Court name
Supreme Court
Case name
Total Namibia (Pty) Ltd v OBM Engineering And Petroleum Distributors
Media neutral citation
[2015] NASC 10
Judge
O'Regan AJA










IN
THE SUPREME COURT OF NAMIBIA






CASE
NO: SA 9/2013






DATE:
30 APRIL 2015






REPORTABLE






In
the matter between






TOTAL
NAMIBIA (PTY)
LTD
................................................................................................Appellant






And






OBM
ENGINEERING AND PETROLEUM


DISTRIBUTORS
CC
.............................................................................................................Respondent






Coram:
SHIVUTE CJ, CHOMBA AJA and O’REGAN AJA






Heard:
17 October 2014






Delivered:
30 April 2015


APPEAL
JUDGMENT


O’REGAN
AJA (SHIVUTE CJ and CHOMBA AJA concurring):


[1]
This appeal arises from a dispute
concerning a written agreement that was made an order of the High
Court. The appellant, Total Namibia (Pty) Ltd, is a wholesale seller
and distributor of petroleum products. The respondent, OBM
Engineering & Petroleum Distributors CC, operates a depot in
Otjiwarongo. Between 2003 and 2007, in terms of a supply agreement
between the parties, the respondent purchased fuel products from the
appellant in Walvis Bay, transported the products to Otjiwarongo and
distributed them to its clients, and also to clients of the
appellant, in Otjiwarongo.


[2]
During 2007, a dispute arose between the
parties and the supply and distribution arrangement between them
ended in August 2007. In November 2007, the respondent issued summons
against the appellant for the sum of N$4 609 940,72. This amount
apparently represented an amount of money levied by the appellant on
the respondent as a ‘transport differential’ based on the
quantity of fuel delivered to the respondent during the period 2005 –
2007. The appellant lodged both a plea and a counterclaim in the
proceedings and then filed a notice in terms of rule 33(4) seeking a
separation of issues. After the application in terms of rule 33(4)
had been argued but before judgment was handed down, the parties met
and entered into a written agreement on 27 October 2010 to establish
a procedure to determine whether either was indebted to the other
(the agreement). The agreement was made an order of court and the
High Court proceedings were suspended
sine
die
pending the conclusion of the
procedure provided for in the agreement.



The agreement


[3]
The agreement between the parties states
that the parties’ accountants ‘will be instructed to
verify all transactions underlying the current account of plaintiff
with defendant (with reference to source documents) in order to
determine, by agreement, any liability of defendant to plaintiff or
vice versa’.
The agreement also provides that the plaintiff (respondent) deems the
opening balance to be zero as at 1 June 2005, but says that the
defendant (appellant) may prove a different opening balance by
reference to source documents. It is also clear from the agreement
that the plaintiff had tendered a verification annexed to a summary
provided by its expert, Mr Dreyer. That summary formed part of the
appeal record. The agreement affords the plaintiff an opportunity to
reconsider that verification whereupon the defendant is to be
afforded an opportunity to respond to the verification. The agreement
further stipulates that both the plaintiff’s amendment to its
verification, if any, and the defendant’s response to it,
‘shall be valid only insofar as supported by verified source
documents’. The agreement then provides that a meeting will be
held between the legal representatives of the parties to discuss the
defendant’s response to the verification and to debate any
issues raised, and compile a list of issues that the parties are
unable to resolve. It also provides that the trial will continue for
the purpose of adjudicating issues that remain in dispute, including
the costs of litigation. It is clear therefore that the agreement
provides a process to define and narrow issues in dispute between the
parties, and possibly, but not necessarily, resolve them.


[4]
The appellant insists that when the
agreement refers to verification by way of ‘source documents’,
the agreement refers to ‘invoices, credit notes and debit
notes’ but not to delivery notes, while the respondent insists
that the references to source documents in the agreement includes
delivery notes. This dispute goes to the heart of the verification
process contemplated in the agreement.


[5]
Accordingly, the appellant launched motion
proceedings in the High Court in July 2012, seeking the following
relief –


(a)
a declaration that the verification of
transactions referred to in the agreement ‘which relies on
invoices, credit notes and debit notes properly complies with the . .
. agreement . . . and need not be additionally supported by any proof
of delivery’; alternatively,


(b)
declaring that the agreement is of no force
or effect, and rescinding the court order that made the agreement an
order of court; alternatively


(c)
rectifying and varying the agreement by
inserting the words ‘which need only to be invoices, debit
notes or credit notes’ after the words ‘source documents’
wherever they appear in the agreement.


[6]
The respondent opposed the relief. Its
deponent asserted that when the agreement was concluded, the precise
ambit of the dispute between the parties was not clear, and asserted
that there was a dispute between the parties relating to the accuracy
of the appellant’s invoices, and the question as to how much
fuel had been delivered by appellant to respondent. The purpose of
the agreement was to seek to undertake an agreed accounting process
to determine whether either party was indebted to the other.


[7]
The application was heard by the High Court
on 26 November 2012 and on 28 January 2013, Miller AJ dismissed the
application. The court found that the terms of the agreement were
clear; that the phrase ‘source documents’ was not
ambiguous, but were of wide import and would include delivery notes.
The judge reasoned that if the parties had intended to exclude
delivery notes they would have made provision for that exclusion in
the agreement. The High Court reasoned that in the absence of
ambiguity, extraneous evidence of what the parties intended is not
admissible. The High Court did not directly address the question
whether the agreement should be declared to be of no force or effect,
or the question whether the agreement should be rectified.


[8]
Appellant appeals against the judgment of
the High Court. The notice of appeal was lodged in time, as was the
record. However, at the hearing of the appeal on 17 October 2014, the
appellant sought leave to supplement the appeal record with two
additional volumes that had been filed more than two months before
the appeal hearing. The respondent did not oppose the application to
supplement and the application to supplement was granted by this
court at the hearing.



Appellant’s
arguments


[9]
Appellant argues that the High Court erred
in its approach to the interpretation of the agreement and adopted an
approach that overlooked significant developments in the law relating
to the interpretation of documents. In particular, the appellant
argues that the High Court should have paid more attention to the
context in which the agreement was reached. The appellant argues that
if the correct approach to the interpretation of contracts had been
adopted, the court would have concluded that the agreement did not
stipulate that delivery notes were necessary for the verification
process.


[10]
Secondly, appellant argues that if the
court accepts that the agreement does contemplate that delivery notes
would be used in the verification process, then the agreement is void
ab initio
because of the absence of consensus. The appellant argues that its
interpretation of the agreement is reasonable, albeit different to
that of the respondent. Given that its interpretation is reasonable,
it argues that its mistake was
iustus.


[11]
Thirdly, appellant argues that the written
agreement does not reflect the true intention of the parties and
should be rectified to reflect the true common intention of the
parties. 



Respondent’s
arguments


[12]
Respondent argues that the conclusion of
the High Court relating to the interpretation of the agreement cannot
be faulted and that it is clear that the agreement contemplated that
delivery documents were a form of ‘source document’.


[13]
Secondly, respondent argues that the
appellant has not made out a case that there was
dissensus
between the parties. The respondent argues that the language of the
agreement is clear; it contemplates that a source document includes a
delivery note and does not indicate that the verification exercise
should take place without reference to delivery notes. Given that the
respondent signed the agreement, it cannot now be said to have signed
the agreement on a mistaken basis.


[14]
Thirdly, the respondent argues that the
appellant has not made out a case for rectification because the
person who signed the agreement on behalf of the appellant has not
testified as to his understanding of the true intention of the
parties.



Issues on appeal


[15]
The following issues arise for
determination:


(a)
What is the proper approach to the
interpretation of the agreement;


(b)
Is Appellant correct that, properly
interpreted, the reference in the agreement to verification by
reference to ‘source documents’ means that the
verification process need not refer to delivery notes;


(c)
If not, can it be said that the agreement
entered into between the parties was vitiated by
dissensus
with the consequence that no valid agreement was entered into;


(d)
Should the agreement be rectified and
varied by inserting the words ‘which need only to be invoices,
debit notes or credit notes’ after the words ‘source
documents' wherever they appear in the agreement; and


(e)
What relief, if any, should follow?



The proper
approach to the interpretation of the agreement


[16]
Appellant
argues that the High Court erred in its approach to the
interpretation of the agreement. In particular, the appellant pointed
to the High Court’s reasoning that extraneous evidence as to
the meaning of the contract was not admissible given the absence of
ambiguity in the language of the contract.[1]
The appellant pointed to recent developments in the United Kingdom[2]
and South Africa[3] to propose
that in interpreting contracts courts should always have regard to
the broader context within which the contract was agreed and not only
in circumstances where the language of the contract is found to be
ambiguous. The respondent did not disagree with this approach but
suggested that on this approach too the conclusions of the High Court
were correct.


[17]
In
the
Investors
Compensation Scheme
case
in the House of Lords
,
Lord
Hoffmann acknowledged that there had been ‘a fundamental
change’ in the way in which courts approached the construction
of contracts since the 1970s.[4]
He summarised the new approach as follows –


1.
Interpretation is the ascertainment of the meaning which the document
would convey to a reasonable person having all the background
knowledge which would reasonably have been available to the parties
in the situation in which they are at the time of the contract.


2.
The background was famously referred to by Lord Wilberforce as the
“matrix of fact” but this phrase is, if anything, an
understated description of what the background may include. 
Subject to the requirement that it should have been reasonably
available to the parties and to the exception to be mentioned next,
it includes absolutely everything which would have affected the way
in which the language of the document would have been understood by a
reasonable man.


3.
The law excludes from the admissible background the previous
negotiations of the parties and their declarations of subjective
intent. They are admissible only in an action for rectification. The
law makes this distinction for reasons of practical policy and, in
this respect only, legal interpretation differs from the way we would
interpret utterances in ordinary life. The boundaries of this
exception are in some respects unclear. But this is not the occasion
on which to explore them.


4.
The meaning which a document (or any other utterance) would convey to
a reasonable man is not the same thing as the meaning of its words.
The meaning of words is a matter of dictionaries and grammars; the
meaning of the document is what the parties using those words against
the relevant background would reasonably have been understood to
mean. The background may not merely enable the reasonable man to
choose between the possible meanings of words which are ambiguous but
even (as occasionally happens in ordinary life) to conclude that the
parties must, for whatever reason, have used the wrong words or
syntax. (See
Mannai Investments Co Ltd v
Eagle Star Life Assurance Co Ltd
[1997]
2 WLR 945).


5.
The “rule” that words should be given their ‘natural
and ordinary meaning’ reflects the common sense proposition
that we do not easily accept that people have made linguistic
mistakes, particularly in formal documents. On the other hand, if one
would nevertheless conclude from the background that something must
have gone wrong with the language, the law does not require judges to
attribute to the parties an intention which they plainly could not
have had.’[5]


[18]
South African courts too have recently
reformulated their approach to the construction of text, including
contracts. In the recent decision of
Natal
Joint Municipal Pension Fund v Endumeni Municipality
Wallis
JA usefully summarised the approach to interpretation as follows –


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 weighted 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 reasonable, sensible or businesslike for the
words actually used.’[6]


[19]
For the purposes of this judgment, it is
not necessary to explore fully the similarities and differences that
characterise the approaches adopted in the United Kingdom and South
Africa. What is clear is that the courts in both the United Kingdom
and in South Africa have accepted that the context in which a
document is drafted is relevant to its construction in all
circumstances, not only when the language of the contract appears
ambiguous. That approach is consistent with our common-sense
understanding that the meaning of words is, to a significant extent,
determined by the context in which they are uttered. In my view,
Namibian courts should also approach the question of construction on
the basis that context is always relevant, regardless of whether the
language is ambiguous or not.


[20]
It
is significant to note that this shift had precursors in the law of
both the United Kingdom and South Africa.[7]
For example, in a famous passage in
Jaga
v D
önges
NO & Another,
Schreiner
JA encapsulated the two approaches as follows-


[T]he
approach to the work of interpreting may be along either of two
lines. Either one may split the inquiry into two parts and
concentrate, in the first instance, on finding out whether the
language to be interpreted has or appears to have one clear ordinary
meaning, confining a consideration of the context only to cases where
the language appears to admit of more than one meaning; or one may
from the beginning consider the context and the language to be
interpreted together.’[8]


[21]
A
related development in South Africa has been the abandonment by the
courts of a distinction previously employed between ‘background
circumstances’, evidence of which was always admissible as an
aid to interpretation and ‘surrounding circumstances’,
evidence of which was only admissible in the case of ambiguity.[9]


[22]
In
KPMG
Chartered Accountants (SA) Ltd v Securefin Ltd
,
[10] Harms JA suggested that
the terms ‘background circumstances’ and ‘surrounding
circumstances’ were ‘vague and confusing’ and that
there was little merit in attempting to distinguish them.[11]
It is now clear that the South African Supreme Court of Appeal
considers this approach to ‘be no longer consistent with the
approach now adopted by South African courts in relation to contracts
or other documents . . . ’.[12]


[23]
Again
this approach seems to comport with our understanding of the
construction of meaning, that context is an important determinant of
meaning. It also makes plain that interpretation is ‘essentially
one unitary exercise[13] in
which both text and context, and in the case of the construction of
contracts, at least, the knowledge that the contracting parties had
at the time the contract was concluded, are relevant to construing
the contract. This unitary approach to interpretation should be
followed in Namibia. A word of caution should be noted. In accepting
that the distinction between ‘background circumstances’
and ‘surrounding circumstances’ should be abandoned,
courts should remember that the construction of a contract remains,
as Harms JA emphasised in the
KPMG
case,
‘a matter of law, and not of fact, and accordingly,
interpretation is a matter for the court and not for witnesses’.[14]


[24]
The approach adopted here requires a court
engaged upon the construction of a contract to assess the meaning,
grammar and syntax of the words used, as well as to construe those
words within their immediate textual context, as well as against the
broader purpose and character of the document itself. Reliance on the
broader context will thus not only be resorted to when the meaning of
the words viewed in a narrow manner appears ambiguous. Consideration
of the background and context will be an important part of all
contractual interpretation.



The proper
approach to the interpretation of the phrase ‘source documents’
in the agreement


[25]
I turn now to the interpretation of the
agreement. Appellant asserts that the agreement needs to be
interpreted in terms of the dispute between the parties in the
litigation that resulted in the agreement being concluded. In
particular, the appellant asserts that the agreement should be
limited to the scope of the dispute as pleaded in the earlier
litigation. It is common cause that, initially the litigation related
in the main to the question whether the appellant was liable to repay
amounts relating to the ‘transport differential’ to the
respondent. The respondent had paid these amounts (calculated at
N$0,163 per litre of fuel) to the appellant, allegedly on the basis
that it would be refunded these amounts by the Namibian Government.
The appellant asserts that the amount of fuel delivered to the
respondent was not in issue between the parties in the initial High
Court proceedings but simply the question whether the transport
differential should have been paid. Accordingly, says the appellant,
it never considered that the amount of fuel that respondent took
delivery of from appellant would be an issue in the verification
process. Appellant accordingly argues that the agreement, properly
interpreted, does not require verification by reference to delivery
notes.


[26]
Respondent asserts, however, that during
the litigation proceedings, the nature of the dispute between the
appellant and respondent expanded to include the calculation by the
appellant of the respondent’s indebtedness to the appellant. In
particular, the respondent asserts that when it instructed an
accountant to reconcile the amounts it had paid to the appellant with
the source documents; it discovered errors in the appellant’s
calculations as set out in the invoices.


[27]
A reading of the agreement makes plain that
it is concerned in the main with the verification ‘of all
transactions underlying the current account of plaintiff with
defendant (with reference to source documents) in order to determine,
by agreement any liability of defendant to plaintiff’.
Moreover, the agreement also makes plain that there is a potential
dispute about the opening balance as at 1 June 2005, and the
agreement provides a procedure to seek to settle that dispute.
Accordingly, the procedure contemplated by the agreement appears to
be far broader than the dispute relating to the payments for the
‘transport differential’ to which appellant refers, as
the High Court judge pointed out in his judgment at para 12. If the
purpose of the verification procedure was simply to determine the
liability of the appellant to refund the respondent the
‘transportation differential’ one would have expected the
terms of the agreement to be formulated more narrowly.


[28]
Accordingly, a reading of the full text of
the agreement suggests that the purpose of the verification process
was broader than the issue of the reimbursement of the
‘transportation differential’ and instead sought to
determine any liability of either of the parties to the other in
relation to the supply agreement between them. The precise ambit of
the dispute between the parties is not clear from the agreement, but
it cannot be said that on a reading of the agreement, the parties had
excluded disputes relating to the quantum of fuel delivered by the
appellant to respondent. Reference to delivery notes would be one of
the documentary mechanisms that might be used to verify indebtedness
in such circumstances. The language of the agreement itself therefore
does not support appellant’s contention that it should be read
narrowly to be limited to the ambit of the pleadings in the earlier
litigation.


[29]
Appellant’s argument that the terms
of the pleadings necessarily bound the terms of the agreement can
also not be accepted. It is not unusual for a dispute between parties
in litigation to alter as the litigation process develops. To
accommodate the changing ambit of the dispute, a court may permit
amendment of pleadings till late in the litigation process. Moreover,
there is no legal bar to a settlement agreement regulating issues
other than those traversed on the pleadings. South African courts
have long recognised that agreements that are entered into during the
litigation process might well canvass issues that do not appear on
the pleadings. In
Van Schalkwyk v Van
Schalkwyk
, for example, Horwitz AJ
noted that –


Where,
however, the parties arrive at a compromise or an agreement on, or in
relation to, an issue so pending and triable then that compromise or
agreement can be fittingly embodied in an order of Court even though
it includes terms which were not directly in issue before the
compromise or agreement was arrived at.
[15]


See
also
Sadie
v Sadie; Waldman v Waldman
.[16]


[30]
Given the breadth of the verification
exercise that appears to be contemplated in the agreement, can the
appellant’s argument that when the agreement stipulates that
the verification process will take place by reference to ‘source
documents’, a verification process that relies on invoices,
credit notes and debit notes will suffice and delivery notes are not
necessary be sustained?


[31]
A source document is an accounting term.
Given the verification process that was being regulated by the
agreement, the term was used with its accounting connotations. As
Yekiso J held in the Western Cape High Court decision of
Garden
Cities Inc v City of Cape Town
2009 (6)
SA 33 (WCC) para 20, ‘a source document can be in the form of
an invoice, a tax invoice or any document of prime entry, no matter
what label it carries’. A delivery note would ordinarily be
considered to be a document of prime entry and the appellant did not
argue that a delivery note, ordinarily understood, was not a source
document. It argued instead that in the context of this case, the
phrase ‘source documents’, where it appeared in the
agreement, should be given a narrow meaning to exclude the need for
verification by way of delivery notes.


[32]
The only reason that appellant proffered
for the unusually narrow meaning it suggested be attached to ‘source
documents’ in the agreement was the fact that the issue of the
quantity of fuel received by the respondent was not an issue in the
litigation that preceded the signing of the agreement. Yet, as
discussed above, the terms of the agreement appear to require an
exercise far broader than one determining whether the appellant
should reimburse the respondent for the transport differential
amounts paid by respondent. Indeed, the terms of the agreement
contemplate a wider investigation of the question of indebtedness by
both parties. The agreement makes plain for example that there is a
dispute between the parties as to the extent of indebtedness (‘the
opening balance’) on 1 June 2005.  Given the breadth of
the verification exercise contemplated in the agreement, as well as
the fact that there is no textual basis in the agreement that
suggests that the amount of fuel delivered by appellant to respondent
is not in dispute, the appellant’s argument that it is entitled
to a declaratory order that the agreement does not require reference
to delivery notes cannot be upheld.



Was the agreement
void because of dissensus?


[33]
Appellant
argues in the alternative that if the agreement, properly
interpreted, contemplates reference to delivery notes as part of the
verification process, then the agreement is void
ab
initio

because of the absence of consensus between the parties. Appellant
notes that the agreement constitutes both a contract between the
parties and an order of court. In that sense it is a ‘hybrid’.[17]


[34]
The
precise legal character of an agreement that is made an order of
court is not certain.[18]
However, whatever the precise legal character of an agreement that is
made an order of court by consent, it is clear that if the original
agreement was vitiated by mistake, then a court may set aside the
order that made that agreement an order of court. In the South
African Appellate Division decision of
Gollach
& Gomperts (1967) (Pty) Ltd and Others v Universal Mills and
Produce Co (Pty) Ltd and Others
,
Miller JA reasoned that an agreement made a court order may –


.
. . be successfully attacked on the very grounds which would justify
rescission of the agreement to consent to judgment. I am not aware of
any reason why
justus
error

should not be a good ground for setting aside such a consent
judgment, and therefore also an agreement of compromise, provided
that such error vitiated true consent and did not merely relate to
motive or to the merits of a dispute which it was the very purpose of
the parties to compromise.’[19]


[35]
Appellant argued that, if the contract
properly interpreted contemplates the possibility that the
verification exercise would require the use of delivery notes, it
‘would never have agreed to that’. Appellant argues
therefore that the contracting parties were at cross-purposes and no
consensus existed between them in signing the agreement. Appellant
argues that it never intended to agree that the verification exercise
would require the use of delivery notes, whereas the respondent did
intend the use of delivery notes to verify the question of
indebtedness.


[36]
In Sonap
Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v
Pappadogianis
, the South African
Appellate Division set out the approach to unilateral mistake as
follows –


.
. . the decisive question in a case like the present is this: did the
party whose actual intention did not conform to the common intention
expressed, lead the other party, as a reasonable man, to believe that
his declared intention represented his actual intention? . . . To
answer this question, a three-fold enquiry is usually necessary,
namely, firstly was there a misrepresentation as to one party’s
intention; secondly, who made that representation; and thirdly, was
the other party misled thereby? . . . The last question postulates
two possibilities: was he actually misled and would a reasonable man
have been misled?’[20]


[37]
The first question is whether there was a
misrepresentation to the respondent regarding appellant’s
intention and the second is who made that misrepresentation. In this
case, appellant signed an agreement that, properly construed,
provided for a process to determine on the basis of source documents
the extent of liability of either of the parties to the agreement to
the other. In signing that agreement, which does not exclude delivery
notes from the purview of the verification process nor does it limit
the process to the question of the transport differentials, the
appellant indicated its intention to follow the process provided for
in the agreement. The respondent relied upon the appellant’s
signature of the agreement. It was not unreasonable for the
respondent to rely on the misrepresentation or error made by the
appellant.


[38]
Appellant seeks to rely on facts
surrounding the signing of the agreement to assert that its mistake
in assuming the agreement had a narrower purport was reasonable. Even
assuming that this evidence should be admitted, something which we
expressly choose not to decide, it would not assist the appellant for
there is a dispute of fact on the papers as to what happened at the
meeting where the agreement was negotiated. On behalf of the
appellant, it is asserted that the respondent’s expert had
conceded that his calculations that were based on delivery notes
‘were likely to be incorrect and that his calculations ought
rather to be based on invoices’. This averment is firmly denied
on behalf of the respondent. Instead, the respondent asserts that it
was agreed that appellant would be given an opportunity to challenge
respondent’s expert’s conclusions and that the
verification could
not
proceed simply on the basis of invoices. These allegations are denied
by the appellant without any further elaboration. It is noteworthy
that, as the agreement makes plain, the appellant was to be given an
opportunity to comment on the respondent’s expert’s
verification exercise. The agreement expressly provides that the
appellant will be given an opportunity to respond to the verification
process conducted by the respondent’s expert after first giving
the respondent an opportunity to reconsider its verification.


[39]
In conclusion, in determining whether there
was a
dissensus
between the parties at the time the agreement was signed, it is
important to note that the ordinary meaning of ‘source
document’ in the agreement would have included delivery notes.
In the absence of an explicit limitation of the term ‘source
document’, the respondent was entitled to assume that delivery
notes would be useful and relevant to the verification exercise.
Appellant suggests, nevertheless, that it would not have signed the
agreement if it knew that the agreement would have required reference
to delivery notes. The difficulty for the appellant is that it signed
the agreement and the meaning which the appellant seeks to attach to
the agreement is inconsistent with the language of the agreement. It
was not unreasonable for the respondent to rely on appellant’s
signature of the agreement and expect appellant to be bound by the
written terms of the agreement.


[40]
Moreover, given that the appellant chose to
institute these proceedings by way of motion, any dispute of fact
between the parties must be determined on the basis of that portion
of the applicant’s (here the appellant’s) version as is
not put into genuine dispute by the respondent, according to the
well-established rule in motion proceedings (see
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984
(3) SA 623 (A) at 634I–635A). In this case, appellant’s
version of the negotiations surrounding the signature of the
agreement is firmly disputed by the respondent. According to the
respondent, both parties understood at the time the agreement was
drafted that delivery notes would have been relevant to the
verification exercise, and that understanding is consistent with the
language of the agreement. In the light of the respondent’s
version of the events, the appellant’s submission that there
was
dissensus
between the parties at the time the agreement was signed cannot be
sustained.



Rectification of
the agreement


[41]
The
third and final question that arises for consideration is whether the
Court should rectify and vary the agreement by inserting the words
‘which need only to be invoices, debit notes or credit notes’
after the words ‘source documents’ wherever they appear
in the agreement. The general principle is that there are only narrow
circumstances in which an order of court may be varied.[21]
Moreover, it is not clear to what extent a court will have the power
to vary an order made by consent.[22]
It is not necessary to determine this question here. Given the
conclusion reached earlier in this judgment, that, properly
construed, the agreement does not mean that the verification exercise
need only proceed by way of reliance on invoices, credit notes and
debit notes, there is no basis for a rectification of the contract as
sought by the appellant.


[42]
In the circumstances the appeal fails.



Costs


[43]
There is no reason why costs should not
follow the result. The appellant should be ordered to pay the costs
of the respondent in this court on the basis of one instructing and
two instructed counsel.


Order


[44]
The following order is made –


1.
The appeal is dismissed.






2.
The appellant is ordered to pay the costs of the respondent on the
basis of one instructing and two instructed counsel.






O’REGAN
AJA






SHIVUTE
CJ






CHOMBA
AJA


APPEARANCES






APPELLANT:
S du Toit, SC (with him J J Meiring)


Instructed
by Fisher, Quarmby & Pfeifer


RESPONDENT:
R Heathcote (with him B de Jager)


Instructed
by Ellis Shilengudwa Inc.



[1]
In reaching this conclusion, the High Court relied on three
decisions of the South African courts:
Hadiaris
v Freeman and Freeman
1948
(3) SA 720 (W);
Sonarep
(SA) (Pty) Ltd v Motorcraft (Pty) Ltd
1981
(1) SA 889 (N) and
Scottish
Union and National Insurance Co Ltd v Native Recruiting Corporation
Ltd
1934
(AD) at 458.




[2]
See, for example,
Kirin-Amgen
Inc & Others v Hoechst Marion Roussel Ltd & Others
[2004]
UKHL 46 2005 (1) All ER 667 (HL) where Lord Hoffmann spoke of the
rule of construction that required ambiguity before turning to
context as follows: ‘These rules, if remorselessly applied,
meant that unless a court could find some ambiguity in the language,
it might be obliged to construe the document in a sense which a
reasonable reader, aware of its context and background, would not
have thought the author intended. Such a rule, adopted in the
interests of certainty at an early stage in the development of
English law was capable of causing considerable injustice and
occasionally did so’. (Para 29);
Investors
Compensation Scheme v West Bromwich Building Society
[1998]
1 WLR 896 (HL) at p 912; and
Chartbrook
Ltd v Persimmon Homes Ltd and Others and Another

[2009] UKHL 38 [2009] 1 AC 1101 (HL).




[3]
See, for example,
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593 (SCA) para 19 and
KPMG
Charter Accountants (SA) v Securefin Ltd and Another; KPMG Chartered
Accountants (SA) v Securefin Ltd

2009 (4) SA 399 (SCA) at para 39.




[4]
See
Investors
Compensation Scheme v West Bromwich Building Society,
cited
above n 1, at p  912.  Whether Lord Hoffmann was correct
to identify the shift as a fundamental change has been a matter of
some debate. See Wallis ‘What’s in a word?
Interpretation through the eyes of ordinary readers’ 127
(2010)
South
African Law Journal
673–693
at 691–692.




[5]
At pp 912–913.




[6]
Cited
in n 3 above
para
19.




[7]
See the fuller discussion in Wallis ‘What’s in a word?
Interpretation through the eyes of ordinary readers’ 127
(2010)
South
African Law Journal
673–693;
and Lord Bingham of Cornhill ‘A new thing under the sun: the
interpretation of contract and the ICS decision’ (2008) 12
Edinburgh
LR
374.




[8]
1950 (4) SA 653 (AD) at 662H-663A.




[9]
See
Coopers
& Lybrand and Others v Bryant
1995
(3) SA 761 (A) at 768A–E. See also the helpful discussion in
Hutchison and Pretorius
The
Law of Contract in South Africa
2
ed (2012: Oxford University Press) at 260–265.




[10]
Cited
above n 3.




[11]
Id. At para 39.




[12]
See
Bothma-Batho
Transport (Edms) Bpk v S Bothma en Seun Transport (Edms) Bpk
2014
(2) SA 494 (SCA) para 12 where Wallis JA continued by saying that
the distinction ‘has fallen away’ and ‘[i]nterpretation
is no longer a process that occurs in stages but is “essentially
one unitary exercise”.’ (para 12).




[13]
Id.




[14]
Id.




[15]
1947
(4) SA 86 (O) at 98–99.




[16]
1953
(4) SA 39 (W) at 42F–G.




[17]
For a consideration of the nature of a settlement agreement made a
court order,
see
the full and illuminating discussion in Dale Hutchison ‘Contracts
embodied in orders of court: the legal nature and effect of a
judgment by consent’ in Kahn (ed)
The
Quest for Justice: essays in honour of MM Corbett (
1995:
Juta
)
at
229–263, and especially at 243–246.




[18]
Id. At 245–246.




[19]
1978
(1) SA 914 (A) at 922G.




[20]
1992
(3) SA 234 (A) at 239J –240A.




[21]
See
Firestone
South Africa (Pty) Ltd v Gentiruco AG
1977
(4) SA 298 (A) at 304E. See also
Fish
Orange Mining Consortium (Pty) Ltd v !Goaseb
2014
(2) NR 385 (SC) para 22.




[22]
See the discussion in Dale Hutchison "The Legal Nature and
Effect of a Judgment by Consent” in Kahn (ed) "
The
Quest for Justice: Essays in Honor of Michael McGregor Corbett Chief
Justice of the Supreme Court of South Africa"
(1992
Juta) at 256–258.