University of Johannesburg v Auckland Park Theological Seminary and Another (CCT 70/20) [2021] ZACC 13; 2021 (8) BCLR 807 (CC) ; 2021 (6) SA 1 (CC) (11 June 2021)

CONSTITUTIONAL COURT OF SOUTH AFRICA


Case CCT 70/20

In the matter between:


UNIVERSITY OF JOHANNESBURG Applicant

and

AUCKLAND PARK THEOLOGICAL SEMINARY First Respondent

WAMJAY HOLDINGS INVESTMENTS (PTY) LIMITED Second Respondent



Neutral citation: University of Johannesburg v Auckland Park Theological
Seminary and Another [2021] ZACC 13

Coram: Mogoeng CJ, Jafta J, Khampepe J, Madlanga J, Mathopo AJ,
Mhlantla J, Theron J and Tshiqi J


Judgments: Khampepe J (unanimous)

Heard on: 5 November 2020

Decided on: 11 June 2021

Summary: Contract — delectus personae — contractual interpretation —
admissibility of contextual evidence — parol evidence rule —
permissibility of cession — rights in a long lease can be personal
in nature and incapable of cession

2

ORDER



On appeal from the Supreme Court of Appeal (hearing an appeal from the High Court
of South Africa, Gauteng Local Division, Johannesburg):
1. Leave to appeal is granted.
2. The appeal is upheld.
3. The order of the Supreme Court of Appeal is set aside and replaced with
the following:
“The appeal is dismissed with costs.”
4. The respondents are ordered jointly and severally to pay the costs of the
applicant in this Court, including the costs of two counsel.



JUDGMENT




KHAMPEPE J (Mogoeng CJ, Jafta J, Madlanga J, Mathopo AJ, Mhlantla J, Theron J
and Tshiqi J concurring):


“Poetry never stood a chance
of standing outside history
. . .
Suppose you want to write
of a woman braiding
another woman’s hair—
straight down, or with beads and shells
in three-strand plaits or corn rows—
you had better know the thickness
the length the pattern
why she decides to braid her hair
how it is done to her
KHAMPEPE J
3
what country it happens in
what else happens in that country
You have to know these things
. . .
I am writing this in a time
when anything we write
can be used against those we love
where the context is never given
though we try to explain, over and over
For the sake of poetry at least
I need to know these things.”1

Introduction
[1] I make bold to say that it is not just for the sake of poetry that the old adage,
context is everything, holds true. In so many scenarios, w ords alone ring hollow.
Context gives life and meaning to what is said or written. Is a court of law then entitled,
or required, to take cognisance of context when interpreting a contract ? That is the
question that this Court is called upon to answer.

[2] At the core of this matter is a dispute over the permissibility of the cession of
rights in a long-term lease agreement. The solution to the dispute lies in the answer to
whether or not the rights in question are personal to the first respondent (delectus
personae) and therefore incapable of cession .2 This requires the Court to cons ider an
antecedent question: can contextual evidence be brought, and used, to demonstrate the
personal nature of rights in an agreement to support an argument that the rights therein
may not be freely ceded? The judgment of the Supreme Court of Appeal answered this

1 Adrienne Rich “North American Time” (1983).
2 Roughly translated from Latin, delectus personae means “chosen person” or “choice of person”. See Scott The
Law of Cession 2 ed (Juta & Co Ltd, Cape Town 1991) at 202 which states:
“Delectus personae becomes important where the parties to a juristic act intend to negotiate
personally with each other to the exclusion of others. . . . In these circumstances the general
principle that a person may dispose of his rights freely is restricted.”
See also Gowie v Provident Insurance Co Ltd (1885) 4 SC 118 at 122, where it was held that “where two parties
enter into a personal contract neither of them can compel the other to accept a third person as a substitute for the
party with whom he has personally contracted”.
KHAMPEPE J
4
in the negative and held that the contract was unambiguous and that the words should
therefore be read objectively. Further, it held that the evidence the applicant sought to
adduce to show that the rights in the contract were delectus personae was, in fact,
brought to vary, add to or contradict the contract and was therefore inadmissible in terms
of the parol evidence rule. This matter therefore requires this Court to consider the
interplay, in the delectus personae setting, between the interpretative injunction on
courts to interpret contracts within their context, having regard to relevant contextual
evidence, and the accepted legal principles that form part of the parol evidence rule. In
particular, it requires this Court to consider whether the Supreme Court of Appeal
conflated the relevant legal principles and thus applied the incorrect principles to the
determination before it. More on this later.

Parties
[3] The applicant is the University of Johannesburg (UJ), a public institution of
higher education established in terms of section 23(1) of the Higher Education Act.3 It
is the successor of the Rand Afrikaans University, which was established in terms of
the Rand Afrikaans University Act. 4 The Rand Afrikaans University and another
institution of higher education, Technikon Witwatersrand, merged in 2005 to form UJ.
Throughout this judgment, I refer to the applicant as UJ, for ease of reference, even
when referring to the pre-2005 entity.

[4] The first respondent is Auckland Park Theological Seminary (ATS), an entity
which provides theological training to students who wis h to become pastors of the
Apostolic Faith Mission of South Africa. The second respondent is Wamjay Holdings
Investments (Pty) Limited (Wamjay), a company wishing to build a faith -based school
on premises in Auckland Park owned by the applicant.


3 101 of 1997.
4 51 of 1966.
KHAMPEPE J
5
Background facts
[5] UJ is the owner of Portion 1 of Erf 809, Auckland Park Township, Registration
Division I.R, Province of Gauteng (the leased premises), situated at
51 Richmond Avenue, Auckland Park. The leased premises were expropriated from
the Johannesburg Coun try Club in order to afford UJ additional land to establish its
campus.

[6] UJ and ATS concluded a co -operation agreement in 1993, authorised by
section 10B(1) of the Universities Act, 5 which empowered the university to conclude
agreements with other institut ions involved in the provision of h igher education
(co-operation agreement). The co -operation agreement provided, among other things,
that students who registered for theological degrees would be taught some courses by
UJ and others by ATS.

[7] In 1995, during the course of the co -operation agreement, further negotiations
between UJ and ATS were entered into for the purpose of ATS acquiring property for
a theological college. In terms of section 4(2) of the Rand Afrikaans University Act,
UJ was entitled to lease immovable property belonging to the university to others, but
required the approval of the Minister of Education before its property could be let or
alienated. UJ therefore applied to the Minister for the approval to lease parts of its land
to different entities for various purposes. Part of this application included a request for
permission from the Minister to allow UJ to let the leased premises to ATS . UJ
specifically mentioned ATS by name in its application, and outlined that ATS required
this particular property to build a theological college, a project with which UJ wished
to assist by providing the property . Permission was granted by the Minister on
18 June 1996. Following this, in December 1996, UJ and ATS concluded a written
long-term lease agreement, registered against the title deed of the property. The lease
was to endure for 30 years, renewable with six months’ written notice by ATS prior to
the expiry of the period. ATS paid UJ a once-off rental of R700 000.

5 61 of 1955.
KHAMPEPE J
6

[8] As it turns out, ATS di d not end up establishing a theological college on the
leased premises. Instead, on 28 March 2011, i t ceded its rights under the lease
agreement to Wamjay, by means of a written cession. A notarial deed of cession was
subsequently concluded in October 2011. Wamjay paid ATS R6 500 000 for the rights
under the lease agreement. It is common cause that Wamjay’s intention was to establish
a religious-based school for primary and high school education on the leased premises.
Of particular relevance is that neither ATS nor Wamjay notified UJ of the cession, nor
did they seek UJ’s permission or ministerial approval to conclude the cession
agreements.

[9] When UJ came to know of the cession between the respondents, it took the view
that: the rights in the lease agreement were personal to ATS; ATS had therefore
repudiated the lease agreement by purporting to cede to Wamjay rights that were
incapable of cession; and ATS had divested itself of the ability to give effect to the
agreed use of the property under the lease agreement. UJ thus purported to accept
ATS’s repudiation and cancelled the lease agreement.

[10] ATS and Wamjay , in turn, disputed UJ’s right to cancel the lease agreement.
This dispute led to an eviction application in the High Court by UJ for orders evicting
ATS and Wamjay from the leased premises and cancelling the registration of the
notarial lease against the title deed.

Litigation history
High Court
[11] The High Court found in favour of UJ.6 It held that the evidence was consistent
and uncontroverted in relation to the personal nature of the relationship between UJ and
ATS. It undertook a contextual interpretative exercise of the lease agreement and

6 University of Johannesburg v Auckland Park Theological Seminary (Pty) Ltd 2017 JDR 1991 (GJ).
KHAMPEPE J
7
clause 87 in particular, and held that UJ had made out the case that the lease was delectus
personae. It was therefore entitled to the relief it sought. ATS and Wamjay were
ordered to vacate the leased premises and the Registrar of Deeds was ordered to cancel
the registration of the notarial long -term lease agreement registered against the title
deed.

[12] ATS and Wamjay appealed to the Full Court.

Full Court
[13] The Full Court, per Van Oosten J with Carelse J concurring, dismissed the appeal
with costs.8 Although the minority judgment of Wright J differed in its approach, it too
would have dismissed the appeal with costs. The majority of the Full Court held that
the reasoning and findings of the High Court regarding the interpretation of the lease
could not be faulted . It held that, in addition to those mentioned by the Hi gh Court,
there were several additional factors that pointed to the personal nature of the rights in
the lease. For example, it found that the functions and goals of UJ and ATS were
intertwined and aligned. It held that the primary and high school facili ties planned by
Wamjay could not be reconciled with any of these goals. The Full Court further noted
that the cession, if upheld, would lead to the absurdity that Wamjay would be the holder
of the lease rights, but ATS would remain bound by the obligation s under the lease
agreement.


7 Clause 8 of the lease agreement (translated from Afrikaans to English) reads as follows:
“Use of Property
8.1 The Lease Premises shall be used by the Lessee for educational, religious and related
purposes, construction of campus for education, teaching, research, training, offices
and student facilities.
8.2 The lessee has the right to erect buildings, constructions, facilities, improvements and
landscaping and structures for the use of the Lease Premises as define d in Clause 8.1
of this agreement and provided that the building, construction and other plans with
respect to such buildings, constructions, facilities, improvements and landscaping and
structures must first be submitted to the Registrar (Operations) of t he Lessor for his
comments and written approval. Said approval will not be refused unreasonably by
the Lessor.”
8 Auckland Park Theological Seminary v University of Johannesburg 2018 JDR 1631 (GJ).
KHAMPEPE J
8
[14] The Full Court went further and raised the question whether perhaps all leases,
by their inherent nature, ought to be considered personal. It noted that it may be time
to reconsider the general statement in Boshoff9 that, as regards a lessor, there is generally
no delectus personae. However, the Full Court did not deem it necessary to go into this
aspect in any further detail.

[15] The respondents appealed the finding of the Full Court to the Supreme Court of
Appeal.

Supreme Court of Appeal
[16] The Supreme Court of Appeal upheld the appeal with costs and replaced the
order of the High Court with an order dismissing UJ’s claim.10 It is necessary to go into
the findings of the Supreme Court of Appeal’s curt judgment in some detail.

[17] The Supreme Court of Appeal held that all contractual rights can be transmitted
unless their nature involves a delectus personae or the contract shows that the rights
were not intended to be ceded. It held that the restriction on cession imposed by the
delectus personae concept is simply a manifestation of the general principle that the
cession should not disadvantage the debtor. It quoted with approval the statement from
Boshoff that, in a long lease, the lessor does not expect that the obligations of th e lease
will be carried out personally by the lessee throughout the whole term and that there is
therefore no delectus personae. The Supreme Court of Appeal held that this was true
of an urban tenement and that a lessee can therefore cede its rights under a lease without
the consent of a landlord, unless the terms of the lease forbid it from doing so.

[18] The Court held that, in this case, there was nothing in the lease itself that
indicated that ATS’s rights were not intended to be ceded. It noted that UJ sought to
meet that difficulty by adducing oral evidence. According to the Court, however,

9 Boshoff v Theron 1940 TPD 229.
10 Auckland Park Theological Seminary v University of Johannesburg [2020] ZASCA 24; 2020 JDR 0494 (SCA)
(Supreme Court of Appeal judgment).
KHAMPEPE J
9
“[a]lmost all of the evidence [adduced by UJ and taken into account by the High Court]
was plainly inadmissible” on the basis of the parol evidence rule, which states that “[i]f
a document was intended to provide a complete memorial of a jural act, extrinsic
evidence may not contradict, add to or modify its meaning”. 11 The Court stated that
UJ’s introduction of the evidence in this case was done “under the guise that such
evidence was being introduced as to context, [but] [p]roperly construed, however, such
evidence was introduced to add to, vary or contradict the general words of the lease”.12
The Court therefore held that, by virtue of the parol evidence rule, that e vidence was
plainly inadmissible and should not have been allowed by the High Court. As the basis
of UJ’s claim could not be supported, it concluded that the High Court’s judgment could
not be sustained.

[19] As a final point, the Supreme Court of Appeal considered that the lease
agreement prohibited the parties from relying on any warranties or representations not
expressly included in the lease agreement and that the lease agreement was intended to
be the sole memorial of the agreement between the parties.13 In addition, the lease
agreement itself contained no express or implied provision to the effect that the rights
therein were personal to ATS. Therefore, the Court concluded that , on a proper
interpretation, the rights in the lease were not personal t o ATS. Since the terms of the
lease were unambiguous, the Supreme Court of Appeal held that the High Court ought
only to have had regard to the words used, which should have been construed
objectively. In this instance, the Supreme Court of Appeal held that there was nothing

11 Id at para 6, referring to KPMG Chartered Accountants (SA) v Securefin Ltd [2009] ZASCA 7; 2009 (4) SA
399 (SCA) (KPMG) at para 39.
12 Supreme Court of Appeal judgment id at para 10.
13 This is in terms of the whole agreement clause in clause 15 of the lease agreement, which reads as follows:
“Whole agreement
15.1 This is the whole agreement between the parties.
15.2 On concluding this lease, neither of the parties relies on any guarantees,
representations, disclosures or opinions that have not been included in this agreement
as guarantees or undertakings.
15.3 A change to or agreed cancellation of this lease will have no force or effect unless it is
reduced to writing and signed by both parties and registered in notarial format in a
Deeds Office as an addendum to this agreement.”
KHAMPEPE J
10
in clause 8 which justified an assertion that the rights were personal to ATS and
incapable of cession.

[20] UJ now applies to this Court for leave to appeal against the whole judgment and
order of the Supreme Court of Appeal.

UJ’s main arguments before this Court
[21] UJ maintains that: (a) the rights under the lease agreement are personal to ATS
and are therefore incapable of being ceded; (b) ATS repudiated the lease by purporting
to cede rights to Wamjay in circumstances where this incapacitated ATS from giving
effect to the agreed use of the leased premises ; (c) UJ accepted the repudiation and
cancelled the lease agreement; and (d) UJ is therefore entitled to an order evicting ATS
and Wamjay from the leased premises.

[22] UJ’s appeal in this Court is based on two central arguments. First, that the
Supreme Court of Appeal conflated two mechanisms by which a creditor may be
prohibited from ceding a contractual right without the debtor’s consent. The first
prohibition is where there is a term in the contract to that effect; often referred to as a
pactum de non cedendo (agreement not to cede), which is not applicable here. The other
arises out of the nature of the right in the contract in question ; where the right is so
personal to the creditor that it is incapable of being ceded to another without the consent
of the debtor (delectus personae).

[23] According to UJ, the Supreme Court of Appeal conflated these two concepts by
holding that, since there was no express clause in the lease that prohibited cession, it
followed that the rights in the lease were not delectus personae and were therefore
capable of cession. UJ is of the view that this reasoning is a non sequitur (a conclusion
that does not logically follow from the previous argument) as the fact that the lease
agreement does not contain a pactum de non cedendo does not just ify the conclusion
that the rights are not personal. The Supreme Court of Appeal therefore asked the wrong
question in determining whether the rights were capable of being ceded.
KHAMPEPE J
11

[24] Second, UJ submits that the Supreme Court of Appeal erred by failing to hav e
regard to the context of the lease agreement. Since the Court was required to consider
whether the rights were personal, it needed to interpret the lease agreement in
accordance with the general principles relating to the interpretation of contracts.
According to UJ, the Supreme Court of Appeal’s approach was inconsistent with its
prior case law on the interpretation of contracts and represented a departure from the
contextual approach set out in Endumeni,14 which has been endorsed by this Court. UJ
submits that the evidence it led was admissible to shed light on the nature of the rights
in order to show that they are personal and to show that it make s a difference to UJ
whether the rights under the lease agreement are vested in ATS or someone el se. In
UJ’s view, the effect of the Supreme Court of Appeal’s approach is that the doctrine of
delectus personae will never again find application, as courts will not be able to consider
context when assessing whether rights are personal.

[25] According to UJ, if the Supreme Court of Appeal had chosen to have regard to
the evidence of context, it would have reached the same conclusion as the High Court
and the Full Court: namely, that the rights were personal to ATS. All the evidence
indicates that it makes a significant difference to UJ whether the person in whom the
rights are vested under the lease agreement is ATS (as a provider of higher education)
or Wamjay (an entity not involved in higher education). According to UJ, the cession
of rights to Wamjay de feats the purpose of the lease agreement. It could never have
been intended by the parties , when concluding the lease, that the land could go to an
entity not involved in higher education.

[26] Since a cession agreement cedes the rights but do es not also assign ATS’s
obligations to Wamjay, UJ contends that this would mean that, if Wamjay occupies the
leased premises, ATS – by virtue of no longer having the right to occupy the leased
premises – would not be able to fulfil its positive obligations to use the lan d for the

14 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA)
(Endumeni).
KHAMPEPE J
12
purposes of higher education in terms of clause 8.15 This leads to a prejudicial outcome
for UJ. As the restriction on cession imposed by the delectus personae is simply a
manifestation of the general principle that the cession should not disadvantage the
debtor, UJ contends that this is another reason that the rights are not cedable.

[27] Finally, UJ submits that because the rights are not capable of cession , ATS
repudiated the lease agreement by purporting to cede them. By ceding its rights, so UJ
argues, ATS purported to divest itself of the ability to give effect to the agreed use of
the leased premises , and objectively communicated to UJ that it no longer held itself
bound to the terms of the lease agreement . This entitled UJ to cancel the agreement.
As a result, ATS and Wamjay have no right to occupy the premises.

[28] UJ therefore submits that the finding and order of the High Court was correct, as
was that of the Full Court. UJ requests that this Court upholds the appeal with costs.

Respondents’ main arguments before this Court
[29] The respondents are of the view that UJ, and not the Supreme Court of Appeal,
conflated the concept of pactum de non cedendo with delectus personae by seeking to
interpret the rights and obligations in the lease agreement to establish whether they were
personal to ATS. This is because delectus personae does not require a contractual term
to establish it, but is established by an analysi s of the nature of the right itself.
Therefore, t he extent of contractual interpretation required, according to the
respondents, is to determine the nature of the right. Contextual evidence for this
purpose is only necessary insofar as one is unable to determine the nature of the right
on the ordinary grammatical meaning of the words of the contract.

[30] The respondents contend that the nature of the right in issue is easily capable of
determination from a plain reading of the lease agreement. The nature of the right is

15 UJ contends that the words in clause 8, “shall be used . . . for . . . construction of campus for education . . . and
student facilities”, impose a positive obligation on ATS to use the land for purposes of higher education.
KHAMPEPE J
13
simply the “beneficial occupation of [the] premises [by a tenant] and the rights that flow
[therefrom]”. Once the nature of the right conferred by the contract is determined, the
question for determination is whether this right is by its nature incapable of cession and
there is nothing further to interpret in order to determine whether the right is delectus
personae.

[31] The respondents rely on the Law of South Africa ( LAWSA), which states that
“a tenant under an urban tenement may accordingly cede the rights under a lease without
the consent of the landlord” as there is ordinarily no delectus personae for lessors.16
The respondents note that, according to LAWSA, “in the absence of an express or
implied provision, the lessee may without the le ssor’s consent cede his or her rights
under a lease of urban property”.17

[32] They submit that the concept of delectus personae states that a right cannot be
ceded without the consent of the debtor if the performance the debtor is to render to the
proposed cessionary would differ in character from the current performance. Here, the
respondents submit, the performance due by the debtor does not change: the right to
beneficial occupation does not alter the characteristics of the performance owed by UJ
merely because the creditor changed from ATS to Wamjay. This means that the rights
cannot be delectus personae and are freely capable of cession. In addition, there is no
prejudice to UJ’s obligations as a result of the cession of ATS’s rights to Wamjay.

[33] Since the right in issue is not by its very nature delectus personae , the
respondents submit that it is freely transmissible and ATS could only be precluded from
ceding its rights if it was contractually prevented from doing so. In this case, there was
no such term, express or tacit. The respondents further submit that clause 8 cannot be
a factor in determining whether the right is delectus personae . As, f or example, if
Wamjay intended to use the land for higher education, that would not contravene

16 Lubbe “Cession” in LAWSA 3 ed (2013) vol 3 at para 165.
17 Bradfield “Lease” in LAWSA 3 ed (2020) vol 26(1) at para 111.
KHAMPEPE J
14
clause 8. Yet, if the right was actually delectus personae, it would preclude cession to
any party, including to one that may fall within the description of the intended use of
the property.

[34] The respondents are of the view that the Supreme Court of Appea l was correct
in finding that the contextual evidence was inadmissible, as there was no term in the
contract that required interpretation. They say that the difficulty with UJ’s contention
that, in the context of the circumstances in which the lease was c oncluded, the parties
intended the rights to be delectus personae, is that it militates against the express terms
of the lease. Those terms, the respondents aver, do not prohibit cession, and it cannot
be said that there is an implied term prohibiting ces sion. Importantly, contextual
evidence cannot be used to alter, modify or vary the express wording of the lease.

[35] In the event that the Court finds that the contextual evidence was admissible and
relevant, then the respondents submit that the evidence in any event did not establish
that the rights were delectus personae. Since the nature of the right per se does not
establish a delectus personae, the respondents submit that it can only be established that
the right was intended by the parties to be delectus personae if that was the common
intention of the parties and if that intention appears from the admissible documents .
According to the respondents, there is nothing in the contextual evidence to suggest that
both parties intended that the rights in the lease could only be exercised by ATS.

[36] Further, the respondents submit that even if UJ succeeds in proving that the rights
were personal, ATS cannot be held to have repudiated the lease by ceding the rights .
That is so because ATS’s conduct falls far short of an intention not to be bound by the
lease. Even if the conduct constituted a breach of the lease by ATS, this breach was
remediable and UJ ought to have put ATS in mora (breach) as required by clause 11 of
the lease. ATS avers that since repudiation is not lightly presumed, it cannot be that a
party’s minor breaches can constitute an intention not to be bound by the lease. The
cession itself could not be said to be a repudiation of the lease as UJ could have simply
asked ATS to remedy its breach and cancel the cession. The respondents submit further
KHAMPEPE J
15
that, in any event, ATS retained its obligations in terms of the lease and did not divest
itself of those obligations by ceding its rights. As a result, the respondents submit that
UJ did not prove an unequivocal and deliberate intention not to be bound by the lease
on the part of ATS.

[37] Finally, the respondents raise the defences of waiver and estoppel against UJ’s
claim that ATS repudiated the lease. In relation to waiver, they say that UJ’s conduct
in selling the property temporarily during the lease , and cancelling the co -operation
agreement, is indicative of an intention to waive any reliance on the delectus personae
of ATS’s rights in the lease . The respondents say that ATS accepted the waiver by its
conduct when it did not object to the sale despite having knowledge of the sale. As to
estoppel, the respondents argue that UJ’s temporary sale of the property and
cancellation of the co-operation agreement represented to ATS that UJ no longer relied
on the contention that the lease was for the purposes of giving practical effect to the
co-operation agreement after its cancellation. This representation induced ATS to
believe that UJ did not regard the right as being personal to ATS, which in turn induced
it to conclude the cession. Wamjay paid ATS R6 500 000 for the rights in the lease .
The respondents submit that Wamjay would reclaim this amount if it were to be found
that the rights were incapable of cession, and this would prejudice ATS. T herefore,
even if this Court finds the rights to have been personal to ATS, UJ should be estopped
from relying on this.

[38] For all those reasons, t he respondents submit that the appeal ought to be
dismissed.

Issues for determination
[39] The main issues for determination are as follows. First, does this matter engage
this Court’s jurisdiction and is it in the interests of justice for this Court to grant leave
and determine the matter? If UJ overcomes these hurdles , the first question on the
merits is whether the Supreme Court of Appeal erred in how it approached the question
of delectus personae . Connected to this is whether that Court adopted the incorrect
KHAMPEPE J
16
approach to contractual interpretation. This raises the question, if it did err: what is the
correct approach to interpreting contracts when determining whether rights are delectus
personae? And is the lease agreement in this matter personal to ATS? Following this,
this Court will need to determine whether ATS was entitled to cede the rights under the
lease agreement to Wamjay and whether or not this constituted a repudiation of the lease
agreement. Even if all of the above is decided in favour of UJ, consideration will still
need to be had to the defences of waiver and estoppel that the respondents have raised
against UJ’s claims.

Leave to appeal
Jurisdiction
[40] Although the Constitutional Court acts as a final appellate court that affords
litigants the opportunity of a “super appeal”, this is not merely for the taking and this
Court has made it clear that “not all litigants who knock on this Court’s door” will be
granted leave to appeal.18 For leave to be granted, the matter must engage this Court’s
jurisdiction under section 167(3)(b) of the Constitution and, further, it must be in the
interests of justice for leave to be granted.

[41] Section 167(3)(b) provides that this Court may decide—

“(i) constitutional matters; and
(ii) any other matter, if the Constitutional Court grants leave to appeal on the
grounds that the matter raises an arguable point of law of general public
importance which ought to be considered by that Court.”

[42] UJ tries to pin jurisdiction on both legs of section 167(3)(b). I begin my analysis
on jurisdiction with the s econd leg: UJ submits that the application raises arguable
points of law of general public importance that ought to be considered by this Court. In
Paulsen, this Court held that:

18 Economic Freedom Fighters v Gordhan [2020] ZACC 10; 2020 (6) SA 325 (CC); 2020 (8) BCLR 916 (CC) at
para 30.
KHAMPEPE J
17

“Reduced to bare essentials, [section 167(3)(b)(ii)] provides for this Cour t to grant
leave if
(a) the matter raises an arguable point of law;
(b) that point is one of general public importance; and
(c) the point ought to be considered by this Court.”19

[43] Regarding the first element, which requires that the matter must raise an arguable
point of law, the Court held that this is a bifurcated requirement: the point must be one
of law and it must be arguable. 20 According to UJ, the important points of law arising
from the Supreme Court of Appeal judgment are as follows:

“[W]hether and to what extent a party is entitled to adduce evidence of facts pertaining
to the context within which an agreement has been concluded [and] to what extent a
court is entitled to take cognisance of and rely on evidence of context in the process of
interpretation.”

It is quite clear that the points raised by UJ are questions of law.

[44] It is also clear that the determination of this matter raises other points of law
related to those explicitly pointed out by UJ. The first arises out of the Supreme Court
of Appeal’s apparent finding that because the parties had “expressly agreed that no party
may rely on any warranties or representations not expressly included in the lease
agreement”, then contextual evidence could not be led to show that the rights in the
lease agreement were delectus personae.21 This requires us to decide whether, and the
extent to which, a whole agreement clause ousts a court’s entitlement to have regard to
contextual evidence in the interpretation of a contract. We are also required to de cide
the extent to which the parol evidence rule, on which the Supreme Court of Appeal

19 Paulsen v Slip Knot Investments 777 (Pty) Ltd [2015] ZACC 5; 2015 (3) SA 479 (CC); 2015 (5) BCLR 509
(CC) at para 16.
20 Id at para 20.
21 Supreme Court of Appeal judgment above n 10 at paras 10-1.
KHAMPEPE J
18
relied, prevents contextual evidence from being adduced to show that rights in a contract
are delectus personae.

[45] The other related point of law stems from the Supreme C ourt of Appeal’s
finding, relying on Boshoff, that “[a] tenant under an urban tenement may accordingly
cede the rights under a lease without the consent of the landlord, unless the terms of the
lease forbid the tenant from doing so ”.22 This seems to imply that rights under a lease
can never be delectus personae and that the only possible restriction on cession in this
context is if there is a term in the lease forbidding cession. Axiomatically then, this
matter requires us to decide the contours of Boshoff, and to pronounce on whether rights
under a lease are capable of being delectus personae. These are evidently questions of
law.

[46] During the hearing, argument centred on the second part of the bifurcated
requirement: that is, are the points of law raised arguable? In my view, the answer must
be in the affirmative. In Paulsen, Madlanga J construed the expression “arguable point
of law” and determined what makes a legal point arguable. He stated:

“Surely, a point of law which, upon scrutiny, is totally unmeritorious cannot be said to
be arguable. . . . The notion that a point of law is arguable entails some degree of merit
in the argument. Although the argument need not, of necessity, be convincing at this
stage, it must have a measure of plausibility.”23

[47] In simple terms , then, the test is that the point of law must have reasonable
prospects of success. 24 In my view, the points of law raised by this matter are
undoubtedly arguable. As I explain more fully later , there is merit to UJ’s contention
that the Supreme Court of Appeal’s approach that since the terms of the lease were
unambiguous, the lease had to be interpreted “objectively” and without resort to

22 Id at para 9.
23 Paulsen above n 19 at para 21.
24 Id at para 22.
KHAMPEPE J
19
contextual evidence, conflicts with that Court’s previou s decisions on the proper
approach to the interpretation of contracts , which have been endorsed by this Court.
Not only is the Supreme Court of Appeal’s approach in this regard seemingly in conflict
with its own jurisprudence and that of this Court, but it also appears to set our law back
by a few decades to the bygone era where contextual evidence (then known as “evidence
of surrounding circumstances”) was only admissible if the language of the contract
under interpretation was ambiguous. 25 This is no longer our law. There are therefore
prospects that this Court may reverse the Supreme Court of Appeal’s decision to
exclude the contextual evidence introduced by UJ and accepted by the High Court and
the Full Court, and deem that evidence relevant to the question of whether the rights in
the impugned lease are delectus personae.

[48] Moreover, and as I show in the exposition of the merits, it was not correct for the
Supreme Court of Appeal to rely on Boshoff for the apparent contention that rights in a
lease can never be delectus personae , and its consequent conclusion that the only
possible restriction on the cession of rights under a lease is a term forbidding cession
was thus also incorrect. There are the refore reasonable prospects of success that this
Court will find that the Supreme Court of Appeal erred both in its exposition of the law
relating to the admissibility of contextual evidence for contractual interpretation and to
the concept of delectus personae, and in the conclusion that this led to. That makes the
points raised arguable.

[49] Lastly, there was some time dedicated at the hearing to whether the points of law
raised by UJ were arguable given that the contextual approach to contractual
interpretation is mostly settled in our law. It was argued that this case merely involves
a misapplication of established principles by the Supreme Court of Appeal and therefore
does not engage this Court’s jurisdiction. This argument must fail. While it is trite that
a wrong decision in the application of the law raises neither a constitutional issue26 nor

25 Rane Investments Trust v Commissioner, South African Revenue Service [2003] ZASCA 60; 2003 (6) SA 332
(SCA) at para 26 and Coopers & Lybrand v Bryant [1995] ZASCA 64; 1995 (3) SA 761 (A) (Coopers) at 768C-E.
26 The point that the misapplication of established legal principles does not raise a constitutional issue has been
made in a number of cases. See S v Jacobs [2019] ZACC 4; 2019 (1) SACR 623 (CC); 2019 (5) BCLR 562 (CC)
KHAMPEPE J
20
an arguable point of law of general public importance, 27 we are not concerned with an
alleged misapplication of settled legal principles in this matter. What i s alleged is that
the Supreme Court of Appeal got the law wrong, and applied the incorrect legal
principles when considering the lease agreement and determining whether the rights
under the agreement were delectus personae.

[50] In any event, if a point of law is raised under circumstances where it is alleged
that a decision of the Supreme Court of Appeal on that point of law conflicts with that
Court’s own jurisprudence , or that of this Court, and on assessment by this Court the
argument is not unmeritorious a nd has prospects of success, the conclusion should
generally be that the point of law raised is arguable. That the matter, when adjudicated,
would require the application of the trite principles departed from by the Supreme Court
of Appeal should have no bearing on whether the point raised is arguable. The departure
by the Supreme Court of Appeal from settled law establishes the arguability of the point.
In this case, I have already said that the approach taken by the Supreme Court of Appeal
appears to depart from its own settled jurisprudence and that of this Court. The points
of law raised are thus evidently arguable.

[51] Turning briefly to the final requirements for an arguable point of law to engage
this Court’s jurisdiction: it must be a point of gener al public importance that ought to
be considered by this Court. A point is of general public importance if its resolution
transcends the interest s of the parties to a particular litigation. In other words, its
resolution must benefit the general public. There is no doubt in my mind that it is of
general public importance that this Court, amongst other things, clarifies the correct
approach to contractual interpretation, particularly where the contract being interpreted
contains a whole agreement clause. Such clauses are common in contracts, and it is of
public importance that we clarify whether they prevent a court from taking into account

at paras 38-9; Booysen v Minister of Safety and Security [2018] ZACC 18; 2018 (6) SA 1 (CC); 2018 (9) BCLR
1029 (CC) at paras 50-3; and Phoebus Apollo Aviation CC v Minister of Safety and Security [2002] ZACC 26;
2003 (2) SA 34 (CC); 2003 (1) BCLR 14 (CC).
27 General Council of the Bar of South Africa v Jiba [2019] ZACC 23; (2019) JDR 1194 (CC); 2019 (8) BCLR
919 (CC) at para 59.
KHAMPEPE J
21
contextual evidence. It is also of public importance for this Court to clarify whether
rights under a lease are capable of being delectus personae, and to shed light on whether
Boshoff can still be relied on for the proposition that they are not so capable. It also
follows that the points of law raised ought to be decided by this Court. Ultimately, this
is an interests of justice consideration28 and, as I have already noted, and as my ensuing
discussion on the merits indicates, the points of law raised have reasonable prospects of
success.

[52] Given that this Court’s jurisdiction has been engaged on the basis that the matter
raises arguable points of law of general public importance that this Court ought to
consider, I do not think it necessary to consider UJ’s alternative basis for jurisdiction,
which is that the matter raises constitutional issues under section 167(3)(b)(i) of the
Constitution. I turn instead to consider the second leg of the leave to appeal inquiry,
which is whether it is in the interests of justice for this Court to determine the matter.

Interests of justice
[53] The final hurdle under the rubric of leave to appeal is the question of interests of
justice. As mentioned, the issues raised here have reasonable prospects of succeeding
and, in my view, that decisively compels the granting of leave. In Bruce, this Court
said:

“In dealing with applicat ions for leave to appeal against the decision of the Supreme
Court of Appeal this Court has held that the prospects of success are of fundamental
importance. Such an appeal is the only remedy left to the applicant and if there are
reasonable prospects tha t the appeal will succeed there are compelling reasons for
granting the leave that is necessary.”29

[54] The good prospects of success here warrant the granting of leave. Therefore,
leave to appeal should be granted.

28 Paulsen above n 19 at para 30.
29 Bruce v Fleecytex Johannesburg CC [1998] ZACC 3; 1998 (2) SA 1143 (CC); 1998 (4) BCLR 415 (CC) at
para 6.
KHAMPEPE J
22

Merits
[55] Was ATS allowed to cede its rights in the lease agreement to Wamjay without
UJ’s consent? This is ultimately the question that this Court must determine. It is trite
that, in general, rights may be freely ceded.30 Thus, “any right arising out of a contract
may be ceded by the party entitl ed thereto to a third party without the knowledge or
consent of the party liable”. 31 It is equally uncontroversial that an exception to this
general position is that—

“[a] right arising out of a contract cannot be ceded without the consent of the party
liable, if the parties intended that the promisee alone should be entitled thereto. Such
an intention is presumed, if the nature of the transaction involves personal confidence
between the parties or is otherwise such that personal considerations are of the essence
of the contract (delectus personae).”32

[56] It is this exception to the general transferability of rights – delectus personae –
on which UJ seeks to rely in this case. Scott describes this exception as arising in two
circumstances:

“[This] restriction [on freely ceding rights] applies to cases where the nature of the
contract is such that the rights flowing from it may not be ceded, and also where the
contract itself is not of such a nature that the rights flowing from it are non -
transferrable, but where special circumstances create a delectus personae , thereby
rendering the rights flowing from the contract non-transferrable.”33


30 Wessels The Law of Contract in South Africa (Hortors Limited, Johannesburg 1937) vol 1 at 543.
31 Lee and Honoré The South African Law of Obligations (Butterworth & Co. (Africa) Limi ted, Durban 1950)
at 55. See also Kerr Principles of the Law of Contract 3 ed (Butterworth & Co. (Africa) Limited, Durban 1980)
at 286, where it is stated tha t “in general, contractual rights, present and future, may be freely transferred by
cession without the knowledge or consent of the party against whom the right is held, i.e. the party obliged to
perform”.
32 Lee and Honoré id. See also Kerr id at 286-7, which states that “[c]ertain exceptional cases fall out of the scope
of the general rule [and] . . . these are, in the main, those where the personal element is of considerable importance,
[for example] rights under contracts of personal service”.
33 Scott above n 2 at 202.
KHAMPEPE J
23
[57] So, do the rights in the lease agreement before us involve a delectus personae?
Before answering this, I touch briefly on the principles surrounding this concept.

Delectus personae
[58] The delectus personae exception to the general principle that rights are freely
transferrable was explicated over a century ago by Innes CJ as follows:

“Now, speaking generally, the question of whether one of two contracting parties can,
by cession of his interest, establish a cessionary in his place without the consent of the
other contracting party depends upon whether or not the contract is so personal in its
character that it can make any reasonable or substantial difference to the other party
whether the cedent or the cessionary is entitled to enforce it . Subject to certain
exceptions founded upon the above principle, rights of action may, by our law, be freely
ceded.”34

[59] More recently, in Propell, the Supreme Court of Appeal reiterated that “all
contractual rights can be transmitted unless their nature involves a delectus personae or
the contract itself shows that they were not intended to be ceded”. 35 That case queried
whether the indemnification rights of an insured under a professional indemnity contract
with an attorney’s insurance fund were cedable. The Supreme Court of Appeal said
that what needed to be determined was whether the nature of contractual rights flowing
from the contract was such that it excludes the cession of the rights.

[60] In answering that question, the Supreme Court of Appeal held, it was “necessary
to interpret the terms of the [contract] in accordance with the principles enuncia ted in
the recent cases of [that] C ourt” 36 which included cases such as KPMG, Endumeni,

34 Eastern Rand Exploration Co Ltd v A J T Nel, J L Nel, S M Nel, M M E Nel’s Guardian and D J Sim 1903
TS 42 at 53 (Eastern Rand Exploration).
35 Propell Specialised Finance (Pty) Ltd v Attorneys Insurance Indemnity Fund NPC [2018] ZASCA 142; 2019
(2) SA 221 (SCA) ( Propell) at para 17. See also Friedlander v De Aar Municipality 1944 AD 79 at 93 where
Greenberg JA held that, “ prima facie, all contractual rights can be transmitted unless their nature involves a
delectus personae or the contract itself shows that they were not intended to be ceded”.
36 Propell id at para 20.
KHAMPEPE J
24
Bothma-Batho37 and Novartis.38 Having had regard to the nature of the debtor39 and its
primary purpose, the nature of its funding scheme, the objectives of the empowering
legislation of the debtor and the various specific clauses in the contract, the Court
concluded:

“The preceding analysis makes it clear that the rights flowing from the [contract] are
not cedable. The specific group or class of people for whose benefit the insurance was
established is specifically defined in clause 2.5 of the [contract]. . . . Clause 6.8 is
another clause which indicates that the [contract] applies to the restricted group of
people. These factors viewed cumulatively show that the nature of the contractual
rights under the [contract] indicate that the insured is a delectus personae.”40

[61] The Court went on to say that “[f]rom the point of view of Attorneys Insurance,
the identity of the insured matters to it”. 41 It therefore concluded that that matter fell
squarely within the ambit of delectus personae as outlined by Botha JA in Densam.42

[62] Before I determine whether the rights in the lease agreement in this matter are
delectus personae, it is necessary to clarify whether contextual evidence is relevant to
that determination. This is so because the approach taken by the Supreme Court of

37 Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA 176; 2014 (2)
SA 494 (SCA).
38 Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd [2015] ZASCA 111; 2016 (1) SA 518 (SCA) (Novartis).
39 The terms “debtor” and “creditor” are used in this context to refer to the contract debtor and contract creditor
of the specific contractual right under discussion. For example, the rights under consideration in the facts of the
matter before us are the rights that ATS had in the contract, inter alia, to use and occupy the leased premises. A
contract creditor is entitled to a particular right and the contract debtor owes to that creditor an obligation to ensure
the enjoyment of that right. This means that ATS, as the party who has the right to be in beneficial possession of
the leased premises, is the creditor and UJ, as lessor, is the contract debtor who has the corresponding obligation
to give the right of occupation and beneficial possession to ATS.
40 Propell above n 35 at para 30.
41 Id at para 31.
42 In Densam (Pty) Ltd v Cywilnat (Pty) Ltd [1990] ZASCA 120; 1991 (1) SA 100 (A) (Densam), the Appellate
Division explained that what matters, when determining whether the creditor is delectus personae, is the nature
of the debtor’s obligation and the question of whether the identity of the creditor matters to it. It held at 112A-D:
“The question whether a claim (that is, a right flowing from a contract) is not cedable because
the contract involves a delectus personae falls to be answered with reference, not to the nature
of the cedent’s [creditor’s] obligation vis-à-vis the debtor, which rema ins unaffected by the
cession, but to the nature of the debtor’s obligation vis-à-vis the cedent, which is the counterpart
of the cedent’s right, the subject-matter of the transfer comprising the cession.”
KHAMPEPE J
25
Appeal in the current matter is markedly different to the approach that Court took in
Propell, and may create confusion if the position is not clarified. According to UJ, the
result of the Supreme Court of Appeal’s decision here is that delectus personae will
almost never be found to exist, because a court will be precluded from considering
contextual evidence.

Relevance of contextual evidence to the delectus personae inquiry
[63] I must dispose upfront of the respondents’ argument, seemingly endorsed by the
Supreme Court of Appeal, that in a delectus personae inquiry, once the nature of the
right can be determined on the ordinary gram matical meaning of the words of the
contract, contextual evidence is irrelevant because there is nothing further to interpret.
This is incorrect. It is perspicuous that when a court determines the nature of the parties’
rights and obligations in a contra ct, it is involved in an exercise of contractual
interpretation. It follows then, that the determination of whether rights in a contract are
delectus personae is always a matter of contractual interpretation. That means that the
inquiry must adhere to the strictures of the now settled approach to the interpretation of
contracts. But what does that approach entail?

[64] The Supreme Court of Appeal famously set out the p osition in the following
widely-quoted statement in its decision in Endumeni:

“Interpretation is the process of attributing meaning to the words used in a document,
be it legislation, some other statutory instrument, or contract, having regard to the
context provided by reading the particular provision or provisions in the light of the
document as a whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must be given to the language used
in the light of the ordinary rules of grammar and syntax; the context in which the
provision appears; the apparent purpose to which it is directed and the material known
to those responsible for its production. Where more than one meaning is possible each
possibility must be weighed in the light of all these factors. The process is objective,
not subjective. A sensible meaning is to be preferred to one that leads to insensible or
unbusinesslike results or undermines the apparent purpose of the document. Judges
must be alert to, and guard against, the temptation to substitute what they regard as
KHAMPEPE J
26
reasonable, sensible or businesslike for the words actually used. To do so in regard to
a statute or statutory instrument is to cross the divide between interpretation and
legislation; in a contractual context it is to make a contract for the parties other than the
one they in fact made. The ‘ inevitable point of departure is the l anguage of the
provision itself’, read in context and having regard to the purpose of the provision and
the background to the preparation and production of the document.”43

[65] This approach to interpretation requires that “ from the outset one considers the
context and the language together, with neither predominating over the other ”.44 In
Chisuse, although speaking in the context of statutory interpretation, this Court held that
this “now settled” approach to interpretation, is a “unitary” exercise.45 This means that
interpretation is to be approached holistically : simultaneously considering the text,
context and purpose.

[66] The approach in Endumeni “updated” the previous position, whi ch was that
context could be resorted to if there was ambiguity or lack of clarity in the text. 46 The
Supreme Court of Appeal has explicitly pointed out in cases subsequent to Endumeni
that context and purpose must be taken into account as a matter of cour se, whether or
not the words used in the contract are ambiguous.47 A court interpreting a contract has
to, from the onset, consider the contract’s factual matrix, its purpose, the circumstances
leading up to its conclusion, and the knowledge at the time of those who negotiated and
produced the contract.48


43 Endumeni above n 14 at para 18.
44 Id at para 19.
45 Chisuse v Director-General, Department of Home Affairs [2020] ZACC 20; 2020 (6) SA 14 (CC); 2020 (10)
BCLR 1173 (CC) at para 52.
46 Coopers above n 25 at 768C-E where the Court held that a court could “apply extrinsic evidence regarding the
surrounding circumstances when the language of the document is on the face of it ambiguous , by considering
previous negotiations and correspondence between the parties, subsequent conduct of the parties showing the
sense in which they acted on the document”.
47 Novartis above n 38 at para 28; Unica Iron and Steel (Pty) Ltd v Mirchandani [2015] ZASCA 150; 2016 (2)
SA 307 (SCA) at para 21; and North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd [2013] ZASCA
76; 2013 (5) SA 1 (SCA) at para 24.
48 Endumeni above n 14 at para 18 and KPMG above n 11 at para 39.
KHAMPEPE J
27
[67] This means that parties will invariably have to adduce evidence to establish the
context and purpose of the relevant contractual provisions. That evidence could include
the pre-contractual exchanges betwe en the parties leading up to the conclusion of the
contract and evidence of the context in which a contract was concluded. As the Supreme
Court of Appeal held in Novartis:

“This court has consistently held, for many decades, that the interpretative proce ss is
one of ascertaining the intention of the parties – what they meant to achieve. And in
doing that, the court must consider all the circumstances surrounding the contract to
determine what their intention was in concluding it. . . . A court must examine all the
facts – the context – in order to determine what the parties intended. And it must do
that whether or not the words of the contract are ambiguous or lack clarity. Words
without context mean nothing.”49

[68] Let me clarify that what I say here does not mean that extrinsic evidence is
always admissible. It is true that a court’s recourse to extrinsic evidence is not limitless
because “interpretation is a matter of law and not of fact and, accordingly, interpretation
is a matter for the court and not for witnesses”.50 It is also true that “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 pu rposes of identification,
one must use it as conservatively as possible”.51 I must, however, make it clear that this
does not detract from the injunction on courts to consider evidence of context and
purpose. Where, in a given case, reasonable people may disagree on the admissibility
of the contextual evidence in question, the unitary approach to contractual interpretation
enjoins a court to err on the side of admitting the evidence. There would, of course, still
be sufficient checks against any undue reach of such evidence because the court dealing
with the evidence could still disregard it on the basis that it lacks weight. When dealing
with evidence in this context, it is important not to conflate admissibility and weight.


49 Novartis above n 38 at paras 27-8.
50 KPMG above n 11 at para 39.
51 Id.
KHAMPEPE J
28
[69] What the preceding discussion clearly shows is that, to the extent that the
Supreme Court of Appeal in the current matter purported to revert to a position where
contextual evidence may only be adduced when a contract or its terms are ambiguous,
it erred. Context must be considered when interpreting any contractual provision and it
must be considered from the outset as part of the unitary exercise of interpretation. But
does this differ when the interpretive exercise is undertaken to establish whether rights
are delectus personae ? The respondents say yes. They argue that all the delectus
personae inquiry involves is ascertaining the nature of the right, and asking whether it
is personal. If, on a “plain reading” of the contract, the right conferred is by its nature
not personal, there is no need to resort to contextual evidence. The r espondents’
contentions in this regard must be rejected for a number of reasons.

[70] First, I have already debunked the myth that the delectus personae inquiry is
unique. It, too, is a form of contractual interpretation, and must thus follow the settled
principles of interpretation enunciated by this Court and the Supreme Court of Appeal
in numerous cases, as was done in Propell. It is not open to a court conducting a
delectus personae inquiry simply to look at the right conferred in the contract in the
abstract, without grounding the right in the context and purpose of the contract.

[71] Second, the respondents’ argument ignores the nature of the delectus personae
inquiry. As I see it, the true focus of the inquiry is reflected in the statement quoted
above from Innes CJ’s judgment in Eastern Rand Exploration more than 100 years ago,
which has withstood the test of time. That is, that the principal question in each case is
“whether or not the contract is so personal in its character that it can make any
reasonable or substantial difference to the other party whether the cedent or the
cessionary is entitled to enforce it”.52 Thus, in Propell, indemnification rights were said
to be delectus personae because “[f]rom the point of view of Attorneys Insurance the
identity of the insured matters to it”.53 Similarly in Densam, it was found that delectus

52 See [58] above.
53 Propell above n 35 at para 31.
KHAMPEPE J
29
personae had not been establ ished because “it could make no difference at all to
Densam whether it was the Bank or Cywilnat who exercised the right to enforce
payment”.54 Those conclusions fell squarely within Innes CJ’s formulation in Eastern
Rand Exploration.

[72] The respondents rely on Densam, and implore us to pay heed to Botha JA’s
statement in that case that the focus of the delectus personae inquiry is the debtor’s
obligation (the debtor in this case being UJ) . They say that since UJ’s obligation is
merely one of providing beneficial occupation, and the performance owed to ATS does
not change whether it is ATS or Wamjay that is owed the obligation, the rights under
the lease cannot be delectus personae, and no contextual evidence is required to reach,
or can change, that conclusion. Let me make it clear that I do not understand Botha JA’s
judgment in Densam to have departed from, or added anything novel to, Innes CJ’s age
old framing of the inquiry into delectus personae in Eastern Rand Exploration. All I
understand Botha JA to have done is to clarify that in conducting that inquiry, a court
must focus on the debtor’s obligation, and not on the creditor’s. It will be recalled that
Botha JA’s clarification was in the context of his criticism of Stegmann J’s judgment in
George Consultants ,55 which in his view had (wrongly) exclusively focused on the
obligations of the creditor and not those of the debtor . What Botha JA did not do,
however, is alter the inquiry into delectus personae laid down by Inne s CJ. To the
contrary, he endorsed that inquiry.56

[73] The essence of my approach in this judgment is that the inquiry into delectus
personae postulated by Innes CJ and affirmed in Densam and numerous other cases
over the years, ought to be undertaken with du e regard to contextual evidence, in line
with this Court’s jurisprudence and that of the Supreme Court of Appeal on the
interpretation of contracts, which accords with the Propell approach to the inquiry ,
which I consider to be correct. That requires courts to determine the true nature of the

54 Densam above n 42 at 112G-H.
55 G S George Consultants and Investments (Pty) Ltd v Datasys (Pty) Ltd 1988 (3) SA 726 (W).
56 Densam above n 42 at 112D-F.
KHAMPEPE J
30
rights flowing from the contract in question by undertaking the unitary exercise of
interpreting the contract in the light of its factual matrix, its purpose, the circumstances
leading up to its conclusion, and the knowledge at the time of those who negotiated and
produced the contract.

[74] To my mind, the interpretive injunction on courts to take the contextual approach
postulated above is the same whether one considers the principal question in Innes CJ’s
formulation (i.e. whether the rights are so personal that it makes a reasonable or
substantial difference to the debtor whether the cedent or the cessionary is entitled to
enforce them), or whether one considers the correlative question which Botha JA in
Densam implores us to ask (i.e . whether the nature of the debtor’s obligations, which
are the counterpart of the cedent’s rights, is such that it establishes that those rights are
personal to the cedent). Botha JA’s formulation is really just another way of asking the
same question. The crisp point I make in this judgment is that the question falls to be
answered by taking the firmly established contextual approach to interpreting the
contract in question, and determining the nature of the rights and obligations that flow
from it.

[75] It is that crisp point which compels me to reject the respondents’ submission that
UJ’s obligation under the lease was merely that of providing beneficial occupation, and
that because this does not change whether that beneficial occupation is provided to ATS
or Wamjay, the rights under the lease cannot be delectus personae. It cannot be that the
rights created by the lease in this case are not delectus personae merely because the
general right (and correlative obligation) flowing from a leas e is that of beneficial
occupation, which is generally not personal. The critical question we must answer is
whether the occupation rights and obligations created by this lease are delectus
personae. One cannot assess the rights and obligations in questi on at a level of
abstraction, divorced from the contract actually entered into by the parties. Otherwise
the delectus personae principle would seldom ever find application, because most rights
are, at a level of abstraction, capable of being construed impersonally.

KHAMPEPE J
31
[76] Indeed, on the approach propounded by the respondents, the simple question
which the Supreme Court of Appeal in Propell would have had to have asked was
whether the ordinary nature of indemnification rights is personal, instead of asking the
question which that Court in fact asked , and answered, which was whether the nature
of the particular indemnification rights before it was personal, given the context and
purpose of the contract in question and the underlying statutory matrix. Similarly, the
approach taken by the Appellate Division in various cases concerning the transferability
of option agreements, which are not inherently personal, is instructive. In Hersch,
Schreiner JA held:

“[I]n the absence of circumstances or language in the offe r showing that the intention
of the grantor was that only the person to whom the option was addressed, [in other
words] the grantee, should be entitled to accept it, the general assumption would be
that the grantee may pass the right to accept on to other persons. All the circumstances
would, of course, have to be taken into account . . . . [I]t would depend on the proper
interpretation of the option [agreement] in the light of the circumstances.”57

[77] In Dettmann, Corbett JA held that:

“In the case of an option to buy for cash the right is, prima facie, cedable unless the
terms of the contract or such surrounding circumstances as are admissible in the
interpretation of the contract indicated a different intention.”58

[78] What is clear from these cases is that the inquiry requires more than the kind of
abstract determination advanced by the respondents. On the respondents’ approach, the
question before the Appellate Division in these cases would simply have been whether,
generally, option rights are capable of being ceded. To the contrary, the question posed
and answered by that Court in each case was whether, notwithstanding the fact that
option rights are generally considered to be cedable, the specific option rights before it

57 Hersch v Nel 1948 (3) SA 686 (A) at 693.
58 Dettmann v Goldfain 1975 (3) SA 359 (A) at 399H-400A.
KHAMPEPE J
32
were incapable of cession on the proper interpretation of the specific option contract in
question, in the light of its context and circumstances.

[79] The respondents’ contention that rights under urban leases are generally not
delectus personae, therefore, cannot simp ly be the end of the inquiry. Whilst certain
rights may generally, or prima facie, be of a certain nature, the authorities show that the
question of whether they are personal will always depend on the “proper interpretation
of the contract in the light of the circumstances”. That “proper interpretation” must now
be in the form of the unitary approach set out in this judgment . The relevant question
in the current matter, then, is whether, since the rights and obligations in a long -term
lease are not inherently personal, the circumstances in the current case create a delectus
personae, thereby rendering the rights non-transferable.

[80] In making that determination, this Court must interpret the lease agreement in
the light of its context so as to ascertain the parties’ intention regarding ATS’s right of
use of the property, and the correlative obligation on UJ to provide the property for that
use, and whether it makes any reasonable or substantial difference to UJ whether ATS
or Wamjay (or another party) is entitled to enforce the obligations of UJ under the lease.
UJ is correct that contextual evidence is relevant to the inquiry. As I have already stated,
determining the nature of the right of use of the property in this case and whether that
right was delectus personae ought to follow the settled principles of interpretation as
enunciated by this Court and the Supreme Court of Appeal. What is required here is a
proper interpretation of the lease agreement in order to ascertain the intention of the
parties and the interpretation of clause 8 in particular – which speaks to the right of use
of the property – in order to establish whether there is delectus personae.

[81] There is one last thing which I must clarify. What I have said above about the
need for a contex tual approach to the delectus personae inquiry, and the relevance of
contextual evidence to that inquiry, does not change whether or not the contract under
interpretation contains a whole agreement clause. The obligation on courts to take a
contextual approach to the interpretation of contracts is peremptory. It is not capable
KHAMPEPE J
33
of exclusion by agreement between the parties. To the extent that the Supreme Court
of Appeal held otherwise, it erred. I repeat: context is always relevant to the
interpretation of a contract, whatever its terms.

Can lease rights be delectus personae?
[82] Is it relevant that we are dealing with a lease agreement in this matter? Does any
of what I have said above about the proper approach to delectus personae change when
the agreement under interpretation is a lease? I think not. It is necessary, however, for
me to address Greenberg JP’s judgment in Boshoff, and the reliance on that judgment
by the Supreme Court of Appeal (citing LAWSA) in its apparent conclusion t hat lease
rights cannot be delectus personae , and that a lessee can therefore cede such rights
freely and subject only to a term forbidding their cession. First, I must point out that
Boshoff was concerned with the position of the lessor, and whether leas e rights are
delectus personae in the sense that their correlative obligations attach to the lessor even
after the lessor has sold the property that is the subject of the lease to another who has
stepped into her or his shoes. The lessee’s position was not before Greenberg JP in that
case, and his statements on that position are therefore obiter.

[83] Second, Greenberg JP ’s statement that a long -term lease is seldom delectus
personae stems from the statement by Wessels that the longer the period of time, the
less likely a lessor would intend for the same person to occupy the property for the
whole period. But earlier in that same work, Wessels states that:

“If we apply the [ delectus personae] principle to the law of lease, then, whenever it
will make a reasonable or substantial difference to the landlord whether the contract is
to be performed by the lessee or by the lessee’s substitute, a cession of the lease ought
not be allowed. The personal character of the lessee is often of the greatest importance
in leases.”59


59 Wessels above n 30 at 552.
KHAMPEPE J
34
[84] Wessels then goes on to note that there was inconsistency in how the then
Cape Colony and Transvaal each dealt with whether or not there is a presumption that
rights in a lease are delectus personae. He concludes, to the extent that there is such a
presumption in relation to long leases, that “the longer the period, the greater is the
presumption that the parties intended the contract with all its obligations to be
transmissible to the assigns of the lessee”.60 But like all presumptions, that presumption
can be rebutted where it is shown that the parties contemplated that they would deal
personally with each other and no one else.

[85] The proper reading of Boshoff is that it did not purport to lay down a rule that a
lease can never be delectus persona e, but merely adopted the position espoused by
Wessels. That is, that long leases are ordinarily not delectus personae but can be so.
To the extent that the statement in LAWSA relied upon by the Supreme Court of Appeal
suggests that the import of Boshoff is that rights under a lease agreement are not subject
to the delectus personae concept but are subject only to the existence of a term
prohibiting cession, that statement is wrong . So is the Supreme Court of Appeal’s
reliance on it. Even if there is a general rule that rights in a long lease are not delectus
personae, it does not follow that such rights can never be delectus personae.

[86] The inquiry in all cases, including in respect of a lease (long or otherwise), is the
one postulated in Innes CJ’s articulation of the inquiry into delectus personae quoted
above. That is, whether the rights flowing from the contract in question are so personal
in nature that it makes a reasonable or substantial difference to the debtor whether the
cedent or the intended cessionary is entitled to enforce them. That applies to all
contracts, including lease agreements. Whether or not rights under a particular lease
agreement are delectus personae will always depend on the specific agreement between
the parties ; its factual matrix and purpose ; the circumstances leading up to its
conclusion; and the knowledge at the time of those who negotiated and produced the
agreement. That approach is consistent with the one taken in Propell, and aligns with

60 Id at 557.
KHAMPEPE J
35
the unitary approach to interpretation which the jurisprudence of this Court and the
Supreme Court of Appeal has adopted. Clearly, then, the fact that we are concerned
with a lease is of little relevance.

Effect of the parol evidence rule on this case
[87] As stated earlier, the Supreme Court of Appeal relied on the parol evidence rule
in excluding the evidence adduced by UJ and admitted by the High Court. UJ submits
that part of the reason the Supreme Court of Appeal failed to take the contextual
evidence into account when interpreting the lease agreement was because it confused
the two “legs” of the parol evidence rule , and incorrectly held that that rule precluded
UJ from adducing extrinsic evidence in this matter. It is therefore necessary for me
briefly to consider how the principles of contractual interpretation, which require
context to be taken into account, interact with the parol evidence rule in the delectus
personae context.

[88] In KPMG and Swanepoel, the Supreme Court of Appeal held that the parol
evidence rule remains part of our law, and is one of the caveats to the principle that
extrinsic contextual evidence may be admitted.61 The essence of the rule was most aptly
captured in the case of Vianini Ferro-Concrete Pipes, where it was stated:

“Now this Court has accepted the rule that when a contract has been reduced to writing,
the writing is, in general, regarded as the exclusive memorial of the transaction and in
a suit between the parties no evidence to prove its terms may be given save the
document or secondary evidence of its contents, nor may the contents of such document
be contradicted, altered, added to or varied by parol evidence.”62

[89] The rule consists of two sub -rules. This duality was outlined by Corbett JA in
Johnston:


61 Standard Bank of South Africa Ltd v Swanepoel N.O. [2015] ZASCA 71; 2015 (5) SA 77 (SCA) at para 19 and
KPMG above n 11 at para 39.
62 Union Government v Vianini Ferro-Concrete Pipes (Pty) Ltd 1941 AD 43 at 47.
KHAMPEPE J
36
“As has been indicated, the parol evidence rule is not a single rule. It in fact branches
into two independent rules or sets of rules: (1) the integration rule . . . which defines
the limits of the contract, and (2) the [interpretation] rule, or set of rules, which
determines when and to what extent extrinsic evidence may be adduced to explain or
affect the meaning of the words contained in a written contract.”63

[90] The parol evidence rule therefore has both an integration facet and an
interpretation facet. It is the latter facet that was relied on by the Supreme Court of
Appeal. That facet of the rule was explained by Corbett JA as follows:

“In many instances recourse to e vidence of an earlier or contemporaneous oral
agreement would, in any even t, be precluded by . . . that branch of the ‘ rule’ which
prescribes that, subject to certain qualifications, when a contract has been reduced to
writing, the writing is regarded as t he exclusive embodiment or memorial of the
transaction and no extrinsic evidence may be given of other utterances or jural acts by
the parties which would have the effect of contradicting, altering, adding to or varying
the written contract. The extrinsic evidence is excluded because it relates to matters
which, by reason of the reduction of the contract to writing and its integration in a
single memorial, have become legally immaterial or irrelevant.”64

[91] He continued to say:

“[I]t is clear to me that the aim and effect of [the integration] rule is to prevent a party
to a contract which has been integrated into a single and complete written memorial
from seeking to contradict, add to or modify the writing by reference to extrinsic
evidence and in that way to redefine the terms of the contract. The object of the party
seeking to adduce such extrinsic evidence is usually to enforce the contract as redefined
or, at any rate, to rely upon the contractual force of the additional or varied terms, as
established by the extrinsic evidence.”65


63 Johnston v Leal 1980 (3) SA 927 (A) at 942H-943A.
64 Id at 938C-F.
65 Id at 943B-C.
KHAMPEPE J
37
[92] The integration facet of the parol evidence rule relied on by the Supreme Court
of Appeal is relevant when a court is concerned with an attempted amendment of a
contract. It does not prevent contextual evidence from being adduced. The rule is
concerned with cases where the evidence in question seeks to vary, contradict or add to
(as opposed to assist the court to interpret) the terms of the agreement. If UJ had sought
to adduce evidence to show the Court that the parties had intended to include a pactum
de non cedendo, but had failed to do so, this part of the parol evidence rule would have
precluded UJ from seeking to add this term to the contract by means of extrinsic
evidence. However, it is quite clear that UJ did not seek to adduce its evidence for that
reason. My reading of its judgment is that the Supreme Court of Appeal’s invocation
of the parol evidence rule in this case was influenced by its broader view that the whole
agreement clause in the lease prevented the High Court from having regard to the
contextual evidence adduced by UJ. I have already found that view to have been
incorrect. It follows that the parol evidence rule was not an obstacle to the evidence
being admitted.

Should contextual evidence have been admitted in this case?
[93] Having outlined the boundaries of and interplay between the contextual
interpretative approach and the parol evidence rule, and in the light of the general legal
principles for d etermining delectus personae, in my view it is evident that contextual
evidence in this case ought to have been permitted in order to undergo a proper
contextual interpretation of the contract and, particularly, clause 8, so that the nature of
the rights could be determined. Contextual evidence in this sense is not precluded by
the parol evidence rule as it does not seek to add to, vary, modify or contradict the terms
of the lease agreement. Rather, it gives context and background to the lease agreement,
which can be used by a court in its interpretation of that agreement and when seeking
to ascertain whether the circumstances give rise to an intention of the parties (at the time
of the conclusion of the agreement) that the rights were personal to ATS. The approach
to determining whether or not there was delectus personae thus ought to have mirrored
the approach taken by the Supreme Court of Appeal just a year and a half earlier in
Propell.
KHAMPEPE J
38

Did the evidence in this case establish that the rights accorded to ATS in the
lease agreement were delectus personae?
[94] I cannot fault the finding of the High Court and Full Court that the rights were
delectus personae based on the circumstances of this case. These Courts had due regard
to the words of clause 8, interpreted in the light of the circumstances present at the
conclusion of the lease agreement . These considerations included the existing
relationship between the parties, the statutory framework and ministerial permission on
which the conclusion of the lease relied.

[95] Clause 8 of the lease agreement, 66 interpreted in the light of the request for
ministerial approval and the attendant permission, reveals that the parties intended that
the leased premises would be used by ATS for its project of establishing an institute of
higher learning. The request for ministerial permission by UJ to lease the property to
ATS stated:

“[ATS] ur gently needs property, in the vicinity of our university, to build their
Theological College. . . . They have identified property owned by our university as the
most suitable site for erecting their Theological College. We would like to extend a
helping hand to them by letting this property to them over a period of thirty years.”

I agree with the courts a quo that this ought to inform the interpretation of the right to
use of the leased premises in clause 8 and that it points towards the personal nature of
the right.

[96] Alongside this, the High Court found that the evidence revealed that the
considerable negotiations leading up to the conclusion of the lease emphasised the
personality of ATS. Throughout the negotiations, references were made to the
“partnership” between UJ and ATS, with repeated reference to their relationship under
the co -operation agreement. The Full Court noted that UJ and ATS were “clearly

66 See above n 7.
KHAMPEPE J
39
operating in tandem and their functions and goals [were] intertwined”. I am in
agreement with both of these courts that this, too, leans in favour of the personal nature
of the rights in issue.

[97] I further agree with the High Court and Full Court that the statutory framework
within which the lease agreement was concluded is also relevant. UJ entered into the
co-operation agreement and lease agreement on the basis of the Universities Act and
the Rand University Act respectively. It was in terms of section 10B(1) of the
Universities Act that UJ entered into the co -operation agreement, which empowered i t
to contract with other institutions of higher education, including allowing it to contract
with ATS initially. Subsequent to this, UJ then relied on section 4(2) of the Rand
University Act to lease its immovable property to ATS. The application for permission
from the Minister and the permission itself were personally directed at UJ leasing the
premises to ATS in order to assist it in its project of providing tertiary education. On
top of this, UJ agreed to a once -off payment by ATS in exchange for the lease of the
property – even if the lease is renewed after 30 years. In my view, it could never have
been intended by the parties at the time of conclusion of the lease agreement that ATS
could simply cede its rights to use the property to another in exchange for profit.

[98] It is appropriate to note, in relation to Wessels’ statement adopted in Boshoff that
the longer the period of time, the less likely a lessor would intend for the same person
to occupy property for the whole period, that the scenario in the circumstances before
us – of two juristic persons, which do not have a limited lifespan in the same way that
natural persons do – is entirely different to the scenario of two natural persons envisaged
by Wessels.

[99] All of the above weighs in favour of a finding that it did matter to UJ that the
lessee was ATS, which would use the land to provide tertiary education as was intended
at the conclusion of the lease. “[H]aving regard to the context provided by reading
[clause 8] in the light of the document as a whole and the circumstances attendant upon
KHAMPEPE J
40
its coming into existence ,”67 in my view, it would make a “ reasonable or substantial
difference”68 to UJ that ATS, and not Wamjay, is entitled to enforce the right to use the
property “for educational, religious and related [tertiary education] purposes” under the
lease agreement. I am therefore of the view that, in the circumstances of this agreement,
the right to use of the property, encapsulated in clause 8, was personal to ATS.

[100] I should say something about prejudice in the light of the respondents’ argument
that the rights in the lease cannot be delectus personae because there is no prejudice to
UJ as a result of the cession. I could find no authority which indicates that prejudice is
an independent element of the inquiry into delectus personae. All I could find is the
often-quoted statement from the Sasfin69 and Goodwin Stable Trust 70 cases that the
restriction on cession imposed by the delectus personae concept is simply a
manifestation of the general principle that the cession should not disadvantage the
debtor. What is clear from these cases is that all that statement was meant to achieve
was to encapsulate the interest which the delectus personae concept is designed to
protect rather than to lay down a rule that prejudice is a requirement thereof. I repeat
that in all cases, the inquiry is simply whether on a proper interpretation of the contract,
in the light of its context and purpose, the rights are personal in that it makes a difference
to the debtor whether the cedent or the cessionary is entitled to enforce them.

[101] To the extent that it is a factor in the delectus personae inquiry, however, the
proper approach to prejudice is the flexible one set out in Propell. In that case, the
Supreme Court of Appeal explained that the debtor does not have to show that a cession
will occasion the cessionary actual prejudice but merely that it will impose greater
burdens.71 UJ has explained that it is prejudiced by the cession in that ATS is no longer
in a position to fulfil its obligation under the lease to build the agreed theological

67 Endumeni above n 14 at para 18.
68 Eastern Rand Exploration above n 34.
69 Sasfin (Pty) Ltd v Beukes [1988] ZASCA 94; 1989 (1) SA 1 (A) at 31G-H.
70 Goodwin Stable Trust v Duohex (Pty) Ltd 1998 (4) SA 606 (C) at 617H-I.
71 Propell above n 35 at para 36.
KHAMPEPE J
41
college. Where the cession has the effect of rendering the cedent unable to meet its
obligations under the contract, the cessi on evidently imposes burdens on the debtor
which would otherwise not exist, and there can be no doubt that the debtor is prejudiced.

[102] Moreover, the cession in this case makes a difference to UJ’s contemplated
performance required under the lease, properly construed in its context and purpose. As
explained earlier, UJ’s obligation under the lease was not merely one of beneficial
occupation in the abstract, as argued by the respondents, and has to be understood within
the scope of the purpose of the agreemen t, which was to provide the premises as a
helping hand to ATS to enable it to build a theological college. Indeed, UJ now has to
provide the use of the premises for a purpose which could never have been conceived
by the parties when they contracted. In the light of ATS’s consequent inability to build
the college as a result of the cession, this is evidently prejudicial to UJ, and buttresses
the conclusion that the use rights under the lease were personal to ATS.

[103] As ATS’s rights under the lease agreement were delectus personae, ATS was
not entitled to cede them to Wamjay without first obtaining UJ’s consent. The next
question to answer is therefore the following: did ATS’s cession to Wamjay, without
the permission of UJ, amount to a repudiation of the lease agreement?

Did the cession by ATS amount to a repudiation of the lease agreement?
[104] A party to a contract commits the breach of repudiation when, through words or
conduct, that party manifests an unequivocal intention to no longer be bound by the
contract or by the obligations forming part of the contract.72 The intention to repudiate
is thus determined objectively. The test is whether the cedent acted in a manner that
would lead a reasonable person in the position of the innocent party to believe that they
do not intend to fulfil, or completely fulfil, their part of the contract.73


72 Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd [2000] ZASCA 81 ; 2001 (2) SA 284 (SCA)
(Datacolor) at para 16.
73 Id.
KHAMPEPE J
42
[105] Would a reasonable person in the position of UJ have thought that proper
performance in terms of the contract would not be forthcoming as a result of ATS’s
words or conduct? A court, in making this assessment must take heed of the
“background material and circumstances that should have weighed with the innocent
party”.74 It is important to bear in mind that repudiation ought not be lightly presumed.75

[106] The relationship between the parties in this matter centred on the provision of
tertiary education by both UJ and ATS and the provision of land by UJ to ATS for the
latter’s project of providing tertiary education on the leased premises. This is evident
from the lease agreement, properly interpreted in its context, as discussed above. The
type of performance reasonably expected at the conclusion of the contract was that ATS
would establish an institution of higher learning on the leased premises, which was
intended by the parties to be used for purposes relating to tertiary education. The
motivation to the Minister expressly stated that ATS planned to establish a theolog ical
college, an institution of higher learning, on the property. It cannot be disputed that the
establishment of a theological college constituted a ground upon which the application
by UJ, and the subsequent approval by the Minister, was based.

[107] The cession of the rights to use and occupy the leased premises to another not
only meant that ATS would be unable to build and establish a theological college on
the property as the parties had intended at the conclusion of the lease agreement, but
also that clause 8 of the lease would be incapable of being complied with at all by ATS
once it had divested itself of the right to use the property.

[108] As a result, given the very personal nature of the lease and the use of property
right in particular, it was reasonable of UJ to believe that through its conduct of ceding
the rights to another institution which would be unable to use the land in accordance
with how the lease required it to be used, ATS intended to no longer be bound by the

74 Id at para 20.
75 Id at para 18.
KHAMPEPE J
43
lease agreement. The cession o f the rights under the lease agreement to Wamjay
therefore amounted to a repudiation of the lease agreement by ATS.

Was UJ entitled to cancel the contract?
[109] Before a party to a contract may cancel a contract by “accepting” the repudiation
of the contract by the other, the repudiation must be material and of a sufficiently serious
nature to warrant rescission. In Datacolor, the Supreme Court of Appeal said that
“[w]hether the innocent party will be entitled to resile from the agreement will
ultimately depen d on the nature and the degree of the impending non - or
malperformance”.76

[110] In Hovis,77 the Appellate Division held that a repudiation of the entire contract
will always entitle the innocent party to rescind the entire contract and if the debtor
refuses to perform at all, or rejects the contract, the creditor may forthwith terminate the
contract. On the other hand, if only a part of a divisible performance is repudiated, the
creditor may rescind that part only.78

[111] In this case, the conduct by ATS was of the n ature that ATS could no longer
establish an institute of higher education on the land. This was the reason for which the
lease agreement was concluded. It not only formed part of the negotiations between the
parties, but it also formed part of the motivation to the Minister, for the approval of the
lease. Since Wamjay does not provide, or intend to provide, tertiary education, the
cession means that the property will not be used as intended. In my view, the
repudiation by ATS is of a serious nature. It defeats the entire purpose for which the
contract was entered into. Where the breach is of this fundamental nature, the innocent
party is entitled to cancel the contract. T he cession of rights is tantamount to an
unequivocal intimation on the part of AT S that it no longer wanted to perform or be

76 Id at para 17.
77 Tuckers Land and Development Corporation v Hovis 1980 1 SA 645 (A).
78 Nash v Golden Dumps (Pty) Limited [1985] ZASCA 6; 1985 (3) SA 1 (A) at 23F-G.
KHAMPEPE J
44
bound by an essential part of the lease agreement (to use the land to establish an institute
of higher education or related purpose). UJ was justified in cancelling the agreement
upon accepting the repudiation.

[112] I now briefly touch on the defences raised by the respondents, although neither
of these were adequately ventilated at the hearing.

Defences of waiver and estoppel raised by the respondents
[113] It is trite that a waiver “ is the renunciation of a right ”.79 Determining the
intention to waive a right is an objective test, which must be judged by its outward
manifestations and adjudged from the perspective of the reasonable person standing in
the shoes of the other party. 80 No one is presumed to have waived the ir rights and so
the conduct from which waiver is inferred must be so unequivocal that it can be
consistent with no other hypothesis.81

[114] In Lufuno Mphaphuli, this Court held:

“Our courts take cognisance of the fact that persons do not as a rule lightly abandon
their rights. Waiver is not presumed; it must be alleged and proved; not only must the
acts allegedly constituting the wavier be shown to have occurred, but it must also
appear clearly and unequivocally from those facts or otherwise that there was an
intention to waive. The onus is strictly on the party asserting waiver; it must be shown
that the other party with full knowledge of the right decided to abandon it, whether
expressly or by conduct plainly inconsistent with the intention to enforce it. Waiver is
a question of fact and is difficult to establish.”82


79 Botha (now Griessel) v Finanscredit (Pty) Ltd [1989] ZASCA 56; 1989 (3) SA 773 (A) at 792B-D.
80 Road Accident Fund v Mothupi [2000] ZASCA 27; 2000 (4) SA 38 (SCA) at para 16.
81 Id at para 19.
82 Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews [2009] ZACC 6; 2009 (4) SA 529 (CC); 2009 (6)
BCLR 527 (CC) at para 81.
KHAMPEPE J
45
[115] In the light of this strict test for proving a waiver, I am of the view that the
respondents have not overcome the hurdle of showing that there is no other conceivable
hypothesis to draw from UJ’s temporary sale of the leased premises than that UJ
intended to abandon its right to ever rely on the personal nature of the lease in
subsequent instances where ATS purported to pass on its right to use the property under
the lease agreement to another. The personal nature of the rights, existing as it did from
the conclusion of the lease agreement, is not alterable by the later conduct of the parties.
And I am not convinced that this is an instance where UJ clearly and unequivocally
waived its right to ever rely on this fact.

[116] Turning now to the respondents’ second defence, is there any merit in the
defence of estoppel?

[117] In Aris Enterprises (Finance) , Corbett JA outlined the concept of estoppel as
follows:

“The essence of the doctrine of estoppel by representation is that a person is precluded,
[in other words,] estopped, from denying the truth of a representation previously made
by him to another person if the latter, believing in the truth of the representation, acted
thereon to his prejudice. The representation may be made in words, i.e. expressly, or
it may be made by conduct, including silence or inaction, i.e. tacitly; and in general it
must relate to an existing fact.”83

[118] Thus, where one party has a reasonable belief in a misrepresent ation made by
the other party and relies thereon to his own detriment, the former may hold the latter
to the misrepresentation and prevent the party who made the misrepresentation from
relying on the true state of affairs. However, a party may only rely o n estoppel if the
reasonable person on the street would also have been misled by the conduct on which
the estoppel is founded.84

83 Aris Enterprises (Finance) v Protea Assurance 1981 (3) SA 274 (A) at 291D-E.
84 Rabie The Law of Estoppel in South Africa 1 ed (Butterworths Publishers (Pty) Ltd, Durban 1997) at 53.
KHAMPEPE J
46

[119] Because of the heavy burden of proof on the party raising estoppel, I am not
convinced that ATS has shown that it relied upon a representation by UJ when
concluding the cession agreement that would give rise to this Court estopping UJ from
asserting its rights. The faint passing reliance by ATS on UJ’s temporary sale of the
property does not discharge this heavy burden.

[120] In my view, both the defences of waiver and estoppel are “last chance” attempts
by the respondents not to be held responsible for unlawfully attempting to cede rights
that were non-transferable, and, in doing so, profiteering handsomely by ceding rights
in the lease, in the case of ATS, where that agreement had been concluded as a result of
UJ wanting to extend a helping hand to a partner provider of tertiary education.

Conclusion
[121] In conclusion, I hold that UJ must succeed in this matter. The Supreme Court of
Appeal erred in refusing to admit contextual evidence relevant to the proper
interpretation of the lease agreement and in concluding that that agreement was not
delectus personae . The circumstances attendant to the conclusion of the lease
agreement and the terms of the agreement, properly construed, quite evidently indicate
that the rights therein were of a personal nature and therefore not freely cedable. In
ceding the rights t o Wamjay, ATS repudiated the agreement and this repudiation was
of a sufficiently serious manner – preventing the entire purpo se of the lease from
continuing – to justify UJ’s subsequent cancellation of that agreement.

[122] I see no reason why costs should not follow the result.

Order
[123] The following order is made:
1. Leave to appeal is granted.
2. The appeal is upheld.
KHAMPEPE J
47
3. The order of the Supreme Court of Appeal is set aside and replaced with
the following:
“The appeal is dismissed with costs.”
4. The respondents are ordered jointly and severally to pay the costs of the
applicant in this Court, including the costs of two counsel.



For the Applicant:



For the Respondents:


A Cockrell SC, A R G Mundell SC and
N Khumalo instructed by Webber
Wentzel

G Kairinos SC instructed by WP Steyn
Attorneys