquires or establishes direct or indirect control over the whole or part of
the business of another firm. This was a merger because the MEPF
acquired control, as defined in the Competition Act, over the business of
the Adamax co-owners.

[7] Importantly, these provisions demonstrate that under the sale
agreement the MEPF did not merely purchase certain immovable
properties, but acquired an interest in the business of operating the three
shopping centres (the Letting Enterprise). Its principal tangible assets
were the shopping centres themselves and the leases with tenants that
provided the revenue stream of the business. The importance of the leases
is apparent from clause 5 under which the sellers provided the MEPF
with a guarantee that the net income of the MEPF's 55 percent undivided
share in the Letting Enterprise would amount to at least R49.5 million per
annum for the first four years. Without the leases the shopping centres
would have been white elephants with little commercial value. The leases

(cc)
in respect of supplies on or after 1 January 2000, such supplier and such recipient have at the
time of the conclusion of the agreement for the disposal of such enterprise or part, as the case may be,
agreed in writing that the consideration agreed upon for that supply is inclusive of tax at the rate of zero
per cent;'

and their income earning potential were what transformed the buildings
from empty shells into a business valued for the purposes of the sale
agreement at R1 billion. Leases to suitable tenants, whose wares and
services were aimed at the target market of shoppers and visitors to the
business premises in the centres, would generate footfall through the
centres and create the goodwill attaching to them. Their importance was
demonstrated by the extensive warranties concerning the existence and
commercial viability of the leases given by the Adamax co-owners to the
MEPF in clauses 9.3, 9.4 and 9.5 of the sale agreement. In turn, without
the right to occupy the centres and turn them to commercial account, the
shopping centre business and the letting enterprise that was the subject of
the sale would not have existed. Counsel for both parties agreed that, in
the words of an old song, 'You can't have one without the other.'3

[8] I stress that the subject of the sale agreement was the business
described as the Letting Enterprise, although the immovable properties
together with the leases constituted the Letting Enterprise. However, the
application was brought on the premise that it concerned only the joint
ownership of the properties on which the shopping centres are situated.
The deponent to the founding affidavit, Dr de Muelenaere, said:
'The purpose of this application is to obtain an order under the common law in terms
of the actio communi dividundo to dissolve the current co-ownership between the
Adamax Co-owners and the MEPF and to provide for the structured unbundling of the
common property.
As will appear more fully herein below, the Adamax co-owners and the MEPF are co-
owners of immovable property in the form of three shopping centres in Pretoria. The
MEPF is the owner of a 55% undivided share in the common properties and the

3 Clause 4.3.11 of the Sale Agreement recorded that the 'Properties, together with the Sellers' rights and
obligations under the Leases (all of which are being sold to the Purchaser in terms of this Agreement)
comprise all the assets necessary for the carrying on of the business.'

Adamax co-owners are the owners of the remaining 45% share in the common
property.'

[9] In referring to co-ownership Dr de Muelenaere was concerned only
with co-ownership of the immovable properties on which the shopping
centres are situated. He made this clear a little later in the affidavit, where
he said that the Adamax co-owners 'owned a number of properties
essentially comprising of, or adjacent to, three shopping centres' and that
on 9 November 2011 they 'sold an undivided share in certain properties
(including the properties comprising the three aforementioned shopping
centres) to the MEPF'.  He described these as the co-owned properties
and in dealing with the relief sought explained that the Adamax
co-owners were not in a position to buy the MEPF's 'share in the
properties'. The suggested relief was that 'the property portfolio' should
be placed on the market by a liquidator to be sold.

[10] It is true that in delivering the Letting Enterprise to the MEPF a
55 percent share in each of the immovable properties owned by the
Adamax co-owners was transferred to the MEPF. But there was also a
cession and assignment of their rights and obligations under the leases to
the extent of a 55 percent interest. Together this resulted in the transfer to
the MEPF of a 55 percent interest in the Letting Enterprise purchased by
it. Had the undivided share in the immovable properties not been
transferred to the MEPF, the sale of the 55 percent stake in the Letting
Enterprise would not have been affected, although its terms would have
needed to be adjusted, as the Adamax co-owners would still have been
obliged to allow the shopping centres to be used by the Letting Enterprise
for the purposes of conducting its business. No doubt part of the reason
for effecting a transfer of the 55% interest in the immovable properties

was to provide the MEPF with greater security and because in terms of
clause 9.2 of the COA each party was entitled to procure and register a
mortgage bond over their pro rata share in order to secure financing from
a financial institution without the consent of the other party.

[11] Turning to the COA it was concluded by Adamax, both on its own
behalf and on behalf of an entity, described in the COA as 'Propco' and
consisting of Adamax and the Adamax co-owners, thereby demonstrating
the complete control that Adamax exercised over the Adamax co-owners.
The other party was the MEPF. It recorded that the MEPF had a '55%
undivided share in the Letting Enterprise' which it defined as meaning
'the retail and commercial concern namely the letting enterprise'
comprised by the immovable properties and the right, title and interest in
and to the leases and the revenues relating to the properties. In other
words, it was a 55 percent share in the overall shopping centre business.
Propco, that is Adamax and its subsidiaries, had a 45 percent share. The
subject of the co-ownership was therefore the Letting Enterprise, not the
immovable properties separated from it. The Letting Enterprise and the
immovable properties could not be separated.

[12] It was the intention of Adamax and the MEPF that they would
conduct the business of the Letting Enterprise together for an indefinite
period. This emerges from clauses 4 and 5 of the COA, which read as
follows:
'4
Constitution of Co-Ownership
4.1
The Parties agree to carry on the Letting Enterprise under such name and style
as they may choose, currently, Parkview, Glen Village North and Glen Villlage
South.
4.2
The Parties agree that should this Co-Ownership be dissolved for any reason
whatsoever, that the use of any name applicable to the business or any part or

derivative thereof shall remain the absolute right of that Party which may continue to
operate such business and that no proprietary right in and to any name so used will
vest individually in the Co-Owners.
Duration
5.1
The Co-Ownership will commence with effect from the Effective Date and
shall terminate:
(1)
…
(2)
on the disposal of the Letting Enterprise by the Co-Owners; or
(3)
if either of the Co-Owners disposes of its share in the Letting Enterprise,
subject however to the provisions of clause 22 hereof.'

[13] Clause 22 is headed 'Prohibition on Sale' and reads as follows:
'It is expressly agreed amongst the Parties that no Party shall be entitled to sell its
undivided share in the Property without having complied in full with the terms and
conditions of this Agreement, more particularly the pre-emptive rights referred to in
Clause 23 below.'
It is unnecessary to set out the terms of clause 23 in full. It is a relatively
standard clause affording the party which does not wish to sell their share
in the Letting Enterprise a right of pre-emption if the other party or
parties wish to do so. Two provisions are important. The one is that if the
remaining co-owner acquires the interest of the departing co-owner they
become obliged to seek the release of the latter from any suretyship or
guarantee provided by the seller to any creditor of the co-ownership and,
if unable to do so, to indemnify the seller against any claim under such
suretyship or guarantee. The other is that it was to be a condition of a sale
to a third party that they agree to be bound by the terms and conditions of
the COA. In other words, the business relationship involved in
conducting the Letting Enterprise of the shopping centre business was to
continue. Whilst the co-ownership between the MEPF and the Adamax
co-owners would have terminated in terms of clause 5.1(3), a fresh

relationship of co-ownership would come into existence between the
remaining co-owner and the new purchaser.

Adamax's contentions
[14] Notwithstanding the creation of this complex web of ongoing
commercial relationships, Adamax contended that it could be brought to
an end in a manner other than that provided by the COA. Dr de
Muelenaere set out its position in the founding affidavit:
'I am advised that co-owners have a right under the common law, more specifically
under the actio communi dividundo to, at any time, demand that co-owned assets be
divided. I am further advised that no co-owner is obliged to remain a co-owner
against his will. In the absence of an agreement to the contrary, any co-owner may
consequently demand partitioning of the common property at any time.'

[15]  The breadth of this contention is apparent from the repeated
statement that the actio may be invoked 'at any time'. In other words,
Adamax claimed that it was open to it to invoke the actio immediately
after the conclusion and implementation of the sale agreement and the
COA or at any time thereafter. One could add 'for any reason' because the
claim is unqualified by any restraint on the exercise of the right to
demand partition of the co-owned property. Notionally, it could be
because the one party had fallen out with the other over an issue unrelated
to the running of the business, or because they thought that selling the
entire enterprise would generate a greater return for them than would a
sale of their undivided share. A disagreement over the prescribed matters
in Schedule 1 to the COA, on which clause 11.9 required unanimity,
could be met with the nuclear option of a demand for division of the
co-ownership, even though clause 21 contained detailed provisions to
resolve a deadlock over any operational issue.

[16] Adamax's contentions meant that it mattered not that this would
destroy the very basis upon which the MEPF entered into the
arrangement, namely in order to secure a stable stream of income to meet
its obligations to pensioners. The blunt proposition was that resort could
be had to the actio communi dividundo because it afforded Adamax a
right to demand that the co-owned assets be divided. Resistance to such a
demand entitled it to bring the present application.

[17] The MEPF resisted this contention, pointing to the terms of the sale
agreement and the COA as the basis for opposing the application of the
actio communi dividundo. They contended that the application was an
endeavour to subvert the provisions of the COA, which they said
regulated all incidents of its operation and constituted the complete record
of the parties' agreement. Their primary case was that the relationship
between the parties was governed by the contracts and nothing else. The
actio was accordingly unavailable to Adamax. It is unfortunate that they
did not refer in their argument to the distinction between bound and free
co-ownership, their attention to it having been prompted by questions
posed by this court prior to the hearing. Greater clarity might then have
emerged at an earlier stage of the proceedings, but these are merely
jurisprudential labels and the essential case advanced by the MEPF was
always that the agreements created a situation of bound co-ownership.

[18] In the high court the judge characterised this argument as being
based on a tacit term that would exclude the actio communi dividundo.
He reached that conclusion notwithstanding the absence of any
suggestion in the answering affidavit that reliance was being placed upon
any such tacit term. He thought, erroneously, that the availability of the
actio was one of the naturalia (inevitable legal consequences) of any

agreement giving rise to co-ownership. In the result his entire approach to
the case was flawed. In refusing leave to appeal he compounded these
errors by burdening the MEPF with an onus to prove as a defence the
exclusion of the actio, when the true question was whether it was
available at all given the terms of the agreements. He then refused leave
to appeal. Had he paid regard to the consequences of holding that the
actio was available in the circumstances of this case he should have
granted leave to appeal to this court, notwithstanding his view that his
judgment was correct. All too frequently this court bemoans the grant of
leave to appeal in matters of no great complexity raising no significant
legal issue. This was not such a case and the leave to appeal that should
have been granted was granted by this court.

The elements of free and bound co-ownership
[19] There are countless situations that may create co-ownership of
property. The old authorities and the older cases are almost all concerned
with immovable property or inheritances.4 A common situation was
where under a will, or in accordance with the law governing intestacy,
property was inherited by two or more people in undivided shares. A
deed of donation of property in undivided shares to more than two people
was another. The purchase of immovable property by two or more
individuals in undivided shares was a third. Marriage in community of
property and partnership are common examples. The establishment of a
trust, which is not itself a separate juristic entity, renders the trustees the
co-owners in undivided shares of the trust property. The members of a
common law universitas that owns property, such as a club, a political
party, a church and many non-governmental organisations, own the

4 Grotius The Introduction to Dutch Jurisprudence 3.ed (A F S Maasdorp's translation, 1903) 3.28;
Johannes Voet Commentary on the Pandects (Gane's translation) 10.2 and 10.3.

property of the universitas in undivided shares. The owners of units in a
sectional title development are co-owners of the common property in
undivided shares.

[20] Co-ownership may be either free or bound co-ownership. The
distinction is explained by Professor C G van der Merwe in LAWSA:5
‘Common ownership may either constitute the only legal relationship between the
co-owners or it may result from some other legal relationship between the parties. In
the former case (designated free co-ownership) the relationship between the
co-owners is more individualistic in that the community of property can be dissolved
by any co-owner and in that each co-owner is allowed to use and enjoy the common
thing in accordance with his or her undivided share in it. … In the latter instance
(designated bound co-ownership), which is, for example, the result of a marriage in
community of property or a partnership, the relationship is more permanent in that no
division of property can be requested during the course of the community of property
and in that the undivided shares allotted to each owner do not have real significance.
The legal relationship between the parties further largely determines the rights and
duties of the co-owners.’ (My emphasis)

[21] Professor van der Merwe writes more extensively, but to similar
effect, in his book Sakereg.6 In regard to bound co-ownership he says the
following:7
‘Gebonde mede-eiendom ontstaan wanneer ’n besondere regsverhouding tussen
gemeenskaplike
eienaars
geskep
word,
soos
by
mede-erfgenaamskap,
huweliksgoederegemeenskap,
ń
vennootskap
en
verenigings
sonder
regs
persoonlikheid. Die besondere regsverhouding wat tussen die deelgenote bestaan,
bepaal die manier waarop eiendomsbevoegdhede ten opsigte van die gemeenskaplike
saak uitgeoefen word. Die feit van mede-eiendom is slegs één van die gevolge van die
regs betrekking wat tussen die partye bestaan. By vrye mede-eiendom daarinteen is

5 LAWSA, vol 27 (2 ed re-issue) para 265 (Citations omitted).
6 CG van der Merwe Sakereg (2 ed) 378-380. Cited with approval by this court in Mazibuko v National
Director of Public Prosecutions [2009] ZASCA 52; 2009 (6) SA 479 (SCA) para 47.
7 Ibid at 378-379.

die feit dat die mede-eienaars tesame eienaars van dieselfde saak is, die enigste
regsverhouding wat tussen die partye bestaan.’8 (My emphasis.)

[22] The fundamental point to be distilled from these passages is that in
bound co-ownership the existence of the co-ownership arises from a legal
relationship between the parties other than the co-ownership itself. In
other words, there is a legal relationship between them going above and
beyond the fact that they happen to be the co-owners of property. The
co-ownership arises from and is constituted as a consequence of that
relationship. It is not the source of the relationship between the parties.

[23] This point is emphasised by Kleyn and Wortley,9 writing jointly in
comparative terms about bound co-ownership in South Africa and its
equivalent, joint ownership, in Scotland:
‘As far as bound co-ownership is concerned, South African authorities mention the
following. There exists some other (special) relationship between the parties which is
of a more permanent nature; this relationship determines the rights of the parties;
co-ownership is just one of the consequences of that relationship; no division can be
called for unilaterally during the existence of the relationship; and a co-owner cannot
deal independently with the undivided share during the relationship. Scots law
provides a similar picture. As Lord Cooper pointed out in Magistrates of Banff v
Ruthin Castle,10 an independent relationship is ‘the indispensable basis of every joint
right’ and the ‘attributes [of joint property] are … the consequences flowing from the
relationship … there is no entitlement to division and sale.' …

8 'Bound co-ownership arises whenever a particular legal relationship is established between
co-owners, as in co-inheritance, marriage in community of property, a partnership and associations
without legal personality. The particular legal relationship that exists between the co-owners
determines the manner in which their ownership rights in relation to the joint property are exercised.
The fact of co-ownership is only one of the consequences of the legal relationship that exists between
the parties. By contrast, with free co-ownership the fact that the co-owners are owners of the same
thing is the only legal relationship between the parties.' (My translation.)
9 Kleyn & Wortley 'Co-Ownership' in Zimmerman, Visser and Reid (eds) Mixed Legal Systems in
Comparative Perspective: Property and Obligations in Scotland and South Africa (2005) at 709-710.
10 Magistrates of Banff v Ruthin Castle Ltd 1944 SC 36 at 68.

The importance, in bound co-ownership, of an extrinsic relationship is emphasised in
both systems. All the consequences of bound co-ownership flow from that
relationship. Although the two jurisdictions identify a limited number of different
kinds of relationships that constitute bound co-ownership, without such a special
relationship the co-ownership must always be free.’
Counsel for Adamax relied on this last sentence, and two later ones to
similar effect, as restricting the potential for a relationship to be one of
bound co-ownership. For my part I do not understand the reference in the
last sentence to 'a limited number of different kinds of relationships' or a
'special relationship' to mean that there is a closed list of situations of a
peculiar nature in which bound co-ownership can arise. That would be
inconsistent with the recognition earlier in the same passage that a
relationship between the parties that determines their rights and
obligations, and of which the co-ownership is only one consequence,
gives rise to bound co-ownership. It is simply a statement that in the two
jurisdictions in question only a few instances of bound co-ownership have
been identified. Insofar as the authors intend it to go further I do not agree
with them.

[24] South Africa recognises various sources of extrinsic legal
relationships giving rise to bound co-ownership. It may arise as a matter
of law from the fact that the parties have entered into a particular
relationship. An example of this is a marriage in community of property,
where the common law, as varied by the Matrimonial Property Act 88 of
1984, imposes co-ownership upon the parties to the marriage. Another is
the co-ownership of the common property in a sectional title
development, by virtue of the provisions of s 16(1) of the Sectional Titles

Act 95 of 1986.11 It may arise from an act such as the execution of a trust
deed by the founder of a trust and the acceptance by the trustees of office
under that deed. Another possibility is an agreement between the
co-owners, as in a partnership12 or the constitution of a universitas. In the
case of trust deeds, partnership agreements and constitutions the parties
are usually free to vary their terms and the terms of the relationship
between the co-owners.

[25] The leading Scottish judgment on joint ownership is that of Lord
Justice Clerk Cooper in Magistrates of Banff v Ruthin Castle.13 Lord Gill,
a recent successor of his as Lord President, said that this judgment
'eruditely expounded the distinction in Scots law between joint
ownership, being the class of right typified by the ownership of
co-trustees, and ownership in common, being the right typified by the
ownership of two or more persons in whom the right of a single subject
has come to be vested'.14 The key passage reads as follows:
'Joint property, on the other hand, has received little doctrinal exposition as a mode of
holding property, probably because its attributes are not so much the incidents of the
joint right as the consequences flowing from the relationship existing between the
persons who alone can have a joint right. So far as has been traced, there is no
instance of a joint right in the strict sense having been held to exist except in persons
who were inter-related by virtue of some trust, contractual or quasi-contractual bond
— partnership or membership of an unincorporated association being common
examples — and it seems to me that such an independent relationship is the
indispensable basis of every joint right. The distinctive feature of the right of such
joint proprietors is the jus accrescendi, which excludes the possibility of separate

11 This is not the case in Scots law where ownership of the common property is treated as free
co-ownership, but without the ability to invoke the actio communi dividundo. Klein and Wortley op cit
fn 9 at 711.
12 In South African law a partnership is not a separate juristic person, whereas in Scots law it is by
virtue of the Partnerships Act 1890. Klein and Wortley op cit fn 9 at 711-712.
13 Op cit fn 12 at 68-69.
14 Lord Gill 'Two Questions in the Law of Leases' in McCarthy, Chalmers and Bogle (eds) Essays in
Conveyancing and Property Law in Honour of Professor Robert Rennie' Chapter 13.

shares in the several joint owners, and still more emphatically excludes the possibility
of severance of the tie, except, of course, by dissolution of the relationship on which
the joint ownership rests. Finally, the considerations of public policy that nemo in
communis invitus detineri potest, have no application to the entirely different situation
created by joint ownership.' (My emphasis.)

[26]  This statement of Scots law is undoubtedly authoritative in that
jurisdiction and wholly consistent with the views of Professor van der
Merwe. It stresses the fact that the incidents of the relationship between
the parties are derived not from the co-ownership itself, but from the
extrinsic relationship between the co-owners, separate and distinct from
their co-ownership. It accepts that the source of a joint ownership (bound
co-ownership in South African terminology) can be a trust or a
contractual or quasi-contractual bond. Lastly, it makes the point that in
cases of joint co-ownership the public policy rule that a person cannot be
compelled to remain a co-owner against their will has no application.

[27]  Neither Professor van der Merwe, nor Lord Justice Clerk Cooper,
suggested that bound co-ownership was restricted to any defined class of
agreement. The former referred to legal relationships extrinsic to the
co-ownership and mentioned various examples of such relationships. The
latter said that it arose in relation to persons 'who were inter-related by
virtue of some trust, contractual or quasi-contractual bond', without in
any way limiting the type of contractual or quasi-contractual relationship
that might give rise to bound co-ownership. The only other Scots case I
have found in the course of my research is Munro v Munro.15 There the
court held that joint co-ownership was created where a property was
passed to family members on terms that it would descend to the last

15 Munro v Munro 1972 SLT (Sh Ct) 6.

surviving of their number and the family members contractually agreed to
this. The court held that this created a bound co-ownership that none of
the family members could defeat by way of a claim for division of the
property. On its face that appears to be consistent with the view of Lord
Justice Clerk Cooper. I cite the case with a measure of hesitation because
it has been criticised in its country of origin, both because it creates
problems for a good faith purchaser of a share in the property and
because it creates some difficulties in regard to the complex Scots law
provisions governing special destination clauses, such as this one.16
However, neither criticism has any purchase in South African law, at
least insofar as the issue of creating bound co-ownership by contractual
agreement is concerned.

[28] Adamax relied upon certain passages from Kleyn and Wortley's
article to contend that bound co-ownership only arises from an extrinsic
exceptional relationship in which the rights and obligations of the parties
are defined by common law or statute. The contention was that there is
only a limited number of relationships that constitute bound co-ownership
and that these are special relationships of a more permanent nature that
cannot be altered by agreement between the parties.

[29] Insofar as Scots law is concerned, neither Magistrates of Banff v
Ruthin Castle nor Munro v Munro lends any support to these conclusions.
Nor is it apparent that the relevant passages from Kleyn and Wortley's
article are dealing with the issue of whether the relationship between the

16 D L Carey Miller and M M Combe 'The Boundaries of Property Rights in Scots Law' (2006) EJCL
1-26 (art 103-4) accessed at <www.ejcl.org> (accessed 23 September 2020).

parties is one of bound or free co-ownership. They mainly occur in a
section of the article that commences as follows:17
'However clear the distinction between free and bound co-ownership may be in
theory, it can be undermined by the freedom of contract that the parties have in cases
of free co-ownership. The question then arises as to whether co-owners can arrange
matters in such a way that free co-ownership is converted into bound co-ownership. In
other words is it for the parties to decide whether the ownership is bound or free, or
does property law dictate the issue?' (Emphasis added.)
This is a puzzling passage. It is dealing with free co-ownership, not with
whether in any particular case the co-ownership is bound or free. If the
premise is that save in specific limited cases, such as partnership, all
co-ownership is free, it is unhelpful, as questions that assume the answer
always are. Furthermore, the two propositions are not the same. The
former deals with the conversion of free co-ownership to bound
co-ownership18 and the latter with the parties' freedom to determine
contractually the nature of their co-ownership. Approaching the problem
from an assumption of free co-ownership and asking whether this can be
altered by contract, is the wrong question, or at least the wrong question
in the present context. We are not dealing with a relationship
commencing as free co-ownership and asking whether the parties can
alter it by contract. Our concern is whether from the outset the
relationship created by the sale agreement and the COA was one of bound
or free co-ownership.

17 Kleyn & Wortley op cit fn 9 at 711.
18 A similar passage at the conclusion of this section includes the statement that:
'It is clear that the parties can to some extent change the rules of co-ownership by means of agreement.
…However, the matter is different with respect to the right to call for division, which personifies the
individual nature of co-ownership. …It therefore seems that there are underlying and fundamental
characteristics in free co-ownership which cannot be changed by agreement in order to convert it into
bound co-ownership: property law cannot be altered by contract.'
Ibid at 712. Adamax relied on this passage, but it deals with a situation other than that with which we
are concerned.

[30] Other passages from this section of the article also deal expressly
with free co-ownership. For example, the authors say:19
'It is clear that the parties can, to some extent, change the ordinary rules of free co-
ownership by means of agreement. … However, the matter is different with respect to
the right to call for division, which personifies the individualistic nature of free co-
ownership. Both jurisdictions seem to accept the principle that a free co-owner can
agree not to call for partition within a limited time, but that an agreement never to ask
for partition is void, a result which is in accordance with Roman Law'. (Emphasis
added)
In the result these passages are unhelpful in resolving the issue with
which we are confronted. That is not a criticism of the authors who said
at the outset20 that their focus was free co-ownership.

[31] The one South African judgment relied on by Kleyn and Wortley is
that of Ex parte Geldenhuys.21 That involved a will bequeathing a farm to
the children of the testatrix in undivided shares on the basis that division
would take place when the eldest child reached majority and then by a
drawing of lots. The court held that this was permissible and the
condition could be registered against the title deeds showing the
children's undivided shares in the property. De Villiers JP (as he then
was) said:22
'By the common law, each owner of an undivided share has the right to claim a
partition at any time, and can claim that such partition shall be effected either by
agreement or by the Court. The will, therefore, modifies the common law right, or
dominium, which an owner of an undivided share possesses. That this can validly be
done by a will (and presumably also by agreement inter vivos) seems to me to be clear
on principle, for the rights of an owner of an undivided share are not sacrosanct or
unalterable any more than the rights of an owner of a defined share are. Portions of

19 Kleyn & Wortley op cit fn 9 at 712.
20 Ibid at 705.
21 Ex Parte Geldenhuys 1926 OPD 155.
22 Ibid at 164-165.

the dominium of an owner of an undivided share can be parted with as undoubtedly as
portions of the dominium of an owner of a defined share can be parted with. There is,
in fact, the express authority of Grotius, if authority were needed, that an owner of an
undivided share can by will be deprived for a specified time of his right to claim a
partition (Grotius 3.28.6, Maasdorp's Institutes of Cape Law, bk. 2, ch. 14).
The rights of a joint owner in regard to partition can therefore be validly limited by
last will at any rate, and the limitations now under discussion (i.e., as to the time of
partition and as to the drawing of lots) are therefore valid.' (Emphasis added.)

[32]  In fact, the provision of the will in Geldenhuys effectively
removed the right to demand division entirely, by specifying that it would
take place in a specific way at a defined future date. At no stage before
the arrival of that date would any of the children be entitled to claim
division of the property in accordance with their co-ownership. And, as
De Villiers JP said, if that could be done by will it could also be done by
agreement inter vivos. Therefore the judgment does not support the view
that bound co-ownership is confined to 'a limited number of relationships
that constitute co-ownership' and that without such a 'special relationship'
the co-ownership will always be free.23 That view is also not supported by
any South African or Roman Dutch authority to which they refer and is
incompatible with Professor van der Merwe's descriptions of bound
co-ownership.

[33] I have already mentioned that the old authorities address situations
far removed from the present one. They also do not use the terminology
of free and bound co-ownership, which we owe to an article by
Professor van Warmelo.24 As such, their discussion of the division of

23 Kleyn & Wortley op cit fn 9 at 710 and 711.
24 P van Warmelo ‘Die Geskiedkundige Ontwikkeling van die Mede-Eiendom in die Romeinse en
Romeins-Hollandse Reg’ (1950) 13 THRHR 205-242.

common property is apt to situations of free co-ownership, but does not
address bound co-ownership and does not consider a situation
comparable to that in this case. However, there are indications that there
are circumstances in which the right to division may be restricted. Grotius
3.28.6 says that co-owners are entitled to division unless it has by last
will been forbidden to dissolve within a certain time, although he accepts
that a perpetual prohibition would be invalid. Voet 10.2.32 goes further
and says that there is no reason why a testator may not forbid the division
of an inheritance for a long period or even the lifetime of a person. He
draws an analogy with partnership, pointing out that a partnership can be
constituted for the lifetime of the partners, which he describes as 'for
ever', and says:
'… it can be arranged that within a definite period no division shall take place nor any
departure from the partnership.'

[34]   It is clear that these writers accepted that there were situations of
community of property, as they describe situations of co-ownership, that
were not susceptible to the action for division until the broader
relationship between the parties giving rise to the community had ended.
Van Leeuwen says this in relation to partnerships and marriages in
community of property.25 Recognition of the fact that partnership gives
rise to bound co-ownership of partnership assets, both tangible and
intangible, involves an acceptance of the proposition that parties can by
agreement so order their affairs as to create a situation of bound
co-ownership. Van der Linden gives the example of joint shipowners
being obliged to remain such, at least until the completion of the voyage,
in terms of the deed of ship ownership.26 It is important to note that this

25 Van Leeuwen Commentaries on Roman-Dutch Law (Kotzé's translation, 2 ed, 1923) 4.23.11.
26 Van der Linden Institutes of Holland (Juta's translation, 5 ed, 1906) 4.4.2.1.

would not necessarily be a partnership, but the parties could contract for
co-ownership and restrict any right to claim division of the jointly-owned
property, namely, the ship.

[35] It is necessary to consider in greater detail the article in which
Professor van Warmelo first applied the expressions free and bound
co-ownership in our jurisprudence. The learned author drew a distinction
between two forms of co-ownership. The first was where the relationship
between the co-owners and their rights to the property were determined
by the law and were unalterable by the exercise of free will on the part of
the parties. He said this could be called 'bound co-ownership'. The
instances he gave of this form of co-ownership were joint heirs in relation
to a joint estate; marriage in community of property; and
'boedelhouerskap', where the surviving spouse from a marriage in
community of property is appointed as executor of the predeceased
spouse, administrator of their estate and guardian of the minor children
born of the marriage, and continues the community pending the children's
majority.

[36]  The second possibility was the relationship he called free
co-ownership. This was where a thing was owned by more than one
party, but the law did not impose unalterable consequences upon the
relationship of the parties to the property or among each other. Here there
were two possibilities. The first was where the only relationship between
the parties flowed from their co-ownership of the property. The second
was where there was a further arrangement emanating from the parties
themselves, that either confirmed the conventional legal relationship as
determined by the law, or changed it in whole or in part. The typical
example of this was a partnership, under which the partners could

regulate their relationship to the property and one another. Having said
that he went on to explain that the further discussion in the article would
be of free co-ownership other than partnership, because partners were
free to determine their own rules and in so doing alter the rules that would
otherwise apply to the partnership relationship.

[37]  It will be immediately apparent that this description of bound and
free co-ownership is not the same as the distinction drawn by Professor
van der Merwe, who places partnership in the category of bound
co-ownership. Professor van Warmelo derived his terminology from a
Dutch work,27 but acknowledged that its authors used it in a different
way, one that accords with Professor van der Merwe.28 The Dutch usage
was that free co-ownership applied to situations where the only
relationship between the parties was the co-ownership, while bound co-
ownership was where there was another legal tie between the co-owners
governed by its own rules.

[38] The argument by counsel for Adamax was that bound
co-ownership is limited in accordance with the approach adopted by
Professor van Warmelo. That approach was inconsistent with the
approach of Professor van der Merwe; this court's approval of Professor
van der Merwe's approach;29 the views of Kleyn and Wortley, and the

27 Asser-Scholten Handleiding tot de beoefening van het Nederlandsch Burgerlijk Recht Vol II
(8 ed, 1945) p133 et seq.
28 Van Warmelo op cit fn 24 at 210 fn 1, which reads: 'Hierdie terminologie word ook geneem uit
ASSER-SCHOLTEN … alhoewel dit daar in ń ander betekenis gebruik word. Met vrye mede-eiendom
word slegs verstaan dié verhouding waar daar geen ander regsband is dan die feit dat die partye saam
eienaar is van die saak nie, terwyl as gebonde mede-eienskap verstaan word waar daar wel ń ander
regsband is en sodoende ń mede-eiendom wat deur sy eie reëls beheers word. Hieronder val dus wel
die geval dat daar ń vennootskap tussen die mede-eienaars bestaan, asook die vorme soos
huweliksgemmenskap of medeerfenis.'
The Dutch writers cited by L Kuyler in his dissertation Vrye Mede-eiendom in die Suid-Afrikaanse Reg
at 1-3 accord with Asser-Scholten.
29 Mazibuko v National Director of Public Prosecutions op cit fn 6.

Scottish cases. Professor van Warmelo's view is cited in Dr Kuyler's
thesis but without any detailed analysis or consideration, which is hardly
surprising as the subject of the thesis was free co-ownership, not bound
co-ownership. The force of Dr Kuyler's endorsement of Professor van
Warmelo's approach30 is considerably diluted by the fact that on the
following page he says that partnership is a case of bound co-ownership,
whereas Professor van Warmelo said that it is a case of free co-
ownership.

[39]  The exposition of the nature of the actio communi dividundo in
Robson v Theron31 does not assist in resolving the issue of free and bound
co-ownership. The case arose from the dissolution of a partnership where
the one partner had appropriated and retained the goodwill of the
partnership practice. It concerned a claim by the other partner to be
compensated for his share of the goodwill. It was not concerned with the
distinction between free and bound co-ownership as the dissolution of the
partnership had brought the co-ownership to an end. The parties had
agreed on what was to be paid for the retiring partner's share and the real
dispute between the parties was the factual one of whether the other
partner had retained the goodwill for his own benefit and was obliged to
compensate the retiring partner therefor.

[40] The judgment commences with a discussion of the remedies
available to the departing partner on dissolution of the property, namely

30 Kuyler, op cit, fn 27 at 4, fn 15.
31 Robson v Theron 1978 (1) SA 841 (A) at 854G-855H.

the actio pro socio and the actio communi dividundo.32 The discussion of
the former contains the following quotation from Pothier:33
'In order to dissolve the community which subsists, after the dissolution of the
partnership between the former partners, and to discharge the respective debts for
which they may be liable to each other, each of the former partners, or his heir, has a
right to demand of his partners or their heirs to proceed to an account and distribution
of the partnership effects. To effect this they can each maintain  the actio pro socio or
the actio communi dividundo, at their option.' (Emphasis added.)

[41] Joubert JA endorsed the view of Pothier, concluding his discussion
of the actio pro socio in the following terms:34
'Pothier, on the other hand, makes it abundantly clear that, in the liquidation of a
partnership, distribution or division of the partnership assets may be effected among
the partners in such a manner as not to involve the physical division or partition of
tangible assets of the partnership. According to him the actio pro socio or the actio
communi dividundo may be used for the distribution or division of partnership assets.
His approach is both logical and practical. In following it Van der Linden introduced
it into Roman-Dutch law. It is also basically in conformity with our present day
practice of liquidating partnerships.'

[42] In discussing the actio communi dividundo Joubert JA did not
revisit these principles. The discussion is brief and concentrates on the
modes of division and the powers of the court in dividing the co-owned
property. The only substantive proposition was the statement that the
actio has been extended to intangible things held in common ownership
of which the goodwill in dispute in that action was an example.

32 Ibid at 848H-I. According to the heads of argument printed in the report there was no argument or
dispute over these principles.
33 Pothier Treatise on the Contract of Partnership (translation by Owen Davies Tudor) section 161.
34 Robson v Theron op cit fn 31 at 854D-E.

[43] A brief summary of the provisions of the two actiones followed. In
dealing with the actio pro socio it started by making the point that the
actio was available during the existence of the partnership to claim
specific performance and after dissolution to wind up the partnership.
Turning to the actio communi dividundo the summary commenced by
saying that:35
'No co-owner is normally obliged to remain a co-owner against his will.' (My
emphasis)
Significantly, there was no suggestion that the actio was available during
the subsistence of the partnership. Given that this was a brief summary of
the actio, it is no surprise that Joubert JA did not go on to set out in which
circumstances a co-owner would be obliged to remain a co-owner against
their will. The obvious case would be that of bound co-ownership (of
which partnership is a quotidian example) until the relationship giving
rise to the tie had itself been terminated. It would be surprising, given his
academic background, were Joubert JA not aware of this. He continued
by saying that the actio was available to any co-owner, whether or not the
co-owners were partners.

[44] The third point may be misconstrued. It contained the following
passage:36
'Hence this action may be brought by a co-owner for the division of joint property
where the co-owners cannot agree to the method of division. Since a partnership asset
is joint property which is held by the partners in co-ownership, it follows that a
partner may as a co-owner bring this action for the division of a partnership asset
where the co-partners cannot agree to the method of its division. This would
obviously cover the position where, after dissolution of a partnership, a continuing
partner as a co-owner retains possession of an undivided partnership asset.'

35 Ibid at 856H-857A.
36 Ibid at 856H-857B.

While the second sentence is not in terms limited to a division after
dissolution of the partnership, it should not be understood as postulating
that the actio is available during the subsistence of the partnership,
although it may possibly be invoked in conjunction with a claim that the
partnership has been dissolved or for its dissolution. It is unnecessary to
express a firm view on this. Given the entire discussion in the judgment it
does not support the proposition that the actio is available during the
subsistence of the partnership, as opposed to at the stage of its
dissolution. The relevant principles are discussed solely in the context of
the dissolution of the relationship leading to a claim for division of the
co-ownership.

[45]  Accordingly, the judgment casts no light on how to determine
whether co-ownership is free or bound. The case is not authority for the
general proposition that no co-owner may be compelled to remain a
co-owner against their will. That ignores the context and the careful
qualification that this is 'normally' the position. Bound co-ownership is
precisely the case where a co-owner is obliged to remain such against
their will, unless and until the tie that creates the bound co-ownership has
been severed.

[46] In summary therefore, I conclude, in accordance with the
authorities discussed above, that the distinction between free and bound
co-ownership is that in the former the co-ownership is the sole legal
relationship between the co-owners, while in the latter there is a separate
and distinct legal relationship between them of which the co-ownership is
but one consequence. Co-ownership is not the primary or sole purpose of
their relationship, which is governed by rules imposed by law, including
statute, or determined by the parties' themselves by way of binding

agreements. The relationship is extrinsic to the co-ownership, but is not
required to be exceptional.37 In other words it requires no special feature
for the co-ownership consequential upon the relationship to qualify as
bound co-ownership. Whether it is depends upon the terms upon which
the relationship is constituted. The mere fact that co-owners decide to
exploit their co-ownership commercially will not of itself constitute the
co-ownership as bound co-ownership. That will depend upon the nature
and terms of the commercial agreement between the parties and matters
such as the provision made for its termination.

[47]  There is no closed list of instances of bound co-ownership. If the
relationship gives rise to bound co-ownership the co-ownership will
endure for so long as the primary extrinsic relationship endures. Once it is
terminated then, as in Menzies38 and Robson v Theron, it will become free
co-ownership and be capable of being terminated under the actio. I
consider the facts of this case in accordance with those principles.

Is this a case of bound co-ownership?
[48] It is necessary to start by identifying both the subject matter of the
co-ownership and how it arose. That is complicated by the fact that there
are different things that are the subject of co-ownership. As explained
earlier in analysing the sale agreement and the COA the primary subject
of the co-ownership is the Letting Enterprise. The COA regulates the
operation of the business relationship between the MEPF and Adamax
and the Adamax co-owners. Pursuant to the obligation of the Adamax
co-owners to deliver the 55 percent share in the Letting Enterprise to the

37 Counsel for Adamax contended for an exceptional relationship on the basis of Professor van der
Merwe's expression 'ń besondere regsverhouding', but in context that means 'a particular legal
relationship', not an exceptional legal relationship.
38 Ex Parte Menzies et Uxor 1993 (3) SA 799 (C) at 810G-811G.

MEPF in terms of the sale agreement, a 55 percent interest in each of the
immovable properties was transferred to the MEPF in undivided shares.

[49] The primary relationship between the parties is therefore their
relationship in respect of the Letting Enterprise governed by the COA.
Their co-ownership of the immovable properties is a consequence of that
relationship, albeit not a necessary consequence, in that transfer of an
undivided share in the properties was not essential in order to give effect
to the sale of the Letting Enterprise or its operation in terms of the COA.
Conceivably the Letting Enterprise could have come into existence
without transferring an undivided share in those properties to the MEPF.
Some other mechanism for securing the right to conduct the Letting
Enterprise in the shopping centres could have been devised. It is not, as I
understand it, suggested that in that case the Adamax co-owners would
have been entitled to dispose of the properties to a third party and thereby
deprive the Letting Enterprise of access to and control over the shopping
centres and the MEPF of its interest in the Letting Enterprise.

[50]  The premise upon which the Adamax co-owners brought the
application was therefore incorrect, because it undermined the entire
relationship between the parties in terms of the COA. It took as its
starting point the subsidiary and consequential co-ownership of the
immovable properties and treated it not simply as if it were the primary
legal relationship, but as if it were the only legal relationship. That was
plainly incorrect. Any attempt to invoke the actio had necessarily to start
with the co-ownership of the Letting Enterprise and the question whether
that constituted bound co-ownership. It is to that question that I now turn.

[51] At the outset I reject the proposition in the respondents' heads of
argument that the starting point is that in co-ownership the availability of
the actio is implied by law, so that it must be excluded unambiguously.
That is incorrect. It puts the cart of a conclusion – 'This is free
co-ownership' – before the horse of the question – 'Is this free or bound
co-ownership?'. The common law is that the actio is always available in
the case of free co-ownership and never available in bound co-ownership.
In any particular case the question of the proper characterisation of the
co-ownership arises at the outset. Only once it has been answered can one
decide what the common law attributes of the co-ownership are. One
cannot therefore start with a predisposition in favour of free
co-ownership. That also renders irrelevant the reliance placed upon the
statement by Marais JA in First National Bank of SA Ltd v Rosenblum,39
that:
'In matters of contract the parties are taken to have intended their legal rights and
obligations to be governed by the common law unless they have plainly and
unambiguously indicated the contrary.'
Where, as here, we are dealing with one of two different forms of
co-ownership, one of which affords the right to invoke the actio and the
other does not, it is necessary first to identify which form of
co-ownership is applicable in order to determine what the common law is.
As it happens, Marais JA was dealing with an exception clause and was
articulating the approach our law adopts to such clauses, which is that
they are strictly construed and must clearly and unambiguously exclude
liability for the loss suffered by the claimant. The quoted dictum must be
read and understood in that light.

39 First National Bank of SA  Ltd v Rosenblum and Another 2001 (4) SA 189 (SCA) para 6.

[52] The relevant features of the co-ownership of the Letting Enterprise
have already been identified in the analysis of the sale agreement and the
COA. It was a business relationship of indefinite duration with careful
and detailed provisions for the conduct of the relationship. In clause 5 it
contained an express provision in regard to its duration, providing that it
would terminate as a result of an election by the parties if transfer had not
been achieved by 30 June 2012; if the parties agreed to dispose of the
Letting Enterprise; or, if either co-owner disposed of its share in the
Letting Enterprise after affording the other a right of pre-emption in terms
of clauses 22 and 23 of the COA. Although not mentioned in clause 5 it
could also be terminated as a result of cancellation for breach, or as a
result of a forced sale upon insolvency or winding up.

[53]  During the course of argument there was some debate with
counsel for the MEPF over whether, in the light of the decision in Putco
Ltd v TV & Radio Guarantee Ltd and Other Related Cases,40 these were
the only grounds upon which the COA could be terminated. I would be
hesitant without full argument to reach any conclusion on this point, as
neither side's counsel had addressed their minds to the issue and the
implications of an ability to terminate the COA by notice were not
explored in the affidavits. However, it is unnecessary to do so because the
PUTCO case is clearly distinguishable. It concerned a contract to secure
advertising to be placed on the appellant's buses. The contract was
embodied in a letter containing the following paragraphs:41
'This letter, although binding upon both of us, is intended to be a temporary interim
arrangement, and we confirm that, in due course, a detailed agreement will be
concluded between us as a result of the negotiations we have been conducting.

40 Putco Ltd v TV & Radio Guarantee Co (Pty) Ltd and Other Related Cases 1985 (4) SA 809 (A) at
827D-828C.
41 Ibid at 824C-F.

… [W]e reserve to ourselves the right to withdraw from this arrangement should
damage result to our image flowing from your activities, or should our earnings at any
time be insufficient from this scheme, or should the arrangement become
administratively impracticable in regard to your ability to signwrite and maintain the
advertising copy.'

[54] In that context it was said:42
‘[W]hen parties bind themselves to an agreement which requires them to work closely
together and to have mutual trust and confidence in each other, of which the
agreement under consideration is an example, it is reasonable to infer that they did not
intend to bind themselves indefinitely, but rather contemplated termination by either
party on reasonable notice. Where an agreement is silent as to its duration, it is
terminable on reasonable notice in the absence of a conclusion that it was intended to
continue indefinitely. The inclusion in the agreement of three specific grounds for
termination does not exclude termination by reasonable notice. The logical
consequence of an argument that only three specific grounds for cancellation of the
agreement exist would be that, provided those grounds for cancellation do not arise,
the agreement would continue indefinitely. This would not be a proper construction to
place on the agreement as it ignores the intention of the parties when entering into the
agreement …’

[55] That situation was by no means comparable to the present case.
The parties clearly expressed the intention that their agreement was an
interim and a temporary arrangement. A detailed agreement was to be
negotiated which would no doubt have dealt with matters such as the
ability of either party to terminate it on notice. The nature of the
relationship did not involve the joint and co-ordinated operation of a
business, but the provision of services to PUTCO. All of this is absent
from the present case. We are dealing with a suite of agreements of some
considerable commercial complexity, in a transaction involving more

42 Ibid at 827G-828B.

than half a billion Rand. It was clearly intended to continue for more than
four years, as that was the period in respect of which the income
guarantee in terms of clause 5 of the sale agreement would operate.
Construing the COA as permitting a termination on notice within that
period would run counter to an express provision of the sale agreement.
Similarly, permitting the Adamax co-owners to bring the actio during that
period would also be utterly inconsistent with the sale agreement that
created the co-ownership of the Letting Enterprise and the immovable
properties. Yet, as pointed out at the outset of this judgment, that is the
approach of the Adamax parties.

[56]   It may be, as debated in argument, that the COA is terminable on
reasonable notice duly given. I express no firm view on that question. The
fact that it may terminate in other circumstances does not necessarily
exclude that possibility, but it does not affect the question whether the
relationship gives rise to bound co-ownership. A partnership undoubtedly
does so, but most partnership agreements provide for their termination on
reasonable notice and in the ordinary course that is one of the naturalia of
a partnership. Nothing was drawn to our attention to suggest that this
would affect the partners' co-ownership of either the partnership business
or any movable or immovable property co-owned by them.

[57] The mention of partnership brings me to a consideration of the
nature of the legal relationship constituted under the COA. The
requirements of a partnership are that each party bring something into the
business, be it assets, finance, skill or labour; that the business is carried
on for the joint benefit of the partners; and that the business is conducted

for the purpose of making a profit.43 Any joint venture that exhibits the
characteristics of a partnership is itself a partnership.44 The COA exhibits
all of these features. Of course, if it is a partnership then cadit quaestio,
as it is accepted that co-ownership of a partnership business or property is
bound co-ownership.

[58] As with termination on notice, the possibility that the COA gave
rise to a partnership was not explored in argument. No doubt this was
because clause 7 of the COA, said that:
'Nothing in the agreement shall be deemed to constitute a partnership or a joint
venture of whatsoever nature and/or description and none of the Parties shall be
entitled to bind the other in any manner.'
This clause cannot detract from the other provisions of the agreement or
alter its proper legal characterisation. Its principal purpose is to make it
clear that there is no agency relationship under which the parties would
be able to bind one another contractually, as would conventionally be the
case with a partnership. Whether it has effect in accordance with its terms
to exclude the COA from being characterised as a partnership or joint
venture is another matter.

[59]  I have reservations whether the mere fact that the parties say that it
is not a partnership can affect the legal position where the relationship has
all the hallmarks of a partnership.45 In Rhodesia Railways Stratford AJA
said:
'I asked Mr. Tindall, who appeared on behalf of the appellant, if he had found any
authority or any decided case in which these four essentials have been present where
the relationship has been held not to constitute a partnership, and he was unable to cite

43 Butters v Mncora [2012] ZASCA 29; 2012 (4) SA 1 (SCA) para 11.
44 Bester v Van Niekerk 1960 (2) SA 779 (A) at 784B-785A; Purdon v Muller 1960 (2) SA 785 (E) at
792F-793C. The latter was confirmed on appeal. See fn 37 below.
45 Rhodesia Railways and Others v Commissioner of Taxes 1925 AD 438 at 465.

any. Where all these four essentials are present, in the absence of something showing
that the contract between the parties is not an agreement of partnership, the Court
must come to the conclusion that it is a partnership. It makes no difference what the
parties have chosen to call it; whether they call it a joint venture, or letting and hiring.
The Court has to decide what is the real agreement between them.'
The nature of 'something showing that the contract between the parties
was not an agreement of partnership' was explained by Ogilvie-
Thompson JA in Purdon v Muller46 in the following terms:
'The meaning of this qualification is, I think, that, although the presence in an
agreement of the four essentials will prima facie establish the existence of a
partnership, such presence is not necessarily conclusive but must yield to contrary
intention as revealed in the agreement itself read in the light of the other admissible
evidence. (Cf. Estate Davison v Auret, 22 S.C. 10 at p. 16). In the ultimate analysis
the question is always one of construction.'
I doubt that a boilerplate clause in an agreement suffices to avoid the
relationship being characterised as a partnership.

[60] Be that as it may, it is unnecessary to reach any final conclusion on
this question. The parties have described the business venture on which
they embarked as a Letting Enterprise, an expression that has no specific
legal meaning. Its basic character is that the business lets premises in
shopping centres and seeks to make a profit from them. Its primary assets
are the shopping centres and the tenant leases that generate the revenue of
the business. Such a business has employees, letting agents, cleaning and
maintenance staff or contractors, and a need to engage in marketing both
to potential tenants and to potential customers, because 'footfall' is vital.
We were not told how the accounting for this enterprise worked, but there
seems to be no reason to believe that the revenue was not used to pay the
bills and the surplus, subject to provisions or building up a contingency

46 Purdon v Muller 1961 (2) SA 211 (A) at 218A-C.

fund, was to be distributed between the parties in proportion to their
interest in the enterprise.

[61] The relationship constituted by the COA was plainly an ongoing
joint business venture, regulated in terms of the three agreements
concluded by the parties. It had many characteristics of a partnership and
counsel accepted that the central document, the COA, was based on a
conventional shareholders' agreement in a private company.47 A
convenient term is to describe it as a joint business venture, without the
need to go further and place it in some jurisprudential pigeonhole.48 Its
importance is that it established the terms of the contractual bond
between the parties. In my view those terms make it sufficiently similar
to a partnership or joint venture in the conventional sense that the
co-ownership of the letting enterprise (the primary asset) and that of the
properties (the subsidiary assets) should like partnership be a case of
bound co-ownership.

[62] I am not concerned at the prospect of bound co-ownership being
created by way of a commercial agreement between contracting parties.
Partnership is a product of a commercial agreement between private
contracting parties yet it has always been recognised as bound
co-ownership. Going back to the old authorities they always accepted that
a partnership would terminate in accordance with the provisions of the
partnership agreement. The co-ownership arising from a marriage in
community of property is likewise the result of a private agreement

47 Gihwala and Others v Grancy Property Ltd and Others [2016] ZASCA 35; 2017 (2) SA 337 (SCA)
paras 53-54. Of course, if the same business had been conducted through the medium of a company the
only way in which Adamax could have achieved its goal would have been by way of a winding-up on
just and equitable grounds. There could be no question of it being entitled to a sale of the property
portfolio as a matter of right.
48Ibid para 61.

between the parties to the marriage. Both a will and a deed of trust are
capable of creating a situation of bound co-ownership where the actio is
excluded for a significant period of time, yet they are also the product of
private arrangements. If the co-ownership is exercised through the
medium of a company the actio is excluded. The similarities between a
conventional shareholders' agreement and the COA in this case have
already been noted.

[63] In summary, my view is that the correct analysis must start from
the primary fact that what was bought and sold was a business, the
Letting Enterprise, and that the terms of the co-ownership of the Letting
Enterprise, rather than the consequential co-ownership of the immovable
properties, should determine whether this is bound or free co-ownership.
The legal relationship under the COA is governed by conventional
principles of the common law in regard to contracts. It is separate from
and extrinsic to the co-ownership of the immovable properties. It is
impermissible to separate the co-ownership of the immovable properties
from the co-ownership of the Letting Enterprise and the agreement to
operate it for the joint benefit of the MEPF and Adamax. To quote
Professor van der Merwe, co-ownership of the immovable properties is
not the sole relationship between the parties. It results from another legal
relationship, namely the co-ownership of the Letting Enterprise and the
COA and it can only be dissolved when the latter relationship is
terminated in any manner that may be permissible.

Result
[64]   In the result I make the following order:
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.

The order of the high court is set aside and replaced by the
following order:
'The application is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.'

________________________
M J D WALLIS
JUDGE OF APPEAL

Appearances

For appellant:
A E Franklin SC (with him B L Manentsa).
Instructed by:
Webber Wentzel, Johannesburg;

Symington & De Kok, Bloemfontein.

For respondent:
M C Maritz SC (with him D R van Zyl).

Instructed by:
Malatji & Co, Sandton;

Honey Attorneys, Bloemfontein.
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
FROM The Registrar, Supreme Court of Appeal
DATE 1 October 2020
STATUS Immediate
Please note that the media summary is for the benefit of the media and
does not form part of the judgment.
Municipal Employees' Pension Fund and Others v Chrisal Investments (Pty)
Ltd and Others (792/2019) [2020] ZASCA 116 (1 October 2020)

The SCA today upheld an appeal by the Municipal Employees' Pension Fund
(the MEPF) against a judgment of the Gauteng Division of the High Court,
Pretoria, granting an order at the instance of the group of companies
controlled by the fourth respondent Adamax Property Projects Menlyn (Pty)
Ltd (Adamax), for the liquidation of the properties on which stand three
shopping centres in Menlyn, Pretoria.
The MEPF purchased a 55% interest in the shopping centre business
conducted by the three subsidiaries of Adamax for a price of R550 million.
The parties concluded a detailed co-ownership agreement with Adamax (the
COA) encompassing the manner in which the business would be jointly
conducted. A 55% share in each of the immovable properties on which the
shopping centres were erected was transferred to the MEPF and a 55%
interest in all the leases of premises in the centres was ceded and assigned to
it as part of the delivery of the interest it had purchased in the business.
The parties having fallen out the Adamax companies claimed that they were
entitled as a matter of law to require that the immovable properties be divided

between them and the MEPF and contended that this should be done by
placing the shopping centres in the hands of a liquidator to be sold. The
MEPF contended that this would undermine the foundations of their
acquisition of a 55% share in the business of the shopping centres and the
terms of the COA in regard to the circumstances in which the relationship
between it and the Adamax parties could be terminated. The high court
granted an order for the liquidation of the properties in accordance with the
actio communi dividundo, the common law action for the dissolution of
co-ownership.
The SCA held that there are two categories of co-ownership in our law. The
first is free co-ownership, where any party to the co-ownership may demand
that it be terminated and the co-owned assets divided among the co-owners,
or sold and the proceeds divided in accordance with the co-owners'
respective shares. The second is bound co-ownership, where the co-
ownership has its source in another binding relationship between the parties
and can only be dissolved when that relationship is dissolved. Examples of
this are partnership, marriage in community of property, clubs and other
unincorporated associations and the co-ownership of the common property in
sectional title developments. The essential difference between the two is that
in free co-ownership the co-ownership was the only relationship between the
parties and any party can at any stage demand its dissolution, while in bound
co-ownership the extrinsic relationship is the primary relationship and the co-
ownership only incidental to or consequent upon that relationship. As a result
the co-ownership can only be dissolved when the primary relationship is
dissolved.
The SCA held that this was a case of bound co-ownership. The primary
relationship between the parties was the sale of the letting enterprise by the
Adamax parties to the MEPF and the COA that regulated in considerable
detail their future joint business relationship. An income guarantee given to
the MEPF for the first four years of the relationship was inconsistent with the
notion that the relationship could be terminated at will by the Adamax parties.
The nature of the relationship was governed by the COA to which the co-
ownership of the immovable properties was subordinate. Accordingly, the
court held that there was no right to demand division of the immovable

properties and that the appeal had to succeed and the high court order be set
aside.