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[2016] ZAGPJHC 311
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V v V (A5021/12) [2016] ZAGPJHC 311 (24 November 2016)
SAFLII
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Certain
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: A5021/12
Court
a quo
case
no: 11971/11
Reportable:
YES
Of
interest to other judges: YES
Revised.
24
November 2016
In
the matter between:
V,
C
F Appellant
And
V,
M Respondent
SUMMARY
SPILG
J with Maluleke and Kathree-Setiloane JJ concurring
INTERPRETATION
OF CONTRACTS:
-
Integrated
interpretational process applied to the words used (ie; by reference
to both their internal and external contexts).
-
The
ordinary meaning of the words used when limited to the clause itself
must yield to the intention of the parties as expressed
in the
balance of the contract as a whole, the purpose for which they were
introduced and the factual matrix in which the document
came into
existence. To interpret otherwise would result in absurdity and not
make commercial sense in the context of the relationship
established
by the parties.
EVIDENCE-
PAROL EVIDENCE
-
What
constitutes admissible evidence in order to determine the purpose of
the agreement and its factual matrix
JUDGMENT
SPILG,
J:
INTRODUCTION
1.
This is an appeal against the
decision of Makume J. The case concerns an agreement of settlement
which was made an order of court
in divorce proceedings.
2.
The contentious clauses in the
agreement relate to the maintenance obligations undertaken by the
respective parties. These are to
be found in section C of the
agreement and provide:
‘
2. Maintenance in
respect of the children
2.1
Until the fixed property at […] Paul Newham Avenue is sold and
registered in the name of the purchaser or until 31 December
2010
[whichever date arises last] the defendant will be solely responsible
and liable for the maintenance of the children.
2.2
As and when the fixed property situated at 19 Paul Newham Avenue is
sold and registered in the name of a purchaser or until
31 December
2010 [whichever date arises last] the plaintiff and the defendant
will be jointly responsible and liable for the reasonable
and
necessary maintenance expenses of the children, which reasonable and
necessary maintenance expenses will be agreed between
the parties
alternatively decided by a court of competent jurisdiction’
THE
ISSUES
3.
The respondent successfully
contended before the court
a
quo
that she would only be
responsible for contributing toward the maintenance of their children
on the later of the two postulated
events, the key to the
construction of the clauses being the common phrase “
whichever
date arises last
” and
the commencing words “
Until”
in the first subparagraph
and “
As and when”
in the second.
4.
The appellant had
unsuccessfully counterclaimed for an order that the parties were
jointly liable for all reasonable maintenance
costs to be incurred in
respect of their children.
5.
The appellant contends that if
regard is had to the circumstances prevailing at the time, then on a
proper interpretation of the
clauses transfer was expected to go
through prior to 31 December 2010 but that the respondent would bear
the risk if there was
a delay beyond that date. The appellant did not
seek rectification of the agreement to amend the phrase to read
“
whichever date is the
sooner
”. The
appellant also argues that the mutual responsibility of parents under
the common law to maintain their children overrides
the agreement.
The
concern we raised during argument was whether the agreement in fact
covered the contingency that arose: If it did, then by when
was
transfer to be effected? If not, then was there consensus. We raised
these questions because at the time of the divorce a written
sale
agreement had been concluded with a purchaser. However the sale was
cancelled sometime after the divorce was granted because
the
purchaser failed to come up with the purchase consideration despite
being granted extensions of time.
6.
Aside from the argument that
the mutual duty of support overrides the agreement, the issues
concern the proper interpretation of
the agreement between the
parties, including whether it was intended to cover the eventuality
that arose.
7.
The first question is whether
it is permissible to go behind the terms of a written agreement which
was made part of the court order,
and which on the face of it may be
clear and unambiguous. This involves a consideration of the method of
interpreting contracts
as well as the entitlement to introduce
extrinsic evidence where there has been no application for
rectification.
INTERPRETATION
OF CONTRACTS
8.
The fundamental consideration
in determining the terms of a written contract or its application to
an event that arose during the
course of their relationship is to
discern the intention of the parties from the words used in the
context of the document as a
whole, the factual matrix surrounding
the conclusion of the agreement and its purpose or (where relevant)
the mischief it was intended
to address (
KPMG
Chartered Accountants (SA) v Securefin Ltd and Another
2009
(4) SA 399
(SCA) at para 39 and
Novartis
SA (Pty) Ltd v Maphil Trading (Pty) Ltd
2016(1)
SA 518 (SCA) at paras 27, 28, 30 and 35).
9.
Since at
least
Swart
en 'n Ander v Cape Fabrix (Pty) Ltd
1979(1)
SA 195 (A) at 202C and
List
v Jungers
1979
(3) SA 106
(A) at 118G-H the Supreme Court of Appeal (‘the
SCA’) and its predecessor have stated that one considers the
contentious
words by having regard to their context
in
relation
to the contract as a whole
and
by taking into account the nature and purpose of the contract
[1]
.
While
there have been some hiccups along the way, in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18 Wallis JA said:
‘
Interpretation is
the process of attributing meaning to the words used in a document,
be it legislation, some other statutory instrument,
or contract,
having regard to the context provided by reading the particular
provision or provisions in the light of the document
as a whole and
the circumstances attendant upon its coming into existence. Whatever
the nature of the document, consideration must
be given to the
language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears;
the apparent
purpose to which it is directed and the material known to those
responsible for its production. Where more than one
meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective, not subjective.
A sensible meaning
is to be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose
of the document. Judges
must be alert to, and guard against, the temptation to substitute
what they regard as reasonable, sensible
or businesslike for the
words actually used. To do so in regard to a statute or statutory
instrument is to cross the divide between
interpretation and
legislation; in a contractual context it is to make a contract for
the parties other than the one they in fact
made. The 'inevitable
point of departure is the language of the provision itself, read in
context and having regard to the purpose
of the provision and the
background to the preparation and production of the document.’
10.
After citing this extract
Wallis JA in
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014
(2) SA 494
(SCA) at para 12 continued:
‘
Whilst the
starting point remains the words of the document, which are the only
relevant medium through which the parties have expressed
their
contractual intentions, the process of interpretation does not stop
at a perceived literal meaning of those words, but considers
them in
the light of all relevant and admissible context, including the
circumstances in which the document came into being. The
former
distinction between permissible background and surrounding
circumstances, never very clear, has fallen away. Interpretation
is
no longer a process that occurs in stages but is ‘essentially
one unitary exercise’. Accordingly it is no longer
helpful to
refer to the earlier approach.’
11.
Accordingly
the so called ‘golden rule’ no longer applies. In terms
of that rule a court could not have regard to the
surrounding
circumstances if the ordinary grammatical meaning of the words used
are clear, unambiguous and do not lead to an absurdity
when
considered in the context of the document as a whole.
[2]
12.
Put another way; a court is now
at liberty to depart from the words used, even when they are clear
and unambiguous when considered
in the context of the document as a
whole if, having regard to admissible background and surrounding
factors, it is evident that
they would lead to a result contrary to
the purpose and intention of the parties or the legislature as the
case might be.
13.
The difficulty is to determine
the threshold point. As stated in
Endumeni,
a court cannot make a contract for the parties or transform a process
of interpretation into one of legislating from the bench.
14.
More recently Wallis JA had
this to say in
Commissioner
For The South African Revenue Service v Bosch and Another
2015 (2) SA 174
(SCA) at para 9:
‘
The words of the
section provide the starting point and are considered in the light of
their context, the apparent purpose of the
provision and any relevant
background material. There may be rare cases where words used in a
statute or contract are only capable
of bearing a single meaning, but
outside of that situation it is pointless to speak of a statutory
provision or a clause in a contract
as having a plain meaning. One
meaning may strike the reader as syntactically and grammatically more
plausible than another, but,
as soon as more than one possible
meaning is available, the determination of the provision’s
proper meaning will depend as
much on context, purpose and background
as on dictionary definitions or what Schreiner JA [
Jaga
v Dönges NO and Another; Bhana v Dönges NO and Another
1950 (4) SA 653
(A) at 664G – H]
referred to as ‘excessive
peering at the language to be interpreted without sufficient
attention to the historical contextual
scene’
15.
The
position in our law as expressed by Wallis JA in
Educated
Risk Investments 165 (Pty) Ltd and Others v Ekurhuleni Metropolitan
Municipality and Others
[2016]
3 All SA 18
(SCA) at para 19 is that ‘the
words
must be taken as the starting point and construed in the light of
their context and purpose and where applicable the dictates
of the
Constitution’.
The
enquiry must not necessarily always commence by examining the words
used.
[3]
16.
While
the object is to determine the meaning to be given to the words used,
it remains the primary function of the court to gather
the intention
of the parties or the legislature by reference to those words; and
this can only occur if the object and purpose
of the contract or the
legislation (in which case it would include the mischief sought to be
remedied) are brought into consideration
when examining the words
used in the context of both the document as a whole and the context
or factual matrix in which the document
came to be produced.
[4]
17.
Another
critical feature of modern case law is that the interpretational
process is integrated.
[5]
There
is no immutable starting point in the enquiry to determine the
meaning of the words used.
[6]
That is more likely to be governed by the dictates of the case or
individual judicial preference. In
Jaga
v Dönges at
664B-H Schreiner JA pointed out that each has its own
disadvantages.
[7]
Of importance
is that, unless the issues are narrowed, neither an examination of
the words used, nor a consideration of their
context as a whole
or the factual matrix in which the document came into existence can
be looked at in isolation.
[8]
18.
Finally,
in the recent case of
Novartis
Lewis
JA maintained that the process of interpretation is to ascertain the
intention of the parties or the legislature.
[9]
In
Endumeni
Wallis
JA had considered the terminology inappropriate since the enquiry is
restricted to ascertaining the meaning of the language
of the
provision itself.
[10]
Nonetheless in both cases, the SCA described the process as requiring
the words used to be read in the context of the document
as a whole
and in the light of all relevant circumstances.
[11]
In both cases the SCA confirmed that reliance can no longer be placed
on the outcome of earlier cases which restricted the enquiry
to the
words used read with reference only to the internal context of the
document as a whole, and without regard to the external
context
of the factual matrix at the time of its conclusion.
[12]
19.
Accordingly,
the fact that the agreement was made an order of court does not
detract from the need to interpret it with reference
to the words
actually used as well as its internal and external context. In
KPMG
Chartered Accountants (SA) v Securefin Ltd and Another
2009
(4) SA 399
(SCA) at para 39 Harms DP confirmed that:
‘…
the
rules about admissibility of evidence in this regard do not depend on
the nature of the document, whether statute, contract
or patent.’
The
issue before us remains the proper interpretation of the agreement,
and its intended scope or purpose.
ADMISSIBLE
EXTRINSIC EVIDENCE (PAROL EVIDENCE RULE)
20.
In
Coopers & Lybrand
at 768D-E the court limited the
extrinsic evidence that could be considered to:
‘…
previous
negotiations and correspondence between the parties, subsequent
conduct of the parties showing the sense in which they
acted on the
document, save direct evidence of their own intentions. Delmas
Milling case at 455A-C, Van Rensburg's case at 303A-C,
Swart's case
at 201B, Total South Africa (Pty) Ltd v Bekker NO1992 (1) SA 617 (A)
E {dictum at 624G appl} at 624G, Pritchard
Properties (Pty) Ltd v
Koulis1986 (2) SA 1 (A) {dictum at 10C-D appl} at 10C-D.’
21.
It
has already been observed that Wallis JA in
Bothma-Batho
at
para 12 mentioned that the distinction between permissible background
and surrounding circumstances has fallen away. This was
determined in
KPMG
Chartered Accountants (SA) v Securefin Ltd and Another
2009
(4) SA 399
(SCA) where Harms DP said at para
39 :
‘
First,
the integration (or parol evidence) rule remains part of our law.
However, it is frequently ignored by practitioners and
seldom
enforced by trial courts. If a document was intended to provide a
complete memorial of a jural act, extrinsic evidence may
not
contradict, add to or modify its meaning (Johnson v Leal1980 (3) SA
927 (A) at 943B). Second, interpretation is a matter of
law and not
of fact and, accordingly, interpretation is a matter for the court
and not for witnesses (or, as said in common-law
jurisprudence, it is
not a jury question: Hodge M Malek (ed) Phipson on Evidence (16 ed
2005) paras 33 - 64). Third, the
rules about admissibility of
evidence in this regard do not depend on the nature of the document,
whether statute, contract or
patent (Johnson & Johnson (Pty) Ltd
v Kimberly-Clark Corporation and Kimberly-Clark of South Africa (Pty)
Ltd 1985 BP 126 (A)
([1985] ZASCA 132 (at www.saflii.org.za)).
Fourth, to the extent that evidence may be admissible to
contextualise the document
(since 'context is everything') to
establish its factual matrix or purpose or for purposes of
identification, 'one must use it
as conservatively as possible'
(Delmas Milling Co Ltd v Du Plessis1955 (3) SA 447 (A) at 455B - C).
The time has arrived for us
to accept that there is no merit in
trying to distinguish between 'background circumstances' and
'surrounding circumstances.
The
distinction is artificial and, in addition, both terms are vague and
confusing. Consequently, everything tends to be admitted.
The terms
'context' or 'factual matrix' ought to suffice. (See Van der
Westhuizen v Arnold2002 (6) SA 453 (SCA) ([2002]
4 All SA 331)
paras
22 and 23, and Masstores (Pty) Ltd v Murray & Roberts
Construction (Pty) Ltd and Another B
[2008] ZASCA 94
;
2008 (6) SA 654
(SCA) para
7.)’
[13]
22.
The
effect of these decisions is to remove the limitation on bringing
into consideration the factual matrix and do away with the
categories
of cases where extrinsic evidence may or may not be resorted to.
(
Delmas
Milling Co Ltd v Du Plessis
1955
(3) SA 447
(A) at 454F-455B.) What is preserved is the meaning
to be given to surrounding circumstances; at 454G Schreiner JA said
it
meant:
‘…
matters
that were probably present to the minds of the parties when they
contracted (but not actual negotiations and similar statements).’
and
at 455B where surrounding circumstances may not clear up an ambiguity
then;
‘…
recourse
may be had to what passed between the parties on the subject of the
contract. One must use outside evidence as conservatively
as possible
but one must use it if it is necessary to reach what seems to be a
sufficient degree of certainty as to the right meaning.’
23.
It
would also appear that where the parties are agreed as to the
underlying facts, whatever their nature, then the issue of
parol evidence need not enter the discussion. This would follow from
the acceptance that where the parties agree on the meaning
of their
contract even if it contradicts the unequivocal contents of their
written memorial the courts will give effect to the
former. See
Shill
v Milner
1937 AD 101
at 111
[14]
.
24.
In
Novartis
at
para 27 Lewis JA said:
‘
This
court has consistently held, for many decades, that the
interpretative process is one of ascertaining the intention of the
parties — what they meant to achieve. And in doing that, the
court must consider all the circumstances surrounding the contract
to
determine what their intention was in concluding it. KPMG, in the
passage cited, explains that parol evidence is inadmissible
to
modify, vary or add to the written terms of the agreement, and that
it is the role of the court, and not witnesses, to interpret
a
document. It adds, importantly, that there is no real distinction
between background circumstances and surrounding circumstances,
and
that a court should always consider the factual matrix in which the
contract is concluded — the context — to determine
the
parties' intention.’
25.
The
issue of the parties subsequent common conduct did not arise for
consideration in
Novartis
and
the other cases referred to in that decision. It is however well
established that such evidence is admissible since it amounts
to an
objective demonstration of how the parties conducted themselves,
without objection, in implementing the terms of the contract.
It also
amounts to conduct against interest, conduct evidencing consensus as
to the application of the agreement (much in the same
way as
subsequent verbal confirmation as to their mutual understanding of
the terms) and objective evidence of their common understanding
as to
the terms of their agreement at the time of its conclusion. See Harms
JA (at the time) in Telcordia
Technologies
Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007
(3) SA 266
(SCA) at para 91
[15]
and
Lewis JA in
Rane
Investments Trust v Commissioner, South African Revenue Service
2003
(6) SA 332
(SCA) at para 27.
Rectification
would not be required if the document was ambiguous or if ambiguity
arose when considering the factual matrix. Furthermore
where the
interpretation is intended to explain the document or limit its reach
and not to contradict its terms then it appears
unnecessary to apply
for rectification before extrinsic evidence is allowed.
26.
As I
understand the appellant’s case, he seeks to contradict the
express wording of the agreement but has not applied for
rectification. He would therefore have to demonstrate that ambiguity
arises from a consideration of admissible external factors.
THE
WORDS USED AND THEIR INTERNAL CONTEXT
27.
The
opening words to clauses 2.1 and 2.2 of section C of the agreement,
namely “
Until
”
and “
As
and
when
”
respectively, indicate that the appellant will be solely responsible
for maintenance of the two children until one or other
of the events
mentioned in the clauses occurs. It is evident that the condition
which will release the respondent from being solely
responsible for
maintenance is not based on the performance of some act by the
parties themselves. The parties will be commence
being jointly
responsible for the children’s maintenance either when the
Newham property is sold and registered in the name
of the purchaser
or on 31 December 2010.
28.
Which
of the two postulated events will release the appellant from sole
responsibility for maintenance is governed by the phrase
“
whichever
date arises last
”.
It is added in parenthesis in both clauses 2.1 and 2.2. The phrase is
clear and unambiguous and in the context of the two
clauses qualifies
the words which precede them.
29.
If
the words used are read in the context of the agreement as a whole
the “financial” rationale becomes self-evident.
It was
not that the appellant assumed a more onerous obligation that would
result in the respondent’s release from any of
the joint
financial commitments that arose from their relationship for so long
as transfer of the property was delayed.
The
following clauses of the agreement appear relevant to understand the
words used in clauses 2.1 and 2.2 in the context of the
agreement as
a whole.
30.
Clause
3.1 of Section B to the agreement provides that:
‘
Each
party shall be responsible for all liabilities incurred in their
respective names and/or attached to any property [movable
and
immovable] which they acquire sole and exclusive ownership of
in terms of this agreement, save that the shared bond facility
incurred in respect of […] Paul Newham Avenue. In regard
to the aforesaid bond facility the defendant shall be liable
to
settle 50% of the outstanding balance of the facility after the
proceeds of the sale of the fixed property situated at […]
Paul Newham Avenue have been paid to reduce the facility amount less
the lump sum payment paid by him to ABSA during August 2010’
It
is evident from the agreement that although the Newham property was
registered in the respondent’s name, the parties marriage
out
of community of property with the accrual system meant that both
parties had obtained a joint loan facility, even though the
bank had
secured the loan over property belonging to the respondent only.
31.
In
terms of clause 2.1 of section B to the agreement, each party would
retain, as his or her sole and exclusive property, the immovable
property registered in each of their respective names. Once again, it
is clear from the agreement as a whole that the respondent
was the
sole registered owner of the Newham Avenue property.
32.
Under
clause 2.2 of section B to the agreement, the defendant would vacate
the Newham property by no later than 30 September 2010.
Until that
date he was to be responsible for rates and taxes, water and
electricity.
33.
The
children’s primary residence was to be with the appellant
(clause 1.2.1 of section C) although at that time the eldest
son was
at university in Potchefstroom.
34.
Section
E to the agreement provides as follows:
‘
The
parties place on record that by the signing hereof they will have no
further claims against each other, but the parties specifically
record that this clause will have no effect on the parties’
right from time to time, to apply for maintenance in respect
of the
minor children , taking into account changing needs and
circumstances’
35.
There
are some other clauses which deal with specific exclusions relating
to the circumstances where the appellant will continue
to be
responsible for certain charges, such as rates and taxes while he
remains in occupation of the property. There are also clauses
where
the respondent assumes certain specific maintenance responsibilities
such as retaining the children on her medical aid. However,
these are
clearly and unambiguously set out. They constitute specific
exclusions to the arrangement that the appellant will be
solely
responsible for the children’s maintenance while the respondent
will be solely responsible for paying the monthly
bond instalments
until the happening of the relevant event described in the clauses
under consideration.
36.
These
other provisions of the agreement are entirely consistent with the
ordinary grammatical meaning of the words under consideration,
and
the financial rationale for the appellant assuming sole
responsibility for payment of maintenance until the property is
transferred
into the name of a purchaser. The agreement as a whole
addresses the two financial obligations arising from their
relationship.
The one was the joint responsibility for maintaining
their children. The other was the joint responsibility they accepted
to pay
off the monthly bond installments until the house was sold,
and to assume equal responsibility for any shortfall between the
purchase
price for the house and the outstanding bond amount.
Moreover, the parties provided in their agreement that circumstances
that
were not contemplated might arise which would result in a
reappraisal of the maintenance obligations. This explains the
insertion
of section E.
37.
The
arrangement was straight forward. For as long as the respondent would
assume sole responsibility for paying the monthly bond
instalment,
which they jointly owed, the appellant would assume sole
responsibility for the payment of maintenance. This would
obviously
endure for as long as the property was registered in her name, unless
of course either party approached a court to change
the maintenance
arrangement.
38.
The
clauses requiring the appellant to vacate by 30 September 2010, and
which indicate that there would be a shortfall between the
purchase
price for the property and the outstanding bond amount, might suggest
that the parties envisaged an imminent transfer
of the property or at
least a sale where occupation had to be given on or after 1 October
2010.
39.
But
reading the agreement as a whole there is no suggestion that the
parties did not intend their arrangement, that each would solely
assume on of the joint financial responsibilities, to endure for as
long as the Newham property was not transferred to a purchaser.
In
its terms, the 31 December date reflected that even if transfer
occurred before this date, the parties would, nonetheless, continue
up to the end of that year with each assuming sole responsibility to
pay the respective joint financial obligations that arose
from their
relationship.
40.
As
was pointed out in Makume J’s judgment, the case of
Claassens
v Claassens
1981(1)
SA 371 (NPD) at 371A-C is authority for the proposition that divorce
agreements dealing with, amongst other things, property
and
maintenance are the products of compromises that courts may not
necessarily go along with. It is evident that the underlying
considerations which result in any particular provision, limitation
or extension may be the result of give and take based on past
events,
including past failures to meet financial obligations that the other
party had then assumed. The relevant passage
from
Claassens
was
recently approved in
Eke
v Parsons
2016
(3) SA 37
(CC) at paras 14-22.
41.
In
the present case there was a safety valve expressly provided for by
section E to the agreement. If circumstances changed
then
either party was at liberty to approach a court. This reinforces a
reading of the agreement as a whole to have catered for
the
eventuality that transfer did not go through. It would also lead to
the absurdity that the appellant’s obligations would
be
significantly reduced after having been released from his liability
for half of the monthly loan repayments while the respondent’s
(on the appellant’s version) would at least double.
EXTRINSIC
FACTORS
42.
It is
common cause that the parties were married in January 1990 out of
community of property with the application of the accrual
system.
43.
There
were two dependent children covered by the maintenance provisions of
the agreement. This was determined by the court and is
not the
subject of appeal.
44.
The
agreement was signed on 22 September 2010. The one child was then a
few days short of his 18
th
birthday and the other was 14 years old.
45.
The
factual matrix regarding the property mentioned in clause 2 of
section C to the agreement is set out in the following paragraphs.
46.
The
Newham property is exclusively owned by the respondent.
47.
In
2004 the parties obtained a shared loan facility from Absa Bank. They
agreed to be responsible for its repayment in equal portions.
The
respondent’s Newham property was bonded as security for the
loan.
48.
Prior
to the conclusion of the settlement agreement the parties accepted an
offer to purchase the Newham property from a Mrs Adams.
Although the
page reflecting the date of acceptance of the offer is not provided
the offer was forwarded by the estate agent on
12 August 2010.
49.
The
following clauses are relevant:
a.
The
purchase price was R2.5 million. There was no deposit. However, the
amount was to be secured by a bank or other approved guarantee
within
30 days of obtaining bond approval, and bank approved had to be
obtained by no later than 30 August 2010;
b.
Occupation
was to be given to the purchaser on 25 September 2010 from which date
she would be responsible for occupational rent
calculated at 1% of
the purchase price, payable monthly in advance.
50.
The
purchaser did not obtain bond approval by 30 August but it is common
cause that extensions were granted to enable her to obtain
finance.
It was a term of the agreement that the period could be extended.
51.
On 28
August 2010 the appellant had paid R195 500 into the shared loan
facility account. At that time the amount outstanding
on the bond was
R2 745 000. It is clear from the respondent’s own
version that the appellant put the R195 000
in as representing
his 50% portion of the anticipated shortfall between the purchase
price and the outstanding bond. The arithmetic
adds up. Nonetheless
clause 3.1 of section B to the agreement itself recognises that there
may be further amounts that he will
have to pay in. That would only
likely arise if the sale to Adams fell through.
52.
On 1
October 2010 the appellant vacated the property after securing
alternative accommodation. Until then he had been occupying
the
property rent free although he had an obligation to pay the municipal
charges. The date he vacated the property does not coincide
strictly
with the date vacant possession was to be given to the purchaser in
terms of the agreement, but I do not believe that
anything turns on
it. The dates are sufficiently close not to be coincidental.
53.
The
sale was however cancelled on 20 December 2010 and the property was
put back on the market. The respondent states that at the
time of the
divorce agreement both parties believed that the sale would be
successful, “
to
such an extent that I granted the prospective purchaser several
extensions to comply with the suspensive condition”
54.
I
however accept that further on the respondent, in her replying
affidavit, claims that they both were cautioned by the appellant’s
attorneys that the chances of a cash sale being successful were very
remote. And that is why, although anticipating that transfer
would be
effected by 31 December, they both understood the risks and she
claims that this led to them agreeing to insert
“
whichever
date arises last”
Since
the appellant disputes this, and by reason of the cases referred to
earlier, which remain good law on admissible evidence,
such evidence
is inadmissible.
55.
The
appellant contended that the phrase “
whichever
date arises last
”
was introduced because no one anticipated that the sale would fall
through but rather that transfer of the consummated sale
would occur
prior to 30 December 2010. Again this evidence is inadmissible for
the same reason.
56.
However,
the conduct of both parties demonstrates that they were working
around the Adams sale going through. This is
evidenced by the
appellant vacating the Newham property on 30 September, by him also
paying his 50% of the shortfall (between the
purchase price of the
Adams sale and the outstanding bond in August 2010) and the
respondent granting Adams further extensions
of time after 30
September. The question is whether this was the only contingency they
contemplated.
57.
By 4
June 2011 the property was again occupied and appears to have been
sold.
58.
The
obligations each party assumed reveal that the total monthly loan
repayment on the outstanding bond of some R2 750 000
was
not insubstantial, amounting to R19 000 per month, while she had
her own accommodation to provide for elsewhere, and also
paid other
specified amounts to the children including just over R1 000 per
month for their portion of the medical aid up
to January 2011, as
provided for in terms of the agreement.
59.
The
appellant produced an additional affidavit setting out his alleged
expenses post January 2011. Even if they are correct (and
on a
cursory examination there are items included such as a R15 000
holiday expense apportioned to the one son) he did not
seek to
correlate them to what he had been paying previously.
60.
It is
significant that the appellant described the purpose of the
arrangement to be “
that
it was agreed that it would make economic sense for the one party to
make full payment in respect of the shared loan facility
and for the
other party to attend the joint liability in respect of the
maintenance of our two children”
.
The respondent confirms this.
61.
Accordingly
applying
Shill,
this
evidence is admissible. In any event, the purpose is clear enough
from the document, and the other surrounding circumstances,
including
the fact that the sons were to stay primarily with the appellant
while the security for the loan facility, which had
been utilised by
both parties, was the respondent’s exclusive property. It would
make sense for the allocation of the joint
obligations to be assumed
in the manner they were.
62.
In
short the appellant did not contend that the monthly maintenance for
the children was expected to increase in 2011. No such case
is made
out. Even if it could, then the agreement itself provided a remedy;
the appellant could approach the court to vary
the maintenance.
63.
Accordingly
the liabilities each assumed under the agreement appeared to be
treated by them as co-extensive
64.
Moreover
if occupation had been given to Adams on 1 October then;
a.
there
would be additional income received by the respondent by way of
occupational rent although she would then have to take up
the payment
of rates and taxes while continuing to service the bond until
transfer was effected. But that does not take into account
the
financial obligations she would continue to incur at the residence
where she was living.
b.
The
appellant would be obliged to incur an additional liability for
renting accommodation but, would be released of the obligation
to pay
rates and taxes on the Newham property.
If
occupation had been given to Adams on 1 October 2000 in accordance
with the sale agreement and transfer was not effected by 31
December
2000, then on the interpretation contended for by the appellant, as
from 1 January 2011 the maintenance obligation would
be shared, while
the respondent would continue to pay an addition al R19000 plus rates
and taxes for the property. To put it bluntly
this would make no
commercial sense
[16]
and
would result in an absurdity inconsistent with the purpose and
intent of the agreement as confirmed by both parties.
WEIGHING
THE WORDS BY REFERENCE TO THEIR INTERNAL AND EXTERNAL CONTEXT
65.
The
process of examining the words used in the agreement divided the
enquiry into reading the words in relation to the document
as a
whole, and having regard to admissible external evidence. They also
could have been considered comprehensively.
66.
Ultimately
the parties concluded a settlement agreement which was a compromise
that would ensure that the respondent would assume
the sole
responsibility of paying up the joint loan obligations incurred and,
in return for relieving him of responsibility for
paying his 50%
towards the monthly loan instalment, the appellant would assume sole
responsibility for the children’s maintenance.
67.
The
economic realities are that this arrangement would endure for as long
as the property was not transferred into the name of a
purchaser. If
it were otherwise, then the respondent would be obliged to continue
paying both hers and the appellant’s liability
for the monthly
bond installments (and rates and taxes if the property was not
occupied by Adams) while simultaneously attracting
liability for half
the maintenance.
68.
The
appellant’s counterclaim to have the agreement interpreted in a
manner that, as from 1 January 2011, the parties
would resume
sharing the payment of their maintenance obligations towards their
children, even if the property was not sold and
transferred by then,
would result in the appellant’s overall liability to the common
pool of financial obligations being
significantly reduced, while
increasing that of the respondent’s by over R20 000 per
month. It would not make commercial
sense for the respondent to have
exposed herself to paying both half the maintenance and the full
amount on the bond, when the
appellant was jointly liable for raising
the loan and servicing it.
It
is also evident that the parties wished to negotiate an agreement
that would avoid a return to court. If the agreement was dependent
on
the single sale then it was of very short duration.
69.
This
possibility is unlikely as the obligations of the respondent to
service the monthly bond repayments would still remain until
the
property was sold. It is also unlikely because, despite the Adams
sale having been concluded before the divorce agreement,
the clauses
under consideration are not definitive; they did not allude to an
existing sale or only mention an awaited transfer.
They are couched
in neutral terms that are broad enough to include a prospective sale
and transfer.
70.
If
the agreement is to be interpreted in a manner that only the sale to
Adams was contemplated, then either the agreement will have
failed or
terminated once a reasonable time had elapsed without the sale and
transfer going through.
71.
However,
the saving clause contained in section E militates against that
interpretation. This clause effectively provides for the
survival of
the agreement through all contingencies of whatever nature, and
whether foreseen or not, unless one of the parties
approaches a court
to vary it.
72.
Moreover
such an argument assumes that the agreement was silent as to the time
of performance. It also assumes that the divorce
settlement agreement
should be construed as an ordinary bilateral contract where neither
party can be expected to wait indefinitely
for performance.
73.
In
the present case there is continued performance by each party. The
agreement does no more than provide that the method of performance
will change on the happening of the last postulated event. In its
terms, on the happening of the last mentioned event, the bond
will be
settled (save for the respondent’s obligation to make up her
portion of the shortfall). This event would result in
the reduction
of the total obligations for which the parties had jointly remained
liable post the divorce, leaving only their joint
responsibility to
pay for their children’s maintenance. Once the property is
transferred to a buyer, the performance effected
by the respondent in
paying both her and the appellant’s liability to the bank, in
respect of the shared loan ceases, is
converted into paying half of
the children’s maintenance. In turn, the appellant’s
obligation to pay both his and the
respondent’s share for the
children’s maintenance is halved.
74.
Accordingly,
it would be incorrect to characterise the issue as one where
performance must occur within a reasonable time. Performance
between
the parties was ongoing. It would only be reduced when the property
was transferred and the joint part of the loan obligation
settled.
The provisions of section E also ensure that the agreement does
not fail but persists until varied by a court of
competent
jurisdiction.
THE
AGREEMENT AND THE CHILDREN’S RIGHTS TO MAINTENACE
75.
There
is nothing in the agreement that can be construed as adversely
affecting the children’s rights to maintenance.
Nor is
any case made out that the appellant cannot afford to continue
meeting their joint maintenance obligations for so long as
the
respondent is required to service their monthly joint debt repayments
under the loan.
CONCLUSION
AND ORDER
76.
am
satisfied that the contentious words read in the context of the
agreement as a whole, the purpose for which they were introduced
and
the factual matrix remain clear and unambiguous; until transfer of
the Newham property is effected the appellant will assume
the
responsibility that both parties have to maintain their sons in
return for which the respondent will assume full responsibility
for
servicing the bond. To accede to the interpretation contended for by
the appellant would make no commercial sense as it would
reduce his
share of the joint obligations considerably, while increasing the
respondent’s by over R20 000 per month
without any
rational justification. Finally the agreement, in its terms, was
broadly worded so as not to limit the sale of the
property to the
Adams’ transaction. Section E to the agreement furthermore
militates against the agreement not intending
to cover any changed
circumstances that might have been unforeseen.
77.
Accordingly,
the appeal is dismissed with costs.
___________________________
BS
SPILG J
I
agree
________________________________
F
KATHREE-SETILOANE J
I
agree and it is so ordered
___________________________________
GSS
MALULEKE J
COUNSEL
FOR THE APPELLANT:
Adv
L de Wet
INSTRUCTED
BY: CMM
Attorneys Inc
COUNSEL
FOR THE RESPONDENT:
Adv
LC Matthysen
INSTRUCTED
BY: Boela
van der Merwe Attorneys
DATE
OF JUDGMENT: 24
November 2016
[1]
Swart
202 C:
‘
Dit is vir my vanselfsprekend
dat 'n mens na die betrokke woorde moet kyk met inagneming van die
aard en opset van die kontrak,
en ook na die samehang van die woorde
in die kontrak as geheel.’
[2]
Coopers & Lybrand &
others v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at 767E-768 E. Our courts always applied the
broader construct of the golden rule and already in the leading
early case of
Venter
v Rex
1907 TS 910
Innes CJ said:
‘
that when to give the
plain words of the statute their ordinary meaning
would lead to absurdity so glaring that it could never have been
contemplated by the legislature or where it
would
lead to a result contrary to the intention of the legislature, as
shown by the context or by such other considerations as
the Court is
justified in taking into account
, the
Court may depart from the ordinary effect of the words to the extent
necessary to remove the absurdity and to give effect
to the true
intention of the legislature. I do not for a moment pretend to say
that that rule covers the field of inquiry. He
would indeed be a
bold man who attempted to exhaust a subject so difficult, and on
which so many conflicting opinions have been
held. But it covers
sufficient ground to enable one to deal with the case before the
Court, and that is enough for present purposes.’
(emphasis
added)
[3]
See also
Firstrand Bank Limited v Land and
Agricultural Development Bank of South Africa
2015 (1) SA 38
(SCA) at para 27,
Novartis
at
para 28 and
Endumeni
at
para 19
[4]
Jaga
at 662G-H:
‘
Certainly no less important than the oft
repeated statement that the words and expressions used in a statute
must be interpreted
according to their ordinary meaning is the
statement that they must be interpreted in the light of their
context. But it may
be useful to stress two points in relation to
the application of this principle. The first is that 'the context',
as here used,
is not limited to the language of the rest of the
statute regarded as throwing light of a dictionary kind on the part
to be interpreted.
Often of more importance is the matter of the
statute, its apparent scope and purpose, and, within limits, its
background.’
See
also
KPMG Chartered Accountants (SA) v
Securefin Ltd and Another
2009 (4) SA 399
(SCA)
per
Harms DP at para 39; Wallis JA in Bothma-
Batho
at para 12
[5]
Endumeni
at
para 19;
‘
All this is consistent with
the 'emerging trend in statutory construction'. It clearly adopts as
the proper approach to the interpretation
of documents the second of
the two possible approaches mentioned by Schreiner JA in Jaga v
Dönges NO and Another; Bhana
v Dönges NO and Another,
namely that from the outset one considers the context and the
language together, with neither predominating
over the other’
Bothma-Batho
at para 12:
‘
Interpretation
is no longer a process that occurs in stages but is essentially one
unitary exercise.'
[6]
Jaga v Dönges at 662H-663A:
‘
The second point is that the approach to the
work of interpreting may be along either of two lines. Either one
may split the inquiry
into two parts and concentrate, in the first
instance, on finding out whether the language to be interpreted has
or appears to
have one clear ordinary meaning, confining a
consideration of the context only to cases where the language
appears to admit of
more than one meaning; or one may from the
beginning consider the context and the language to be interpreted
together.’
Endumeni
at para 25
[7]
Jaga v Dönges
at
664B-H:
‘
No doubt the result should always be the same,
whichever of the two lines of approach is adopted since, in the end,
the object
to be attained is unquestionably the ascertainment of the
meaning of the language in its context. But each has its own
peculiar
dangers. While along the line approved by Lord GREENE there
is the risk that the context may in a particular case receive an
exaggerated importance so as to strain the language used; along the
other line there is the risk of verbalism and consequent failure
to
discover the intention of the law-giver. The difference in approach
is probably mainly a difference of emphasis, for even
the
interpreter who concentrates primarily on the language to be
interpreted cannot wholly exclude the context, even temporarily;
and
even the interpreter who from the outset tries to look at the
setting as well as the language to be interpreted cannot avoid
the
often decisive first impression created by what he understands to be
the ordinary meaning of that language. Seldom indeed
is language so
clear that the possibility of differences of meaning is wholly
excluded, but some language is much clearer than
other language; the
clearer the language the more it dominates over the context, and
vice versa, the less clear it is the greater
the part that is likely
to be played by the context.
Ultimately, when the meaning of the language in the
context is ascertained, it must be applied regardless of the
consequences
and even despite the interpreter's firm belief, not
supportable by factors within the limits of interpretation, that the
legislator
had some other intention. So too, if, when interpretation
is complete, it is clear that the legislator has failed to deal with
a class of case that in all probability would have been dealt with
if it had not been overlooked, there is a casus omissus which
the
courts cannot fill. But the legitimate field of interpretation
should not be restricted as a result of excessive peering
at the
language to be interpreted without sufficient attention to the
contextual scene.’
[8]
See
Jaga v Dönges
at
662G-663A;
Endumeni
at
paras 24 and 25
[9]
Novartis at para 27:
‘
This court has consistently
held, for many decades, that the interpretative process is one of
ascertaining the intention of the
parties — what they meant to
achieve. And in doing that, the court must consider all the
circumstances surrounding the
contract to determine what their
intention was in concluding it.’
[10]
Endumeni
at paras
20-24.
In
Delmas Milling Co Ltd v Du Plessis
1955 (3) SA 447
(A) at
453C-E, Schreiner JA cited with approval
the statement by Greenberg JA in
Worman v Hughes and Others
1948 (3) SA 495
(A) at 453D-E that:
'It must be borne in mind that in an action on a
contract, the rule of interpretation is to ascertain, not what the
parties' intention
was, but what the language used in the contract
means, i.e. what their intention was as expressed in the contract’
The context appears from 454F-455B of the judgment.
[11]
Endumeni
at para 24;
Novartis
at para 27
[12]
Novartis
at
para 29 referring to the passage cited earlier of Wallis JA in
Bothma-Batho
at
para 12 and
Endumeni
at
para 19:
‘
It clearly adopts as the
proper approach to the interpretation of documents the second of the
two possible approaches mentioned
by Schreiner JA in Jaga v Dönges
NO and Another; Bhana v Dönges NO and Another, namely that from
the outset one considers
the context and the language together, with
neither predominating over the other. This is the approach that
courts in South Africa
should now follow, without the need to cite
authorities from an earlier era that are not necessarily consistent
and frequently
reflect an approach to interpretation that is no
longer appropriate.’
[13]
See also
Absa Technology Finance Solutions
(Pty) Ltd v Michael's Bid a House CC
2013
(3) SA 426
[14]
At 111 explaining
Breed
v Van den Berg and others
1932 AD 283
at 292
‘…
the Court cannot
go beyond the meaning which both parties have agreed to put on the
contract. I do not interpret this statement
of the law to mean that
in the former of the two instances rectification is a necessary
preliminary; the learned Judge of Appeal
was not dealing with this
question. In my view the agreed meaning put on the contract by both
parties in the trial Court must
be held to preclude the appellant
from saying that the order made was not covered by his obligations
under the contract.’
See
also the clarification by Goldstone J (at the time) in
Briscoe v
Deans
1989 (1) SA 100
(W) at 105B-C
[15]
At para 91:
‘
The rule is that evidence of subsequent conduct
is admissible, even where the agreement is on its face unambiguous,
if the parties
by consent lead such evidence.’
[16]
Endumeni
at para 18. The more recent case of
Novartis
does not appear to
have questioned the objective approach to determining what is
businesslike in the context of the commercial
relationship
established by the parties. The criticism of an objective approach
was leveled at the appellant’s contention
that one may only
have regard to the actual words used (at paras 27 and 28).