Interpretation of written agreements

court_rod_gavelShakawa Hunting & Game Lodge (Pty) Ltd v Askari Adventures CC (44/2014) [2015] ZASCA 62 (17 April 2015) is a recent judgment by the Supreme Court of Appeal concerning the interpretation of a written agreement.

The court (per Mpati P) said that what the parties and their witnesses ex post facto think or believe regarding the meaning to be attached to the clauses of the agreement, and thus what their intention was, is of no assistance in the exercise.

The court referred to its earlier judgment in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593; [2012] ZASCA 13 (SCA) where Wallis JA said the following with regard to the construction of a document:

“The present state of the law can be expressed 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.” (Para 18)

And further:

“Unlike the trial judge I have deliberately avoided using the conventional description of this process as one of ascertaining the intention of the legislature or the draftsman, nor would I use its counterpart in a contractual setting, ‘the intention of the contracting parties’, because these expressions are misnomers, insofar as they convey or are understood to convey that interpretation involves an enquiry into the mind of the legislature or the contracting parties. The reason is that the enquiry is restricted to ascertaining the meaning of the language of the provision itself.” (Para 20)

In Shakawa Hunting. Mpati P concluded that, what was stated in Endumeni Municipality regarding the expression ‘the intention of the parties’, was in line with what was expressed by Greenberg JA more than six decades ago in Worman v Hughes & others 1948 (3) SA 495 (A) at 505, namely:

“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….”

According to the judge, it followed that the testimony of the parties to a written agreement as to what either of them may have had in mind at the time of the conclusion of the agreement is irrelevant for purposes of ascertaining the meaning of the words used in a particular clause.

The judgment in Shakawa Hunting should be read with an earlier judgment by the Supreme Court of Appeal in Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) (Bpk)2014 (2) SA 494 (SCA) where Wallis JA emphasised, that while 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, was never very clear and has since fallen away. Interpretation is no longer a process that occurs in stages but is ‘essentially one unitary exercise’.

Dispute Resolution Matters – 18 June 2015 (153KB)

 

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