Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk

• Jurisdiction: South Africa
• Judge: Mthiyane AP, Lewis JA, Shongwe JA, Wallis JA and Pillay JA
• Judgment Date: 28 November 2013
• Citation: 2014 (2) SA 494 (SCA)
• Docket Number: 802/2012 [2013] ZASCA 176
• Hearing Date: 21 November 2013
• Counsel: P Ellis SC (heads of argument prepared by P Ellis SC and PG Leeuwner) for the appellant. C Acker for the respondent.
• Court: Supreme Court of Appeal

Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014 (2) SA 494 (SCA)

2014 (2) SA p494

Citation	2014 (2) SA 494 (SCA)
Case No	802/2012; [2013] ZASCA 176
Court	Supreme Court of Appeal
Judge	Mthiyane AP, Lewis JA, Shongwe JA, Wallis JA and Pillay JA
Heard	November 21, 2013
Judgment	November 28, 2013
Counsel	P Ellis SC (heads of argument prepared by P Ellis SC and PG Leeuwner) for the appellant.; C Acker for the respondent.

Flynote : Sleutelwoorde E

Contract — Interpretation — Proper approach — Process of interpretation starting with words but not stopping at literal meaning — Court must rather consider F them in light of all relevant context — Former distinction of background and surrounding circumstances no longer to be made — Process no longer in stages but now unitary.

Headnote : Kopnota

The approach to the interpretation of contracts that is expressed in G Coopers & Lybrand and Others v Bryant 1995 (3) SA 761 (A) ([1995] 2 All SA 635) is no longer consistent with the approach to interpretation now adopted by South African courts in relation to contracts or other documents, such as statutory instruments or patents. While the starting point remains the words of the document, the process of interpretation does not stop at a perceived literal meaning of those words, but considers them in the light of all relevant H and admissible context, including the circumstances in which the document came into being. The former distinction between permissible background and surrounding circumstances has fallen away. Interpretation is no longer a process that occurs in stages but is now a unitary exercise. (Paragraph [12] at 499G – 500A.)

Cases Considered

Annotations

Case law I

Southern Africa

Aktiebolaget Hässle and Another v Triomed (Pty) Ltd 2003 (1) SA 155 (SCA) ([2002] 4 All SA 138): referred to

Coopers & Lybrand and Others v Bryant 1995 (3) SA 761 (A)([1995] 2 All SA 635): J not followed

2014 (2) SA p495

Ekurhuleni Metropolitan Municipality v Germiston Municipal Retirement Fund A 2010 (2) SA 498 (SCA): referred to

KPMG Chartered Accountants (SA) v Securefin Ltd and Another 2009 (4) SA 399 (SCA) ([2009] 2 All SA 523): referred to

Masstores (Pty) Ltd v Murray & Roberts Construction (Pty) Ltd and Another 2008 (6) SA 654 (SCA): referred to

Mphosi v Central Board for Co-operative Insurance Ltd 1974 (4) SA 633 (A): B dictum at 645C – F applied

Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): dictum in para [18] followed.

England C

Rainy Sky SA v Kookmin Bank [2011] UKSC 50 ([2012] Lloyd's Rep 34 (SC)): dictum in para [21] followed

Society of Lloyd's v Robinson [1999] 1 All ER (Comm) 545: referred to.

Case Information

P Ellis SC (heads of argument prepared by P Ellis SC and PG Leeuwner) for the appellant. D

C Acker for the respondent.

An appeal from the Free State High Court (Hancke AJP). The order is in para [21].

Order E

The appeal is dismissed with costs.

Judgment

Wallis JA (Mthiyane AP, Lewis JA, Shongwe JA and Pillay JA concurring):

Introduction F

[1] The respondent, S Bothma & Seun Transport (Edms) Bpk (Bothma & Seun), was originally a family company established by a father and handed on to his sons, Louis, Pelham and Tertius. Louis died, and in 2005 Pelham and Tertius went their separate ways. Pelham retained G Bothma & Seun and Tertius established the appellant, Bothma-Batho Transport (Edms) Bpk (Bothma-Batho). In dividing the original business between them they had to deal with a tank farm situated in Standerton, which Bothma & Seun were hiring from Omnia Kunsmis Bpk (Omnia) under a contract executed in 1999, but pre-dating that date. In 2005 a new lease agreement was concluded with Omnia to H which both Bothma & Seun and Bothma-Batho were parties. It provided for Bothma & Seun to have the use of three tanks, numbers 1, 2 and 3, with a total capacity of some 15 000 cubic metres, and for Bothma-Batho to have the use of six tanks, numbers 4 to 9, having a total capacity of some 11 800 cubic metres. In return they became obliged to pay rental to Omnia on a monthly basis. I

[2] Although both Bothma & Seun and Bothma-Batho were parties to the lease, Omnia only wished to deal with one of them. Accordingly the lease provided that Omnia would invoice Bothma-Batho for the entire rental due under the lease in respect of all nine tanks, and that Bothma-Batho would have the exclusive management and control over J

2014 (2) SA p496

Wallis JA (Mthiyane AP, Lewis JA, Shongwe JA and Pillay JA concurring)

A the tank farm. It would have to enter into a separate agreement with Bothma & Seun on how to deal with the management and handling costs. It also undertook not to recover more from Bothma & Seun in respect of rental of tanks than the latter was obliged to pay to Omnia under the lease. In addition Bothma & Seun was to be given free access B to the facility to store product in its tanks and to accompany clients there. In practice Bothma-Batho let its tanks to Sasol and Bothma & Seun let its tanks to FFS Refiners.

[3] The present dispute arose from the separate agreements concluded between Bothma & Seun and Bothma-Batho in relation to the allocation C and recovery of expenses incurred in the operation of the Standerton tank farm. Two such agreements were concluded, the first in settlement of an arbitration between the parties and the second in settlement of subsequent litigation between them. Bothma-Batho contends that on a proper interpretation of the relevant clause in the second agreement it was entitled to receive the entire benefit from an increase in the rental D paid by FFS Refiners to Bothma & Seun during the period 1 July 2008 to 28 February 2009. That claim was disputed. It was dismissed by Hancke AJP at first instance and the appeal is with his leave.

The contracts

[4] It is convenient to start with the first agreement dealing with the E allocation and recovery of the operating costs of the tank farm. It was concluded on 14 February 2007 as part of an overall settlement of issues that were at the time being debated in an arbitration. The clause dealing with these issues was clause 7, which reads as follows:

'Ten opsigte van die Standerton Stoortenks van Omnia sal F Bothma-Batho Transport (Edms) Bpk self sy kliënte faktureer ten opsigte van die tenks deur Bothma-Batho Transport (Edms) Bpk gebruik. S Bothma en Seun Transport (Edms) Bpk sal self vir sy kliënte FFS faktureer ten opsigte van die stoortenks wat Bothma en Seun Transport (Edms) Bpk se kliënte van tyd tot tyd gebruik. Bothma en Seun Transport (Edms) Bpk sal die pro rata uitgawe plus 10% bestuursfooi G ten opsigte van die bestuur van die stoortenks oorbetaal binne sewe dae na lewering van faktuur van Bothma-Batho Transport (Edms) Bpk welke uitgawes ooreenkomstig die tenkkapasiteit persentasie wat Bothma en Seun Transport (Edms) Bpk se kliënte gebruik van tyd tot tyd.' [1]

[5] Some aspects of this arrangement are reasonably clear. Bothma-Batho H would incur expenses in the management of the tank farm and

2014 (2) SA p497

Wallis JA (Mthiyane AP, Lewis JA, Shongwe JA and Pillay JA concurring)

those costs would be divided between it and Bothma & Seun in A proportion to the tank capacity of the tanks that they and their clients respectively used. As the...