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[2014] ZASCA 181
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Belet Industries CC t/a Belet Cellular v MTN Service Provider (Pty) Ltd (936/2013) [2014] ZASCA 181 (24 November 2014)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 936/2013
Not
Reportable
In
the matter between:
Belet
Industries CC t/a Belet
Cellular
.....................................................................................
Appellant
and
MTN
Service Provider (Pty)
Ltd
..........................................................................................
Respondent
Neutral
Citation:
Belet Cellular v MTN Service Provider
(936/2013)
[2014] ZASCA 181
(24 November 2014)
Coram:
Lewis, Cachalia, Bosielo, Saldulker JJA and Meyer AJA
Heard:
13 November 2014
Delivered:
24 November 2014
Summary:
Practice – Pleadings – Exception on ground that
particulars of claim bad in law because term of contract limiting
liability
of the parties to each other prohibits the recovery of the
type of damages claimed – Language of the limitation clause,
when
read in the context of the agreement as a whole, not clear –
Excipient did not establish that limitation clause cannot reasonably
bear the meaning contended for by the appellant – Appeal
upheld.
ORDER
On
appeal from:
South Gauteng High Court, Johannesburg (Bava AJ
sitting as court of first instance):
(a) The appeal
succeeds with costs.
(b) The order of the
court a quo is set aside and replaced with:
‘
The second
exception is dismissed with costs.’
JUDGMENT
Meyer
AJA (
Lewis, Cachalia, Bosielo and Saldulker JJA
concurring)
[1]
This appeal has its origin in three exceptions in the South Gauteng
High Court, Johannesburg, raised by the respondent, MTN
Service
Provider (Pty) Ltd (MTN), against the summons of the appellant, Belet
Industries CC (Belet), asserting that the particulars
of claim lacked
averments necessary to sustain an action. Bava AJ upheld one of
the exceptions with costs. Contrary
to principle and standard
practice his judgment is wholly unreasoned. The appeal against
the upholding of the exception as
well as the costs order in favour
of MTN is with the leave of this court.
[2]
By the nature of exception proceedings the correctness of the facts
averred in the particulars of claim must be assumed (see
for example
Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty)
Ltd
2006 (3) SA 138
(SCA) paras 3-10;
Stewart &
another v Botha & another
[2008] ZASCA 84
;
2008 (6) SA 310
(SCA) para 4).
According to the particulars of claim the parties concluded a written
‘Dealer Agreement’ on 14
October 2010 (the agreement) in
terms of which Belet (referred to as ‘the Dealer’) was
appointed to market, promote
and facilitate the distribution by MTN
(referred to as ‘the Service Provider’) of network
services and stock.
In consideration for its services MTN was
obliged to pay to Belet ‘commissions’ as provided for in
the agreement.
The agreement was to continue for an indefinite
period unless terminated earlier in accordance with its terms.
[3]
Effect was given to the agreement and Belet conducted the business of
an MTN dealer through two dealer stores. MTN, however,
cancelled the agreement with effect from 5 November 2011 as a result
of an alleged breach on the part of Belet. The breach
and MTN’s
entitlement to cancel the agreement as a result are disputed by
Belet. It asserts that MTN’s cancellation
constituted a
breach or repudiation of the agreement. According to the
particulars of claim Belet elected to accept the repudiation
and to
cancel the agreement. As a result of MTN’s repudiation of
the agreement, so the particulars of claim proceed,
Belet suffered
damages in the total sum of R15,4 million, which amount plus interest
and punitive costs it now claims from MTN.
[4]
MTN contends that clause 40.1 of the agreement precludes Belet from
claiming the damages it seeks to claim in its summons.
Belet’s
rival contention is that clause 40.1 merely excludes the recovery of
consequential damages. The limitation
clause in issue reads as
follows:
‘
Except
for consequential damages which arise as a result of the Dealer not
complying with the provisions of clause 31, the liability
of the
parties to each other under this Agreement will be limited to direct
damages. For the avoidance of doubt, this excludes
financial
loss, loss of business, profit, savings, revenue or goodwill suffered
or sustained by the Dealer howsoever arising.’
(Clause 31 enjoins
Belet, inter alia, to comply with applicable licence conditions,
regulatory requirements and directives from
a competent regulatory
authority.)
[5]
As was said by Brand JA in
Trustees, Bus Industry Restructuring
Fund v Break Through Investments CC & others
2008 (1) SA 67
(SCA) para 11-
‘
Because the
respondents chose the exception procedure - instead of having the
matter decided after the hearing of evidence at the
trial - they had
to show that the appellants' claim is (not may be) bad in law. In the
present context they therefore had to show
that clause 19.5 cannot
reasonably bear the narrower meaning contended for by the appellants
(see eg
Lewis v Oneanate (Pty) Ltd and Another
[1992] ZASCA 174
;
1992 (4) SA 811
(A) at 817F - G;
Vermeulen v Goose Valley Investment (Pty) Ltd
[2001] 3 All SA 350
(A) para 7).’
The
same holds true in this case. MTN had to show that clause 40.1
cannot reasonably bear the meaning contended for by Belet.
[6]
In the past decade there have been significant developments in the
law relating to the interpretation of instruments (see
Natal Joint
Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) paras 18-26). The present state of the law on the correct
approach to interpretation was concisely stated by Lewis
JA in
North
East Finance (Pty) Ltd v Standard Bank of South Africa Ltd
2013
(5) SA 1
(SCA) paras 24-25, thus:
‘
The court
asked to construe a contract must ascertain what the parties intended
their contract to mean. That requires a consideration
of the words
used by them and the contract as a whole, and, whether or not there
is any possible ambiguity in their meaning, the
court must consider
the factual matrix (or context) in which the contract was concluded.
See
KPMG Chartered Accountants (SA) v Securefin Ltd
[2009 (4)
SA 399
(SCA) para 39] . . . In addition, a contract must
be interpreted so as to give it a commercially sensible meaning:
Ekurhuleni Metropolitan Municipality v Germiston Municipal
Retirement Fund
[2010 (2) SA 498
(SCA) para 13].’
[7]
And recently Wallis JA said the following in
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014
(2) SA 494
(SCA) para 12:
‘
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.’
[8]
MTN argues that the unambiguous meaning of clause 40.1 is that apart
from consequential damages suffered by MTN as a result
of Belet’s
breach of the obligations imposed upon it under clause 31, the
liability of the parties to each other for the
recovery of
consequential damages is excluded and their liability is limited to
the recovery of direct damages. The
types of loss listed
in the second sentence of clause 40.1, MTN argues, are matters
ejusdem generis
the ‘direct damages’ referred to
in the preceding sentence. The second sentence defines the
meaning which the
parties attributed to ‘direct damages’.
Or as counsel put it in MTN’s heads of argument: ‘.
. . the parties’ liability to each other is limited to direct
damages only’ and ‘”
for the avoidance of doubt”
(ie should any doubt arise regarding the understanding of
what
the parties meant
by “direct damages”) financial
loss, loss of business, profit, savings, revenue or goodwill are
excluded’.
[9]
Belet’s opposing contention is that on a proper interpretation
of clause 40.1 the types of loss listed in the second sentence
are
matters
ejusdem generis
‘consequential damages’,
the recovery of which is excluded except in the event of a breach by
Belet of the provisions
of clause 31. The second sentence of
the limitation clause only serves to illustrate what could constitute
consequential
damages. The meaning of the clause, Belet argues,
at best for MTN, is ambiguous and the court a quo should therefore
not
have upheld the exception.
[10]
Thus, the issue between the parties turns on the interpretation of
clause 40.1 and more particularly whether the types of loss
listed in
the second sentence of the limitation clause are matters
ejusdem
generis
the ‘consequential damages’ or the ‘direct
damages’ referred to earlier on in the clause. The
crucial
question, therefore, is whether the addition of the last
sentence in the limitation clause serves to alter what I conceive to
be
the plain meaning of the first sentence. Both parties assume
that what the clause means by ‘direct’ and
‘consequential’
damages are ‘general’ or
‘intrinsic’ damages and ‘special’ or
‘extrinsic’ damages
respectively (see LTC Harms
Amler’s
Precedents of Pleadings
7 ed, 2009 at 118-119).
[11]
The language of clause 40.1, when read in the context of the
agreement as a whole, is not clear. It has not been established
that the clause cannot reasonably bear the meaning contended for by
Belet. Without an examination of the factual matrix to
ascertain the intention of both parties it is not even possible to
determine the question whether commission payable to Belet
constitutes direct or extrinsic damages.
[12] I conclude,
therefore, that MTN has not shown that Belet’s claim is bad in
law. The limitation clause gives rise
to difficulties of
interpretation and (this being an exception) cannot be construed
without the benefit of evidence relating to
the full factual matrix.
At least two possible meanings are available on the language used.
In my view the proper meaning
of clause 40.1 and the nature of the
damages claimed should only be determined after the hearing of
evidence at the trial.
[13]
In the result the following order is made:
(a) The appeal
succeeds with costs.
(b) The order of
the court a quo is set aside and replaced with:
‘
The second
exception is dismissed with costs.’
___________________
PA
Meyer
Acting
Judge of Appeal
APPEARANCES
For
Appellant: A de Kok
Instructed
by: Fasken Marineau, Johannesburg
Webbers,
Bloemfontein
For
Respondent: V Maleka SC, BW Maselle
Instructed
by: Wotshela & Associates, Midrand
Phatshoane
Henney, Bloemfontein