About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2010
>>
[2010] ZAGPJHC 55
|
|
City of Johannesburg v Clear Channel Independent ( Pty) Ltd (39798/08) [2010] ZAGPJHC 55 (12 July 2010)
IN THE HIGH COURT OF SOUTH AFRICA
(
SOUTH GAUTENG
)
JOHANNESBURG
NOT REPORTABLE
CASE NO
: 39798/08
DATE
: 2009-10-12
In the matter between
CITY OF JOHANNESBURG
Applicant
and
CLEAR CHANNEL INDEPENDENT (PTY)
LTD
Respondent
J U D G M E N T
SPILG AJ
:
In this matter the Court is required to interpret a contract dated
14 February 2008 which reads as follows:
"Expiry agreement: Freeway Fliers
The freeway flier agreement between the City of Jo'burg Property
Company (Pty) Ltd (JPC) and Clear Channel Independent expired on
31
January 2008.
The contract for the above sites has been put out to tender.
We are advised that despite termination of the agreement you
continue to display advertisements.
In view of the fact that the new tender will in all probability
only be finalised in three months' time a decision has been taken
by
JPC to allow the current advertising to continue on a month-to-month
basis, subject to JPC issuing a
two-week notice period at any
time
, to remove all freeway fliers from the sites and all related
costs shall be borne by Clear Channel.
The notice period to remove all advertising from the sites will be
served immediately after the new bridge-sign tender has been awarded.
Payments must continue to be made in terms of the expiry
agreement.
Should you have any more enquiries please do not hesitate to
contact the writer.
Yours sincerely."
The agreement of 14 February 2008 was signed by a certain Sidlanos
the Acting GM Asset Management as the agents for the City
of
Johannesburg.
The issue in this matter arises because the tender that was awarded
was subsequently cancelled, the term used was "withdrawn",
and the City has not decided whether to issue a new tender.
The City applied for an order on motion, requiring the respondent
to remove its advertising boards on the ground that the agreement
has
come to an end since it gave the two-week notice referred to in the
agreement after the new tender had been awarded.
The respondent contends that the two-week notice can only be given
once a tender has been lawfully awarded.
In this case there is an inherent difficulty in reconciling the
contents of the fourth and fifth paragraphs. The fourth uses the
term
"
at any time"
as if notice may be given unilaterally
at any stage, whereas the fifth paragraph appears to only permit
notice after the new tender
has been awarded and allows the notice to
be “
served
” immediately after the new tender has
been awarded.
A number of cases have repeated the narrow way in which contracts
are to be interpreted. I refer to the golden rule of interpretation
mentioned in
Venter v R
1907 TS 910
at 913
. The golden rule of
interpretation had regard to the primary meaning of the actual words
used and only the recognised exceptions
of ambiguity or absurdity or
certain other anomalies would entitle a court to go outside those
words.
The cases that continue to adopt that position appear to be wrong
in view of two fundamental considerations. The first
is that
the fundamental purpose of interpretation is to ascertain the
intention of the parties, and that it is now beyond quarrel
that one
has regard to the document as a whole when interpreting any document
(compare
Venter
supra at p914-915). The effect is that one is
not compelled to have regard to other aids to interpretation only
when the actual
words used in the specific clause become problematic.
In my view the starting point must be to apply what I believe is
the fundamental rule of interpretation, namely to ascertain
the
intention of a document by having regard to the words in their
setting; by having regard to the context in which the words
are used;
and the purpose for which the words are intended. (See e.g.
Secretary for Inland Revenue v Bray
,
1980 (1) SA 472
(A)
478A-B;
Ferreira v Levine
;
Vryenhoek
v
Powell
,
1996 (1) SA 984
(CC) para 52, 54, 57, 70 and 170).
In this case the purpose of the words used can be readily gleaned
from the undisputed history of the relationship between the
parties
recorded in the earlier contract and the context in which this
agreement was concluded, which in the present case all constitute
admissible evidence.
In 1998 the respondent was awarded a five-year tender commencing on
31 January 2000 to erect a number of non-illuminated steel-plated
signs some six-by-three metres in size over a number of the City's
highway bridges with an option to renew for a further three-year
period. Subject to certain changes in the location of the signs
the contract was renewed and subsequently expired in terms
of the
renewed agreement on 30 January 2008.
Prior to the expiry of the contract period and on 13 November 2007
the respondents sought to extend it. The City advised
that the
contract would go out to public tender. The City had been
preparing a public tender process with a closing date
for submission
of 4 April 2008.
The papers do not indicate whether the actual tender was published
before or after the letter in issue of 14 February 2008.
The
tender was certainly issued by March of that year.
On 14 February 2008 the letter was written by the applicant's
agent, the most obvious change in the existing relationship is
that
the contract was now monthly. Previously payments were effected
on a periodic basis and initially the agreement had
in fact provided
that payments were to be effected in a particular manner but that the
parties could subsequently amend them.
Moreover, there were
payments that not only were to be made by the respondent to the
applicant, but also certain payments by the
applicant to the
respondent. What is however clear is that in terms of the 14
February 2008 agreement the payments were still
to be effected as
previously, but that the period was regarded as monthly.
One of the respondent's associated companies with BEE credentials
submitted a bid. This would have been known to the applicant's
agent
and it is also evident that the parties envisaged that the period of
the new arrangement would endure until the new tender
had been
awarded. It was anticipated in terms of the letter itself, that the
tender would be awarded within a period of about three
months.
Accordingly the need to terminate the contract prior to the
envisaged three-month period, and considering that rentals were being
paid on the pre-existing basis, the clauses involved appear to take
on significance. Moreover, there had been no breach in
the
past. The City was receiving a regular revenue stream from the
billboards and could not give the site to anyone else
until the
tender process had been concluded.
This is consistent with how the City did act on the assumption that
the tender was lawfully concluded. I say this for the
following
reasons:
1. No notice was given prior to the tender award
announcement. The tender process was delayed and the tender
committee
only announced the three successful bidders on 28 August 2008.
These bidders were notified on 17 September 2008.
It was on 18
September 2008 that the respondent was advised that the new contract
had been awarded. The letter itself commenced
with reference to
the award of the new tender and then a reference to the two-week
notice period in the 14 February 2008 letter.
2. Because the time allowed for the removal was two
weeks exactly, in terms of the notification of 18 September
2008 the
respondent was required to remove the signs by no later than
3 October 2008. On 2 October 2008 the respondent's
attorney requested that the signs be allowed to remain up until the
new tenderer could erect its signs. The applicant refused.
The lawfulness of the tender process was challenged on the grounds
that the process was fatally flawed and that the tender process
should commence afresh. Such notice was done formally some time
after 24 October 2008. Unfortunately the letter of
complaint in
the required form is undated. There was no formal response to
the letter. Instead the City advised on 18 March
2009 that the tender
award had been "withdrawn" and therefore there was no
decision that could be the subject matter
of a review. The City
also stated that for the same reason it would not be responding to
the complaint. It therefore required
this application to be finalised
and the respondent to file an Answering Affidavit.
Respondent relies on the unlawfulness of the tender award as a
basis for asserting that the entitlement to give notice has not
been
triggered. The applicant however contends that the award itself
triggered the entitlement to give notice and that in
terms of the
agreement the two-week notice could be given at any stage.
It argues that this was to allow the applicant to terminate at any
stage; for instance if it did not wish to carry on putting
up signs
on the highway. This submission can be safely rejected since
the whole purpose of the agreement was precisely because
a tender was
in the offing. If the applicant no longer wishes to erect any
highway signs then it must say so. It confirms
that at this
stage it is undecided. It would be a travesty if someone else to whom
an objection was made regarding the regularity
of the tender process
were to take over in the meantime. It certainly was not what the
parties envisaged.
As I indicated, unless the case is that there are to be no more
highway signs, then, and only then, does the question arise of
what
the parties would have contemplated if that eventuality were to
occur. It has not, and I cannot make it an issue where
different considerations apply.
The respondent contends that the agreement was impliedly subject to
the new tender being lawful and that in any event the respondent
contends that the two-week period must be read in the context, the
minimum period for giving notice
"at any time after the
tender has been awarded
".
The allegations of the tender being fatally flawed are
comprehensively set out and are relied upon by the respondent.
The relief sought is final and therefore
Plascon-Evans Paints v
Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A)
applies; the
respondent's averments are taken to be accepted in these proceedings
since none of the considerations to alter the
ordinary acceptance of
evidence in motion proceedings for final relief apply.
There are therefore two issues that require consideration and
involve interpreting the contract. The first is whether a
notice given on the basis of the award of a new tender could only be
given if the tender was a lawful tender. In my view
it would be
stretching the parties' intention to believe that if asked both would
have said of course a fatally flawed tender process
would suffice.
I say this particularly bearing in mind that the respondent's
associated company was a bidder. Moreover it is trite that
in
respect of the actions of an organ of State any reference to the
taking of an action by such a body is confined to the taking
of
lawful action and all legislation and documentation is interpreted in
that way. Accordingly the applicant could not have
intended
differently.
The respondents have set out a strong case of a flawed tender and
in view of the
Plascon Evans
principle, on the papers, as they
are before me, the tender would be set aside and declared a nullity
as if it never existed had
there not been a withdrawal. The
withdrawal cannot affect the nature of the tender award- it either
was flawed or not flawed.
The respondents have set out a case
that it is flawed and for the reasons already given those are the
facts with which I am to
consider the matter.
The notice of two weeks was clearly given "
any time
"
after the award. It was not given on the 1st of the month,
nor was it required to, and that brings me to unravelling
the second
issue; namely whether even if the new tender was not a lawful one
whether the two-week period could be given at any
stage irrespective
of whether or not there had been a lawful tender award.
In this case the two-week period is inserted in a clause referring
to a month-by-month agreement. I have had regard to
the
original agreement. The parties were agreed to let me have sight of
it. Clearly the provisions of that agreement despite
the
professed expiry must have survived. These are provisions
relating to the dimensions, relating to indemnities and relating
to
when the signs could be taken down if they did not comply with
certain requirements. There is also a breach provision
of 28
days unless there had been more than one breach, in which case the
breach provision would be triggered immediately.
The agreement did not however provide for any other relevant period
of expiry short of the effluxion of time of the period stipulated
in
the agreement which I have referred to earlier.
I must also bear in mind that the persons who wrote and received
respectively the letter of 14 February 2008 are laymen.
In my
view what would have been of concern and was of concern in writing up
the document was that the termination period was now
effectively
described by reference to an event rather than an extended fixed
period of five years or three years.
There is also the difficulty of the “
month-to-month
”
period which would indicate that payments by the one party to the
other required to be effected with that regularity.
The problem
facing the drafter was therefore a perceived short period until an
award was made, which then created the necessity
for the
month-to-month reference, but that without more the month-to-month
reference would mean that if termination was to be effected
it would
require a full calendar-month notice period, which would defeat the
ability of the City to be able to give undisturbed
possession of the
bridges for the purpose of allowing the successful tenderer to erect
its own structures within a short period
such as envisaged from the
time the new tender would become effective.
In my view this explains, and is the only rational explanation, as
to why the two-week period and the reference to "at any
time"
is juxtaposed with the month-to-month period referred to in the one
paragraph, whilst the actual triggering mechanism
allowing for a
notice to be given is separately set out. It also explains the
apparent anomaly of the use of the words "
at any time
"
in the fourth paragraph and the words "
served immediately
after the new bridge sign tender has been awarded".
In my view there was a need in the mind of the drafter of the
document to cover the situation that inevitably was expected to
arise
where a notice period would have to be given “
at any time
”
as opposed to at the end of a calendar month, having regard to the
identification of the nature of the agreement as being
a
“
month-to-month
one”
.
That would also explain why the two-week period and the words
"at
any time
" after it were placed in the same context and, as
indicated from the extract itself, within commas after the words
"on
a month-to-month basis".
In my view this renders the notice period paragraph readily
comprehendible. Firstly, the notice period referred to in the
fifth paragraph is the notice period of two weeks. It is
triggered on the award of the new bridge sign tender. Accordingly
the
previous paragraph remains consistent in that it did not deal with
the triggering event; it only sought to clarify the period
of the
notice having regard to the fact that it was no longer a five- or a
three-year contract, but a contract determined by an
event,
ie
,
the lawful tender award. It was inserted to avoid any
contention that a full calendar month notice was still required,
hence the use of the phrase "
two-week notice period at any
time
" was emphasised in contradistinction to a full calendar
month notice once the triggering event had occurred.
As already stated, that paragraph was only concerned with the
period of notice, not with what would trigger it. That the
parties did not intend a two-week period at any time prior to the
award of a new tender is reinforced by the nature of the advertising.
By their nature six-by-three metre large billboards used in
advertising drives would mean that the respondent itself would be
bound up to contracts with advertisers, and whilst it would know by
when the new tender award would become effective and therefore
adjust
advertising that may arise at that time, it could not prior to that
event,
i.e.
the award of the tender, know how to regulate
advertising on its screens.
Mr Both
argued that it would be absurd if the respondent
were to obtain more rights than a successful tenderer. In my
view that is
not so. It was in the City's hands to retender. It
elected not to.
It is for these reasons that I made the order I did on Friday,
namely that the application is dismissed with costs.
Counsel for Applicant
Adv
Both SC
Counsel for Respondent
Adv
Paul Kennedy SC
Date of Hearing
12
October 2009
Date of Judgment
12th July 2010