THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case no: 1077/2019
In the matter between:

MTN SERVICE PROVIDER (PTY) LTD
Appellant

and

BELET INDUSTRIES CC t/a BELET CELLULAR
Respondent

Neutral citation:
MTN Service Provider (Pty) Ltd v Belet Industries CC t/a Belet
Cellular (Case no 1077/2019) [2020] ZASCA 07 (15 January
2021)

Coram:
ZONDI, SCHIPPERS and NICHOLLS JJA and WEINER and GOOSEN
AJJA

Heard:
9 November 2020

Delivered:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email. It has been published on the
Supreme Court of Appeal website and released to SAFLII. The date and
time for hand-down is deemed to be 10h00 on 15 January 2021.

Summary: Interpretation of contract – between cell phone service provider and dealer
of cell phone products – repudiation – dealer alleged to possess goods not supplied

by service provider – not proved – indemnity clause – dealer not precluded from
recovering damages resulting from repudiation of agreement by service provider –
whether dealer precluded by non-variation clause from including new store under the
agreement – permissible as agreement contains procedure for an amendment due to
changed circumstances – followed by service provider – appeal dismissed.

___________________________________________________________________

ORDER
___________________________________________________________________

On appeal from: Gauteng Local Division of the High Court, Johannesburg
(Kathree-Setiloane J) sitting as court of first instance:
(a)
The appeal is dismissed with costs;
(b)
The appellant is ordered to pay 30 percent of the costs incurred in the
preparation, perusal and copying of the record on an attorney and client scale.
___________________________________________________________________

JUDGMENT
___________________________________________________________________
Zondi JA (Schippers and Nicholls JJA and Weiner and Goosen AJJA
concurring)
[1] On 14 October 2010, the appellant, MTN Service Provider (Pty) Ltd (MTN) and
the respondent, Belet Industries CC t/a Belet Cellular (Belet) concluded a dealer
agreement (the agreement) in terms of which MTN appointed Belet to market, promote
and facilitate distribution by MTN of network services and stock in the territory. The
‘territory’ is defined in the agreement to mean the Republic of South Africa. The
agreement was to continue ‘for an indefinite period unless terminated earlier in
accordance with the provisions of this agreement.’ The agreement replaced the
previous agreement concluded by the parties on 4 April 2003 (the 2003 agreement).
In return for its services Belet was to receive payment by way of commissions and
discounts for pre-paid stock.

[2] During the currency of the 2003 agreement, Belet had traded from different
stores but at the time of the conclusion of the agreement, it traded from two stores;
one at the Central City Shopping Mall in Mabopane (the Mabopane store) and the
other at the Temba City Mall in Temba (the Temba City store). During April 2011 Belet
closed the Temba City store and on 27 April 2011 it opened a further store within the
nearby Jubilee Mall (the Jubilee Mall store).

[3] In consequence of a contractual dispute between the parties, the full details of
which will be dealt with later in the judgment, MTN on 4 November 2011 terminated
the agreement with effect from 5 November 2011. MTN dispossessed Belet of its
business by placing guards outside both stores and refusing Belet access to the
stores, taking back all stock, terminating the electronic access to the systems needed
to trade and refusing to supply further stock. On 7 and 8 November 2011 MTN notified
the landlords of the respective premises from which the two stores operated, of the
termination of Belet’s agreement and sought to be substituted as a lessee of the two
stores until replacement dealers were appointed. In due course MTN installed different
dealers in these stores.

[4] On 2 December 2011, Belet instituted action against MTN in the Gauteng Local
Division of the High Court, Johannesburg (high court) in which it claimed payment of
R13 120 933, alternatively the amount of no less than R3 629 615.50, as damages.
The essential basis of the claim was that MTN’s termination of the agreement
constituted a breach, alternatively a repudiation of the agreement, resulting in Belet
suffering damages.

[5] MTN defended the action. It denied the breach, alternatively repudiation, of the
agreement or that Belet had suffered damages. It averred that it terminated the
agreement because Belet had repudiated the agreement. In the alternative, MTN
contended that Belet’s claims had become prescribed. This latter defence was raised
following amendment by Belet of its particulars of claim on 25 October 2016.

[6] The matter came before Kathree-Setiloane J, who after hearing the evidence,
dismissed MTN’s defences, upheld Belet’s claim and granted the following order:
‘1.
The special plea is dismissed.
2.
Judgment is granted in favour of the Plaintiff for:
2.1
Payment of the amount of R5 849 789.00 together with interest on this amount at the
rate of 10.25% per annum from 1 March 2016 to date of payment;
2.2
Payment of the amount of R5 581 937.00 together with interest on this amount at the
rate of 10.25% per annum from date of judgment to date of payment;

2.3
Costs of suit on the scale as between attorney and client which shall include all costs
previously reserved and the qualifying fees of Ms Wood.’

[7] MTN appeals against the judgment and orders with leave of the court a quo.
There is no appeal against the dismissal of the special plea of prescription.

Background
[8] The facts which gave rise to the termination of the agreement between MTN
and Belet are briefly the following. The agreement allowed MTN to conduct a general
audit of Belet’s stores at any time. In terms of the agreement, on 26 August 2011 MTN
informed Belet that it intended to conduct an internal audit of the Mabopane store on
2 September 2011. Mr Sulaiman, the auditor arrived just before the store opened. In
preparation for the audit, Mrs Letebele, the General Manager instructed the shop
assistants to place obsolete items, which she considered unnecessary for the audit,
into black bags.  There was no space for the bags in the store and she asked the
assistants to place them in a shopping trolley and keep it outside the store until the
audit was completed. The assistant removed the trolley in front of Mr Sulaiman. The
trolley was left with a parking assistant where Mr Sulaiman saw it.

[9] MTN claimed that 15 items in the trolley constituted grey goods, ie goods not
supplied to Belet by MTN, and ‘were held in violation’ of the terms of the agreement.
It contended further that Belet had hidden these goods from the auditor and in doing
so obstructed the auditing process. As a result, MTN summarily cancelled the
agreement by letter dated 27 September 2011(the termination letter). On 4 November
2011, it confirmed the cancellation in a letter. Belet accepted the repudiation and
cancelled the agreement.

[10] On 2 December 2011, Belet instituted action against MTN in the high court,
seeking damages based on a breach, alternatively, a repudiation and cancellation of
the agreement. It contended that, but for the repudiation, it would have continued
trading for at least a further ten years and it claimed the income it would have earned,
less expenses. Belet contended that the damages flow generally and naturally from
MTN’s breach and/ or repudiation of the agreement.

[11] Belet alleged that MTN terminated the agreement prematurely without lawful
grounds and contrary to its terms. In the alternative, Belet contended that the conduct
of MTN in terminating the agreement prematurely constituted a repudiation which,
Belet contended, it accepted and elected to cancel the agreement.

[12] In the further alternative, Belet contended that MTN breached the material
terms of the agreement in that, contrary to the provisions of clause 39.1 of the
agreement, MTN failed to give proper notice to Belet to remedy the breach, and denied
Belet the opportunity to dispute the issue of the ‘grey goods.’

[13] MTN admitted that it terminated the agreement for reasons set out in the
termination letter, and that Belet disputed its right to terminate the agreement but it
denied that the agreement was prematurely cancelled and without lawful grounds.

[14] In amplification of its denial, MTN averred that in terms of the agreement, Belet
was obliged to use MTN’s Online Management System known as OMS 1 to which
Belet had been given access and furnished with its operating procedures and
directions. MTN averred further that it had notified Belet to use MTN’s Point of Sales
operating system (POS) for the purpose of recording, inter alia, all stock supplied and
received from MTN.

[15] MTN further alleged that, in and during July 2011 and in particular prior to the
audit which occurred on 2 September 2011, it instructed Belet to migrate its OMS1
system to MTN’s new Online System known as OMS2. It contended that, as a result
of the instruction, Belet – by the time of the audit in September 2011 – was not entitled
to use OMS1 and all stock reflected on its OMS1 ought to have been transferred to
OMS2. MTN alleged that the purpose of the audit it performed at Belet’s Mabopane
store on 2 September 2011 was to ensure that Belet was utilising the OMS2. It averred
that during the audit it discovered several transgressions. These were that Belet did
not record 15 items in a trolley on OMS2; Belet used an unknown POS system and
failed to explain its conduct when asked to do so. MTN contended that Belet’s conduct
indicated an intention on the part of Belet to be dishonest and not to comply with its
obligations in terms of the agreement; and/or to mislead MTN.

[16] MTN contended further that as a result of Belet’s conduct, the trust between the
parties was lost, could not be restored and the breach by Belet was irremediable and
amounted to a repudiation of the agreement entitling MTN to cancel the agreement.

[17] MTN denied that Belet suffered damages. It contended that the damages
allegedly suffered by Belet are precluded from being claimed in terms of clause 40.1
as read with clause 39.4 of the agreement.  In the alternative, MTN alleged that in
terms of clause 39.1 of the agreement, MTN has a right to terminate the agreement
by giving 90 days written notice of termination of the agreement to Belet. MTN
contended that:
‘14.3.2.
in terms of the special circumstances of the matter, by the Defendant
terminating the Dealer Agreement on the basis of a breach of trust, the Defendant expressly
alternatively impliedly notified the Plaintiff that it did not wish to have any contractual
relationship with the Defendant and as a consequence, the Plaintiff ought to have known that
had the Defendant terminated the said Agreement on the basis set out in clause 39.1, the
Plaintiff would only have been able to earn an income for 90 days thereafter and nothing more.

14.3.3. In the circumstances, should it be found that the Defendant is liable to the Plaintiff for
damages (which is denied) the Defendant pleads that such damages should be limited to a
period of 90 days from date of termination based on the loss of trust between the parties in
respect of the Dealer Agreement.’

[18] The appeal therefore raises three issues: first, whether MTN’s cancellation of
the agreement constituted a repudiation of the agreement, or whether MTN was
entitled to terminate it at the time and in the manner in which it did; second, whether
Belet is precluded from recovering the damages suffered by it because of clause 40.1
and/or clause 39.2 of the agreement and third, whether Belet is precluded from
recovering any damages suffered as a result of the closure of its Jubilee Mall store
because this store did not fall within the ambit of the agreement.

Did Belet repudiate the dealer agreement?
[19] Belet alleged that the cancellation by MTN of the agreement was unlawful and
amounted to a repudiation entitling it to cancel the agreement while MTN asserted that
the cancellation was valid. The court a quo found that Belet did not repudiate the

agreement and that MTN was not entitled to cancel it. It held accordingly that MTN’s
cancellation constituted a repudiation entitling Belet to cancel the agreement.

[20] MTN challenged the conclusions of the court a quo. It contended that the court
a quo failed to appreciate that in and during July 2011 and prior to the audit, MTN had
instructed Belet to migrate its OMS1 system to MTN’s OMS2 system.  OMS2 was
required to be used by Belet for everything. It alleged that the purpose of the
inspection it undertook on 2 September 2011 was to ensure that Belet was utilising
OMS2.

[21] MTN argued that given the express terms of the agreement and the surrounding
circumstances, it was a tacit term of the agreement that Belet would at all times act in
a trustworthy manner, honestly and with integrity in its dealings with MTN. It contended
that honesty and trust had always been an integral part of the relationship between
the parties.

[22] MTN alleged that it found (a) Belet hiding goods from the auditor in a trolley and
obstructing the auditing process which affected the trust element of the parties’
relationship and (b) that there were numerous problems with Belet’s OMS2, in
particular stock relating to the Mabopane store that was supposed to be recorded on
OMS2 was not recorded thereon and stock recorded on OMS2 was not found in the
store. Moreover, the goods hidden in the trolley were not recorded on Belet’s OMS2.

[23] On the basis of these facts MTN inferred an intention on the part of Belet to be
dishonest and not to comply with its obligations in terms of the agreement and to
mislead it. It contended that in the letters it addressed to Belet after the inspection it
relied on these facts as a basis for its decision to cancel the agreement. MTN pointed
out that in the termination letter dated 27 September 2011, it inter alia, conveyed the
following to Belet:
‘7.
Your conduct in hiding these goods from the auditor and thereby obstructing the
auditing process amounts to a fraudulent misrepresentation and is a breach of the dealer
agreement which cannot be remedied.’

[24] In the letter dated 6 October 2011 MTN stated:

‘4.
…The trust with which MTN SP views [Belet] has been irreparably broken.

5.
Accordingly, MTN SP has no alternative other than to terminate the Dealer relationship.

6.
…[Belet] is hereby given a calendar month’s notice of termination that is, closure of
the stores will take place on 5 November 2011.’

[25] And finally in the letter dated 4 November 2011, MTN informed Belet, inter alia
that:
‘2.
As the trust element of our relationship has been broken down irretrievably our position
is not changed and the dealer agreement between MTN SP and Belet Industries CC t/a trading
as Belet Cellular.

3.
(sic)
has been terminated in terms of our letter dated 27 September 2011.’

[26] Belet’s conduct, argued MTN, constituted a repudiation of the agreement
entitling it to cancel the agreement which it did.

[27] MTN has not been consistent in the manner in which it pleaded its defence. In
its letter of cancellation of 27 September 2011, it sought to justify its cancellation on
the basis that some of the goods that were found in a trolley were not supplied by it to
Belet. They were grey goods and were held in violation of the agreement. MTN
asserted that Belet’s conduct in hiding these goods from the auditor amounted to a
fraudulent misrepresentation as it obstructed the auditing process and was in breach
of the agreement which could not be remedied.

[28] As I have pointed out, in subsequent correspondence MTN accused Belet of
failing to ‘acknowledge and recognise that such an act is irremediable.’ Despite
requests by Belet to meet with Mr Forrester, MTN’s National Franchise Manager to
sort out the issue, this was refused. On 4 November 2011 MTN wrote to Belet’s
erstwhile attorneys to confirm that the agreement ‘has been terminated in terms of our
letter dated 27 September 2011’.

[29] In the original plea MTN alleged that 15 items in the trolley were ‘grey goods’
and that Belet’s representative told the auditor that he had been advised ‘to hide the

said products until the audit was completed.’ It then alleged that this breach was
irremediable and amounted to a repudiation of the agreement entitling it to cancel
same. The original plea contained no reference to the OMS2 system, being the POS
system which MTN required Belet to use as from July 2011. In MTN’s amended plea,
a different justification for the cancellation was pleaded. MTN abandoned the
allegation of possession of ‘grey goods’ and sought to justify its cancellation on the
basis that Belet’s conduct constituted a breach of trust and amounted to repudiation
of the agreement.

[30] The court a quo correctly found that there was no evidence that the goods in
the trolley had to be recorded on OMS2, and that there was no obligation that they
had to be kept in the store. It was also common cause at the trial that MTN had never
asked Belet for an explanation for the goods in the trolley. The allegation of an
unknown POS being used was entirely refuted and effectively abandoned at the trial.
In this regard, the court a quo held that since MTN did not, during argument persist
with its pleaded case that Belet breached the dealer agreement by using an unknown
POS, it saw no need to deal with that allegation. These factual findings are not
challenged in MTN’s notice of application for leave to appeal or in its heads of
argument.

[31] In its heads of argument on appeal, MTN advanced yet another version to justify
its summary cancellation. It submitted that the ‘hiding of the goods by Belet in the
trolley’ and Belet’s failure to comply with the OMS2 system indicated an intention on
the part of Belet, first, to be dishonest and not to comply with its obligations in terms
of the agreement; and second, to mislead MTN and obstruct the auditing process, was
in breach of trust, and constituted a repudiation of the agreement by Belet. It has never
been MTN’s case that it cancelled the agreement because Belet failed to generally
comply with the OMS2 system. Unsurprisingly, this allegation was never raised in the
letters of cancellation of 27 September and 4 November 2011.

[32] The court a quo correctly concluded that there was no evidential basis on which
to find that by placing the 15 items in black plastic bags, and removing them from the
store, Belet was in breach of the agreement. This conclusion was based on the finding
that the agreement is silent as to where stock must be kept and that MTN did not lead

evidence indicating that written instructions were given or Standard Operating
Procedures published as envisaged in the agreement. Both Mr and Mrs Letebele
testified that all of these 15 items had previously been paid for by Belet. They were
either obsolete or defective. They stated that there was no reason to hide these goods.
The court a quo accepted Mrs Letebele’s evidence that the goods in the trolley were
all paid for, and that she could therefore keep them wherever she wished. This was
confirmed by Mr Sulaiman, who testified that once stock had gone beyond the 60 days
for returns and had been paid for, the dealer could do with it what it liked.

[33] MTN contended further that Belet’s breach of the agreement was material and
could not be remedied by the payment of money. This is so, MTN argued, because it
resulted in a breach of the trust relationship between the parties. MTN submitted that
it was accordingly not required to give Belet a notice to remedy the breach. The court
a quo rejected MTN’s contention. It reasoned that clause 37.1 makes it clear that even
in the case where the breach appears irremediable by the payment of money, MTN is
still required to give Belet notice to remedy its breach before it cancels the agreement.
I cannot find fault with the court a quo’s finding. If MTN was dissatisfied with the
manner in which Belet was implementing the OMS2 system or considered it to be in
breach of a contractual term, it should and ought to have notified Belet of this breach.
Such a breach would have been remediable and would fall squarely within the
provisions of clause 37.

[34] In these circumstances the court a quo was correct in finding that Belet did not
repudiate the agreement, that MTN was not entitled to cancel it and that MTN’s
cancellation constituted a repudiation of the agreement.

Whether the liability of MTN is limited / excluded by clause 40.1 read with clause
[35] Clause 39 deals with termination of the agreement and its consequences. Sub-
clause 39.4 in its relevant terms provides as follows:
‘Upon termination of this Agreement due to any reason whatsoever the following shall apply:

39.4.1. the termination shall be without prejudice to any other claims or remedies accrued by
either party immediately prior to the date of termination;

. . .

39.4.3. the Dealer shall immediately discontinue any allocation of Stock to Customers or
potential Customers;

39.4.4. the Dealer shall immediately cease to use or display any mark or logo, whether
registered or unregistered, which is proprietary to the Service Provider or the Operator and
shall make or cause to be made such changes to its advertising in all media, vehicles, shop
frontage, the interior of its premises, stationery and the like, so as to distinguish its business,
to the satisfaction of the Service Provider, from one that is being carried on in association with
the Service Provider;

. . .

39.4.8. the Dealer shall, cease forthwith to qualify for any discounts, commissions and any
other amounts to which it would otherwise have been entitled.’

Like clause 40.1, clause 39 survives the termination of the agreement.

[36] MTN argued that Belet is not entitled to claim damages arising from inability to
earn commissions and income from the sale of network services and stock, because
in terms of clauses 39 and 40 of the agreement the parties specifically agreed that,
upon termination of the agreement, Belet would not have any stock and would not be
entitled to earn any commission or other amount. In support of this contention, MTN
relied on the evidence of Mr Letebele and Ms Wood, who testified that their
understanding was that once there had been a cancellation of the agreement Belet
would not get an allocation of stock from MTN and would therefore not earn any
commission or income.

[37] MTN’s reliance on clause 39 and in particular sub-clause 39.4.8 is misplaced
for two reasons. First, properly read in its context clause 39 has nothing to do with the
limitation or exclusion of liability in the event of repudiation of the agreement. Belet is
not claiming specific performance. It claims damages. It alleges that, but for MTN’s
repudiation, the agreement would not have terminated, clause 39.4 would never have
come into operation, and it would have operated its two stores for another ten years.
It claims to be put into the position that it would have been in, had the contract been

properly performed. Second, questions of interpretation of documents are matters of
law and are the exclusive preserve of the court.1 The court is therefore not bound by
the subjective interpretation that either Mr Letebele or Ms Wood placed on clause 39.4.
The court a quo, therefore, correctly found that clause 39.4 does not preclude Belet’s
claim.

[38] MTN’s further argument is that clause 40.1 limits the liability of the parties to
each other, that this limitation applies equally to either a breach or cancellation of the
agreement. This is so, MTN argued, because in terms of clause 40.4 the provisions of
clause 40.1 survive any termination of the agreement for any reason. MTN contended
that Belet’s claim for damages is precluded by clause 40.1 as the second sentence
defines what is meant by ‘direct damages and in doing so excludes financial loss, loss
of business, profit, savings, revenue, or goodwill suffered or sustained by the Dealer
howsoever arising.’

[39] MTN’s contention is based on the wording of clause 40.1 which has two parts.
It provides as follows:
‘Liability and indemnity
Except for consequential damages which arise as a result of the Dealer not complying with
the provisions of clause 31, the liability of the parties to each other under this Agreement will
be limited to direct damages. For the avoidance of doubt, this excludes financial loss, loss of
business, profit, savings, revenue, or goodwill suffered or sustained by the Dealer howsoever
arising.’

[40] MTN argued that the reference to ‘consequential damages’ in the first part of
the first sentence relates to damages it may suffer as a result of Belet’s failure to
comply with clause 31 of the agreement. Stated differently, its argument was that
claims for ‘consequential damages’ can only accrue to MTN. It further argued that in
the second part of the first sentence, both parties are treated equally and it specifically
provides that the liability of the parties to each other under the agreement would be
limited to ‘direct damages’.

1 International Business Machines South Africa (Pty) Ltd v Commissioner for Customs and Excise
[1985] 2 ALL SA 596 (A) at 609.

[41] Based on this construction, MTN submitted that the liability of Belet to MTN is
limited on a dual basis. Firstly, for ‘consequential damages’ relating to a failure to
comply with clause 31. Secondly, its liability for ‘direct damages’ is further limited by
the second sentence of clause 40.1.

[42] MTN contended that the second sentence in clause 40.1 precludes Belet from
claiming damages for financial loss, loss of business, profit, savings, revenue, or
goodwill suffered or sustained by Belet, howsoever arising. In developing this
argument MTN, argued that the second sentence caters for and is no different to the
consequences that arise as a result of a cancellation of the agreement in terms of
clauses 39.4.3 and 39.4.8. These clauses preclude Belet from claiming financial loss,
loss of business, profit, savings and revenue it sustained due to any reason
whatsoever.

[43] Belet contended, on the contrary, that the purpose of clause 40.1 is to exclude
consequential damages and must for that reason be interpreted to mean that liability
is limited to direct damages. The second sentence serves to illustrate what types of
claims may constitute consequential damages, and thus are not claimable. Belet,
however, argued that since the question of whether damages are direct or
consequential is a factual one, one cannot predetermine that a certain type of
damages is either one or the other.2

[44] Clause 40.1 is not a model of clarity. A similar argument was initially raised by
MTN by way of an exception to Belet’s particulars of claim before the amendment. The
exception was upheld by the high court, but its judgment was subsequently overturned
by this Court.3 It held that the clause was ambiguous and could bear the meaning
contended for by Belet.

[45] The issue between the parties turns on the interpretation of clause 40.1 and in
particular, whether the types of loss referred to in the second sentence of the limitation
clause are examples of ‘consequential damages’ or the ‘direct damages’ the recovery

2 Victoria Falls and Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1 at 22.
3 Belet Industries CC t/a Belet Cellular v MTN Service Provider (Pty) Ltd [2014] ZASCA 181; para 10-
12.

of which is excluded. The recent cases of this Court have made it clear that in
interpreting any document, while the starting point is inevitably the language 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 and admissible context,
including the circumstances in which the document came into being’, the apparent
purpose to which the document is directed and the material known to those
responsible for its production.4

[46] There are two fundamental problems with the construction contended for by
MTN. First, in general under the common law, an innocent party to a contract is entitled
to be placed in the position it would have occupied had the contract been performed,
so far as that can be done by the payment of money, and without undue hardship to
the defaulting party. Such damages only are awarded as flow naturally from the
breach, or as may reasonably be supposed to have been in the contemplation of the
contracting parties as likely to result therefrom. The parties are taken to have intended
their legal rights and obligations to be governed by the common law unless they have
plainly and unambiguously indicated the contrary. Where one of the parties wishes to
be absolved either wholly or partially from an obligation or liability which would or could
arise at common law from a contract of the kind which the parties intend to conclude,
it is for that party to ensure that the extent to which it is to be absolved is plainly spelled
out.5 There is no evidence that this was intended to be the case in the present matter.

[47] Secondly, on MTN’s construction, it would mean that clause 40.1 suffers from
internal inconsistency in that, in the first sentence it recognises a claim for direct
damages while in the second sentence it excludes the same claim. To avoid an internal
conflict and to render clause 40.1 meaningful, one would have to ignore the first part
of the first sentence which reads: ‘the liability of the parties to each other under this
Agreement will be limited direct damages.’ This is not a sensible meaning, because it
renders clause 37 - which recognises that in the event of a breach of the agreement

4 Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA 176;
2014 (2) SA 494 (SCA) para 12; KPMG Chartered Accountants (SA) v Securefin Ltd and Another [2009]
ZASCA 7; 2009 (4) SA 399 (SCA) para 29-40; Natal Joint Municipal Pension Fund v Endumeni
Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18; and Norvatis v Maphil [2015] ZASCA
111; 2016 (1) SA 518 (SCA) para 27.
5 First National Bank of Southern Africa Ltd v Rosenblum [2001] 4 All SA 355 (A) para 6.

an aggrieved party is entitled to sue for damages – nugatory. MTN’s construction
ignores the context in which clause 40.1 appears in relation to how the parties’ liability
to each other would be limited. As correctly pointed out by Belet, the purpose of the
first sentence is to limit the parties’ liability to each other – except in relation to
damages flowing from a breach of clause 31 - to direct damages.

[48] Belet’s claim is for the loss of net income which flows naturally from the
repudiation of the agreement. It is this loss which Belet alleged it had suffered as a
result of the repudiation of the agreement. It was conceded by MTN that the loss
claimed by Belet constitutes direct damages. The conclusion of the high court that
clause 40.1 of the agreement does not absolve MTN of liability for Belet’s claimed loss
of income can, therefore, not be faulted.

Whether the Jubilee Mall store is also subject to the agreement.
[49] It is common cause that during April 2011, Belet closed the Temba City Store
and opened its store in the Jubilee Mall with the knowledge and concurrence of MTN.
MTN approved the relocation of the store, determined the design of the Jubilee Mall
store and appointed the contractors and subcontractors who fitted out the store, paid
them for the work done and appointed its own supervisor to the project. Thereafter
MTN claimed a fitting out allowance from the landlord and it provided Belet with
promotional material for the opening of the store. Once the store was set up, MTN
supplied stock to the store, linked it to the OMS and paid commissions to Belet for
sales made by the store. As in the case of the Mabopane store MTN also subjected
the Jubilee Mall store to an internal audit.

[50] However, despite these objective facts MTN argued that the Jubilee Mall store
should not be taken into account in computing Belet’s damages for the reasons that
the Jubilee Mall store is not reflected in annexure ‘A’ to the  agreement;  the agreement
contains a non-variation clause; Belet is unable to produce an amended annexure ‘A’
reflecting the Jubilee Mall store and countersigned by MTN and that Belet cannot
prove which part of the loss of income is attributable to the  Mabopane store and which
to the Jubilee Mall store. The court a quo rejected MTN’s contentions and concluded
that the Jubilee Mall store formed part of the agreement.

[51] MTN attacked the court a quo’s conclusion and argued that on the pleadings,
the facts and the law, its finding was incorrect. As regards the pleadings it contended
that in the original particulars of claim, the application for leave to appeal against the
upholding of the exception, and in Belet’s reply to MTN’s request for trial particulars,
there was no reference to the Jubilee Mall store. Additionally, continued MTN’s
argument, in Belet’s application to amend its particulars of claim, Mr Letebele stated
under oath that clause 35.2 was not applicable and that it had not applied for an
additional store, nor had it been required to close any store. MTN contended that it
defended the claim on the basis that Belet was relying on a relocation as opposed to
the removal or addition of a new store and as a result, only clause 45 of the agreement
was applicable. It argued that Belet should not have been allowed to rely on clause
35.2 to support an argument that the agreement had been lawfully varied. This was
inappropriate, so it was argued, as Belet was bound by the concessions made by its
counsel. MTN argued that Belet should not have presented an argument in conflict
with the parties’ common understanding as to what exactly the issues were in the trial
and in support of this proposition, relied on Filta-Matrix (Pty) Ltd v Freudenberg and
Others 1998 (1) SA 606 (SCA) at 614B-C. In Filta-Matrix this Court held that ‘to allow
a party, without special circumstances, to resile from an agreement deliberately
reached at a pre-trial conference would be to negate the object of Rule 37, which is to
limit issues and to curtail the scope of the litigation (cf Price NO v Allied-JBS Building
Society 1980 (3) SA 874 (A) at 882D-H). If a party elects to limit the ambit of his case,
the election is usually binding.’

[52] The court a quo considered and rejected MTN’s contentions in these terms:
‘[93]
Properly construed, clause 35.2 applied to the situation where a dealer has
successfully applied for an additional dealer store or has been required to close a Dealer
Store. In these instances, the Dealer will be required to complete a new set of annexure
documents in order to incorporate or remove as the case may be, the dealer stores in question
from the Dealer Agreement. On the evidence, once Belet applied to relocate the Temba City
store to Jubilee Mall, the Temba City store was required to close down and, in terms of clause
35.2, a new set of annexures was required to remove it from the Dealer Agreement and
replace it with the Jubilee Mall store. Thus, whether the opening of the Jubilee Mall is regarded
as a relocation or an additional store, clause 35.2 would have application. Accordingly, I am

unable to agree with MTN that Belet is disallowed from relying on clause 35.2 of the Dealer
Agreement because it did not originally rely upon it.’

[53] I agree with the reasoning of the court a quo. Clause 35.2 provides:
‘Where the Dealer has successfully applied for an additional Dealer Store or has been required
to close a Dealer Store, the Dealer will be required to complete a new set of Annexure
documents in order to incorporate or remove as the case may be, the Dealer Stores in question
from this Dealer Agreement.’

[54] Clause 45 provides:
‘Alterations
No alterations, consensual cancellation, variation of, or addition hereto shall be of any force
or effect unless reduced to writing and signed by the duly authorised representatives of both
parties and attached to this Agreement. Notwithstanding the above, the Service Provider
reserves the right to amend the provisions of the Annexures “E1”, “E2”, “B” and “F” by
furnishing the Dealer with a sixty (60) day written notice to that effect.’

[55] It is not a variation, as envisaged in clause 45, where the agreement makes
specific provision (and prescribes its own procedures) for an amendment by virtue of
a change of circumstances. It appears from clause 35.2 that the parties foresaw that,
during the currency of the agreement, dealer stores could be removed from, or added
to, the ambit of the agreement. They chose to make specific provision for the
procedure that would be followed in such a case. Belet would then be required to sign
a new set of annexures, but there was no requirement that MTN would have to
countersign the annexures. If the addition or removal of a store fell within clause 45, it
would have been entirely superfluous to require, in clause 35.2, that Belet would be
required to sign new annexures.

[56] Annexure ‘B’ to the agreement, headed Performance Management, sets out
the targets which the dealer must meet in respect of material targets (relating to the
number of connections) and so-called immaterial targets relating to accounts and
service. Clause 1.1 of Annexure ‘B’ provides that “[U]pon the addition or removal of
any Store from the Dealer, the targets and thus this Annexure “B” will be adjusted
accordingly.” This is exactly what happened in this case. Together with the amended

annexure “A”, Ms Allers of MTN sent Mr Letebele a new annexure “B” which reflected
new targets for the Jubilee Mall store.

[57] Clause 35.2 presupposes that MTN would have already approved the additional
store. All that would then be required to avoid disputes is that Belet signified its assent
by way of the amended annexures, which were to be prepared by MTN (and it would
not have prepared these documents if it had not in fact agreed to the removal/addition).

[58] MTN’s argument that Belet should not be allowed to rely on clause 35.2
because its counsel had, in interlocutory proceedings, disavowed any reliance on it,
should fail for the simple reason that a submission by counsel, or a witness, as to the
meaning of a contractual clause does not bind the party, or the court. The interpretation
of the agreement is a matter of law and not evidence.6 A party is bound by its
pleadings. Belet in its amended particulars alleged that MTN had agreed that Belet
would close the Temba City store and open the Jubilee Mall store in its place.

[59] The court a quo upheld Belet’s contention that in terms of general contractual
principles, a party is not allowed to approbate and reprobate and that MTN is precluded
from now asserting that the Jubilee Mall store did not form part of the agreement.7
MTN contended that the court a quo erred in this regard. It argued that at no time
during the trial was any evidence led that showed that MTN insisted that the Jubilee
Mall store was subject to the agreement and none of the witnesses for Belet gave
evidence that the parties had any verbal discussions or communications regarding a
written variation of the agreement.

[60] On the undisputed facts the court a quo was correct in finding that MTN, having
relied on the Jubilee Mall store being subject to the agreement, could not now, when
sued, contend that it was not. MTN conducted two audits of this store. It would, but for
the provisions of the agreement, have had no right to do so. It set performance targets
for this store. But for the provisions of the agreement it would have had no right to do
so. After purportedly terminating the agreement it insisted that it was entitled to debar

6 KPMG Chartered Accountants (SA) v Securefin Ltd [2009] ZASCA 7; 2009 (4) SA 399 (SCA) para 39-
40.
7 Telcordia Technologies Inc v Telkom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266 (SCA) para 12.

Belet from access to the premises of the Jubilee Mall store (leased by Belet), to take
back all stock in the premises, to substitute itself as lessee and to offer the store to a
different dealer. But for the provisions of the agreement, it would have had no right to
do so. I agree with Belet’s contention that having so insisted that the Jubilee Mall store
was subject to the agreement, notwithstanding that the agreement may not have been
properly varied, it is not open to MTN to now assert that there has been non-
compliance with the non-variation clause. MTN’s contention should therefore fail.

[61] In any event, even if clause 45 was applicable, in my view there was a proper
written variation. Clause 45, in its terms, does not specifically require that an
amendment to the ‘approved Dealer Stores’ must happen by way of a new annexure
‘A’ to the agreement being drafted and signed by the parties. Any written document,
signed by both parties, would therefore suffice. As was held by this Court in Spring
Forest Trading CC,8 a name appended to an email would constitute a signature.

[62] It is common cause that Belet applied in writing during September 2010 for
permission to relocate the Temba City store to one at the Jubilee Mall. On 1 November
2010, Belet accepted an offer to lease from the landlord of the Jubilee Mall subject to
its approval by MTN by 30 November 2010. On 10 November 2010 Mr Govender, the
Account Manager of MTN wrote to Mr Kevin Reichert of MTN’s Site Procurement and
Storebuild referencing Belet’s discussion with him and Ms Eleanor Mitrovich, and
requesting confirmation that:
•
‘Store relocation has been approved from Temba to Jubilee Mall
•
Confirm store build schedule for Q1 occupation on 1 May 2011.’
Mr Reichert responded on 11 November 2010 stating: ‘we have the motivation and El
[Mitrovich] has signed off the feasibility for this relocation.’

[63] Mr Letebele responded seeking confirmation that ‘this would be planned for
beneficial occupation on 1st April, and trading by 1st May please’. Mr Govender
forwarded this email to Mr Reichert and Mr Kapp of MTN. On 17 November 2010 Mr
Govender sent an email to Mr Letebele stating ‘please see attachment for Jubilee Mall
approval letter. As per discussion with Kevin [Reichert] yesterday, dates have been

8 Spring Forest Trading CC v Wilberry [2014] ZASCA 178; 2015 (2) SA 118 (SCA) paras 18 and 25-27.

confirmed 1st April 2011.’ The attachment consisting of a letter addressed to ‘To whom
it may concern’, is headed ‘Re: Belet Industries Application for a store in the upcoming
new Jubilee Mall in 2011’. It stated that:
‘MTN SP (Pty) Limited hereby confirms Beni Letebele of Belet Industries as the preferred
dealer for an application of a dealership store in the upcoming Jubilee Market in 2011. This
would be a relocation of Temba City store to new store in Jubilee Mall.’
It is signed by Mr Govender and Mr Anton Kapp of MTN.

[64] I agree with counsel for Belet’s submission that these emails, in context,
constitute an agreement in writing that the Temba City store would be replaced by the
Jubilee Mall store and therefore, to the extent that clause 45 applies, Belet’s
application for permission and MTN’s emails of 10 November 2010 and 17 November
2010 constitute a variation in writing, substituting the Temba City store with the Jubilee
Mall store.

Quantum of Belet’s claim
[65] The court a quo, relying on the uncontested evidence of Ms Wood, Belet’s
expert, found that Belet had suffered damages and granted an order for the amount
of R5 849 789 and the second amount of R5 581 937 plus costs plus interest at the
applicable rate. It also found that MTN adduced no evidence that, but for its repudiation
of the agreement, it would have exercised its rights in terms of clause 39.1 and when
it would have done so. The court a quo held that clause 39.1 was therefore
inapplicable.

[66] MTN argued that since Belet was unable to prove its variation as pleaded and
inasmuch as the evidence relating to quantum could only relate to the Mabopane
Store, Belet’s claim should fail. In addition, it argued that the court a quo failed to take
into account material aspects of Belet’s claim and the evidence of Ms Wood. MTN
alleged that Ms Wood had determined the value of Belet’s business in 2015 in terms
of clause 33.2.3 of the agreement. It argued that it is entirely inapposite to use the
provisions of clause 33.2.3 to determine the damages suffered by Belet as they only
apply to determine the purchase price of the business in the event of its disposal. In
view of the findings I have made in relation to whether the Jubilee Mall store was
subject of the agreement, it is unnecessary to deal with MTN’s argument. In any event,

the quantum of Belet’s claim was agreed during the course of the trial between Ms
Wood, Belet’s expert and Prof Wainer, MTN’s expert.

Costs
[67] The court a quo upheld Belet’s claim and imposed a punitive costs order on
MTN. The scale of the costs order made by the court a quo is not placed in issue by
MTN and since the determination of costs involves the exercise of discretion by the
trial court there is no basis for this Court to interfere with it in the absence of evidence
of misdirection.

[68] With regard to the costs of appeal it was submitted by Belet that MTN should
be ordered to pay the costs, on an attorney and client scale, necessitated by the
inclusion in the appeal record, documents which were unnecessary for the
determination of the appeal. In this appeal the Court was furnished with a record
comprising 13 volumes running into some 2500 pages and an additional
supplementary volume. In consequence this Court directed the Registrar to send a
note to the parties’ legal representatives informing them that at the hearing of the
appeal, they would be expected to furnish reasons why they should not be penalised
in so far as the recovery of their fees is concerned for non-compliance with the Rules
of this Court regarding the record of the appeal and a core bundle. Their attention was
drawn to the judgment of this Court in Van Aardt v Galway [2011] ZASCA 201; 2012
(2) SA 312 (SCA); [2012] 2 All SA 78 (SCA). This Court held at para 36:
‘[36]
The practice note requires a statement of counsel’s view, in the form of a list, of those
parts of the record that need to be considered in order to decide the case. The fact that his or
her opponent may disagree is neither here nor there. That will emerge from the opponent’s
practice note. In addition the list is to be confined to those parts of the record that are
‘necessary’ for that purpose. Documents and evidence are not to be included in the list on the
off chance that someone might wish to refer to them. The list should include only those parts
of the record that counsel is likely to refer to either in support for the argument, or for rebuttal,
or to highlight flaws in the judgment appealed against. It is inappropriate to include material
on the basis that if a particular question is asked, or explanation is sought, it may be necessary
to refer to it. What is required is a list setting out the portions of the pleadings, the documents
and the particular passages in the record of evidence that counsel believes are necessary to
determine the case. The list must identify by reference to volumes and pages where those
parts of the record are to be found. Lastly, it would be a salutary practice for counsel to prepare

the list in positive terms, identifying the parts of the record necessary for the determination of
the appeal, rather than, as seems frequently to be the case, identifying portions that need not
be read. The list is supposed to assist the judges in identifying what needs to be read. It should
not be treated as the commencement of a process of elimination of unnecessary material.’

[69] MTN ignored the rules of this Court, relating to ‘the preparation of the records
by attorneys and the practice directive relating to the filing of a practice note by counsel
specifying the portions of record that counsel regards as necessary to be read.’ The
list in MTN’s practice note does not identify by reference to volumes and pages where
those parts of the record are to be found. The explanation proffered by MTN is that the
parties were unable to agree on the documents to be included in the core bundle.

[70] Belet alleged that it had repeatedly drawn to MTN’s attention that a number of
documents included in the record should be excluded as they were not necessary for
the determination of the appeal and that MTN ignored the suggestion. In its practice
note Belet identified those portions of the record that were needed in order to decide
the appeal. Belet accordingly submitted that MTN should be ordered to pay the costs,
on an attorney and client scale, necessitated by the inclusion in the appeal record of
these unnecessary documents.

[71] It is clear from the practice note prepared by Belet that it was unnecessary for
this Court to read approximately 30 percent of the record. In my view, MTN should be
ordered to pay the costs, on an attorney and client scale, occasioned by the inclusion
in the appeal record of 30 percent of the record.

[72] The following order is made:
(a)
The appeal is dismissed with costs;
(b)
The appellant is ordered to pay 30 percent of the costs incurred in the
preparation, perusal and copying of the record on an attorney and client scale.

_____________
D H Zondi
Judge of Appeal

Appearances:

For appellant:

T Motau SC (with him B Maselle)
Instructed by:

Macrobert Attorneys, Pretoria

Phatshoane Henney Attorneys, Bloemfontein

For respondent:

A de Kok SC
Instructed by:

Cheadle Thompson & Haysom Inc, Johannesburg

McIntyre van der Post, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:

15 January 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
MTN Service Provider (Pty) Ltd v Belet Industries CC t/a Belet Cellular (Case no 1077/2019)
[2020] ZASCA 07
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing the appeal against an
order of the Gauteng Division of the High Court, Johannesburg; and ordered the appellant to pay 30
percent of the costs incurred in the preparation, perusal and copying of the record on an attorney and
client scale.

The issues before the SCA were first, whether MTN’s cancellation of the agreement constituted a
repudiation of the agreement, or whether MTN was entitled to terminate it at the time and in the manner
in which it did; second, whether Belet was precluded from recovering the damages suffered by it
because of clause 40.1 and/or clause 39.2 of the agreement and third, whether Belet was precluded
from recovering any damages suffered as a result of the closure of its Jubilee Mall store because this
store did not fall within the ambit of the agreement.

On 14 October 2010, the appellant, MTN Service Provider (Pty) Ltd (MTN) and the respondent, Belet
Industries CC t/a Belet Cellular (Belet) concluded a dealer agreement (the agreement) in terms of which
MTN appointed Belet to market, promote and facilitate distribution by MTN of network services and
stock in the territory. The agreement was to continue ‘for an indefinite period unless terminated earlier
in accordance with the provisions of this agreement’. The agreement replaced the previous agreement
concluded by the parties on 4 April 2003 (the 2003 agreement). In return for its services Belet was to
receive payment by way of commissions and discounts for pre-paid stock. During the currency of the
2003 agreement, Belet had traded from different stores but at the time of the conclusion of the
agreement, it traded from two stores; one at the Central City Shopping Mall in Mabopane (the
Mabopane store) and the other at the Temba City Mall in Temba (the Temba City store). During April
2011 Belet closed the Temba City store and on 27 April 2011 it opened a further store within the nearby
Jubilee Mall (the Jubilee Mall store). It was common cause that Belet applied in writing during
September 2010 for permission to relocate the Temba City store to one at the Jubilee Mall.

The agreement allowed MTN to conduct a general audit of Belet’s stores at any time. In terms of the
agreement, MTN informed Belet that it intended to conduct an internal audit of the Mabopane store on
2 September 2011. The auditor arrived just before the store opened. In preparation for the audit, the
General Manager instructed the shop assistants to place obsolete items, which she considered
unnecessary for the audit, into black bags. There was no space for the bags in the store and she asked
the assistants to place them in a shopping trolley and keep it outside the store until the audit was

completed. The assistant removed the trolley in front of the auditor. The trolley was left with a parking
assistant where the auditor saw it. In consequence MTN claimed that 15 items in the trolley constituted
grey goods, ie goods not supplied to Belet by MTN, and ‘were held in violation’ of the terms of the
agreement. It contended further that Belet had hidden these goods from the auditor and in doing so
obstructed the auditing process. As a result, MTN summarily cancelled the agreement by letter dated
27 September 2011. It confirmed the cancellation in a letter. Belet accepted the repudiation and
cancelled the agreement.

In consequence of the contractual dispute between the parties, MTN terminated the agreement. MTN
dispossessed Belet of its business by placing guards outside both stores and refusing Belet access to
the stores, taking back all stock, terminating the electronic access to the systems needed to trade and
refusing to supply further stock. Thereafter Belet instituted action against MTN in the court a quo in
which it claimed payment of R13 120 933, alternatively the amount of no less than R3 629 615.50, as
damages. The essential basis of the claim was that MTN’s termination of the agreement constituted a
breach, alternatively a repudiation of the agreement, resulting in Belet suffering damages. MTN
defended the action. It denied the breach, alternatively repudiation, of the agreement or that Belet had
suffered damages. It averred that it terminated the agreement because Belet had repudiated the
agreement.

The SCA held on the first issue that the court a quo correctly found that there was no evidence that the
goods in the trolley had to be recorded and that there was no obligation that they had to be kept in the
store. The SCA held further that it was also common cause at the trial that MTN had never asked Belet
for an explanation for the goods in the trolley. In these circumstances the court a quo was correct in
finding that Belet did not repudiate the agreement, that MTN was not entitled to cancel it and that MTN’s
cancellation constituted a repudiation of the agreement.

As to the second issue the SCA found that the conclusion by the high court that clause 40.1 of the
agreement did not absolve MTN of liability for Belet’s claimed loss of income, could not be faulted. The
SCA concluded - with regard to the third issue - that Belet’s submission that the emails, in context,
created an agreement in writing that the Temba City store would be replaced by the Jubilee Mall store
in essence constituted a variation in writing, in effect substituting the Temba City store with the Jubilee
Mall store.

~~~~ends~~~~