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[2014] ZASCA 199
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Braun Medical (Pty) Ltd v Ambasaam CC (757/2013) [2014] ZASCA 199; 2015 (3) SA 22 (SCA) (28 November 2014)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case
No: 757/2013
In
the matter between:
B
BRAUN MEDICAL (PTY)
LTD
......................................................................................
APPELLANT
and
AMBASAAM
CC
..............................................................................................................
RESPONDENT
Neutral
citation:
Braun Medical (Pty) Ltd v
Ambasaam CC
(757/13)
[2014] ZASCA 199
(28 November 2014).
Coram:
Ponnan, Shongwe, Swain JJA and Mathopo and Meyer
AJJA
Heard:
19 November 2014
Delivered:
28 November 2014
Summary:
Repudiation of contract – demand for performance –
reasonable person not perceiving demand as an indication
of
repudiation – interpretation of contract – extraneous
evidence to be used as conservatively as possible –
appeal
upheld.
ORDER
On
appeal from:
North Gauteng Trial Court,
Pretoria (Van der Byl AJ, sitting as court of first instance):
1
The appeal succeeds with costs.
2
Paragraphs 1 and 3 of the order of the trial court are set aside and
replaced with the following order:
‘
The
plaintiff’s claim is dismissed with costs.’
JUDGMENT
Swain
JA
(Ponnan, Shongwe JJA and Mathopo
and Meyer AJJA concurring):
[1]
The sole issue for determination in this appeal is whether a demand
for performance by the appellant, B. Braun Medical (Pty)
Ltd (Braun),
directed to the respondent, Ambasaam CC (Ambasaam), constituted a
repudiation by the former of its obligations in
terms of a contract
of carriage, which entitled Ambasaam to cancel the agreement and
claim damages from Braun.
[2]
The North Gauteng Trial Court (Van der Byl AJ) held that Braun had
repudiated the agreement which, so it was put, Ambasaam
had
subsequently validly cancelled. The court a quo granted the following
order:
‘
1.
THAT it be declared that the defendant be liable to the Plaintiff for
such damages as maybe proved by the plaintiff consequent
upon the
defendant’s repudiation of the agreement concluded between the
parties on 8 December 2008.
2.
THAT the defendant’s counterclaim for payment by the plaintiff
of R120 000 be dismissed.
3.
THAT the defendant be ordered to pay the plaintiff’s costs.’
Braun
did not appeal against paragraph 2 of the order. Consequently, only
paragraphs 1 and 3 are the subject of this appeal.
[3]
At the heart of the dispute are two letters of demand written by
Braun’s attorney to Ambasaam dated respectively 9 March
2011
and 14 March 2011. The letter dated 9 March 2011 concluded ‘our
client shall proceed to cancel the AOC without further
notice to
Ambasaam CC and to claim damages from Ambasaam CC, in the event that
Ambasaam CC does not timeously adhere to the aforementioned
demands’.
Ambasaam’s attorney had replied to these letters stating ‘.
. . that the allegations levelled against
our client objectively
leads a reasonable person to the conclusion that your client does not
intend to honour the terms of the
agreement. Our client regards these
actions as repudiation by your client, of the agreement. However, our
client will afford your
client up to and including 1 April 2011 to
withdraw unconditionally, all the allegations and demands made in the
two letters under
reply. Should your client not avail himself of this
opportunity, our client will accept the repudiation and regard the
contract
as cancelled.’
[4]
In response Braun’s attorney stated that it ‘does not
intend to withdraw any allegation and/or demand made by it’
and
that ‘under the prevailing circumstances the defendant (Braun)
confirms that annexure A has been cancelled with effect
from 2 April
2011’. In the result Ambasaam subsequently pleaded in its
summons that ‘whether by an accepted repudiation
or a purported
cancellation, the plaintiff (Ambasaam) and the defendant (Braun) are
both of the view that annexure A has come to
an end’.
Accordingly, so Ambasaam alleged, ‘the defendant (Braun)
breached the agreement by levelling, inter alia,
false allegations
and accusations against the plaintiff (Ambasaam) and indeed
repudiated the agreement . . ..’
[5]
Braun in its plea, whilst admitting the wording of the letters
written by its attorney, denied that it had repudiated the agreement,
It alleged: ‘Under the circumstances we confirm that your
client has cancelled the agreement of carriage with effect from
2
April 2011’. Braun asserted that Ambasaam had cancelled the
agreement in circumstances where it was not entitled to do
so.
[6]
In a request for particulars for trial Braun asked Ambasaam to
specify whether Ambasaam would rely at trial upon a repudiation
of
the agreement, or a breach of the agreement by Braun. The reply was
‘the repudiation of the agreement by the defendant,
which is an
anticipatory breach of the contract’.
[7]
The single issue which thus arose on the pleadings and which was
correctly identified by the court a quo as calling for a decision,
was whether Braun repudiated the agreement. The court a quo having
referred to decisions of this court dealing with the concept
of
repudiation
[1]
then embarked on
an extensive and detailed analysis of the evidence in relation to
each of the ‘breaches’ and ‘complaints’
upon
which Ambasaam relied as set out in the letters of Braun’s
attorney. The court a quo concluded that Braun’s allegations
were ‘unfounded and unsubstantiated’, were made with the
intention not to continue with the agreement, as it had ‘elected
to get out of the agreement’ and had ‘indeed repudiated
the agreement’. It added that Braun ‘objectively
created
without lawful excuse a perception which placed’ Ambasaam ‘in
a position to conclude that proper performance
of the agreement will
not be forthcoming’. In the result Ambasaam ‘was placed
in the inevitable position to accept
such repudiation and to cancel
the agreement’.
[8]
Before considering the correctness of those conclusions, it may first
be opportune to reiterate what this court said in
Datacolor
concerning the requirements for a finding that a party has repudiated
its contractual obligations:
[2]
‘
Conceivably
it could therefore happen that one party, in truth intending to
repudiate (as he later confesses), expressed himself
so
inconclusively that he is afterwards held not to have done so;
conversely, that his conduct may justify the inference that he
did
not propose to perform even though he can afterwards demonstrate his
good faith and his best intentions at the time. The emphasis
is not
on the repudiating party's state of mind, on what he subjectively
intended, but on what someone in the position of the innocent
party
would think he intended to do; repudiation is accordingly not a
matter of intention, it is a matter of perception. The perception
is
that of a reasonable person placed in the position of the aggrieved
party. The test is whether such a notional reasonable person
would
conclude that proper performance (in accordance with a true
interpretation of the agreement) will not be forthcoming. The
inferred intention accordingly serves as the criterion for
determining the nature of the threatened actual breach.
’
[9]
What is immediately apparent is that the court a quo, having referred
to the principles in this passage, did not apply them
to the facts of
the case. Central to the court a quo’s reasoning was that Braun
possessed the subjective intention ‘to
get out of the
agreement’ and in order to do so, made unfounded and
unsubstantiated allegations against Ambasaam which constituted
a
repudiation of the agreement.
[10]
There are a number of problems in the reasoning of the court a quo.
Firstly, emphasis was placed upon the subjective intention
of Braun
whereas the correct enquiry should have been how would a reasonable
person in the position of Ambasaam have perceived
those letters.
Secondly, it decided that Ambasaam justifiably perceived that proper
performance of the agreement by Braun would
not be forthcoming,
whereas the correct test is not subjective, but an objective one.
Simply put, the court a quo approached the
issue of repudiation as a
matter of subjective intention and not one of perception, contrary to
the principle laid down in
Datacolor International (Pty) Ltd v
Intamarket (Pty) Ltd supra.
[11]
The perception of a reasonable person placed in the position of
Ambasaam could never be that proper performance by Braun of
its
obligations in terms of the contract would not be forthcoming. The
court a quo failed to appreciate that the letters demanded
performance from Ambasaam of its obligations. Nowhere in those
letters was there an intimation by Braun that it was unwilling to
perform its own contractual obligations. A reasonable person having
received the letters of demand from Braun’s attorney
would not
have thought that they amounted to a deliberate and unequivocal
intention on the part of Braun not to be bound by the
agreement. Even
if the demands made by Braun were unjustified, this could never have
led to the objective conclusion that Braun
did not intend to perform
its obligations. The court a quo thus misconceived the situation that
in those circumstances the letters
could have constituted a
repudiation.
[12]
Ambasaam’s case on the pleadings and before the court a quo
that Braun repudiated the agreement was never based upon
an
unjustified cancellation of the agreement, nor upon an unjustified
threat by Braun to cancel the agreement. Ambasaam’s
cause of
action of a repudiation of the agreement by Braun, was based solely
upon the allegation that Braun had levelled false
accusations and
allegations against it. However, before us counsel for Ambasaam
sought to argue that the terms of the demands set
out in paragraph 4
above, meant that if Ambasaam did not comply, the contract should be
regarded as having been cancelled. Counsel
also described this as an
‘automatic cancellation’. There is no basis for this
contention. Clause 9.2 of the contract
of carriage provided for seven
days written notice to a party in default to rectify the breach. If
the breach was not rectified
within that period, the aggrieved party
was entitled to cancel the agreement and claim damages. Any decision
to cancel would have
to be conveyed to the party in default for it to
take effect.
[3]
[13]
The demand for performance by Braun constituted compliance with the
notice requirements of clause 9.2 of the contract. In the
event that
Ambasaam did not comply with the demand Braun would have had an
election whether to cancel the agreement or not. Braun
in stating
that it ‘shall proceed to cancel the AOC without further
notice’ conveyed no more than its intention to
cancel as at the
time of the demand, in the event that Ambasaam did not comply with
the demand in the future. There is no basis
for interpreting the
demand to mean that Braun had exercised its election to cancel, or
that the agreement was automatically cancelled.
That Ambasaam never
understood the demand to convey an automatic cancellation of the
agreement in the event of its failure to comply
with the demands, is
indicated by Ambasaam’s reply. Braun was invited by Ambasaam to
withdraw the demands failing which Braun’s
conduct would be
regarded as a repudiation of the agreement. There is accordingly no
basis for this submission. Counsel for Ambasaam
correctly conceded
that if this argument failed, the appeal should succeed.
[14]
A great deal of inadmissible evidence was led before the court a quo
concerning the parties’ intention in concluding
and their
interpretation of the terms of the contract of carriage. As pointed
out by this court:
‘
[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 Leal
1980
(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 Plessis
1955
(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 Arnold
2002
(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
(6) SA 654 (SCA)
para
7.)’
[15]
It is therefore clear that ‘interpretation is a matter of law
and not of fact and, accordingly, interpretation is a matter
for the
court and not for witnesses’. In addition ‘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”.’
[4]
I do not understand anything stated in later decisions of this court
to constitute a departure from those principles.
[5]
[16]
I make the following order:
1
The appeal succeeds with costs.
2
Paragraphs 1 and 3 of the order of the trial court are set aside and
replaced with the following order:
‘
The
plaintiff’s claim is dismissed with costs.’
___________________
K
G B SWAIN
JUDGE
OF APPEAL
APPEARANCES:
For
the Appellant: A R G Mundell SC
Instructed
by:
D
J Greyling Incorporated
Roodepoort
c/o
Honey Attorneys
Bloemfontein
For
the Respondent: M P van der Merwe
Instructed
by:
Couzyn
Hertzog & Horak Attorneys
Pretoria
c/o
Hill McHardy & Herbst Attorneys
Bloemfontein
[1]
Nash
v Golden Dumps (Pty) Ltd
1985
(3) SA 1
(A);
Datacolor
International (Pty) Ltd v Intamarket (Pty) Ltd
2001
(2) SA 284 (SCA).
[2]
Datacolor
International (Pty) Ltd v Intamarket (Pty) Ltd
supra
294E-H.
[3]
Datacolor
International (Pty) Ltd v Intamarket (Pty) Ltd supra
299E.
[4]
KPMG
Chartered Accountants (SA) v Securefin Ltd & another
2009
(4) SA 399
(SCA) para 39.
[5]
Ekurhuleni
Metropolitan Municipality v Germiston Municipal Retirement Fund
2010
(2) SA 498
(SCA);
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA);
North
East Finance (Pty) Ltd v Standard Bank of South Africa Ltd
2013
(5) SA 1
(SCA);
Dexgroup
(Pty) Ltd v Trustco Group International (Pty) Ltd
2013
(6) SA 520
(SCA);
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014 (2) SA 494
(SCA).