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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this

document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: A5021/12

Court a quo case no: 11971/11

In the matter between:

V, C F Appellant

And

V, M Respondent

SUMMARY

SPILG J with Maluleke and Kathree-Setiloane JJ concurring

INTERPRETATION OF CONTRACTS:

(1) REPORTABLE: YES

(2) OF INTEREST TO OTHER JUDGES: YES

(3) REVISED.

24 November 2016 ………………………...

DATE SIGNATURE

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- Integrated interpretational process applied to the words used (ie; by

reference to both their internal and external contexts).

- The ordinary meaning of the words used when limited to the clause itself

must yield to the intention of the parties as expressed in the balance of the

contract as a whole, the purpose for which they were introduced and the

factual matrix in which the document came into existence. To interpret

otherwise would result in absurdity and not make commercial sense in the

context of the relationship established by the parties.

EVIDENCE- PAROL EVIDENCE

- What constitutes admissible evidence in order to determine the purpose of

the agreement and its factual matrix

JUDGMENT

SPILG, J:

INTRODUCTION

1. This is an appeal against the decision of Makume J. The case concerns an

agreement of settlement which was made an order of court in divorce

proceedings.

2. The contentious clauses in the agreement relate to the maintenance

obligations undertaken by the respective parties. These are to be found in

section C of the agreement and provide:

‘2. Maintenance in respect of the children

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2.1 Until the fixed property at […] Paul Newham Avenue is sold

and registered in the name of the purchaser or until 31

December 2010 [whichever date arises last] the defendant will

be solely responsible and liable for the maintenance of the

children.

2.2 As and when the fixed property situated at 19 Paul Newham

Avenue is sold and registered in the name of a purchaser or

until 31 December 2010 [whichever date arises last] the

plaintiff and the defendant will be jointly responsible and liable

for the reasonable and necessary maintenance expenses of

the children, which reasonable and necessary maintenance

expenses will be agreed between the parties alternatively

decided by a court of competent jurisdiction’

THE ISSUES

3. The respondent successfully contended before the court a quo that she

would only be responsible for contributing toward the maintenance of their

children on the later of the two postulated events, the key to the

construction of the clauses being the common phrase “whichever date

arises last” and the commencing words “Until” in the first subparagraph

and “As and when” in the second.

4. The appellant had unsuccessfully counterclaimed for an order that the

parties were jointly liable for all reasonable maintenance costs to be

incurred in respect of their children.

5. The appellant contends that if regard is had to the circumstances

prevailing at the time, then on a proper interpretation of the clauses

transfer was expected to go through prior to 31 December 2010 but that

the respondent would bear the risk if there was a delay beyond that date.

The appellant did not seek rectification of the agreement to amend the

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phrase to read “whichever date is the sooner”. The appellant also argues

that the mutual responsibility of parents under the common law to maintain

their children overrides the agreement.

The concern we raised during argument was whether the agreement in

fact covered the contingency that arose: If it did, then by when was

transfer to be effected? If not, then was there consensus. We raised these

questions because at the time of the divorce a written sale agreement had

been concluded with a purchaser. However the sale was cancelled

sometime after the divorce was granted because the purchaser failed to

come up with the purchase consideration despite being granted

extensions of time.

6. Aside from the argument that the mutual duty of support overrides the

agreement, the issues concern the proper interpretation of the agreement

between the parties, including whether it was intended to cover the

eventuality that arose.

7. The first question is whether it is permissible to go behind the terms of a

written agreement which was made part of the court order, and which on

the face of it may be clear and unambiguous. This involves a consideration

of the method of interpreting contracts as well as the entitlement to

introduce extrinsic evidence where there has been no application for

rectification.

INTERPRETATION OF CONTRACTS

8. The fundamental consideration in determining the terms of a written

contract or its application to an event that arose during the course of their

relationship is to discern the intention of the parties from the words used in

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the context of the document as a whole, the factual matrix surrounding the

conclusion of the agreement and its purpose or (where relevant) the

mischief it was intended to address (KPMG Chartered Accountants (SA) v

Securefin Ltd and Another 2009 (4) SA 399 (SCA) at para 39 and Novartis

SA (Pty) Ltd v Maphil Trading (Pty) Ltd 2016(1) SA 518 (SCA) at paras 27,

28, 30 and 35).

9. Since at least Swart en 'n Ander v Cape Fabrix (Pty) Ltd 1979(1) SA 195

(A) at 202C and List v Jungers 1979 (3) SA 106 (A) at 118G-H the

Supreme Court of Appeal (‘the SCA’) and its predecessor have stated that

one considers the contentious words by having regard to their context in

relation to the contract as a whole and by taking into account the nature

and purpose of the contract1. While there have been some hiccups along

the way, in Natal Joint Municipal Pension Fund v Endumeni Municipality

2012 (4) SA 593 (SCA) para 18 Wallis JA said:

‘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 reasonable, sensible

or businesslike for the words actually used. To do so in regard to a statute or

1 Swart 202 C:

‘Dit is vir my vanselfsprekend dat 'n mens na die betrokke woorde moet kyk met inagneming van die

aard en opset van die kontrak, en ook na die samehang van die woorde in die kontrak as geheel.’

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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

language 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.’

10. After citing this extract Wallis JA in Bothma-Batho Transport (Edms) Bpk v

S Bothma & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA) at para

12 continued:

‘Whilst the starting point remains the words of the document, which are the

only relevant medium through which the parties have expressed their

contractual intentions, the process of interpretation does not stop at a

perceived literal meaning of those words, but considers them in the light of all

relevant and admissible context, including the circumstances in which the

document came into being. The former distinction between permissible

background and surrounding circumstances, never very clear, has fallen

away. Interpretation is no longer a process that occurs in stages but is

‘essentially one unitary exercise’. Accordingly it is no longer helpful to refer to

the earlier approach.’

11. Accordingly the so called ‘golden rule’ no longer applies. In terms of that

rule a court could not have regard to the surrounding circumstances if the

ordinary grammatical meaning of the words used are clear, unambiguous

and do not lead to an absurdity when considered in the context of the

document as a whole.2

2 Coopers & Lybrand & others v Bryant 1995 (3) SA 761 (A) at 767E-768 E. Our courts always applied

the broader construct of the golden rule and already in the leading early case of Venter v Rex 1907

TS 910 Innes CJ said:

‘that when to give the plain words of the statute their ordinary meaning would lead to absurdity so

glaring that it could never have been contemplated by the legislature or where it would lead to a result

contrary to the intention of the legislature, as shown by the context or by such other considerations as

the Court is justified in taking into account, the Court may depart from the ordinary effect of the words

to the extent necessary to remove the absurdity and to give effect to the true intention of the

legislature. I do not for a moment pretend to say that that rule covers the field of inquiry. He would

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12. Put another way; a court is now at liberty to depart from the words used,

even when they are clear and unambiguous when considered in the

context of the document as a whole if, having regard to admissible

background and surrounding factors, it is evident that they would lead to a

result contrary to the purpose and intention of the parties or the legislature

as the case might be.

13. The difficulty is to determine the threshold point. As stated in Endumeni, a

court cannot make a contract for the parties or transform a process of

interpretation into one of legislating from the bench.

14. More recently Wallis JA had this to say in Commissioner For The South

African Revenue Service v Bosch and Another 2015 (2) SA 174 (SCA) at

para 9:

‘The words of the section provide the starting point and are considered in the

light of their context, the apparent purpose of the provision and any relevant

background material. There may be rare cases where words used in a statute

or contract are only capable of bearing a single meaning, but outside of that

situation it is pointless to speak of a statutory provision or a clause in a

contract as having a plain meaning. One meaning may strike the reader as

syntactically and grammatically more plausible than another, but, as soon as

more than one possible meaning is available, the determination of the

provision’s proper meaning will depend as much on context, purpose and

background as on dictionary definitions or what Schreiner JA [Jaga v

Dönges NO and Another; Bhana v Dönges NO and Another 1950 (4)

SA 653 (A) at 664G – H] referred to as ‘excessive peering at the language

to be interpreted without sufficient attention to the historical contextual scene’

indeed be a bold man who attempted to exhaust a subject so difficult, and on which so many

conflicting opinions have been held. But it covers sufficient ground to enable one to deal with the case

before the Court, and that is enough for present purposes.’ (emphasis added)

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15. The position in our law as expressed by Wallis JA in Educated Risk

Investments 165 (Pty) Ltd and Others v Ekurhuleni Metropolitan

Municipality and Others [2016] 3 All SA 18 (SCA) at para 19 is that ‘the

words must be taken as the starting point and construed in the light of their

context and purpose and where applicable the dictates of the Constitution’.

The enquiry must not necessarily always commence by examining the

words used.3

16. While the object is to determine the meaning to be given to the words

used, it remains the primary function of the court to gather the intention of

the parties or the legislature by reference to those words; and this can only

occur if the object and purpose of the contract or the legislation (in which

case it would include the mischief sought to be remedied) are brought into

consideration when examining the words used in the context of both the

document as a whole and the context or factual matrix in which the

document came to be produced.4

17. Another critical feature of modern case law is that the interpretational

process is integrated.5 There is no immutable starting point in the enquiry

3 See also Firstrand Bank Limited v Land and Agricultural Development Bank of South Africa 2015 (1)

SA 38 (SCA) at para 27, Novartis at para 28 and Endumeni at para 19

4 Jaga at 662G-H:

‘Certainly no less important than the oft repeated statement that the words and expressions used in a

statute must be interpreted according to their ordinary meaning is the statement that they must be

interpreted in the light of their context. But it may be useful to stress two points in relation to the

application of this principle. The first is that 'the context', as here used, is not limited to the language of

the rest of the statute regarded as throwing light of a dictionary kind on the part to be interpreted.

Often of more importance is the matter of the statute, its apparent scope and purpose, and, within

limits, its background.’

See also KPMG Chartered Accountants (SA) v Securefin Ltd and Another 2009 (4) SA 399 (SCA) per

Harms DP at para 39; Wallis JA in Bothma-Batho at para 12

5 Endumeni at para 19;

‘All this is consistent with the 'emerging trend in statutory construction'. It clearly adopts as the proper

approach to the interpretation of documents the second of the two possible approaches mentioned by

Schreiner JA in Jaga v Dönges NO and Another; Bhana v Dönges NO and Another, namely that from the

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to determine the meaning of the words used.6 That is more likely to be

governed by the dictates of the case or individual judicial preference. In

Jaga v Dönges at 664B-H Schreiner JA pointed out that each has its own

disadvantages.7 Of importance is that, unless the issues are narrowed,

neither an examination of the words used, nor a consideration of their

outset one considers the context and the language together, with neither predominating over the

other’

Bothma-Batho at para 12:

‘Interpretation is no longer a process that occurs in stages but is essentially one unitary exercise.'

6 Jaga v Dönges at 662H-663A:

‘The second point is that the 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.’

Endumeni at para 25

7 Jaga v Dönges at 664B-H:

‘No doubt the result should always be the same, whichever of the two lines of approach is adopted

since, in the end, the object to be attained is unquestionably the ascertainment of the meaning of the

language in its context. But each has its own peculiar dangers. While along the line approved by Lord

GREENE there is the risk that the context may in a particular case receive an exaggerated importance so

as to strain the language used; along the other line there is the risk of verbalism and consequent failure

to discover the intention of the law-giver. The difference in approach is probably mainly a difference of

emphasis, for even the interpreter who concentrates primarily on the language to be interpreted

cannot wholly exclude the context, even temporarily; and even the interpreter who from the outset

tries to look at the setting as well as the language to be interpreted cannot avoid the often decisive first

impression created by what he understands to be the ordinary meaning of that language. Seldom

indeed is language so clear that the possibility of differences of meaning is wholly excluded, but some

language is much clearer than other language; the clearer the language the more it dominates over the

context, and vice versa, the less clear it is the greater the part that is likely to be played by the context.

Ultimately, when the meaning of the language in the context is ascertained, it must be applied

regardless of the consequences and even despite the interpreter's firm belief, not supportable by

factors within the limits of interpretation, that the legislator had some other intention. So too, if, when

interpretation is complete, it is clear that the legislator has failed to deal with a class of case that in all

probability would have been dealt with if it had not been overlooked, there is a casus omissus which

the courts cannot fill. But the legitimate field of interpretation should not be restricted as a result of

excessive peering at the language to be interpreted without sufficient attention to the contextual

scene.’

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context as a whole or the factual matrix in which the document came into

existence can be looked at in isolation.8

18. Finally, in the recent case of Novartis Lewis JA maintained that the

process of interpretation is to ascertain the intention of the parties or the

legislature.9 In Endumeni Wallis JA had considered the terminology

inappropriate since the enquiry is restricted to ascertaining the meaning of

the language of the provision itself.10 Nonetheless in both cases, the SCA

described the process as requiring the words used to be read in the

context of the document as a whole and in the light of all relevant

circumstances.11 In both cases the SCA confirmed that reliance can no

longer be placed on the outcome of earlier cases which restricted the

enquiry to the words used read with reference only to the internal context

of the document as a whole, and without regard to the external context of

the factual matrix at the time of its conclusion.12

8 See Jaga v Dönges at 662G-663A; Endumeni at paras 24 and 25

9 Novartis at para 27:

‘ This court has consistently held, for many decades, that the interpretative process 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.’

10 Endumeni at paras 20-24.

In Delmas Milling Co Ltd v Du Plessis 1955 (3) SA 447 (A) at 453C-E, Schreiner JA cited with approval

the statement by Greenberg JA in Worman v Hughes and Others 1948 (3) SA 495 (A) at 453D-E that:

'It must be borne in mind that in an action on a contract, the rule of interpretation is to ascertain, not

what the parties' intention was, but what the language used in the contract means, i.e. what their

intention was as expressed in the contract’

The context appears from 454F-455B of the judgment.

11 Endumeni at para 24; Novartis at para 27

12 Novartis at para 29 referring to the passage cited earlier of Wallis JA in Bothma-Batho at

para 12 and Endumeni at para 19:

‘It clearly adopts as the proper approach to the interpretation of documents the second of the two

possible approaches mentioned by Schreiner JA in Jaga v Dönges NO and Another; Bhana v Dönges NO

and Another, namely that from the outset one considers the context and the language together, with

neither predominating over the other. This is the approach that courts in South Africa should now

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19. Accordingly, the fact that the agreement was made an order of court does

not detract from the need to interpret it with reference to the words actually

used as well as its internal and external context. In KPMG Chartered

Accountants (SA) v Securefin Ltd and Another 2009 (4) SA 399 (SCA) at

para 39 Harms DP confirmed that:

‘…the rules about admissibility of evidence in this regard do not depend

on the nature of the document, whether statute, contract or patent.’

The issue before us remains the proper interpretation of the agreement,

and its intended scope or purpose.

ADMISSIBLE EXTRINSIC EVIDENCE (PAROL EVIDENCE RULE)

20. In Coopers & Lybrand at 768D-E the court limited the extrinsic evidence

that could be considered to:

‘… previous negotiations and correspondence between the parties,

subsequent conduct of the parties showing the sense in which they

acted on the document, save direct evidence of their own intentions.

Delmas Milling case at 455A-C, Van Rensburg's case at 303A-C,

Swart's case at 201B, Total South Africa (Pty) Ltd v Bekker NO1992

(1) SA 617 (A) E {dictum at 624G appl} at 624G, Pritchard Properties

(Pty) Ltd v Koulis1986 (2) SA 1 (A) {dictum at 10C-D appl} at 10C-D.’

21. It has already been observed that Wallis JA in Bothma-Batho at para 12

mentioned that the distinction between permissible background and

surrounding circumstances has fallen away. This was determined in

follow, without the need to cite authorities from an earlier era that are not necessarily consistent and

frequently reflect an approach to interpretation that is no longer appropriate.’

12

KPMG Chartered Accountants (SA) v Securefin Ltd and Another 2009 (4)

SA 399 (SCA) where Harms DP said at para 39 :

‘First, the integration (or parol evidence) rule remains part of our law.

However, it is frequently ignored by practitioners and seldom enforced

by trial courts. If a document was intended to provide a complete

memorial of a jural act, extrinsic evidence may not contradict, add to

or modify its meaning (Johnson v Leal1980 (3) SA 927 (A) at 943B).

Second, interpretation is a matter of law and not of fact and,

accordingly, interpretation is a matter for the court and not for

witnesses (or, as said in common-law jurisprudence, it is not a jury

question: Hodge M Malek (ed) Phipson on Evidence (16 ed 2005)

paras 33 - 64). Third, the rules about admissibility of evidence in this

regard do not depend on the nature of the document, whether statute,

contract or patent (Johnson & Johnson (Pty) Ltd v Kimberly-Clark

Corporation and Kimberly-Clark of South Africa (Pty) Ltd 1985 BP 126

(A) ([1985] ZASCA 132 (at www.saflii.org.za)). Fourth, 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

purposes of identification, 'one must use it as conservatively as

possible' (Delmas Milling Co Ltd v Du Plessis1955 (3) SA 447 (A) at

455B - C). The time has arrived for us to accept that there is no merit

in trying to distinguish between 'background circumstances' and

'surrounding circumstances.

The distinction is artificial and, in addition, both terms are vague and

confusing. Consequently, everything tends to be admitted. The terms

'context' or 'factual matrix' ought to suffice. (See Van der Westhuizen v

Arnold2002 (6) SA 453 (SCA) ([2002] 4 All SA 331) paras 22 and 23,

and Masstores (Pty) Ltd v Murray & Roberts Construction (Pty) Ltd

and Another B 2008 (6) SA 654 (SCA) para 7.)’13

13 See also Absa Technology Finance Solutions (Pty) Ltd v Michael's Bid a House CC 2013 (3) SA 426

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22. The effect of these decisions is to remove the limitation on bringing into

consideration the factual matrix and do away with the categories of cases

where extrinsic evidence may or may not be resorted to. (Delmas Milling

Co Ltd v Du Plessis1955 (3) SA 447 (A) at 454F-455B.) What is

preserved is the meaning to be given to surrounding circumstances; at

454G Schreiner JA said it meant:

‘… matters that were probably present to the minds of the parties when they

contracted (but not actual negotiations and similar statements).’

and at 455B where surrounding circumstances may not clear up an

ambiguity then;

‘… recourse may be had to what passed between the parties on the subject

of the contract. One must use outside evidence as conservatively as possible

but one must use it if it is necessary to reach what seems to be a sufficient

degree of certainty as to the right meaning.’

23. It would also appear that where the parties are agreed as to the underlying

facts, whatever their nature, then the issue of parol evidence need not

enter the discussion. This would follow from the acceptance that where the

parties agree on the meaning of their contract even if it contradicts the

unequivocal contents of their written memorial the courts will give effect to

the former. See Shill v Milner 1937 AD 101 at 11114.

14 At 111 explaining Breed v Van den Berg and others 1932 AD 283 at 292

‘… the Court cannot go beyond the meaning which both parties have agreed to put on the

contract. I do not interpret this statement of the law to mean that in the former of the two

instances rectification is a necessary preliminary; the learned Judge of Appeal was not

dealing with this question. In my view the agreed meaning put on the contract by both

parties in the trial Court must be held to preclude the appellant from saying that the order

made was not covered by his obligations under the contract.’

See also the clarification by Goldstone J (at the time) in Briscoe v Deans 1989 (1) SA 100 (W) at 105B-C

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24. In Novartis at para 27 Lewis JA said:

‘This court has consistently held, for many decades, that the interpretative

process 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. KPMG, in the passage cited, explains that parol evidence is inadmissible to

modify, vary or add to the written terms of the agreement, and that it is the

role of the court, and not witnesses, to interpret a document. It adds,

importantly, that there is no real distinction between background

circumstances and surrounding circumstances, and that a court should

always consider the factual matrix in which the contract is concluded — the

context — to determine the parties' intention.’

25. The issue of the parties subsequent common conduct did not arise for

consideration in Novartis and the other cases referred to in that decision. It

is however well established that such evidence is admissible since it

amounts to an objective demonstration of how the parties conducted

themselves, without objection, in implementing the terms of the contract. It

also amounts to conduct against interest, conduct evidencing consensus

as to the application of the agreement (much in the same way as

subsequent verbal confirmation as to their mutual understanding of the

terms) and objective evidence of their common understanding as to the

terms of their agreement at the time of its conclusion. See Harms JA (at

the time) in Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266

(SCA) at para 9115and Lewis JA in Rane Investments Trust v

Commissioner, South African Revenue Service 2003 (6) SA 332 (SCA) at

para 27.

15 At para 91:

‘The rule is that evidence of subsequent conduct is admissible, even where the agreement is on its face

unambiguous, if the parties by consent lead such evidence.’

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Rectification would not be required if the document was ambiguous or if

ambiguity arose when considering the factual matrix. Furthermore where

the interpretation is intended to explain the document or limit its reach and

not to contradict its terms then it appears unnecessary to apply for

rectification before extrinsic evidence is allowed.

26. As I understand the appellant’s case, he seeks to contradict the express

wording of the agreement but has not applied for rectification. He would

therefore have to demonstrate that ambiguity arises from a consideration

of admissible external factors.

THE WORDS USED AND THEIR INTERNAL CONTEXT

27. The opening words to clauses 2.1 and 2.2 of section C of the agreement,

namely “Until” and “As and when” respectively, indicate that the appellant

will be solely responsible for maintenance of the two children until one or

other of the events mentioned in the clauses occurs. It is evident that the

condition which will release the respondent from being solely responsible

for maintenance is not based on the performance of some act by the

parties themselves. The parties will be commence being jointly responsible

for the children’s maintenance either when the Newham property is sold

and registered in the name of the purchaser or on 31 December 2010.

28. Which of the two postulated events will release the appellant from sole

responsibility for maintenance is governed by the phrase “whichever date

arises last”. It is added in parenthesis in both clauses 2.1 and 2.2. The

phrase is clear and unambiguous and in the context of the two clauses

qualifies the words which precede them.

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29. If the words used are read in the context of the agreement as a whole the

“financial” rationale becomes self-evident. It was not that the appellant

assumed a more onerous obligation that would result in the respondent’s

release from any of the joint financial commitments that arose from their

relationship for so long as transfer of the property was delayed.

The following clauses of the agreement appear relevant to understand the

words used in clauses 2.1 and 2.2 in the context of the agreement as a

whole.

30. Clause 3.1 of Section B to the agreement provides that:

‘Each party shall be responsible for all liabilities incurred in their

respective names and/or attached to any property [movable and

immovable] which they acquire sole and exclusive ownership of in

terms of this agreement, save that the shared bond facility incurred in

respect of […] Paul Newham Avenue. In regard to the aforesaid bond

facility the defendant shall be liable to settle 50% of the outstanding

balance of the facility after the proceeds of the sale of the fixed

property situated at […] Paul Newham Avenue have been paid to

reduce the facility amount less the lump sum payment paid by him to

ABSA during August 2010’

It is evident from the agreement that although the Newham property was

registered in the respondent’s name, the parties marriage out of

community of property with the accrual system meant that both parties had

obtained a joint loan facility, even though the bank had secured the loan

over property belonging to the respondent only.

31. In terms of clause 2.1 of section B to the agreement, each party would

retain, as his or her sole and exclusive property, the immovable property

registered in each of their respective names. Once again, it is clear from

the agreement as a whole that the respondent was the sole registered

owner of the Newham Avenue property.

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32. Under clause 2.2 of section B to the agreement, the defendant would

vacate the Newham property by no later than 30 September 2010. Until

that date he was to be responsible for rates and taxes, water and

electricity.

33. The children’s primary residence was to be with the appellant (clause 1.2.1

of section C) although at that time the eldest son was at university in

Potchefstroom.

34. Section E to the agreement provides as follows:

‘The parties place on record that by the signing hereof they will have no

further claims against each other, but the parties specifically record that this

clause will have no effect on the parties’ right from time to time, to apply for

maintenance in respect of the minor children , taking into account changing

needs and circumstances’

35. There are some other clauses which deal with specific exclusions relating

to the circumstances where the appellant will continue to be responsible

for certain charges, such as rates and taxes while he remains in

occupation of the property. There are also clauses where the respondent

assumes certain specific maintenance responsibilities such as retaining

the children on her medical aid. However, these are clearly and

unambiguously set out. They constitute specific exclusions to the

arrangement that the appellant will be solely responsible for the children’s

maintenance while the respondent will be solely responsible for paying the

monthly bond instalments until the happening of the relevant event

described in the clauses under consideration.

36. These other provisions of the agreement are entirely consistent with the

ordinary grammatical meaning of the words under consideration, and the

financial rationale for the appellant assuming sole responsibility for

payment of maintenance until the property is transferred into the name of a

purchaser. The agreement as a whole addresses the two financial

obligations arising from their relationship. The one was the joint

responsibility for maintaining their children. The other was the joint

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responsibility they accepted to pay off the monthly bond installments until

the house was sold, and to assume equal responsibility for any shortfall

between the purchase price for the house and the outstanding bond

amount. Moreover, the parties provided in their agreement that

circumstances that were not contemplated might arise which would result

in a reappraisal of the maintenance obligations. This explains the insertion

of section E.

37. The arrangement was straight forward. For as long as the respondent

would assume sole responsibility for paying the monthly bond instalment,

which they jointly owed, the appellant would assume sole responsibility for

the payment of maintenance. This would obviously endure for as long as

the property was registered in her name, unless of course either party

approached a court to change the maintenance arrangement.

38. The clauses requiring the appellant to vacate by 30 September 2010, and

which indicate that there would be a shortfall between the purchase price

for the property and the outstanding bond amount, might suggest that the

parties envisaged an imminent transfer of the property or at least a sale

where occupation had to be given on or after 1 October 2010.

39. But reading the agreement as a whole there is no suggestion that the

parties did not intend their arrangement, that each would solely assume on

of the joint financial responsibilities, to endure for as long as the Newham

property was not transferred to a purchaser. In its terms, the 31 December

date reflected that even if transfer occurred before this date, the parties

would, nonetheless, continue up to the end of that year with each

assuming sole responsibility to pay the respective joint financial obligations

that arose from their relationship.

40. As was pointed out in Makume J’s judgment, the case of Claassens v

Claassens 1981(1) SA 371 (NPD) at 371A-C is authority for the

proposition that divorce agreements dealing with, amongst other things,

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property and maintenance are the products of compromises that courts

may not necessarily go along with. It is evident that the underlying

considerations which result in any particular provision, limitation or

extension may be the result of give and take based on past events,

including past failures to meet financial obligations that the other party had

then assumed. The relevant passage from Claassens was recently

approved in Eke v Parsons 2016 (3) SA 37 (CC) at paras 14-22.

41. In the present case there was a safety valve expressly provided for by

section E to the agreement. If circumstances changed then either party

was at liberty to approach a court. This reinforces a reading of the

agreement as a whole to have catered for the eventuality that transfer did

not go through. It would also lead to the absurdity that the appellant’s

obligations would be significantly reduced after having been released from

his liability for half of the monthly loan repayments while the respondent’s

(on the appellant’s version) would at least double.

EXTRINSIC FACTORS

42. It is common cause that the parties were married in January 1990 out of

community of property with the application of the accrual system.

43. There were two dependent children covered by the maintenance

provisions of the agreement. This was determined by the court and is not

the subject of appeal.

44. The agreement was signed on 22 September 2010. The one child was

then a few days short of his 18th birthday and the other was 14 years old.

45. The factual matrix regarding the property mentioned in clause 2 of section

C to the agreement is set out in the following paragraphs.

46. The Newham property is exclusively owned by the respondent.

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47. In 2004 the parties obtained a shared loan facility from Absa Bank. They

agreed to be responsible for its repayment in equal portions. The

respondent’s Newham property was bonded as security for the loan.

48. Prior to the conclusion of the settlement agreement the parties accepted

an offer to purchase the Newham property from a Mrs Adams. Although

the page reflecting the date of acceptance of the offer is not provided the

offer was forwarded by the estate agent on 12 August 2010.

49. The following clauses are relevant:

a. The purchase price was R2.5 million. There was no deposit.

However, the amount was to be secured by a bank or other

approved guarantee within 30 days of obtaining bond approval, and

bank approved had to be obtained by no later than 30 August 2010;

b. Occupation was to be given to the purchaser on 25 September

2010 from which date she would be responsible for occupational

rent calculated at 1% of the purchase price, payable monthly in

advance.

50. The purchaser did not obtain bond approval by 30 August but it is

common cause that extensions were granted to enable her to obtain

finance. It was a term of the agreement that the period could be extended.

51. On 28 August 2010 the appellant had paid R195 500 into the shared loan

facility account. At that time the amount outstanding on the bond was

R2 745 000. It is clear from the respondent’s own version that the

appellant put the R195 000 in as representing his 50% portion of the

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anticipated shortfall between the purchase price and the outstanding bond.

The arithmetic adds up. Nonetheless clause 3.1 of section B to the

agreement itself recognises that there may be further amounts that he will

have to pay in. That would only likely arise if the sale to Adams fell

through.

52. On 1 October 2010 the appellant vacated the property after securing

alternative accommodation. Until then he had been occupying the property

rent free although he had an obligation to pay the municipal charges. The

date he vacated the property does not coincide strictly with the date vacant

possession was to be given to the purchaser in terms of the agreement,

but I do not believe that anything turns on it. The dates are sufficiently

close not to be coincidental.

53. The sale was however cancelled on 20 December 2010 and the property

was put back on the market. The respondent states that at the time of the

divorce agreement both parties believed that the sale would be successful,

“to such an extent that I granted the prospective purchaser several

extensions to comply with the suspensive condition”

54. I however accept that further on the respondent, in her replying affidavit,

claims that they both were cautioned by the appellant’s attorneys that the

chances of a cash sale being successful were very remote. And that is

why, although anticipating that transfer would be effected by 31

December, they both understood the risks and she claims that this led to

them agreeing to insert “whichever date arises last” Since the appellant

disputes this, and by reason of the cases referred to earlier, which remain

good law on admissible evidence, such evidence is inadmissible.

55. The appellant contended that the phrase “whichever date arises last” was

introduced because no one anticipated that the sale would fall through but

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rather that transfer of the consummated sale would occur prior to 30

December 2010. Again this evidence is inadmissible for the same reason.

56. However, the conduct of both parties demonstrates that they were

working around the Adams sale going through. This is evidenced by the

appellant vacating the Newham property on 30 September, by him also

paying his 50% of the shortfall (between the purchase price of the Adams

sale and the outstanding bond in August 2010) and the respondent

granting Adams further extensions of time after 30 September. The

question is whether this was the only contingency they contemplated.

57. By 4 June 2011 the property was again occupied and appears to have

been sold.

58. The obligations each party assumed reveal that the total monthly loan

repayment on the outstanding bond of some R2 750 000 was not

insubstantial, amounting to R19 000 per month, while she had her own

accommodation to provide for elsewhere, and also paid other specified

amounts to the children including just over R1 000 per month for their

portion of the medical aid up to January 2011, as provided for in terms of

the agreement.

59. The appellant produced an additional affidavit setting out his alleged

expenses post January 2011. Even if they are correct (and on a cursory

examination there are items included such as a R15 000 holiday expense

apportioned to the one son) he did not seek to correlate them to what he

had been paying previously.

60. It is significant that the appellant described the purpose of the

arrangement to be “that it was agreed that it would make economic sense

for the one party to make full payment in respect of the shared loan facility

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and for the other party to attend the joint liability in respect of the

maintenance of our two children”. The respondent confirms this.

61. Accordingly applying Shill, this evidence is admissible. In any event, the

purpose is clear enough from the document, and the other surrounding

circumstances, including the fact that the sons were to stay primarily with

the appellant while the security for the loan facility, which had been utilised

by both parties, was the respondent’s exclusive property. It would make

sense for the allocation of the joint obligations to be assumed in the

manner they were.

62. In short the appellant did not contend that the monthly maintenance for the

children was expected to increase in 2011. No such case is made out.

Even if it could, then the agreement itself provided a remedy; the

appellant could approach the court to vary the maintenance.

63. Accordingly the liabilities each assumed under the agreement appeared to

be treated by them as co-extensive

64. Moreover if occupation had been given to Adams on 1 October then;

a. there would be additional income received by the respondent by

way of occupational rent although she would then have to take up

the payment of rates and taxes while continuing to service the bond

until transfer was effected. But that does not take into account the

financial obligations she would continue to incur at the residence

where she was living.

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b. The appellant would be obliged to incur an additional liability for

renting accommodation but, would be released of the obligation to

pay rates and taxes on the Newham property.

If occupation had been given to Adams on 1 October 2000 in accordance

with the sale agreement and transfer was not effected by 31 December

2000, then on the interpretation contended for by the appellant, as from 1

January 2011 the maintenance obligation would be shared, while the

respondent would continue to pay an addition al R19000 plus rates and

taxes for the property. To put it bluntly this would make no commercial

sense16 and would result in an absurdity inconsistent with the purpose

and intent of the agreement as confirmed by both parties.

WEIGHING THE WORDS BY REFERENCE TO THEIR INTERNAL AND

EXTERNAL CONTEXT

65. The process of examining the words used in the agreement divided the

enquiry into reading the words in relation to the document as a whole, and

having regard to admissible external evidence. They also could have been

considered comprehensively.

66. Ultimately the parties concluded a settlement agreement which was a

compromise that would ensure that the respondent would assume the sole

responsibility of paying up the joint loan obligations incurred and, in return

for relieving him of responsibility for paying his 50% towards the monthly

loan instalment, the appellant would assume sole responsibility for the

children’s maintenance.

16 Endumeni at para 18. The more recent case of Novartis does not appear to have questioned the

objective approach to determining what is businesslike in the context of the commercial relationship

established by the parties. The criticism of an objective approach was leveled at the appellant’s

contention that one may only have regard to the actual words used (at paras 27 and 28).

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67. The economic realities are that this arrangement would endure for as long

as the property was not transferred into the name of a purchaser. If it were

otherwise, then the respondent would be obliged to continue paying both

hers and the appellant’s liability for the monthly bond installments (and

rates and taxes if the property was not occupied by Adams) while

simultaneously attracting liability for half the maintenance.

68. The appellant’s counterclaim to have the agreement interpreted in a

manner that, as from 1 January 2011, the parties would resume sharing

the payment of their maintenance obligations towards their children, even

if the property was not sold and transferred by then, would result in the

appellant’s overall liability to the common pool of financial obligations

being significantly reduced, while increasing that of the respondent’s by

over R20 000 per month. It would not make commercial sense for the

respondent to have exposed herself to paying both half the maintenance

and the full amount on the bond, when the appellant was jointly liable for

raising the loan and servicing it.

It is also evident that the parties wished to negotiate an agreement that

would avoid a return to court. If the agreement was dependent on the

single sale then it was of very short duration.

69. This possibility is unlikely as the obligations of the respondent to service

the monthly bond repayments would still remain until the property was

sold. It is also unlikely because, despite the Adams sale having been

concluded before the divorce agreement, the clauses under consideration

are not definitive; they did not allude to an existing sale or only mention an

awaited transfer. They are couched in neutral terms that are broad enough

to include a prospective sale and transfer.

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70. If the agreement is to be interpreted in a manner that only the sale to

Adams was contemplated, then either the agreement will have failed or

terminated once a reasonable time had elapsed without the sale and

transfer going through.

71. However, the saving clause contained in section E militates against that

interpretation. This clause effectively provides for the survival of the

agreement through all contingencies of whatever nature, and whether

foreseen or not, unless one of the parties approaches a court to vary it.

72. Moreover such an argument assumes that the agreement was silent as to

the time of performance. It also assumes that the divorce settlement

agreement should be construed as an ordinary bilateral contract where

neither party can be expected to wait indefinitely for performance.

73. In the present case there is continued performance by each party. The

agreement does no more than provide that the method of performance will

change on the happening of the last postulated event. In its terms, on the

happening of the last mentioned event, the bond will be settled (save for

the respondent’s obligation to make up her portion of the shortfall). This

event would result in the reduction of the total obligations for which the

parties had jointly remained liable post the divorce, leaving only their joint

responsibility to pay for their children’s maintenance. Once the property is

transferred to a buyer, the performance effected by the respondent in

paying both her and the appellant’s liability to the bank, in respect of the

shared loan ceases, is converted into paying half of the children’s

maintenance. In turn, the appellant’s obligation to pay both his and the

respondent’s share for the children’s maintenance is halved.

74. Accordingly, it would be incorrect to characterise the issue as one where

performance must occur within a reasonable time. Performance between

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the parties was ongoing. It would only be reduced when the property was

transferred and the joint part of the loan obligation settled. The provisions

of section E also ensure that the agreement does not fail but persists until

varied by a court of competent jurisdiction.

THE AGREEMENT AND THE CHILDREN’S RIGHTS TO MAINTENACE

75. There is nothing in the agreement that can be construed as adversely

affecting the children’s rights to maintenance. Nor is any case made out

that the appellant cannot afford to continue meeting their joint

maintenance obligations for so long as the respondent is required to

service their monthly joint debt repayments under the loan.

CONCLUSION AND ORDER

76. I am satisfied that the contentious words read in the context of the

agreement as a whole, the purpose for which they were introduced and

the factual matrix remain clear and unambiguous; until transfer of the

Newham property is effected the appellant will assume the responsibility

that both parties have to maintain their sons in return for which the

respondent will assume full responsibility for servicing the bond. To

accede to the interpretation contended for by the appellant would make no

commercial sense as it would reduce his share of the joint obligations

considerably, while increasing the respondent’s by over R20 000 per

month without any rational justification. Finally the agreement, in its terms,

was broadly worded so as not to limit the sale of the property to the

Adams’ transaction. Section E to the agreement furthermore militates

against the agreement not intending to cover any changed circumstances

that might have been unforeseen.

77. Accordingly, the appeal is dismissed with costs.

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___________________________

BS SPILG J

I agree

________________________________

F KATHREE-SETILOANE J

I agree and it is so ordered

___________________________________

GSS MALULEKE J

______________________________________________________________

COUNSEL FOR THE APPELLANT: Adv L de Wet INSTRUCTED BY: CMM Attorneys Inc COUNSEL FOR THE RESPONDENT: Adv LC Matthysen INSTRUCTED BY: Boela van der Merwe Attorneys DATE OF JUDGMENT: 24 November 2016