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Court Court of Appeal of Tanzania - Mwanza

Judge Nyalali CJ, Makame JJA and Omar JJA

10 December, 1988


Partnership - Failure to comply with a statutory requirement - Effect.


The appellant and respondent were partners. Their partnership was duly registered.

The first partnership venture failed to take off. Another venture was agreed and resorted to. This change of venture was not registered as C required by section 11 of the Business Names Ordinance, Cap. 213. When a dispute arose between the partners assistance of the Court was sought. The High Court tried the case. On appeal the Court considered the effect of failure to comply with statutory requirements.

Held: (i) Section 15 of the Business Names Ordinance provides for disability to enforce "by action or other legal proceedings whether in the business name or otherwise" where there is non-complience with the provisions of section 6 of the Ordinance;

(ii) the partnership has been tainted by the illegality arising from the failure to comply with the requirements of section 11 and no partner can enforce a right under this tainted partnership.

Case Information

Appeal dismissed.

No case referred to.

Rutabingwa, for the Appellant

Rweyemamu, for the Responsent


Nyalali, C.J., Makame and Omar, JJ.A.: The appellant, Florent Rugarabamu, instituted a suit in the High Court at Mwanza for breach of partnership agreement and seeking various reliefs, including dissolution and winding up of the partnership, restitution of partnership assets, the taking of partnership accounts, the appointment of a receiver and manager and declaratory orders. The appellant was unsuccessful for much of his claim but was awarded a sum of shs. 500,000/- as damages. He was aggrieved by the decision of the High Court, Mwalusanya, J. hence this I appeal to this court. Mr. Rutabingwa, learned counsel from the Tanzania Legal Corporation, appeared for the appellant before us, whereas Mr. Rweyemamu, learned advocate, represented the respondent. Eight grounds of appeal were submitted in the memorandum of appeal.

From the proceedings both in this Court and the trial court, the following primary matters are not in dispute between B the parties. Sometime in the first quarter of 1982 a partnership business firm was established under the business name of H. & F. Enterprises. The firm was duly registered under the Business Names (Registration) Ordinance Cap. 213. The Respondent was one of the partners.

The registered business or venture was that of grain milling. It is common ground that this business or venture failed to take off and a new business or venture was launched, concerning the purchase and sale of foodstuffs. This latter venture proved very successful. Overdraft bank facilities were extended to the partnership and a tipper lorry was hire-purchased by the partnership.

It is apparent from the proceedings both in this Court and the court below that the following primary matters are in dispute between the parties. It is the appellant's case that he was the other partner in the firm and that the E respondent was a managing partner. It is part of the appellant's case, that after the collapse of the grain milling venture, the partnership launched a new venture, that is, the business for the purchase and sale of foodstuffs. The respondent, however, subsequently mismanaged the firm by, inter alia, misappropriating and fraudulently converting to his personal use some money and assets of the partnership. The respondent's case on the other hand is that the appellant has never been a partner in the firm ad that it was the appellant's father, namely, Fabian S. Mwebesa (P.W.4) who joined the respondent in establishing the firm. It is part of the respondent's case that after the grain milling business had failed to take off the respondent alone launched the foodstuffs business with liberty to Mr. Mwebesa to join later if he so wished. The said Mwebesa however never joined in the new venture.

The first important point for consideration and decision in this case is what effect in law did the collapse of the first venture have on the partnership? The learned trial judge specifically considered the point and held that the failure of the grain milling business terminated the partnership by virtue of the provisions of section 212(11)(b) of the Law of I Contract Ordinance, Cap. 433 which states:

(1) Subject to any agreement between the partners, a partnership is dissolved: A

(a) (Not relavant)

(b) If entered into for a single adventure of undertaking, by the termination of that venture or undertaking;

(c) ... (Not relevant).

Mr. Rutabingwa has challenged the finding of the trial court on this point basically on two fronts: Firstly, he has C submitted that even if the partnership was for a single venture, the partnership could not have terminated since there was an agreement by the partners to start a new venture under the partnership. Secondly, the partnership was multi-business, right from the beginning.

Let us examine each of these submissions on merits. Since the partnership in question was registered under the Business Names Ordinance, it is obvious that any agreement to change its venture had the effect of altering the particulars registered under section 6 of the Ordinance and would, for that reason fall within the scope of section 11 of the Ordinance which requires such changes to be registered. The consequences of failure to register such changes are stipulated under section 13 and 15 of the same Ordinance. Section 13 provides for penalties, whereas section E 15 provides for disability to enforce "by action or other legal proceedings whether in the business name or otherwise". We shall have to consider the effect of section 15 to this case at the end of this judgment. For the moment, we turn to the second from of Mr. Rutabingwa's submission concerning the firm being multi-business.

With due respect to learned Counsel for the appellant, we do not think that a firm which registers itself for a single venture under the Business Names Ordinance can lawfully exist and operate in respect of more than the registered single venture. If that was possible, the ordinance would be meaningless. The question however arises whether the learned trial judge was correct in finding that the partnership terminated upon the failure of their milling business. With due respect to the learned judge, we think that he failed to appreciate the evidence which showed beyond doubt that the respondent continued to act as a partner and in furtherance of the criminal partnership of H. & F. Enterprises in the foodstuff business right up to the time when this case was instituted. For instance, he continued to operate the partnership bank account, he obtained bank overdraft facilities on behalf of the partnership firm and he I hire-purchased the tipper lorry for and on behalf of the same firm. The other party reciprocated by taking no action to close the partnership bank account. This conduct on the part of the partners shows that there was at least an implied agreement or understanding by the partners to launch the foodstuff venture under the partnership. But since the partnership was registered, this change effected by agreement of the partners required compliance with the provisions of section 11 as already mentioned.

The next important point for consideration and decision concerns the consequences stated under section 15. In short that section disables a defaulter from getting assistance from the courts. This disability is a restatement of the C common law doctrine expressed in the Latin maxim, "Ex Turpi Causa Non Oritur Actio". The partnership has been tainted by the illegality arising from the failure to comply with the requirements of section 11. No one therefore, who claims to be a partner, can enforce a right under this tainted partnership. Since this contract of partnership is thus unenforceable, we have found it unnecessary to decide the other issues that have been canvassed in this case.

In the final analysis, we agree with Mr. Rweyemamu that the trial court was wrong in awarding damages to the E appellant, since to do so is to act contrary to section 15 above mentioned. It follows therefore, but for different reasons from those used by the trial court, that this appeal must be dismissed in its entirety and the order awarding damages be set aside with costs and we order accordingly.

Appeal dismissed.

1988 TLR p246


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