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1985
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[1985] ZASCA 147
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Pritchard Properties (Pty) Ltd. v Koulis (3) (324/84) [1985] ZASCA 147; [1986] 2 All SA 82 (A) (2 December 1985)
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the matter between:
PRITCHARD PROPERTIES (PROPRIETARY) LIMITED
Appellant
AND
BASIL KOULIS
Respondent
Coram
: JANSEN, KOTZé,
TRENGOVE, BOSHOFF, JJ A et CILLIé, A J A
Heard
: 11 November 1985
Delivered
: 2 December 1985
JUDGMENT
CILLIé
, A J A :
The respondent was the applicant in motion proceedings against the appellant
in the Witwatersrand Local
Division .... / 2
2 Division. The respondent applied for orders declaring
the appellant's purported conversion of the long lease between the parties
into
a monthly tenancy as well as the appellant's notice to the respondent to vacate
the leased premises, to be void and of no force
or effect. In a
counter-application the appellant applied for an order ejecting the respondent
from the premises.
The declaratory orders were granted and the
counter-application was dismissed with costs. (The judgment in this case is
reported at
1984 (4) S A 327
(W)). On an application by the appellant leave to
appeal to this Division was granted by the Court a
quo
.
At the hearing
of the applications the following facts were common cause between the parties.
In terms
of a written contract the appellant was the lessor of
premises .... / 3
3
premises occupied by the respondent as lessee. This lease extended over a
period of five years and was subject to renewal by the respondent.
The
respondent failed to pay the rent promptly on 1 October 1983 as he was obliged
to do in terms of the contract; the rent was not
paid until the fourth of the
month. In a letter dated 5 October 1983 the appellant informed the respondent
that the long lease was
converted into a monthly tenancy and on 1 November he
gave the respondent notice to vacate the premises by 1 December 1983.
In the
Court a
quo
the issue between the parties was whether, in terms of clause
4 of their agreement, the appellant was obliged to give the respondent
seven
days'
notice after the failure to pay the rent promptly, before
exercising .... / 4
4
exercising his rights to convert the lease and to give the
respondent notice to vacate the premises. That was also
the issue in this Court.
In reducing their contract to writing the
parties used a printed form of four pages with spaces open for filling in
necessary particulars.
Apart from these particulars the document finally
contained a number of additions as well as deletions of words and phrases. When
the contract was signed by the parties all the particulars, additions and
deletions were initialled.
The essential part of the relevant clause 4
of the contract is the following:
"4. If the Lessee fails to pay the rent or any other sum payable hereunder
promptly on due date, or if the Lessee contravenes or
permits the contravention
of any one or more of the other conditions of the Lease and fails to remedy such
breach ....../ 5
5
breach within seven (7) days after the receipt of written notice calling upon
him so to do (provided that the Lessor shall not be
obliged, before exercising
its right to cancel or vary the lease under this clause, to give such notice
more than twice), or if the
estate of the Lessee is placed under sequestration
or in liquidation (whether provisional or final) or if the Lessee sustains a
judgment
of a competent court and fails to satisfy such judgment within seven
(7) days, notwithstanding any previous waiver by the Lessor,
the Lessor shall
have the right, in addition to all other rights hereunder, (a) of declaring the
Lessee to be subject to one month's
notice by the Lessor and upon written
notification to the Lessee to this effect this Lease shall immediately thereupon
become terminable
by the Lessor giving the Lessee one calender month's written
notice terminating the same, but subject otherwise to the other provisions
herein contained save for the cancellation of any
option given to the Lessee
herein; or (b) forthwith to terminate this Lease and of immediate re-entry and
repossession of the premises,
provided that the Lessee shall nevertheless remain
liable for the payment of all rent and other monies that may or shall be owing
under this Lease up to the date on which the Lessor regains possession of the
premises, and also for all damages sustained by the
Lessor by reasons of the
Lessee's breach of contract. The Lessor may proceed by way of motion in any
competent court to compel ejectment."
The only deletion from clause 4 was the last
word .... / 6
6
word of the fourth line in the quotation above, that is,
the word between the words "such" and "breach". In his
reference to this deletion the Judge a
quo
said:
"This has been done by means of a manuscript horizontal line having been drawn
through it. The word deleted is just visible, or at
least is to be inferred as
being 'latter'."
The crucial question was whether the Court
should interpret the clause with or without reference to the word "latter" and
its deletion.
The Judge a
quo
decided that he should take into account
the method and the result of the deletion, the word deleted and its meaning and
also the
inferences to be drawn from these factors. In the result he concluded
that the parties intended by the deletion of the word that
the provision for
seven day's notice
after .... / 7
7
after a contravention of a condition of the lease, should
also apply to the non-payment of rent on the due date.
This finding resulted in the granting of the declaratory orders
and the dismissal of the counter-application.
In his judgment the Judge a
quo
quoted from
a paragraph in the
speech of Lord Hagan in the House of Lords
in the case of
A J Inglis v
John Buttery and Co
. Appeal
Cases 1877 - 1878 (3) 552 at p 571. I quote
the same paragraph
in full because it deals with problems and principles
of
construction which show a remarkable resemblance to the
problems
encountered in this case and to the principles
which I think apply in our
law. The paragraph reads:
"With reference to the deleted words, it is of great importance to have it
understood that there is no doubt on that point in the
mind of any one
of
your .... / 8
8
your Lordships. When those words were removed from the paper which had
presented the full contract between the parties, they ceased
to exist to all
intents and purposes; and whether it was possible, as in point of fact it was,
still to read them, in consequence
of their simply having a line drawn through
them, or whether they had been absolutely obliterated, appears to me not to make
the
smallest difference. The contract was complete after the deletion. The
parties had had a confluence of will and purpose, and had
come to an identity of
decision, and the removal of the words took away from it any sort of
qualification or condition which might
have been previously introduced into it
by them. It appears to me that if we yielded to the extremely able argument
which was addressed
to us on behalf of the Respondents, we should fall into the
error, which has been forcibly denounced on both sides, of attempting
to
construe a contract, perfect in itself, by acts antecedent to it. The only
effect of submitting the deleted words to the consideration
of your Lordships
would have been to shew what had been in the contemplation of the parties before
the contract came to be completed.
Such evidence appears to me to be
inadmissible, and all the more so for this reason:- If the words were to be
allowed to affect the
minds of your Lordships in deciding the case, then, had
they been obliterated altogether, you must of necessity have permitted that
secondary .... / 9
9
secondary evidence should be given of them. Now, that manifestly could not be
done. There is no authority for it, and it is contrary
to reason and principle.
Therefore the deleted words will be very properly excluded from the grounds of
your Lordships' decision."
After quoting this and other cases
indicating
a similar approach to the problems of this case, the learned
Judge a
quo
says:
"There is a line of cases, however, to the opposite
effect."
Among the cases then quoted there appears to be no
binding South African authority and the learned Judge, in my view erroneously,
followed the other "line of cases". Apparently the learned Judge came to the
conclusion that the clause was capable of construction
as it stood and that
it
could be construed in favour of the lessor, that is, that
he .... / 10
10
he was not obliged to give the lessee seven days' notice before converting
the lease and terminating the contract. If this was his
final view, I would have
agreed with him. I am, however, not in agreement with his finding that, by
reason of the deletion, he could
draw an inference which led to a different
conclusion.
Dealing with the word "latter" and its deletion the Judge a
quo
said:
"I consider that regard can and should be had to it in interpreting clause 4
which, read in the light of the deletion, I find sufficiently
ambiguous as to
warrant and require this to be done. This may sound like creating an ambiguity
where none exists in order to resolve
it. I do not think so. The deletion is a
fact of life immediately apparent to the reader of the document. To ignore it
would be do
adopt an ostrich-like attitude in conflict with principle (v)
referred to earlier."
The ..... / 11
11
The principle referred to by the learned Judge is:
"(v) In any event, circumstances emerging from the writing itself must at least
be construed."
In my view the clear and uncontradicted
circum-stance which emerges from the writing itself is that the parties by their
deletion
of the word and their initialling of the deletion indicated
unequivocally that the word deleted was to form no part of this contract
and
that the clause should be so construed. To draw any further inference from the
word and its deletion would be erroneous. The
fact that the word could still be
deciphered cannot affect the clear and unmistakable indication of the parties'
agreement and intention,
namely that the word had been expunged and forms no
part of the contract.
The next step in the interpretation of clause
4 is to consider it as part
of the whole written contract.
In
Swart en 'n Ander v Cape Fabrix (Pty)
Ltd
, 1979 (1)
S A 195 (A) this step is described as follows by
Rumpff
, C J ..... / 12
12
Rumpff
C J at p 202 B - C:
"Wat natuurlik aanvaar moet word, is dat, wanneer die betekenis van woorde in 'n
kontrak bepaal moet word, die woorde onmoontlik
uitgeknip en op 'n skoon stuk
pa- pier geplak kan word en dan beoordeel moet word om die betekenis daarvan te
bepaal. Dit is vir
my vanself-sprekend dat 'n mens na die betrokke woorde moet
kyk met inagneming van die aard en opset van die kontrak en na die samehang
van
die woorde in die kontrak as geheel."
It is only when the clause,
considered in the light of the complete contract of which it is part, is
ambiguous or cannot be construed
that the Court may consider evidence of
surrounding circumstances. Schreiner J A said the following in
Delmas Milling
Co Ltd v. Du Plessis
,
1955 (3) S A 447
at p 454 F.
"Where although there is difficulty, perhaps serious difficulty, in
interpretation but it can nevertheless be cleared up by linguistic
treatment
this must be done .... If the difficulty cannot be cleared
up
with .... / 13
13
with sufficient certainty by studying the language, re-course may be had to
'surrounding circumstances' i.e. matters that were probably
present to the minds
of the parties when they contracted (but not actual negotiations and similar
statements). It is commonly said
that the Court is entitled to be informed of
all such circumstan-ces in all cases (cf.
Richter
's case
supra
at
page 69;
Garlick v. Smartt and Another
,
1928 A.D. 82
at p. 87;
Cairns
(Pty.) Ltd. v. Playdon & Co. Ltd
.,
supra
at p. 125). But this
does not mean that if sufficient certainty as to the meaning can be gathered
from the language alone it is nevertheless
permissible to reach a different
result by drawing inferences from the surrounding circumstances. Whether there
is sufficient certainty
in the language of even very badly drafted contracts to
make it unnecessary and therefore wrong to draw inferences from the surrounding
circumstances is a matter of individual judicial opinion on each
case."
See also
Wessels
J A in
Van Rensburg en Andere v
Taute en
Andere
,
1975 (1) S A 279
at p 303 A.
When clause 4 is considered as part of the
complete contract it seems to
me to be unambiguous and
certain .... / 14
14
certain as well as reasonably capable of interpretation. It can be construed
without seeking aid from circumstances outside the written
contract and without
relying on inferen- ces to be drawn from the fact of the deletion and meaning of
the word "latter".
In terms of clause 4 certain occurrences are divided into
four separate groups. The first is the lessor's failure to pay on due date
"the
rent or any other sum payable" in terms of the contract. The second is if the
lessor "con-travenes or permits the contravention"
of other terms of the
contract. The third is if the lessee "is placed under se-questration or in
liquidation (whether provisional
or final)." The fourth is the lessee's failure
to satisfy a judgment
against him by a competent court. These groups are, in
my
view .... / 15
15
view, independent and separate from one another for the following
reasons.
The description of the four groups all start with the word "if" in
the first case and "or if" for the three other groups. They are
separated by
commas, except for the last two which can, in any event, not be confused with
each other.
Although the first two groups are both related
to breaches of the contract
it is important that the first
group refers only to amounts which have to be
paid on a
determined "due date", while the second group refers to
breaches
of "any one or more of the other conditions of the
lease". In my view this description with the words "other
conditions"
excludes breaches where a due date of performance
had / 16
16
had been fixed. This conclusion is emphasized by the fact that in the case of
a breach in the second group provision is made for a
notice giving a period of
seven days to remedy "such breach".
Thirdly, if any one of the groups is removed from the group of four the
truncated clause would still be capable of a reasonable interpretation
which
will not, in respect of any of the remaining groups, differ from the
interpretation given to them in the complete clause. In
my view this indicates,
that it was intended that the four groups were to be separate and
independent.
Finally, it is an important feature of the grouping of
occurrences that each group contains either in
the grouping itself, or in the rest of the contract, its
own .... / 17
17
own provisions for the time to elapse (if any) after the occurrences and
before the lessee may exercise his right to convert the contract
and terminate
the lease. The position of each group will be considered separately.
As far as the first group is concerned the first occurrence is when the
lessee fails to pay the rent "promptly on due date". What
the due date is,
appears from clause 3 of the contract. That clause provides that the rent shall
be "payable in advance on the first
day of each month": It is also provided that
payment of the rent shall be made at the office of the lessor's agent.
In
respect of a failure by the lessee to pay "any other sum payable hereunder
promptly on due date" reference should be made to clause
15(2) of the
contract.
The...../ 18
18
The clause provides that the lessee shall pay an amount to
the lessor each month for the electricity, water and gas used
by him. The amount is to be calculated by the lessor and it
is provided that
"Electricity, water and gas consumption accounts .... shall be payable on
presentation."
Clause 25(1) of the agreement deals
inter
alia
with services
rendered by the lessor to the lessee such as the
cleaning of
the building. In paragraph (2) of the clause reference is
made
to a certificate by the lessor's agents or auditors of
the amount due by the
lessee. Paragraph (3) reads as follows:
"Any amount due by the Lessee to the Lessor in terms of paragraph (1) hereof
shall be payable within 7 (seven) days after delivery
to the Lessee of a written
notice advising the Lessee thereof or in the event of a dispute arising, shall
be payable within 7 (seven)
days after the delivery to the Lessee of the
certificate
referred .... / 19
19
referred to in paragraph (2) hereof."
In these instances the parties
agreed on a definite or
ascertainable time of payment.
The second group
contains the contraventions, or permission to contravene, "other conditions" of
the contract. The lessor may convert
the long lease and terminate the resulting
lease if the lessee
"fails to remedy such breach within 7 (seven) days after the receipt of written
notice calling upon him to do so."
This group therefore contains
its own provisions relating to the time which must elapse before the lessor may
exercise his rights
of conversion and termination. It is not necessary to deal
with the reason why notice should be given
in these cases: it may be mentioned, though, that notice
would .... / 20
20
would only be fair to the lessee because it is possible that
he may
unwittingly be contravening a condition or he may be unaware of a breach by one
of his employees in circumstances in which
he may be regarded as having
permitted the contra-vention.
Reference is made in conclusion to the third
and fourth groups although they are not concerned with payments of money or
breaches
of contract, but because in both cases the time when the lessor may
exercise his rights are contained in the description of the group.
In the third
case the lessor may act as soon as the order for the lessee's provisional or
final sequestration is made. In the second
group the lessor can convert or
terminate the contract if
the lessee does not satisfy the judgment against
him within
seven .... / 21
21
seven days.
The parties provided meticulously for the times of payment of
certain sums which would become pay- able by the lessee to the lessor.
It seems
in a high degree unlikely that the lessor would then, in general terms, give the
defaulting lessee an extention of seven
days to pay amounts already due in terms
of the agreement. There is no indication in the contract that the clear and
distinct stipulations
applying to one specific group of events with reference to
payments of amounts and the result of non-payment or late payment, are
to be
affected by provisions logically applicable to another distinct group of
events.
In ....../ 22
22
In the light of these considerations I have come to the conclusion that the
issue must be resolved in
favour of the appellant. Clause 4 of the contract as
construed above does not require the lessor to give the
lessee who has failed to pay the rent promptly on due date,
seven days
notice to pay before
"declaring the lease to be subject to one month's notice by the lessor"
and to give such notice. In the Court a
quo
, therefore,
the
application for the declaratory orders should have
been refused and the
counter-application for ejectment
should have been granted.
The appeal is allowed with costs and the
order of the Court a
quo
is altered to read:
1 / 23
23
1.
The application is dismissed
with costs.
2. The counter-application succeeds and orders are made in terms of paragraphs 1
and 2 of the Notice of Counter-Application.
P M
CILLIé, A J A TRENGOVE, J A concurs.