THE SUPREME COURT OF APPEAL OF SOUTH
AFRICA
REPORTABLE
CASE NO: 477/2003
In the matter between
BAY CENTRE INVESTMENTS (PTY) LIMITED APPELLANT
and
THE TOWN COUNCIL OF THE BOROUGH OF
RICHARDS BAY RESPONDENT
CORAM: HOWIE P, NAVSA, MTHIYANE, BRAND JJA et
MAYA AJA
HEARD: 15 FEBRUARY 2005
DELIVERED: 23 MARCH 2005
Summary: Interpretation of an agreemen t – meaning and effect of the phrase ‘from
the date of comple tion’ and of the w ords ‘maintenance’ and ‘full liability’ – whether
obligation assumed by a To wn Council tow ards a developer entailed main tenance in
perpetuity and w hether it related to the specific parking bays constructed by the
developer on Town Council land in terms of the agreement.
JUDGMENT
MTHIYANE JA:
2
MTHIYANE JA:
[1] This is an appeal from the judgment of the Natal Provincial Division
(Combrink J, with Mclaren and Hurt JJ concurring) upholding an appeal by the
respondent (the Town Council) against the decision of Levinsohn J, sitting in the
Durban High Court. Levinsohn J had granted certain orders (to which I shall
return later) in favour of the appellant company (Bay Centre), a developer, inter
alia interdicting the Town Council from destroying certain parking bays
constructed by Bay Centre on Town C ouncil land in terms of an agreement
concluded between them (t he agreement). The appeal is with special leave
granted by this Court and turns on the mean ing and effect of a certain clause in
the agreement.
[2] On 15 August 1982 the Town Council sold four plots of land (collectively
referred to as ‘the property’) to Ba y Centre for the sum of R542 000. The
property is situated in the core of the central business district of Richards Bay
(the CBD) and formed part of the designated block in the CBD which had been
set aside to be sold to developers. The property was subject to the conditions of
establishment of the township as laid down by the Administrator and Bay Centre
undertook to accept and abide by them. In terms of the town planning scheme
(the scheme) in the course of preparati on at the time, the property was zoned for
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commercial development and could only be utilised for general commercial
purposes.
[3] Under clause 10.1.1 of the agreement (about which more later), the Town
Council was entitled to instruct Bay Centre , and the latter was obliged, to make
provision for the parking of motor vehi cles on the property in accordance with
certain specifications as to the number and standard (on site parking). Bay Centre
was, however, permitted to pr ovide at its own expense, in lieu of the on site
parking, the equivalent number of park ing bays on adjoin ing land belonging to
the Town Council, which la nd was reserved and zone d for public parking under
the scheme. The land in question was made available to developers for this
purpose. The parties’ respective rights and obligations in respect of the parking
are set out in clause 10.1 of the agreement which reads:
‘10.1 Should the properties and/or any building or buildings thereon be used for purposes
other than a Residential Building or a Hotel, the council may in its sole discretion and in lieu of
the Purchaser having to provide on site parking on the properties:
10.1.1 instruct the Purchaser to provide at own cost, the number of parking spaces that the
Purchaser would have been required to provi de - - - at ground level on neighbouring land
which is the property of the Council and which ha s been reserved for public vehicular parking
purposes . . .’ (off site parking).
Pursuant to this provision Bay Centr e duly constructed 437 parking bays on
Town Council land to the east, west and s outh of the property during the period
March to October 1982 at the cost of R 381 500. Other devel opers, acting under
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like agreements with the Town Council, similarly and at own cost, constructed
parking bays on the adjoining Town Council land.
[4] During or about 1994, some twelve years after the sale of the property to
Bay Centre, the Town Council, acting in terms of a structure plan adopted and
approved during July 1991 for the purpose of revitalising the CBD, commenced
excavations to the east of the property with a view to establishing a water feature.
The structure plan included the constructi on of a shopping centre, restaurant and
plaza. The excavations resulted in some 175 parking bays being destroyed on
Town Council land as set out above (off site). It is now common cause between
the parties that 62 of the parking ba ys destroyed by the Town Council were
constructed by Bay Centre and that their replacement cost was R249 999,65. We
have not been told how this figure was arrived at. This is, however, an aspect of
the case that has a bearing on the ques tion of damages and which for present
purposes need not detain us
[5] On 29 November 1994 Bay Centre app lied for and obtained an interim
interdict in the Durban High Court (bef ore Meskin J), precluding the further
destruction of parking bays by the Town Council as foreshadowed in the
structure plan. The interdic t remained in force and was replaced by the orders
made by Levinsohn J at the conclusion of the trial in the Durban High Court on
22 November 1996. The learned judge made an order:
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(a) interdicting and rest raining the Town Counc il from interfering with,
damaging or destroying certain parking ba ys identified in the annexures to Bay
Centre’s particulars of claim;
(b) interdicting and restraining the Town Council from in terfering with the
existing access routes to the aforesaid parking bays;
(c) declaring in favour of Bay Centre th at the Town Council was, in terms of
clause 10.5 of the agreement of sale betw een the parties obliged to maintain the
said parking bays;
(d) directing the Town Council to pa y an amount of R249 995,65 as and by
way of damages to Bay Centre, together with interest an a tempore morae
calculated from 1 July 1994 to date of payment;
(e) directing the Town Council to pay the costs of the action and further
directing it to pay all the costs of th e interlocutory pro ceedings which were
reserved pending the decision of the action, which costs included costs
consequent upon the employment of two counsel.
[6] The main dispute before Levi nsohn J revolved around the proper
interpretation of clause 10.5 of the agre ement, in particular whether the Town
Council had undertaken an obligation in perpetuity towards Bay Centre and
whether that obligation related to the very same parking bays constructed off site
by Bay Centre. Clause 10.5 reads:
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‘10.5 From the date of completion thereof the council (the Town Council) will accept full
responsibility for the maintenan ce of parking which shall have been provided in terms of
clause 10.1.1. . .’.
After referring in some detail to the background and the context in which the
relevant clause should be in terpreted, Levinsohn J dea lt first with the ordinary
meaning of the phrase ‘neighbouring land’ in clause 10.1.1. This he did by
reference to the meaning given in the Shorter Oxford English Dictionary and
determined that it meant, ‘lying or living near, or adjacent’. From this starting
point the judge found that common sense dictated that the parking would be
located as close as possible to the partic ular shopping complex. The intention, he
concluded, was that these parking bays would be situated on the perimeter of the
property. This, according to the judge, wa s in keeping with the modern concept
of a shopping centre which envisaged that shoppers would not wish to park their
vehicles too far away from the shopping centre that they intend to patronise.
[7] The judge then proceeded to examin e the word ‘maintenance’ and the
phrase ‘full liability’ (for such maintenance), as contained in clause 10.5. Again,
using the dictionary meaning of the word s as the starting point, he determined
that, in context, ‘maintenance’ meant ‘to continue in, preserve, retain, to keep in
being’ and ‘full liability’ meant having a legal obligation to maintain the very
parking bays established by Bay Centre pursu ant to clause 10.1.1. The judge also
considered the phrase ‘date of completion thereof’ in clause 10.5 and determined
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that it referred to the parking which th e developer (ie Bay Centre) had provided
on neighbouring land (off site parking). Levinsohn J concluded that the Town
Council did in effect undertake an obligation in perpetuity towards Bay Centre
and proceeded to make the orders set out to in para [5] above.
[8] With the leave of the trial judge the Town Council appealed successfully to
the Natal Provincial Division. The orde rs made by Levinsohn J were set aside
and replaced with a judgment in favour of the Town Council. Combrink J agreed
with Levinsohn J that, giving the word ‘maintenance’ its ordinary dictionary
meaning, the obligation assumed by the Town Council to maintain the bays,
entailed an obligation to ‘preserve or keep’ the parking bays ‘in a particular state
or condition’. Taking a slightly different view to that taken by the trial judge,
however, Combrink J held that the obligation assumed by the Town Council
entailed a duty to ‘maintain’ the relevant parking bays on its property, in the
sense of keeping them in a good state of repair and fit for use by members of the
public to park their motor vehicles.
[9] The question whether, upon a proper in terpretation of clause 10.5, the
obligation undertaken by the Town Council was to maintain in perpetuity the
very same parking bays constructe d by Bay Centre was not discussed by
Combrink J. It is, however, fair to assume from his reasoning that he and
Levinsohn J were not ad idem on this aspect, especially given that the former
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held that the obligation assumed by the Town Council was not one owed to Bay
Centre, but to the general public. This, Combrink J reasoned, was in keeping with
the local authority’s obligation to maintain all public amenities created under the
scheme, such as parks and recreation areas. The public parking was, he said, such
an amenity. I am not altogether convinced that, in complying with its duty to the
public, the Town Council would have been entitled to ignore the rights acquired
by Bay Centre or the obligations assumed by it under the agreement. However, in
the view which I take of the matter, it is not necessary to decide the correctness
of the findings of the court a quo on this aspect.
[10] As indicated earlier in the judgment, the key issue in this appeal is
whether, on a proper interpretation of clause 10.5 of the agreement, the obligation
undertaken by the Town Council was to main tain in perpetuity the very same
parking bays constructed by Bay Centre a nd whether, in destroying them, it
breached this clause. If one accepts the in terpretation contended for by the Town
Council, namely that it was not obliged to maintain in perpetuity the very same
bays, the other issues flowing from the orders granted by Levinsohn J, the
interdict relating to existing access routes to the parking bays, the declarator and
damages claimed by Bay Centre in th e sum of R249 995,65, will become
academic and fall away. If, on the other hand, an interpretation favourable to Bay
Centre, namely that the council undertook to maintain the very same bays in
perpetuity, is adopted, it would then be necessary to deal with these other issues.
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[11] Because the outcome of the app eal depends primarily upon the
interpretation of the clause 10.5, it is useful to set out first the general approach to
interpretation of contracts which has guide d the courts over many years. The first
step in construing the relevant clause is to determine the ordinary grammatical
meaning of the words employed in the agreement in order to ascertain the
common intention of the parties. 1 Both Levinsohn and Combrink J began from
this starting point, even though they ulti mately came to different conclusions. If
the ordinary sense of th e words necessarily leads to some absurdity or
inconsistency with the rest of the contr act, then the court may modify the words
just so much as to avoid that absurdity or inconsistency, but no more.2
[12] Furthermore, and perhaps more importan tly in this case, the court is also
enjoined to have regard to the nature and purpose of the contract, 3 which would
entail considering the nature and purpose of the obligation assumed by the Town
Council in accepting ‘full liability for the maintenance’ of the parking bays.
Finally, it is essential to have regard to the context in which the word or phrase is
used with its interrelation to the contract as a whole.4
1 See PG Bison Ltd and Others v The Master and Another 2000 (1) SA 859 (SCA) at para 7 and the
cases referred to therein.
2 See Metcash Trading Ltd v Credit Guarantee Insurance Corporation of Africa Ltd 2004 (5) SA 520
(SCA) at para 10 and the cases referred to therein; also Coopers & Lybrand and Others v Bryant 1995
(3) SA 761 (A) at 767E-F.
3Langston Clothing (Properties) CC v Danco Clothing (Pty) Ltd 1998 (4) SA 885 (SCA) at 888H;
Swart en ‘n Ander v Cape Fabrix (Pty) Ltd 1979 (1) SA 195(A) at 202C-D.
4 Metcash supra at para 10.
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[13] The parking facilities which the devel opers were request ed to provide on
Town Council land, under their respective agreements with the local authority,
were not identified in the agreements in relation to specific areas identifiable with
each individual developer. Such was the case with the agreement between Bay
Centre and the Town Council. Each deve loper had to provide a number of
parking bays proportionate to the floor si ze of the building to be erected. In the
case of Bay Centre, as with other deve lopers in the CBD, the ratio was one
parking bay per 15 s quare metres. The developers , including Bay Centre, were
aware that they were purchasing properties which were subject to the scheme and
they agreed to abide by it. The 62 parking ba ys in issue in this case fell into the
pool of parking bays which Bay Centre a nd the other developers had constructed
on Town Council land in order to meet th e requirements of the town planning
scheme and to provide parking pursua nt to the agreement. By making land
available to the developers, the Town Council made it possible for the developers
(including Bay Centre) to comply with the requirements provided for in the
scheme (one parking bay pe r 15 square metres). That it was the ‘number’ rather
than identifiable parking bays that th e Town Council undertook to maintain, is
clear from the agreement itself: the park ing bays were not identified in the
agreement. In clause 10.1.1 reference is made merely to the ‘number of parking
spaces’ and, in clause 10.5, to ‘parking’ rather than to identifiable parking bays.
This point, I think, is reinforced by the trial court’s inability to specify in the
restraining orders granted by it in favour of Bay Centre the parking bays to which
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the order relates. The interdict simply refers to ‘the parking bays’ identified in the
prayer set forth in Bay Centre’s particulars of claim. But when one examines the
relevant prayer in the particulars of cl aim, it merely refers to ‘120 destroyed
parking bays depicted in blue shadin g in annexure ‘D’ to the plaintiff’s
particulars of claim.’ Curiously the shaded document thus referred to in the order
is not mentioned at all in clauses 10.1.1 and 10.5. In these cl auses reference is
made to the ‘number of parking spaces . . . on neighbouring land’ and to
‘parking’, respectively.
[14] Applying the above principles of the interpretation of contracts I am of the
view that, on a proper interpretation of clause 10.5 read with 10.1.1, the
obligation assumed by the Town Council was simply to maintain the ‘number’ of
parking bays, rather than the very same parking bays constructed by Bay Centre.
That follows not only from the wording of the relevant clauses but also from the
nature and purpose of the agreement. The purpose of the sale of the property was
to secure a commercial complex with malls and arcades. In terms of the scheme
the property was zoned general commercia l and could only be utilized for that
purpose. Because of this Levinsohn J was dr iven to conclude that common sense
dictated that the parking would be as clos e as possible to the particular shopping
complex. That may well be so, but the parking had to be built (1) on
‘neighbouring land’ belonging to the Town Council and (2) on that land ‘which
has been reserved for public vehicular parking purposes’. The second aspect does
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not appear to have been given due rec ognition by the trial judge. By its very
nature, a shopping complex of this size a nd nature is open for use (including use
of its parking facilities) by all and sundry (which includes members of the public
who have not come to do business with Bay Centre).
[15] In my view the fact that the parki ng bays had to be located where the
public had access has some significance. What it meant was that, after Bay
Centre had constructed the bays, it ceased to have control ov er them; the bays
were no longer there for the exclusive us e of its clients or customers. If the
parties intended to vest Bay Centre with the sole control of the parking bays
constructed by it, they would have identified them in clauses 10.1.1 and 10.5 and
not referred to them simply as the ‘n umber’ of parking bays and ‘parking’,
respectively. The interpretation conten ded for by Bay Centre of necessity
requires one to read more into the agreement than it actually provides. While the
trial judge was correct in his finding that the word ‘neighbouring’ meant ‘lying or
living near, or adjacent’, the dictionary definition must be considered in the
context in which the word or phrase is us ed, with its interrelation to the contract
as a whole. In Swart en ‘n Ander v Cape Fabrix (Pty) Ltd, 5 this court said that
when the meaning of words in a contr act has to be determined, they cannot
possibly be cut out and pasted on a clean sh eet of paper and then considered with
a view to determining the meaning thereof. Rather, the words must be considered
5 1979 (1) SA 195 (A) at 202C-D.
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having regard to the nature and purpose of the contract, and in the context of the
words in the contract as a whole. 6 If the matter is approached on that basis the
interpretation adopted by the trial court cannot be upheld.
[16] It remains to consider whether Bay Centre has succeeded in establishing
that there was a breach of clause 10.5 of the agreement on the part of the Town
Council. In the light of the reas oning above, the breach could only be
successfully established if it is shown that as a result of the excavations the Town
Council had and/or intended to destroy parking bays paid for by Bay Centre
without intention to replace them with the same number of bays. Bay Centre has
failed to establish this. The undisputed evidence was that there was sufficient
parking on the adjoining Town Council land for Bay Centre’s customers and
other members of the public to park, despite the destruction of some of the bays
and that in any event the construction of a further number of bays adjacent to the
property of Bay Centre was being planned.
[17] I am not persuaded that the Town Counc il has breached clause 10.5. It is
not necessary to express a view on th e rest of the findings of the court a quo nor
is it necessary to deal with the further issues referred to in paragraph 5(b), (c) and
(d) above.
6 Metcash supra at para 10.
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[18] The appeal is therefore dismissed with costs, including the costs
consequent upon the employment of two counsel.
__________________
KK MTHIYANE
JUDGE OF APPEAL
CONCUR:
HOWIE P
NAVSA JA
BRAND JA
MAYA AJA