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[2010] ZAWCHC 135
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Mnopf Trustees Ltd v SA Marine Corporation (Pty) Ltd (9085/2008) [2010] ZAWCHC 135 (23 June 2010)
IN THE HIGH COURT OF
SOUTH AFRICA
WESTERN CAPE HIGH
COURT, CAPE TOWN
CASE NO: 9085/2008
In
the matter between:
MNOPF TRUSTEES
LTD
Plaintiff
versus
SA MARINE CORPORATION
(PTY) LTD
Defendant
REPORTABLE
JUDGMENT : 23 JUNE 2010
Judgment
:
BOZALEK,
J
Counsel
for Plaintiff
:
Adv.
NGD Martiz (SC)
Adv.
R Patrick
Instructing
Attorney
: Webber
Wentzel
Mr.
G
Fitzmaurice
Counsel
for Defendants
:
Adv.
MJ Fitzgerald (SC) Adv. AM Smalberger
Instructing
Attorney
: Deneys
Reitz
Mr.
MS Ash
Dates
of Hearing
:
27 May 2010
Date
of Judgment
: 23
June 2010
IN THE HIGH COURT OF
SOUTH AFRICA
WESTERN CAPE HIGH
COURT, CAPE TOWN
CASE NO: 9085 / 2008
In
the matter between:
MNOPF TRUSTEES
LTD
Plaintiff
versus
SA
MARINE CORPORATION (PTY) LTD
Defendant
JUDGMENT
: 23 JUNE 2010
BOZALEK J:
[1]
This is an opposed application by the plaintiff, an English company
that is the trustee of the Merchant Navy Officer's Pension
Fund ("the
Scheme"), for leave to amend certain paragraphs of its
particulars of claim. The Scheme was established by
a Trust Deed
dated 29 October 1937, which incorporated rules regulating the
Scheme, and which enables merchant navy officers to
accumulate a
pension.
[2]
The defendant was an employer participating in the Scheme and, on 1
March 1950, agreed in writing, in terms of a so-called accession
agreement, to assume and be bound by the obligations undertaken by
employers under the 1937 Trust Deed and 1937 Rules or under
any
subsequent variation thereof.
[3]
The plaintiff claims payment from the defendant of what it terms
three lump sum contributions totalling some £463 000.00,
being
the sum of its share of various shortfalls in the Scheme, actuarially
assessed at various times. In addition the plaintiff
claims an order
declaring that the defendant is a participating employer in the
Scheme, liable to make deficit contributions.
[4]
According to the particulars of claim, the defendant was at all
material times a "participating employer", as defined
in
the Rules of the Scheme. The particulars allege further that the
defendant employed active members of the Scheme during the
period
between 6 April 1978 and 31 March 1999. The significance of the
earlier date is that in 1978, following the passing of the
Social
Security Pensions Act 1975, the Scheme was reconstituted and split
into two sections, the pre-1978 Section and the post-1978
Section so
that each member, in relation to contributory services after 6 April
1978, became entitled to a pension calculated on
a different basis to
that which previously prevailed. The pre-1978 Section comprised the
funds constituting the Fund as defined
in the 1978 Trust Deed and the
1978 Rules as at 5 April 1978. The post-1978 Section comprised funds,
and earnings thereon, secured
by contributions to the Fund in respect
of service by participating employees after 6 April 1978.
[5]
The plaintiff initially based its claims on the provision of the 1999
Trust Deed and the 1999 Rules. It did not, in its particulars
of
claim, plead the various amendments to the original Trust Deed and
the Rules of the Scheme which were effected during the period
from
1937 to 1999, but limited itself to pleading the amendment to the
1995 Trust Deed and 1995 Rules which gave rise to the 1999
Trust Deed
and 1999 Rules.
[6]
The defendant filed a plea and a special plea of prescription. The
details of its special defence are not relevant to the present
application. In its plea on the merits the defendant averred that the
1937 Trust Deed was superseded and replaced by a further
Trust Deed
("the 1978 Trust Deed") with effect from 2 January 1978. It
annexed a copy of the 1978 Trust Deed, incorporating
the 1978 Rules
regulating the Scheme ("the 1978 Rules"), to its plea.
Whilst admitting that it was an employer as defined
in the 1937 Trust
Deed and that it participated in the Scheme up to 5 April 1978, i.e.
the day before the 1978 Trust Deed and 1978
Rules took effect, the
defendant denied that it had assumed any liability under the latter
Trust Deed. It pleaded that it was a
condition precedent to any such
assumption of liability that it sign the accession agreement
contained in the Second Schedule to
the 1978 Trust Deed and averred
that it did "not
admit
signing the 1978 accession agreement".
Upon
this foundation the defendant moved on to deny that it was a
participating employer bound to contribute its share of the Scheme
deficiencies.
[7]
The plaintiff's response to the defendant's plea was to deliver a
notice proposing to amend its particulars of claim so as to
set out
in detail the sequence of amendments to the original Trust Deed and
Rules. The proposed replacement paragraph sets out
the evolution of
the Scheme effected variously by the 1978, 1992, 1995 and 1999 Trust
Deed and 1978 Rules. In several instances
the plaintiff proposes to
plead, furthermore, that, upon a proper interpretation of the
relevant clauses of the 1992, 1995 and
1999 Trust Deeds, the
obligation to sign an accession agreement to render an employer
liable as a contributing employer effectively
"applied
only to employers who were not participating in the Scheme and who
had not previously entered into a similar agreement...".
[8]
The plaintiff further proposes to plead that all the Trust Deeds and
Rules executed after the 1937 Trust Deeds, and upon which
it relies
for its claims against the defendant, constituted subsequent
variations of the 1937 Trust Deed and 1937 Rules as contemplated
by
the accession agreement, annexed to the particulars of claim, which
the defendant signed on 1 March 1950, and that the defendant
is
accordingly bound by the 1999 Trust Deed and the 1999 Rules.
THE DEFENDANT'S
OBJECTION
[9]
The defendant's objection is in effect limited to certain
subparagraphs of the plaintiff's proposed amendment with its basis
being that the amendment will render the plaintiff's particulars
excipiable as failing to disclose a cause of action, alternatively,
vague and embarrassing. The defendant complains that the proposed
amendment omits certain wording in Rule 3(h) but, more fundamentally,
that the plaintiff does not plead the proper construction of Rule
3(h) and clause 2 of the Trust Deed and, if it did, it would
have no
cause of action. The objection thus turns largely around the proper
interpretation of clause 2 of the 1978 Trust and Rule
3(h) of the
1978 Rules which respectively provide as follows:
"2.
Each
Employer
participating in the Scheme shall undertake by entering into the form
of Agreement set forth under the Second Schedule
hereto or otherwise
to the satisfaction of the Committee of Management of the Fund the
obFigations imposed upon such Employer by
the Rules.
Definitions
(a)
...
(h)
'
Employers
'
primarily means and includes
(i)
all
such Owners and Managers of British Merchant Ship to which National
Maritime Board agreements apply and Wireless Companies employing
Radio Officers in such ships except and to the extent that any
such
owner or company is maintaining and continues to maintain a
Private Scheme for officers in its employment;
(ii)
such
other employers of British Merchant Navy Officers and/or former
British Merchant Navy Officers as the Committee may in their
absolute
discretion from time to time determine to bring with them the Scheme;
(iii)
such other employers who were participating in the Scheme on 5 April
1978; and
(iv)
such institutions (including the Fund and the Trustees as employers
of staff) or undertakings formed for purposes connected
with or
relating to the British Merchant Navy as the Committee may from time
to time determine to bring within the Scheme and who
in any such case
undertake in manner provided under Clause 2 of the Trust Deed the
obligations imposed on Employers by the Trust
Deed and the Rules and
become contributors to the Fund."
[10]
in terms of the accession agreement concluded by the defendant in
1950 it acknowledged receipt of a copy of the 1937 Trust
Deed and
1937 Rules and agreed to:
"...
assume and be bound by the obligations undertaken by Employers
thereunder or under any subsequent variation that may be
duly made
therein".
The
terms of the pro forma Form of Agreement for employers in the
Second
Schedule to the 1978 Trust Deed were the same save for
the
addition of the words:
"and
promptly
to pay to the fund all contributions due under the
Rules".
[11]
The core issue raised by the defendant's objection to the
proposed
amendment is whether it is necessary for the plaintiff to plead that
the defendant had concluded an accession agreement
as envisaged in
the Second Schedule to the 1978 Trust Deed in order for it to become
liable to make up a deficiency arising thereafter,
or whether it was
sufficient that the defendant was a contributing employer as of 1950
and had signed the undertaking on 1 March
1950 referred to earlier.
It is common cause that the 1978 Trust Deed and 1978 Rules are
determinative since all subsequent changes
to the Trust Deed and
Rules were, insofar as these provisions were concerned, couched in
similar terms.
[12]
The plaintiff alleges that upon a proper interpretation of the
relevant Trust Deed clause and Rule, the obligation to conclude
an
agreement did not apply to employers who were already part of the
Scheme and who had previously concluded a similar accession
agreement. On behalf of the defendant it was contended that the
plain meaning of the words used was that even existing participating
employers had to sign a fresh accession agreement following the
coming into effect of the 1978 Trust Deed and 1978 Rules, failing
which they assumed no liability under those instruments.
THE CORRECT APPROACH
TO INTERPRETING THE 1978 TRUST DEED AND 1978 RULES
[13]
The plaintiff's claim is a maritime claim and is thus to be
determined by this Court exercising its Admiralty jurisdiction.
The
question which would normally arise is whether, in terms of s 6(1)
of the Admiralty Jurisdiction Regulation Act No. 105 of
1983, the
Court must apply English or Roman Dutch law. This enquiry need not
be made in the present matter, however, since the
parties were in
agreement that the 1978 Trust Deed Rules must be interpreted
according to English law. This appears to be correct.
A contract to
create a trust is governed by its own proper law and the provisions
of the trust, as with a contract, determine
the law that governs
it.
1
In the absence of an express provision to the contrary, the
governing law is that of the locus of administration which in this
case would be determined by the location of its administrator and
trustee, the plaintiff.
2
The Trust is an English trust, administered in England by an English
company with its offices in England and the provisions of
the Trust
Deed and the Rules do not indicate that any system of law foreign to
England apply to them.
[14]
The parties did, however, differ on how this Court should acquaint
itself with the relevant provisions of English law in
order to
interpret the Trust Deed and Rules. On behalf of the plaintiff it
was contended that where documents fall to be construed
in
accordance with foreign law, then expert evidence is admissible in
order to establish such law.
3
The proof of foreign law is a question of fact, it was contended,
and English law is not to be treated in a manner any different
to
other foreign law; a court cannot merely take judicial notice
thereof.
4
[15]
It was further contended that the plaintiff could not be deprived of
the opportunity to prove foreign law in support of its
interpretation of the disputed provisions. As I understood the
argument of Mr. Maritz, who appeared on behalf of the plaintiff
together with Mr. Patrick, this Court should be slow to find against
the plaintiff on any question relating to the interpretation
of the
1978 Trust Deed or Rules without it having enjoyed an opportunity to
lead expert evidence as to the English law in regard
to the
interpretation of such instruments.
[16]
On behalf of the defendant Mr. Fitzgerald, who appeared together
with Mr. Smalberger, submitted that there was no need for
the Court
to hear expert evidence proving English law. In exercising its
Admiralty jurisdiction, a South African court isenjoined
in any
event to ascertain and apply the English law.
5
He contended, furthermore, that the contents of English law can "be
ascertained
readily and with sufficient certainty"
in
accordance with the provisions of s
1(1)
of the
Law of Evidence Amendment Act 45 of 1988
.
[17]
It is correct that, in exercising its Admiralty law jurisdiction,
this Court is not applying foreign law. However, the defendant's
argument tends to overlook that, in determining the issue in the
present matter, the Court will be entering the fields of English
pension law and the interpretation of an English trust deed and
rules. Whilst English law is relatively accessible and familiar
to
our courts, it does not follow, in my view, that the materials which
may be relevant to the present matter are so readily
ascertainable
and with such certainty, that the plaintiff should be deprived of
the opportunity of proving English law. This,
however, is not a
point which is determinative in this application but merely a factor
to be taken into account in considering
the objection to the
amendment.
[18]
For present purposes it is sufficient to have regard to one of the
leading English decisions relating to the interpretation
of
acontractual document. In his speech in
Investors
Compensation Scheme Ltd v West Bromwich,
concurred
in by the majority of law lords, Lord Hoffman summarised the
principles of interpretation by which contractual documents
are to
be construed as follows
6
:
"I.
Interpretation
is the ascertainment of the meaning which the document would convey
to a reasonable person having all the background
knowledge which
would reasonably have been available to the parties in the situation
in which they were at the time of the contract.
2.
The background was famously referred to by Lord Wilberforce as the
'matrix of fact', but this phrase, is, if anything, an understated
description of what the background may include. Subject to the
requirement that it should have been reasonably available to the
parties and to the exception to be mentioned next, it includes
absolutely anything which would have affected the way in which
the
language of the document would have been understood by a reasonable
man.
3.
The law excludes from the admissible background the previous
negotiations of the parties and their declarations of subjective
intent. They are admissible only in an action for rectification
4.
The meaning which a document (or any other utterance) would convey
to a reasonable man is not the same thing as the meaning
of its
words. The meaning of words is a matter of dictionaries and
grammars; the meaning of the document is what the parties
using
those words against the relevant background would reasonably have
been understood to mean. The background may not merely
enable the
reasonable man to choose between the possible
meanings
of
words
which are ambiguous but even (as occasionally happens in ordinary
life) to conclude that the parties must, for whatever
reason, have
used the wrong words or syntax (see
Mannai
Investment Co Ltd v Eaale Star Life Assurance Co Ltd
11997]
[1997] UKHL 19
;
3 All ER 352
[1997j 2 WLR 945).
5.
The 'rule' that words should be given their 'natural and ordinary
meaning' reflects the commonsense proposition that we do
not easily
accept that people have made linguistic mistakes, particularly in
formal documents. On the other hand, if one would
nevertheless
conclude from the background that
something
must have gone
wrong
with the language, the law does not require judges to attribute to
the parties an intention that they plainly could not
have had."
[19]
In common then with our law, English law affords parties in dispute
as to the meaning of a contractual provision the opportunity
to lead
evidence to contextualise or establish the factual matrix or purpose
of the document.
7
It is, no doubt, also for this reason that the Courts are reluctant
to decide questions concerning the interpretation of a contract
upon
exception.
8
[20]
The defendant's objection is raised principally on the basis that
allowing the amendment would render the plaintiff's claim
excipiable. It is thus appropriate to use the test which the court
would normally apply to an exception, namely, that the defendant
must persuade the court that the relevant provisions of the Trust
Deed and Rules cannot reasonably bear the interpretation relied
upon
by the plaintiff in the amended particulars of claim.
9
THE INTERPRETATION OF
THE DISPUTED PROVISIONS
[21]
With these considerations in mind I turn now to the interpretation
of the relevant provisions. On behalf of the defendant
it is
contended that the provisions of clause 2 of the Trust and those of
Rule 3(h) (iv) can bear only one meaning namely, that
each of the
categories of employers described in Rule 3(h) is hit by the
provisions of the
subordinate
concluding clause:
"...
and
who
in any such case undertake in manner provided under Clause 2 of the
Trust Deed the obligations imposed on Employers by the
Trust Deed
and Rules and become contributors to the Fund".
This
meaning, it is further contended, is strengthened by the use of the
word "become" which indicates that an employer
only
becomes a contributor to the Fund once the formalities contemplated
by Rule 3(h) (iv) have been complied with namely, entering
into an
agreement as provided for by clause 2 of the 1978 Trust Deed.
[22]
For the plaintiff, Mr. Maritz initially contended that the final
subordinate clause in Rule 3(h) (iv) applied only to the
category of
employers identified in that sub-rule. He was later constrained to
contend for a wider interpretation, namely, that
compliance with the
provisions of clause 2 of the Trust Deed, through entering into the
specified form of Agreement, applied
only to those parties who had
not previously concluded such an agreement or, alternatively,
satisfied the Committee of Management
of the Fund in some other
manner. He relied also on the similarity of the wording of the
accession agreement concluded by the
defendant in 1950 and that used
in the Second Schedule to the 1978 Trust Deed, the only difference
being the addition to the
latter of the wording "and
promptly
to pay to the fund all contributions due under the Rules".
Mr.
Maritz's argument placed greater weight on the context within which
the 1978 Trust Deed and Rules were introduced, as opposed
to the
dictionary and grammatical meaning of the relevant wording, than did
the defendant's argument. In further support of the
interpretation
favoured by the plaintiff, Mr. Maritz argued that all of the Trust
Deeds and Rules, supplemental and amending,
executed after the 1937
Trust Deed, including the 1978 Trust Deed and 1978 Rules,
constituted variations of the original Trust
Deed and Rules.
[23]
In argument both parties sought to rely on portions of a judgment by
Patten J in the High Court of Justice, Chancery Division,
handed
down in March 2005 in which the plaintiff sought declaratory relief
against various parties as representatives of certain
categories of
participating employers in the self-same Scheme. The principal
dispute in the matter was whether employers who
ceased to employ
active members of the Scheme prior to 8 June 2000, when the
plaintiff executed a Deed of Amendment varying the
definition of
"participating employers" in Rule 3 and inserted a new
Rule in order to remedy a funding deficiency in
the post-1978
section of the Scheme, were liable for their share of such
deficiencies.
[24]
Although some of the same factors and definitions relevant to the
present matter were considered by Patten J, limited regard
can be
had to his findings since the issue before him was quite different
to that in the present matter. I agree, however, with
that Court's
observation that the definition of employers in Rule 3(h) is
adefined term and, like all such terms, would apply
"unless
inconsistent with the context" with the result that
"the
Rules and Trust Deed therefore leave open the possibility that
participating employers may be given a different and
perhaps
narrower meaning in certain places".
Also
material is the following extract where Patten J dealt with
principles of construction relevant to a pension scheme:
10
"Whilst
explaining that there are no special rules of construction to be
applied, Ardern U considered that the following
factors are likely
to be relevant to a consideration of Pension Scheme. They can be
summarised as follows:
Members
of a scheme are not volunteers: the benefits which they receive
under the scheme are part of the remuneration of their
services and
so are in a different position in some respects from beneficiaries
of a private trust;
a
pension scheme must be construed so to give a reasonable and
practical effect to the scheme;
pension
schemes are often subject to considerable amendment over time: the
general principle is that each new provision should
be considered
against he circumstances prevailing at the date when it was adopted
rather than as at the date of the original
trust deed;
a
provision of a trust deed must be interpreted in the light of the
factual situation at the time it was created: this includes
the
practice and requirements of the Inland Revenue at that time, and
may include common practice among practitioners in the
field;
the
function of the Court is to construe the document without any
predisposition as to the correct philosophical approach;
a
pension scheme should be interpreted as a whole: the meaning of a
particular clause should be considered in conjunction with
other
relevant clauses."
[25]
In my view, these factors are germane to the interpretation of the
disputed provisions in the present matter. They align
with the
plaintiff's argument that context must play a significant role in
the interpretation of the disputed provisions. They
tie in,
furthermore, with the fifth principle of construction summarized by
Hoffmann LJ in
Investors
Compensation Scheme Ltd. v West Bromwich
(supra)
when he stated that the rule that words should be given their
natural and ordinary meaning must, in appropriate circumstances,
yield to a different meaning were one to conclude from the
background that something must have "gone wrong" with the
language.
[26]
On balance the factors cited by Ardern LJ militate in favour of the
more limited interpretation contended for by the plaintiff,
namely,
that, after the 1978 amendments, employers who had previously
concluded accession agreements and had been participating
employers
remained liable together with other participating employers
notwithstanding that they had not entered into a fresh
agreement. In
this regard the difference between the wording of the two forms of
agreement is, in my view, not material. On any
reading of the 1937
Trust Deed Rules and the accession agreement, it was implicit that
participating employers were required
to promptly pay the Fund such
contributions as were due. The more limited interpretation favoured
by the plaintiff would, at
one and the same time, locate the 1978
amendments to the Trust Deed, the Rules and the accession agreement
within the context
of the Scheme evolving over the years and give
reasonable and practical effect to the Scheme.
[27]
By contrast, the effect of adopting a literal interpretation of
clause 3(h)(iv), read with the provisions of clause 2, as
contended
for by the defendant's counsel, would be that, notwithstanding that
an employer had signed an accession agreement in
its prior form as
required by earlier Trust Deeds and Rules, it would have ceased to
be a participating employer under the 1978
Trust and Rules unless
and until it concluded an accession agreement in the new form. The
Scheme would, for no apparent gain,
have been at risk of losing
participating employers were the plaintiff unable to persuade them
to conclude fresh agreements.
In this regard, for the purposes of
deciding this objection, I must accept as a fact the averments in
the plaintiff's particulars
of claim that, notwithstanding that it
signed no fresh accession agreement, the defendant employed active
members of the Scheme
during the period 6 April 1978 to 31 March
1999 and that the plaintiff continued to receive member
contributions in respect of
such persons.
[28]
As mentioned earlier, in interpreting the disputed provisions it is
important to apply the appropriate test and onus, namely,
that the
objector must show that the disputed provisions cannot reasonably
bear the interpretation for which the plaintiff contends.
I take
into account, furthermore, that the plaintiff has had no opportunity
to lead such background evidence on which it may
seek to rely nor
any expert evidence as to any further provisions of English law
which may be relevant and admissible in assisting
the Court to
arrive at the correct interpretation of the disputed provisions.
CONCLUSION
[29]
On the material before me, and adopting the approach outlined above,
I am unable to find at this stage that the disputed
provisions are
not reasonably capable of bearing the limited interpretation
advanced on behalf of the plaintiff, namely, that
a participating
employer prior to the 1978 amendments which had already signed an
accession agreement in an earlier form could
nevertheless assume
liability in terms of the amended Trust Deed and Rules, without
having concluded a fresh accession agreement
in the form set out in
the Second Schedule to the amended Rules. The result is that the
objection must fail and the proposed
amendment must be allowed.
COSTS
[30]
The plaintiff sought the costs occasioned by the defendant's
opposition to the application to amend, including the costs
of two
counsel. Mr. Fitzgerald argued that since the defendant's opposition
to the proposed amendment was reasonable, no costs
order should be
made against it or, at worst, the costs should be made costs in the
cause. I am not called upon to determine,
nor have I determined, the
proper interpretation of the disputed provisions. Since this issue
will be the principal issue on
trial, I consider that the most
appropriate award would be that the costs of this application be
costs in the cause.
[31]
In the result the following order is made:
1.
The plaintiff's Particulars of Claim are amended in accordance with
its Notice of Amendment dated 20 October 2009.
2.
The costs of the application to amend will be costs in the cause.
L
J BOZALEK, J
JUDGE
OF THE HIGH COURT
1
Forsyth
Private
international Law
4
ed p 364.
2
See
Forsyth p 365 and
Kalshoven
v Kalshoven and Another N.
0.1966
(3) SA 466 (R) at 469 A.
3
Forsyth
(supra) p 96 and
Mohamed
and Another v President of the Republic of South Africa and Others
2003
(4) SA 64(C)
at87C.
4
Schlesinger
v Commissioner for Inland Revenue
1964
(3) SA 389
(A) at 396 G.
5
The Bouygues Offshore and Another v Owner of the MT Tigr and Another
1995
(4) SA 49
(C) at 57 C and
MT
Tigr: Bouygues Offshore SA v Owners of the MT Tigr
1998
(4) SA 740
(C).
6
[1998] 1 All ER at page 114.
7
See
KPMG
v Securefin Ltd
2009
(4) SA 399
(SCA) at 409 I - 410 A.
8
See
Francis
v Sharp and Others
2004
(3) SA 230
(C).
9
See
Lewis
v Oneanate (Pty) Ltd
[1992] ZASCA 174
;
1992
(4) SA 811
(AD) at 817 F - G and
Theunissen
en Andere v Transvaalse Lewendehawe Kobp Bpk
1988
(2) SA 493
(A) at 500 E.
10
Referring to the judgment of Arden LJ in
British
Airways Pension Trustees Limited v British Airways PLC
[2002]
EWCA CIV 672.