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[2018] ZAGPJHC 474
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Fli-Afrika Travel (Pty) Limited v South African Football Association (A5024/17, 2013/12184) [2018] ZAGPJHC 474 (24 August 2018)
Links to summary
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
APPEAL
CASE NO: A5024/17
CASE
NO: 2013/12184
In
the matter between:
FLI-AFRIKA
TRAVEL (PTY)
LIMITED
Appellant
and
SOUTH
AFRICAN FOOTBALL ASSOCIATION
Respondent
CORAM:
CARELSE J, MABESELE J AND MALUNGANA AJ
J U D G M E N T
MABESELE,
J
:
[1]
This appeal arises from the decision of the court below, dated 09
February 2017, dismissing with costs, the appellant’s
claim for
damages on account of breach of contract and upholding the
respondent’s defence that the ‘
full and final
settlement agreement
’ concluded by the parties extinguished
obligations that existed in terms of the ‘
service level
agreement
’ which the appellant relies on for its claim.
[2]
This ‘
service level agreement
’ was concluded in
preparation for a World Cup Soccer Tournament which was to be hosted
by the respondent in 2010 under the
auspices of the Federation of
International Football Association (FIFA).
[3]
The contention by the appellant is that the intention of the parties
in concluding the ‘
full and final settlement agreement
’
was not to ‘
wipe the slate clean
’ or extinguish
all obligations but merely to terminate the parties’
obligations to acquire and provide tickets and
that only obligations
for the period after 16 April 2010 were implicated.
[4]
This appeal seeks to determine three issues, namely; (i) a proper
interpretation of ‘
full and final settlement agreement
’;
(ii) whether upon a proper interpretation of a ‘
full and
final settlement’, only obligations for the period after 16
April 2010 were implicated
, and (iii)
whether the appellant
has suffered damages
.
[5]
It is evident from the Particulars of Claim that the appellant and
respondent concluded a written ‘
service level agreement
’
dated 23 January 2009.
[6]
The rights and obligations of the parties are set out in clauses 3
and 4 thereof. In terms of clause 3.1 the appellant
was obliged
to source and supply 2 500 Football World Cup 2010 packages per
week, for and on behalf of the respondent.
The packages
included accommodation in various host cities, tickets to football
cup games, return transport from accommodation
provided to the
stadium where the games were played.
[7]
In terms of clauses 3.3 and 3.3.1, respectively, the respondent
undertook to supply the appellant with 2 500 tickets per
week to
various world cup games and to make payment to the respondent of the
balance of any weekly unsold packages in the event
that the appellant
was unable to sell 2 500 packages per week.
[8]
In terms of clause 4 the appellant would be responsible for the
day-to-day running of its finance and administrative affairs,
and as
such would implement travel arrangements and ensure that necessary
costs of such travel arrangements are submitted to the
respondent,
who in turn would arrange for payment of same in terms of the current
payment structure. In addition, the appellant
would pay the
respondent 10% of any benefits ‘
which may accrue after
inception of the partnership, net after payment of all expenses
relating to the FIFA World Cup
’.
[9]
The appellant alleges that on a proper interpretation of clauses 3.2
and 4 of the agreement, the appellant would lay out money
for all
travel arrangements, including accommodation and would be reimbursed
therefor on the submission of the expenditure to the
respondent;
alternatively, it was a tacit term of the agreement that, in
complying with its obligations in terms of clause 3.2
of the
agreement, the appellant would lay out money for hotel accommodation
and would, as contemplated by clause 4, be reimbursed
by the
respondent for the costs of all travel arrangements.
[10]
The appellant further alleges that during the period 29 January 2009
until 31 December 2009, it procured hotel accommodation
in compliance
with its contractual obligations to the respondent and incurred other
expenses, including travel, in terms of the
agreement.
[11]
Despite the ‘
service level agreement
’ the
appellant was unable to market and sell 2 500 packages per week
in terms of clause 3.1 of the agreement.
It was not able to
sell any packages at all. The respondent could not supply tickets to
the appellant. Because the tickets could
not be supplied the
appellant was unable to utilise the accommodation and perform in
terms of clause 3.1 of the agreement.
The costs of cancellation
to the appellant amounted to R27,698,839.26.
[12]
The appellant alleges that on 16 April 2010, the parties agreed in
writing that from that date the respondent had no further
commitments
for the provision of tickets to the appellant. On a proper
interpretation thereof, only obligations for the period
after 16
April 2010 were affected. All obligations which arose before that
date remained unaffected.
[13]
In order to mitigate its loss, the appellant sold 6 418 bed
nights at hotels at a cost of R13,709,346.48 over the period
June to
July 2010.
[14]
Accordingly, the appellant alleges to have suffered loss and damages
in the sum of R13,989,452.78, being the difference between
the sum of
R27,698,839.26 and R13,709,346.48, such loss flowing directly from
the respondent’s breach, alternatively; were
within the
contemplation of the parties as a probable result of breach of
contract on the part of the respondent when the agreement
was entered
into and the agreement was entered into on the basis thereof.
[15]
It is common cause that the parties concluded a ‘
Memorandum
of Understanding
’ which was subsequently replaced by the
‘
service level agreement
’.
[16]
The reason for the parties to conclude the ‘
full and final
settlement agreement
’ was that the respondent was unable to
meet its obligations, as contemplated by clause 3.3 of the ‘
service
level agreement
’, to provide tickets to the appellant
because the respondent was prohibited to do so, in terms of the
policy of FIFA.
[17]
Subsequent to the conclusion of the ‘
full and final
settlement agreement
’ the appellant concluded an agreement
with a company known as Match to enable the appellant to receive
tickets from FIFA.
The agreement is dated 16 March 2010.
[18]
It is common cause that the appellant on the one hand was represented
by its managing director, Mr Camaroodeen, when both the
‘
service
level agreement
’ and the ‘
full and final
settlement agreement
’ were concluded and the respondent on
the other hand was represented by its President, Dr Oliphant, when
the ‘
service level agreement
’ was concluded and Mr
Sedibe, its Chief Executive Officer, when the ‘
full and
final settlement agreement
’ was concluded.
[19]
Mr Camaroodeen testified that there was a legal obligation on the
side of the respondent to provide tickets to the appellant.
The
source of that obligation was in the ‘
Memorandum of
Understanding
’ and the ‘
service level agreement
’.
In that context he stated that it was always his understanding that
the respondent would provide the tickets as stipulated
in clause 3.
He made Mr Sedibe aware of the ‘
service level agreement
’
when Mr Sedibe wanted to find out whether the appellant had already
paid for the hotel accommodation.
[20]
He had no queries with regard to the agreement which the appellant
concluded with Match because Match was a ticket agent.
[21]
He stated that subsequent to the conclusion of the ‘
service
level agreement
’ he began to book and pay various hotels
throughout the country to secure accommodation. The total
amount of money
paid was R27,804,671.67 as evident in ‘
exhibit
A’
, volume 9 of 11 of the record and annexure ‘POC2’
to the pleadings.
[22]
He stated that in order to mitigate his loss, due to the failure by
the respondent to provide tickets, he sold bed nights at
hotels at a
cost of R13,7 million and suffered loss in the amount of
R13,989,452.78, being the difference between the total amount
of
R27,804,671.67 and R13,7 million. All these occurred before the
parties concluded a ‘
full and final settlement agreement
’.
[23]
He was unable to sell any packages after the appellant had concluded
an agreement with Match because it was already late to
advertise
them. He received tickets from Match four weeks before the
World Cup but was unable to sell any packages with the
tickets.
He sold the tickets to people who needed them.
[24]
He stated that he would not have concluded the ‘
full and
final settlement agreement
’ with the respondent had that
agreement intended to terminate the ‘
service level
agreement
’.
[25]
Before he concluded the ‘
service level agreement
’
he was not made aware that such an agreement was in conflict with the
policy of FIFA in so far as it relates to the tickets.
[26]
During cross-examination he disputed the proposition that he procured
accommodation to comply with the obligations imposed
by Match.
He was adamant that the accommodation was booked subsequent to the
conclusion of the ‘
service level agreement
’.
[27]
Mr Mokhari referred him to paragraph 15 of the Particulars of Claim
wherein it is stated,
inter alia
, that the costs of
cancellation for the plaintiff amounted to R27 million and asked him
when did he cancel the accommodation. He
responded that he never
cancelled the accommodation.
[28]
That question resulted to an objection raised by Mr Pauw on the basis
that a witness cannot be cross-examined on a Pleading
which he did
not draw. However, the court decided in favour of Mr Mokhari
and allowed that line of cross-examination which
was intended to
demonstrate discrepancies between the witness’ evidence and
pleadings.
[29]
It is trite that a witness may not be cross-examined on a Pleading
drawn by his or her legal adviser. If a cross-examiner
intends
to cross-examine a witness on a Pleading, it should first be
established whether the witness made statements of fact
to his legal
adviser.
[30]
In this regard, Dowling J, in
Seedat
v Tucker’s Shoe Co
[1]
says the following:
‘…
It is not, in my
opinion, proper to draw conclusions adverse to the credibility of a
party merely because there is discrepancy between
his evidence and
the pleadings which are formulated, not by the party, but by his
legal adviser. If it is established that the
party made statements of
fact to his legal adviser or anyone else in conflict of his trial
evidence, this would be a different
matter …
’
[31]
In the present matter it was not established whether the witness made
statements of fact to his legal adviser. In other
words,
counsel should have established first, whether the pleadings were
drawn from the facts given by the witness. If the
answer was in
the affirmative, then the witness could be questioned about the
contents of the pleadings to demonstrate any discrepancies
between
his trial evidence and the pleadings.
[32]
Since this issue was not established, it cannot be said that the
evidence of Mr Camaroodeen is in conflict with the pleadings.
[33]
In any event, the respondent, in its amended plea, admitted the
contents of paragraph 15 that the agreement was in fact cancelled
and
also that the appellant was unable to utilise the accommodation and
perform in terms of the ‘
service level agreement
’.
[34]
The paragraph reads:
‘
Despite this agreement, the
plaintiff was unable to market and sell 2 500 “packages”
per week in terms of clause
3.3 of the agreement (“POC1”).
In fact, the plaintiff was not able to sell any packages at all.
Because
the tickets could not be supplied the plaintiff was unable to
utilise the accommodation and perform in terms of “POC1”.
The costs of the cancellation to the plaintiff amounted to
R27,698,839.26 as reflected on the last page of “POC2”.
’
[35]
In response to paragraph 15, the following was said: (in
paragraph 33 of the amended plea)
‘
AD PARAGRAPH 15
The
contents of this paragraph are admitted. The plaintiff is put
to the proof thereof.
’
[36]
When Mr Mokhari was invited by the court to comment on paragraph 33
of the amended plea in so far as it relates to paragraph
15 of the
Particulars of Claim, he argued that paragraph 33 should be read with
paragraph 34 which denies the contents of paragraph
15 of the
Particulars of Claim.
[37]
This argument is incorrect, in my view. The reason is that paragraph
34 of the amended plea, addresses the contents of paragraph
16 of the
Particulars of Claim which is unrelated to paragraph 15 in so far as
it relates to the inability of the appellant to
have utilised the
accommodation due to the unavailability of tickets, and the costs of
the cancellation to the appellant in the
said amount.
[38]
In any event the witness, in his undisputed evidence, demonstrated
the loss suffered by the appellant.
[39]
The reasoning by the court
a quo
that the witness booked the
hotel accommodation on the basis of the history of his long
relationship with the respondent and the
Memorandum of Understanding,
is incorrect. The witness stated, clearly, that subsequent to
the conclusion of the ‘
service level agreement
’ he
began to book and pay hotels to secure accommodation. Although the
witness referred to the Memorandum of Understanding
he stated that it
was always his understanding that the respondent would provide the
tickets as contemplated in clause 3 (of the
‘
service level
agreement
’).
[40]
It is again incorrect for the court
a quo
to conclude that the
hotel accommodation was secured in order for the appellant to comply
with the terms and conditions of the
letter of appointment of the
appellant by Match, as a tour operator. The main purpose of
that letter was to confirm reservation,
for the benefit of the
appellant, for the tickets for the 2010 FIFA World Cup and inform the
appellant of his inclusion in the
tour operation programme. The
letter was dated 23 November 2008. On 23 January 2009 (before
FIFA provided the tickets
to the appellant) the appellant and
respondent concluded the ‘
service level agreement
’
in terms of which the respondent undertook to supply the appellant
with tickets and required the appellant to secure hotel
accommodation
which was part of the ‘
package
’ to be marketed and
sold. The respondent undertook to reimburse the appellant for
unsold packages.
[41]
To my understanding of the witness’s evidence, he provided FIFA
with proof of hotel accommodation which was not secured
by him, but
people who bought tickets from him after they were received late from
FIFA and could no longer be sold as part of the
package.
[42]
In addition, it is evident in the pleadings that the issue about
hotel accommodation revolves around the ‘
service level
agreement
’ and not the letter of appointment of the
appellant by Match, as a tour operator.
[43]
The reasoning by the court
a quo
that the ‘
service
level agreement
’ did not require the appellant to book
hotels is again incorrect. Clause 3.1 of the ‘
service
level agreement
’ required the appellant to service and
supply ‘
packages
’ which included hotel
accommodation.
[44]
In light of the above, it is evident that the appellant suffered loss
and damages, as pleaded.
[45]
The question now is whether on a proper interpretation of clauses 3.2
and 4 of the ‘
service level agreement
’ the
appellant would lay out money for all travel arrangements, including
accommodation and would be reimbursed thereof on
submission of the
expenditure to the respondent, and/or whether it was a tacit term of
the agreement that, in complying with its
obligations in terms of
clause 3.2, the appellant would lay out money for hotel accommodation
and would, as contemplated by clause
4, be reimbursed by the
respondent for the costs of all travel arrangements. If the
answer is in the affirmative then the
question that follows is
whether the ‘
full and final settlement agreement
’
substituted the ‘
service level agreement
’ in its
entirety.
[46]
The answer to these questions lie on a proper interpretation of an
agreement or contract, as demonstrated below.
[47]
In the interpretation of a contract the general rule is that the
court should determine what the true intention of the parties
was.
This intention is to be gathered from their language and it is the
duty of the court to give to the language used by
the parties its
ordinary grammatical meaning. The first step in interpretation should
therefore be to determine what the ordinary
grammatical meaning of
the words used by the parties is
[2]
.
[48]
In
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[3]
the Supreme Court of Appeal held that:
‘
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
provision 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.
’
[49]
The court stated that a sensible meaning is to be preferred to the
one that leads to insensible or unbusinesslike results or
undermines
the apparent purpose of the document, and that the temptation should
be guarded against, to substitute what is regarded
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 court emphasised that the ‘
inevitable
point of departure is the language of the provision itself
,’
[4]
read in context and having regard to the purpose of the provision and
the background to the preparation and production of the document.
[50]
Clause 3.2 of the ‘
service level agreement
’ reads:
‘
These Football World Cup
2010 packages are to include accommodation in various host cities,
tickets to various Football World Cup
Games, and return transport
from the accommodation provided in terms of the package to the
Stadium where the games are played.
’
[51]
Clause 4 reads:
‘
FLI-AFRIKA TRAVEL will be
responsible for the day-to-day running of its finance and
administrative affairs, and as such will implement
travel
arrangements, and ensure that the necessary costs of such travel
arrangements are submitted to the Association, who in turn
will
arrange for payment of same in terms of the current payment
structure.
’
[52]
Clauses 3.2 and 4, read in context, to my mind, implies that it was a
tacit term of the agreement that in complying with its
obligations in
terms of clause 3.2, the appellant would lay out money for hotel
accommodation and would, as contemplated by clause
4, be reimbursed
by the respondent for the costs of all travel arrangements. In
addition, in terms of clause 3.3.1 the respondent
irrevocably
undertook to make payment to the appellant of the balance of any
weekly unsold packages in the event that the appellant
was not able
to sell 2 500 packages per week.
[53]
Therefore, the argument by Mr Mokhari that the respondent is in
breach of the agreement only by not providing tickets to the
appellant and not obliged, in terms of the agreement, to reimburse
the appellant for the loss suffered in securing hotel accommodation,
is misplaced.
[54]
It is common cause that the parties concluded the ‘
full and
final settlement agreement
’ because the respondent was
prohibited by the policy of FIFA to provide tickets to the appellant.
In my view, it should be
against this background that this agreement
is interpreted.
[55]
The agreement reads:
‘
BACKGROUND
A.
Fli-Afrika and SAFA
have together been engaged in certain discussions and/or arrangements
which include the provision by SAFA to
Fli-Afrika of match tickets
for the 2010 FIFA World Cup South Africa.
B.
Fli-Afrika and SAFA
wish to confirm by the execution of this full and final settlement
agreement that no such commitment for the
provision of tickets by
SAFA to Fli-Afrika are continuing from the date hereof.
THEREFORE
1.
SAFA hereby
confirms that Fli-Afrika has no continuing commitment of whatever
kind to acquire tickets for the 2010 FIFA World Cup
South Africa from
or through SAFA.
2.
Fli-Afrika hereby
confirms that SAFA has no continuing commitment of whatever kind to
provide tickets for the 2010 FIFA World Cup
South Africa to
Fli-Afrika.
3.
The parties
therefore release each other from any obligations implied or
otherwise that may exist in connection with any such commitments.
’
[56]
Plainly interpreted, the agreement releases parties from their
obligations in so far as they relate to tickets only.
In other
words, the parties agreed that from the date of signing of the
agreement, being 16 April 2010, the respondent on the one
hand has no
continuing commitment to provide tickets to the appellant, as
contemplated by clause 3.3 of the ‘
service level agreement
’,
and the appellant on the other hand has no continuing commitment to
acquire tickets from the respondent, as contemplated
by clause 3.1.
Mr Mokhari seems to agree with this interpretation and that the
agreement includes past obligations.
[57]
Since the agreement is silent about clauses such as 3.2; 3.3.1 to 4
of the ‘
service level agreement
’, it can be
reasonably concluded that the parties never intended to terminate the
‘
service level agreement
’ by concluding the ‘
full
and final settlement agreement
’. Had the parties
intended to do so, they would have simply stated that ‘
full
and final settlement agreement
’ extinguishes all
obligations arising from the ‘
service level agreement
’
or terminates the ‘
service level agreement’
instead of them referring to certain clauses of the ‘
service
level agreement
’ when concluding the ‘
full and
final settlement agreement’
[58]
In addition, the ‘
service level agreement
’ was
about the supply of ‘
packages
’ which are not
mentioned in the ‘
full and final settlement agreement
’.
This, again, suggests that the parties never intended to replace the
‘
service level agreement
’ with the ‘
full
and final settlement agreement
’. Had they done so,
their actions would clearly have led to unbusinesslike results
because the appellant had already
suffered loss and damages in an
amount of R 13,989,452,78. In addition, Mr Camaroodeen stated
that he would not have concluded
the ‘
full and final
settlement agreement’
with the respondent had that
agreement intended to terminate the ‘
service level
agreement’.
[59]
Therefore the conclusion by the court
a quo
to uphold the
respondent’s defence that the ‘
full and final
settlement agreement
’ concluded between the parties
replaced the ‘
service level agreement
’ in its
entirety is incorrect.
[60]
Therefore the case is made out that the loss suffered flows directly
from the respondent’s breach of the ‘
service level
agreement
’ in respect of obligations which arose before 16
April 2010.
[61]
In the result, I propose the following order:
61.1 The
appeal succeeds with costs, including the costs consequent upon the
employment of two counsel.
61.2 The order
of court below is set aside and substituted with the following:
61.2.1 ‘
The
defendant is ordered to make payment to the plaintiff in the sum of
R13,989,452.78.
61.2.2 The defendant is
ordered to pay interest on the sum of R13,989,452.78 at the rate of
15,5% from 10 April 2013
until date of payment of the sum of
R13,989,452.78.
61.2.3
The defendant is ordered to pay the plaintiff’s costs, which
shall include the costs consequent upon the
employment of two
counsel.
’
________________________________________
M M MABESELE
JUDGE OF THE
HIGH COURT
GAUTENG LOCAL DIVISION,
JOHANNESBURG
I
agree, it is so ordered:
________________________________________
Z
CARELSE
JUDGE OF
THE HIGH COURT
GAUTENG LOCAL DIVISION,
JOHANNESBURG
I
agree
________________________________________
P
MALUNGANA
ACTING JUDG OF THE HIGH COURT
GAUTENG LOCAL DIVISION,
JOHANNESBURG
Date
of hearing
: 13
June2018
Date
of judgment
:
24
August 2018
For
the appellant
:
Adv P
Pauw
Instructed
by
: Glynnis
Cohen Attorney, Johannesburg
For
the respondent
:
Adv W
Mokhari
Instructed
by
:
Dikotope Attorneys, Johannesburg
[1]
1952
(3) SA 513
(T) at 516H
[2]
Jonnes
v Anglo-African Shipping Co (1936) LTD
1972 (2) SA 827
(AD) at 834D; see also,
Employee
Solutions (Pty) Ltd v Vital Distribution Solutions (Pty) Ltd
2005
(5) SA 276
(SCA) at 281.
[3]
2012
(4) SA 593
(SCA) at 603.
[4]
The
importance of the words used was stressed in
South
African Airways (Pty) Ltd v Aviation Union of South Africa and
Others
2011 (3) SA 148
(SCA) at 155-156