Ubunye Blog

Endumeni - More than a Municipality, by Glen Goddard

Few South African lawyers know where the 2015 SALGA games were held or which municipality took the 2016 Arbour City (rural category) title, or where the infamous battlefields of Ncome or Talana are situated. But all know about Endumeni.

In Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 the SCA held at [18] that over the last century there have been significant developments in the law relating to the interpretation of documents, that interpretation is the process of attributing meaning to the words used in a document (be it legislation or contract) and that regard should be had 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, the language used in the light of the ordinary rules of grammar and syntax; the apparent purpose to which it is directed and the material known to those responsible for its production. This has caused confusion about extent to which evidence outside the document may be taken into account to determine the meaning of the words; and the extent to which subsequent conduct may be relevant to statutory interpretation.

Starting in 2015, I was involved in an opposed application (Sandhya & Toni assisted me and were also involved at various stages) in which the meaning of Gross Lettable Area in the Kwadukuza Town Planning Scheme fell to be determined. The application was finally decided by the Supreme Court of Appeal, reported in KwaDukuza Municipality v Lahaf (Pty) Ltd (940/18) [2020] ZASCA 9; [2020] 2 All SA 356 (SCA). One of the issues was the extent to which the conduct of municipal officials in approving building plans - and the municipality’s attorney in correspondence - could be taken into account in order to determine the meaning of the scheme (or in other words in order to interpret the words). 

In 2016, the SCA held in Unica Iron and Steel (Pty) Ltd and Another v Mirchandani 2016 (2) SA 307 (SCA) that the principles regarding the interpretation of contracts must now be regarded as well settled and that the way in which the parties to a contract carried out their agreement may be considered as part of the contextual setting to ascertain the meaning of a disputed term because the parties' subsequent conduct 'may be probative of their common intention at the time they made the contract’. While that sounds settled and straightforward, it is not easy to interpret the meaning of conduct or to apply conduct in a way which assists in determining the meaning of words in a document, or even to decide what conduct may be taken into account. 

We lost in the High Court, to some extent on the basis that the court relied on Commissioner, South African Revenue Service v Marshall NO and Others 2017 (1) SA 114 (SCA)  and considered that a course of conduct had been established by the municipality, but were successful on appeal to the SCA. (Commissioner, SARS was subsequently appealed to the Constitutional Court). What is probably most significant about the SCA judgement is that three of the five judges wrote judgements, and that one judge concurred twice. Clearly, the judges struggled to ascribe meaning to the words of the Scheme from the conduct of the parties.

 The other side applied to the Constitutional Court for leave to appeal on the basis, amongst others, that difficulties or inconsistencies in the judicial approach to interpretation in the light of Endumeni has occasioned difficulties and resulted in judicial dissonance, which the Constitutional Court was asked to resolve, and on the basis that the interpretative difficulty is a constitutional issue and/or a matter of general public importance.

 The other side relied on a great number of cases, amongst them Tshwane City v Blair Atholl Homeowners Association2019 (3) SA 398 (SCA), which held [66-77] that the parol evidence rule continues to apply and evidence of priornegotiations is inadmissible. (Subsequent conduct seems to be admissible, but may be hard to understand or to use as an interpretive tool).

 We opposed the application for leave to appeal and referred especially to Tiekiedraai Eindomme v  Shell SA 2019 ZACC 14 (which Max had referred us to), a case where arguable points of general public importance were plainly raised and the Constitutional Court pertinently held that an applicant for leave to appeal to that court must show more than interesting and arguable questions of legal importance arise, and must show why the interests of justice require them to be decided in that litigation. The application for leave to appeal was refused (without reasons).

 The recent Iveco South Africa (Pty) Ltd v Centurion Bus Manufacturers (Pty) Ltd 2020 JDR 0911 (SCA) may provide guidance where it states, at [7]:

“The introduction/preamble to an agreement is instructive, but not decisive, as it is regarded as subordinate to the operative part of a contract, which, if the meaning thereof is clear, will prevail over anything to the contrary in the preamble. However, where the operative part is not clear, recourse may be had to the preamble to assist in elucidating it. [9] The contextual setting for interpretation might furthermore include subsequent conduct of the parties which indicates how they understood their agreement. [10] Recourse to such evidence is permissible [11] where the evidence indicates a common understanding of the terms of the agreement, and does not alter the meaning of the words used, provided such evidence is used as conservatively as possible. [12] All the above considerations must be considered holistically. [13] Insofar as it may find application, regard may also be had to the contra proferentem rule.”

What is clear is that whilst subsequent conduct probably will be ruled admissible, ascribing meaning to conduct may be as, if not more, difficult as ascribing meaning to words. What is even more clear is that Endumeni will continue to create interpretive difficulties, and to remain well known to South African lawyers.

Glen Goddard SC

May 2021

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