THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case No: 936/2013

Not Reportable

In the matter between:

Belet Industries CC t/a Belet Cellular
Appellant

and

MTN Service Provider (Pty) Ltd                                                           Respondent

Neutral Citation: Belet Cellular v MTN Service Provider (936/2013) [2014] ZASCA
181 (24 November 2014)

Coram: Lewis, Cachalia, Bosielo, Saldulker JJA and Meyer AJA

Heard: 13 November 2014

Delivered: 24 November 2014

Summary:  Practice – Pleadings – Exception on ground that particulars of claim bad
in law because term of contract limiting liability of the parties to each other prohibits
the recovery of the type of damages claimed – Language of the limitation clause,
when read in the context of the agreement as a whole, not clear – Excipient did not
establish that limitation clause cannot reasonably bear the meaning contended for by
the appellant – Appeal upheld.

___________________________________________________________________

ORDER

On appeal from:  South Gauteng High Court, Johannesburg (Bava AJ sitting as
court of first instance):
(a)
The appeal succeeds with costs.
(b)
The order of the court a quo is set aside and replaced with:
„The second exception is dismissed with costs.‟
__________________________________________________________________
JUDGMENT

Meyer AJA (Lewis, Cachalia, Bosielo and Saldulker JJA concurring)
[1] This appeal has its origin in three exceptions in the South Gauteng High
Court, Johannesburg, raised by the respondent, MTN Service Provider (Pty) Ltd
(MTN), against the summons of the appellant, Belet Industries CC (Belet), asserting
that the particulars of claim lacked averments necessary to sustain an action.  Bava
AJ upheld one of the exceptions with costs.  Contrary to principle and standard
practice his judgment is wholly unreasoned.  The appeal against the upholding of the
exception as well as the costs order in favour of MTN is with the leave of this court.
[2] By the nature of exception proceedings the correctness of the facts averred in
the particulars of claim must be assumed (see for example Trustees, Two Oceans
Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) paras 3-10;
Stewart & another v Botha & another 2008 (6) SA 310 (SCA) para 4).  According to
the particulars of claim the parties concluded a written „Dealer Agreement‟ on 14
October 2010 (the agreement) in terms of which Belet (referred to as „the Dealer‟)
was appointed to market, promote and facilitate the distribution by MTN (referred to
as „the Service Provider‟) of network services and stock.  In consideration for its

services MTN was obliged to pay to Belet „commissions‟ as provided for in the
agreement.  The agreement was to continue for an indefinite period unless
terminated earlier in accordance with its terms.
[3] Effect was given to the agreement and Belet conducted the business of an
MTN dealer through two dealer stores.  MTN, however, cancelled the agreement
with effect from 5 November 2011 as a result of an alleged breach on the part of
Belet.  The breach and MTN‟s entitlement to cancel the agreement as a result are
disputed by Belet.  It asserts that MTN‟s cancellation constituted a breach or
repudiation of the agreement.  According to the particulars of claim Belet elected to
accept the repudiation and to cancel the agreement.  As a result of MTN‟s
repudiation of the agreement, so the particulars of claim proceed, Belet suffered
damages in the total sum of R15,4 million, which amount plus interest and punitive
costs it now claims from MTN.
[4]     MTN contends that clause 40.1 of the agreement precludes Belet from claiming
the damages it seeks to claim in its summons.  Belet‟s rival contention is that clause
40.1 merely excludes the recovery of consequential damages.  The limitation clause
in issue reads as follows:
„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.‟
(Clause 31 enjoins Belet, inter alia, to comply with applicable licence conditions,
regulatory requirements and directives from a competent regulatory authority.)
[5] As was said by Brand JA in Trustees, Bus Industry Restructuring Fund v
Break Through Investments CC & others 2008 (1) SA 67 (SCA) para 11-
„Because the respondents chose the exception procedure - instead of having the matter
decided after the hearing of evidence at the trial - they had to show that the appellants' claim
is (not may be) bad in law. In the present context they therefore had to show that clause
19.5 cannot reasonably bear the narrower meaning contended for by the appellants (see eg
Lewis v Oneanate (Pty) Ltd and Another 1992 (4) SA 811 (A) at 817F - G; Vermeulen v
Goose Valley Investment (Pty) Ltd [2001] 3 All SA 350 (A) para 7).‟

The same holds true in this case.  MTN had to show that clause 40.1 cannot
reasonably bear the meaning contended for by Belet.
[6] In the past decade there have been significant developments in the law
relating to the interpretation of instruments (see Natal Joint Municipal Pension Fund
v Endumeni Municipality 2012 (4) SA 593 (SCA) paras 18-26).  The present state of
the law on the correct approach to interpretation was concisely stated by Lewis JA in
North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd 2013 (5) SA 1
(SCA) paras 24-25, thus:
„The court asked to construe a contract must ascertain what the parties intended their
contract to mean. That requires a consideration of the words used by them and the contract
as a whole, and, whether or not there is any possible ambiguity in their meaning, the court
must consider the factual matrix (or context) in which the contract was concluded. See
KPMG Chartered Accountants (SA) v Securefin Ltd [2009 (4) SA 399 (SCA) para 39]  . . .  In
addition, a contract must be interpreted so as to give it a commercially sensible meaning:
Ekurhuleni Metropolitan Municipality v Germiston Municipal Retirement Fund [2010 (2) SA
498 (SCA) para 13].‟
[7] And recently Wallis JA said the following in Bothma-Batho Transport (Edms)
Bpk v S Bothma & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA) para 12:
„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.‟
[8] MTN argues that the unambiguous meaning of clause 40.1 is that apart from
consequential damages suffered by MTN as a result of Belet‟s breach of the
obligations imposed upon it under clause 31, the liability of the parties to each other
for the recovery of consequential damages is excluded and their liability is limited to
the recovery of direct damages.   The types of loss listed in the second sentence of
clause 40.1, MTN argues, are matters ejusdem generis the „direct damages‟ referred
to in the preceding sentence.  The second sentence defines the meaning which the

parties attributed to „direct damages‟.  Or as counsel put it in MTN‟s heads of
argument:  „. . . the parties‟ liability to each other is limited to direct damages only‟
and „”for the avoidance of doubt” (ie should any doubt arise regarding the
understanding of what the parties meant by “direct damages”) financial loss, loss of
business, profit, savings, revenue or goodwill are excluded‟.
[9] Belet‟s opposing contention is that on a proper interpretation of clause 40.1
the types of loss listed in the second sentence are matters ejusdem generis
„consequential damages‟, the recovery of which is excluded except in the event of a
breach by Belet of the provisions of clause 31.  The second sentence of the limitation
clause only serves to illustrate what could constitute consequential damages.  The
meaning of the clause, Belet argues, at best for MTN, is ambiguous and the court a
quo should therefore not have upheld the exception.
[10] Thus, the issue between the parties turns on the interpretation of clause 40.1
and more particularly whether the types of loss listed in the second sentence of the
limitation clause are matters ejusdem generis the „consequential damages‟ or the
„direct damages‟ referred to earlier on in the clause.  The crucial question, therefore,
is whether the addition of the last sentence in the limitation clause serves to alter
what I conceive to be the plain meaning of the first sentence.  Both parties assume
that what the clause means by „direct‟ and „consequential‟ damages are „general‟ or
„intrinsic‟ damages and „special‟ or „extrinsic‟ damages respectively (see LTC Harms
Amler’s Precedents of Pleadings 7 ed, 2009 at 118-119).
[11] The language of clause 40.1, when read in the context of the agreement as a
whole, is not clear.  It has not been established that the clause cannot reasonably
bear the meaning contended for by Belet.  Without an examination of the factual
matrix to ascertain the intention of both parties it is not even possible to determine
the question whether commission payable to Belet constitutes direct or extrinsic
damages.
[12] I conclude, therefore, that MTN has not shown that Belet‟s claim is bad in law.
The limitation clause gives rise to difficulties of interpretation and (this being an
exception) cannot be construed without the benefit of evidence relating to the full
factual matrix.  At least two possible meanings are available on the language used.

In my view the proper meaning of clause 40.1 and the nature of the damages
claimed should only be determined after the hearing of evidence at the trial.
[13] In the result the following order is made:

(a)
The appeal succeeds with costs.

(b)
The order of the court a quo is set aside and replaced with:
„The second exception is dismissed with costs.‟

___________________
PA Meyer
Acting Judge of Appeal

APPEARANCES
For Appellant:

A de Kok
Instructed by:

Fasken Marineau, Johannesburg

Webbers, Bloemfontein

For Respondent:

V Maleka SC, BW Maselle
Instructed by:

Wotshela & Associates, Midrand

Phatshoane Henney, Bloemfontein