In what circumstances will a cohabitative relationship be seen as a partnership and not merely a romance? This question was considered by the Supreme Court of Appeal in Butters v Mncora (181/11)  ZASCA 29 (28 March 2012).
Despite the basic common law principles applicable to partnerships, the SCA in the Butters case decided that a partnership enterprise may extend beyond commercial undertakings to include a cohabitive relationship.
The brief facts of this case are that Butters and Mncora lived together as husband and wife for almost 20 years. They had been engaged for nearly 10 years, but never married. During the course of the relationship, Butters had accumulated a sizable estate from his business interests, which included a security company. Mncora had initially worked briefly as a secretary but, at the insistence of Butters, had stopped working to stay at home and care for the couple’s children and Butters’ child from another relationship. Butters had provided for all the financial needs of the family. The relationship terminated abruptly and a dispute soon ensued as to whether Mncora was entitled to any of Butters’ assets, even though she had never been married to Butters.
Since the general rule of our family law currently is that cohabitation does not give rise to special legal consequences; Mncora sought to rely on a remedy derived from the law of partnership. Mncora set out to establish that she and Butters were not only living together as husband and wife, but were in fact partners in a legal sense.
The SCA considered the essential elements of partnerships. Firstly, each of the parties must contribute something into the partnership or bind themselves to bring something into the partnership, whether it be money or labour or skill. The second element is that the partnership business should be carried on for the joint benefit of both parties. The third is that the object should be to make a profit.
Apart from particular partnerships entered into for the purposes of a particular enterprise, the SCA found that Roman and Roman-Dutch law also recognised universal partnerships, including universal partnerships between cohabitees. There are two kinds of universal partnerships; firstly, ones where the parties agreed to put in common all their property present and future; and secondly, those where parties agreed that all they may acquire during the existence of the partnership from every kind of commercial undertaking, will be partnership property. The legal principles applicable to universal partnerships, which the SCA stated are compatible with the legal principles applicable to partnerships in general are: (a) Universal partnerships of all property extending beyond commercial undertakings are 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 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 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 partnerships can be held to exist is whether it is more probable than not that a tacit agreement had been reached. With the legal principles stated, the issue to be decided by the SCA was whether a tacit universal partnership existed between the parties.
Referring to these three elements, Butters’ first contention was that Mncora had failed to establish that she had contributed anything to the alleged partnership. Mncora’s efforts, so Butters argued, had been restricted to the common home and the children. The SCA rejected this argument and found that principles applicable to partnerships are wider; they contemplated partnerships beyond commercial undertakings. From this perspective the SCA stated that the partnership enterprise between Butters and Mncora could notionally include both the commercial undertaking and the non-profit making part of their family life and concluded that the contribution of both parties need not be confined to a contribution to a profit making entity, Mncora’s contribution to that notional partnership enterprise could hardly be denied.
Butters argued that Mncora had failed to show the second element of partnerships which requires that the partnership enterprise must be carried on for the joint benefit of both parties. The SCA found that as the parties had entered into a partnership which encompassed both their family life and the business conducted by Butters, the enterprise as a whole was carried on for the joint benefit of both parties. In this regard, the SCA said that it had no conceptual difficulty with concluding that a partnership agreement existed.
Regarding the third element of partnerships, namely that the object should be to make a profit, the SCA found that on the evidence it was clear that the all-embracing venture pursued by the parties, was aimed at a profit; a profit which the parties had tacitly agreed to share.
Recognising the difficulties faced by parties in cohabitation relationships, the legislature has proposed the Domestic Partnership Bill to regulate the legal consequences of “domestic partnerships”. The Bill will deal in particular with the care of children, maintenance and assets when the cohabitation relationship terminates.
Until such time as the law is reformed, this case opens the door for parties in cohabitation relationships to look at other legal principles for protection, like the law of partnership. The courts will not always infer that there was a partnership and each case will be decided on its own merits. The SCA will, however, go further than looking at the commercial interest of the parties when deciding whether or not a partnership existed between the parties. The SCA will also take into account non-profit elements, including the contribution to family life.
This case is to be welcomed from the perspective of those who find themselves without protection at the end of lengthy cohabitation relationships. Relying on general principles is no substitute for entering into a clear agreement when the relationship is still on track.