THE CULTURE, ARTS, TOURISM, HOSPITALITY Respondent AND SPORTS SECTOR
SUMMARY Contract- breach of – specific performance- when to be granted- applicant and respondent entering into written scholarship agreement to fund applicant’s studies- respondent breaching contact- correct and proper interpretation of contract.
J U D G M E N T
MOSHIDI, J: INTRODUCTION  This matter has a long and unnecessary history, characterised by several interlocutory litigation aimed at compelling the respondent to comply with its contractual obligations. It served before me in the opposed motion court. It involves the interpretation of an agreement (mentioned below) entered into between the parties. However, in the light of the evolution of the respondent’s case, the ultimate issues to be determined are: the respondent’s prayers for a declaratory order, and for the repayment of alleged overpaid amounts to the applicant. THE PARTIES  At the time of the commencement of the litigation, the applicant was a student, residing at Blairgowrie, Johannesburg. The respondent is the Culture, Arts, Tourism, Hospitality and Sports Sector Education and Training Authority (“CATHSSETA”) an institution founded in terms of section 9 of the Skills Development Act 97 of 1998 (“The Act”), and situated at Killarney, Johannesburg. SOME COMMON CAUSE FACTS  It is common cause that the applicant and the respondent concluded a written Learner Agreement (“the Learner Agreement”) at Johannesburg on 1 May 2013. In terms of the Learner Agreement, the respondent awarded the applicant a comprehensive bursary to pursue his studies for a Bachelor of Science Degree in International Hospitality Management at the Ecole Hôteliere de Lausanne, Switzerland (“EHL”), with a commencement date in September 2013, and a completion date in August 2017 (a 4 year course). (insertion added). Pursuant to the conclusion of the Learner Agreement, the respondent’s chief executive officer addressed a letter, Annexure “LA2”, to the Consular Centre South African, Embassy of Switzerland in the following terms: “This letter serves to confirm that Mr Luyanda Lesego Alexander has been accepted to study towards a Bachelor of Science in Hospitality Management at the Ecole Hôteliere de Lausanne in Switzerland. The course is for a duration of 4 years (September 2013 – September 2017). CATHSSETA has offered the learner a comprehensive bursary covering his tuition, accommodation and living expenses during his stay in Switzerland. This sponsorship offer is valid only for the following specified course and duration: Title of course: Bachelor of Consumer Science in Hospitality (Ecole Hoteliere Lausanne): Duration of course: 4 years (September 2013 – September 2017). Please feel free to contact me should you require further clarity.” (underlining added).
 It is further common cause that the respondent duly paid for the studies of the applicant’s studies for the year 2013 whilst doing his first year until successful completion, and duly reported progress to the respondent at the end of 2013. It is further common cause that the respondent also paid for the applicant’s studies for the year 2014 although, the payment was not made timeously.  During or about June 2015, the applicant returned home from Switzerland being the end of his academic year. He made contact with the respondent (Sharon) in order to report his academic progress, and also to make arrangements for payment of the 2015 fees which were due on 31 July 2015, and to avoid penalties for late payment. The meeting could not take place as the applicant and his father were evaded by Sharon until about 25 August 2015. On the latter date, the applicant was informed that the respondent was now under administration, and that in spite of this development, the applicant was told not to worry as the payment of his fees and travel expenses had already been budgeted for, and committed. Nothing constructive occurred thereafter until about September 2015, and in spite of the fact that the applicant had to be back at university in Switzerland by 7 September 2015, and that the fees remained unpaid. On the version of the applicant’s father (Mr Tebogo Alexander), who also filed supporting affidavits, he visited the respondent’s offices on 3 September 2015. The father was assured that nothing untoward had been discovered about how applicant’s bursary had been awarded. However, despite the assurance given, the staff of the respondent addressed an email to the applicant’s father on 4 September 2015 in the following terms: “As per directive of the Administrator, I regret to inform you that the CATHSSETA will no longer be funding your son, Luyanda Alexander’s overseas studies.” (annexure “LA7”) In a later answering affidavit deposed to by the respondent’s Administrator, Pumzile Kedama (“Kedama”) opposing urgent relief sought by the applicant, the respondent contended, inter alia, that it was duty-bound to terminate the Learner Agreement, as CATHSSETA alleged that the agreement concluded with the applicant was irregular and unlawful. In the affidavit, the respondent also threatened to launch a counter-application to set aside the agreement based on the alleged irregularities and unlawfulness connected with the awarding of the bursary. THE COMMENCEMENT OF LITIGATION
 The developments described above, led to an urgent application launched by the applicant on 11 September 2015. The matter came before Victor J on 23 September 2015. Victor J made an order that, pending the determination of the respondent’s counter-application (to have, inter alia, the bursary awarded to the applicant in April 2013 set aside) was postponed sine die with leave to amplify its founding affidavit in the counter-application, if so advised, the respondent had to pay forthwith the applicant’s tuition and ancillary expenses for the 2015 academic year in pursuance of the terms of the Learner Agreement. The costs of the urgent application were reserved (the 11 September 2015 application).  It is common cause that the respondent failed to comply with the above court order despite demand. As a consequence, the applicant’s attorneys issued a writ of execution on 14 July 2016. The writ was for the recovery of the amount of R623 409,63 plus interest and taxed costs in satisfaction of the court order of Victor J. The further inaction of the respondent led to the respondent’s First National Bank account being attached.  On 4 August 2016, the respondent launched an application for setting aside of the writ of execution. On 12 August 2016, Fisher AJ (as she then was), made a consent order in terms of which the writ of execution was set aside and the respondent was ordered to pay the equivalent of CHF 42 309,05 (Swiss Francs) on or before 17 August 2016. Once more, the costs were reserved.  However, consistent with its behaviour, the respondent once more refused/failed to pay the applicant’s study fees for the academic years 2016/2017. The latter year was supposed to be the fourth and final year of the BSC degree in terms of the agreement. This failure of the respondent to comply with the court order, resulted in the applicant launching another urgent application on 25 August 2016. In the application, the applicant sought, inter alia, an order declaring the respondent’s unilateral termination of the Learner Agreement to be unlawful and invalid; ordering the respondent to disburse the bursary grant funding final payment for the applicant’s fourth year of study; and ordering the respondent to procure a return flight ticket to Switzerland for the applicant’s leaving Johannesburg on 10 September 2016, and returning at the end of the European Academic year in August 2017. The application, which was once more opposed by the respondent, came before Modiba J (not Fisher J) on 30 August 2016. It was fully argued. In the end, Modiba J issued an order in terms of which the respondent was ordered to disburse the bursary grant funding final payment for the applicant’s fourth year of study in the amount of CHF 54 874,65 to the Ecole Hoteliere de Lausanne, Switzerland (“EHL”) before close of business on 30 August 2016. The costs were reserved once more (the 25 August 2016 application).
THE RESPONDENT’S COUNTER-APPLICATION  Throughout the litigation, the respondent’s counter-application moved from seeking an order, initially reviewing the decision of the respondent to award the bursary in terms of the Learner Agreement to the applicant, and an order that the Learner Agreement be declared invalid and of no force or effect, to what became an amended counter-application. The latter, in essence contended that the applicant should repay all the amounts which were paid to him or on his behalf in terms of the Learner Agreement, totalling the sum of R1 419 974,94 (one million four hundred and nineteen thousand nine hundred and seventy four rand and ninety four cents), together with interest. In the alternative, the amended counter-application contended for a declaration that the respondent had complied with all its obligations in terms of the Learner Agreement, as well as an order that the applicant has to repay the aforesaid amount of R1 419 974,94, by which he was allegedly overpaid. This defence and claim were significantly raised only for the first time during the second urgent application set out above. However, as mentioned in paragraph  of this judgment, the respondent’s relief has changed. In the respondent’s most recent heads of argument, the main relief sought in the counter-application, namely, the review of its decision to grant the bursary to the applicant, and the declaratory order that the conduct of the respondent in entering into the Learner Agreement was unlawful, and that the agreement itself was invalid, and of no force or effect, was abandoned. In my view, and in the light of the view I take finally in this matter, the abandonment of the main relief sought originally in the counter-application, was well made.
THE ISSUES REMAINING TO BE DETERMINED  Based on the above, there are remaining essentially only three issues for determination by this Court. These are: whether the applicant was entitled to approach the court in the manner in which he did, and whether the applicant has succeeded in making out a case, on a balance of probabilities, for the relief claimed in the notices of motion; secondly, whether the respondent is entitled to a declaratory order to the effect that it has complied with all of its obligations in terms of the Learner Agreement, upon payment of the amounts of R332 751,94 (three hundred and thirty two thousand seven hundred and fifty one rand and ninety four cents) and R661 471,26 (six hundred and sixty one thousand four hundred and seventy one rand and twenty six cents) for the 2013 and the 2014 academic years, respectively, and that consequently the bursary monies it was ordered to pay by virtue of two urgent court orders for the 2015 and 2016 academic years must be repaid by the applicant to the respondent.  It is common cause that the applicant and the respondent entered into the written Learner Agreement on 1 May 2013. The applicant relies on this agreement. In our law, the contract “is regarded as the sole memorial of the transactions and deprives all previous inconsistent statements of their legal effect. The document becomes conclusive as to the terms of the transaction which it was intended to record” (see De Klerk v Old Mutual Insurance Co Ltd 1990 (3) SA 34 (ECD) at 39D).  It is also so that the applicant must allege and prove the terms of the contract. See Kriegler v Ministzer and Another 1949 (4) SA 821 (A). The onus is therefore on the applicant to prove the contents and the terms of the contract. This much is trite as well.  The respondent’s contentions, as contained in the opposing papers, to the effect that: the bursary grant awarded to the applicant was intended for the 2013 academic year only, and for an express limited amount of R339 000,00 (three hundred and thirty nine thousand rand) only; that the parties’ intention was to conclude a new agreement for every year of study; that the parties concluded an alleged different Learner Agreement for the academic year 2014; and that the parties did not conclude an agreement for the academic year 2015, all require to be examined carefully, having regard to the Learner Agreement in question. Stated differently, if the respondent’s contentions, and its interpretation of the provisions of the Learner Agreement, are correct, it would entail that the amounts paid by the respondent for the 2015 and 2016 academic years, as ordered by the court, must be repaid by the applicant to the respondent. SOME APPLICABLE LEGAL PRINCIPLES  It is so that the primary rule in the interpretation of a contract is that effect must be given to the common intention of the parties, that is, what both intended upon entering into the contract, and not what one or the other had at the back of his mind. See Joubert v Enslin 1910 (A) 6 at 37. The Court, in the process of ascertaining the common intention of the parties, is required to consider the grammatical and ordinary meaning of the words the parties used. This is a necessary first step. The intention of the parties in using a particular word or phrase can only be ascertained by examining the context in which it has been used. See Coopers and Lybrand v Bryant 1995 (3) SA 761 (A) at 768.  It is also so that the wording of a contract must be interpreted in the context of other provisions in the document, and not to seize on one word only in a document, determine its more usual or ordinary meaning, and then, having done so, to seek to interpret the document in the light of the meaning so ascribed to that word. See List v Gungers 1979 (3) SA 106 (A) at 118.  Finally on the legal principles, the Court must consider the contentious words by having regard to their context in relation to the contract as a whole and by taking into account the nature and purpose of the contract. See for example, Swart en ‘n Ander v Cape Fabrix (Pty) Ltd 1979 (1) SA 195 (A) at 202C, and List v Gungers (supra) at 118G-H. The proper approach to interpretation of contracts is also set out in the often-quoted summary of Wallis JA (as he then was) in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA), at paragraph , as follows: “Over the last century there have been significant developments in the law relating to the interpretation of documents, both in this country and in others that follow similar rules to our own. It is unnecessary to add unduly to the burden of annotations by trawling through the case law on the construction of documents in order to trace those developments. The relevant authorities are collected and summarised in Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School. The present state of the law can be expressed as follows: interpretation is a process of attributing meaning to the words 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. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective, not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation; in a contractual context it is to make a contract for the parties other than the one they in fact made. The ‘inevitable point of departure is the language of the provision itself’, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.” (footnotes omitted). See also more recently, CSARS v Bosch and Another 2015 (2) SA 174 (SCA) at paragraph . APPLICATION OF THE LEGAL PRINCIPLES  With the above principles in mind, I revert to the facts of the present matter. On a proper construction of the Learner Agreement, it is more than plain that the bursary awarded to the applicant made provision for the payment of all cost necessary for the applicant to complete a 4 year Bachelor of Science Degree in International Hospitality Management at EHL. It was a 4 year study course, starting from September 2013, and ending during August 2017. It could never have been the intention of the parties that the period of study was for one year only, namely for the academic year 2013 only and thereafter renewable annually, as contended for by the respondent. In addition, the total amount for the 4 year study could never have been limited to the amount of R339 000,00. If that was the intention, the parties would have mentioned it expressly. In any event, the stipulation of the CATHSSETA funding of the amount of R339 000,00 on page 8 of the Learner Agreement, paginated page 34 of the founding papers, is clearly an error for a number of reasons mentioned briefly later below.  Annexure “LA12” to the founding papers, to which I have already referred above, makes plain that the duration of the applicant’s study was for 4 years, commencing September 2013, and ending September 2017. This is reflected in the definitions clause of the Learner Agreement under “Effective Date”, and “Termination Date”, respectively. In addition, Part B of the Learner Agreement, under “Programme Details”, (page 8), emphasises the 4 years duration of study by the applicant at the university.  In the counter-application, the respondent seeks a declaratory order that it has complied with all its obligations under the Learner Agreement, and seeks the repayment of amounts allegedly overpaid to the applicant. The respondent relies on the stated bursary amount in Part B of the Learner Agreement, namely, R339 000,00. On the other hand, the applicant contends that the words “for the first year”, must be read-in to Part B, so as to represent the true intention of the parties. The Learner Agreement must be looked at as a whole, in proper context, by taking into account its nature and purpose. It is not in dispute that the applicant was awarded the bursary to an International University after being identified by the respondent as worthy. The wording of Part B “CATHSSETA Funding Amount: R339 000.00”, as a starting point (per Bothma-Batho Transport, CSARS v Bosch (supra) does not take the matter further in ascertaining the intentions of the parties, unless the agreement as a whole is properly constructed.  The reliance on the amount of R339 000,00 by the respondent is clearly misplaced. Prior to the order of Victor J, the respondent, on its own version, paid out the bursary amount of R994 223,18. In this regard, reference is made to paragraphs 5 and 7 of the respondent’s heads of argument. The September 2014 agreement referred to in paragraph 7 of the respondent’s heads of argument, was annexed to Kedama’s answering affidavit in the urgent application of 30 August 2016. In the heads of argument the respondent contends that the bursary pay out for the 2014 academic year was done in pursuance of this agreement.  However, the 2014 agreement is replete with imperfections; for example, clause 3.1 thereof refers to a “termination date stipulated in table 4 of the Schedule of the Particulars of this Agreement”. However no such schedule was annexed; in clause 2.1 thereof, it refers to the fact that payment of the bursary amount will be made to the university as per the agreement between the respondent and the university. However, there is no indication of any such agreement having been concluded between the respondent and EHL. The alleged agreement could not replace or vary the Learner Agreement in any way. The Learner Agreement made no provision at all for entering into a new Learner Agreement for each and every one of the four academic years, as correctly argued by the applicant. It must follow that the Learner Agreement must govern all the bursary conditions and terms over the four-year period of the academic course.  It is indeed so that all the three court orders referred to above, ordered the respondent to pay the amounts stipulated therein in respect of the 2014 to 2016 academic years. This, in spite of the respondent’s obviously mistaken interpretation of the Learner Agreement, namely that it was never obliged to pay more than the R339 000,00 in respect of the applicant’s four years of study at the EHL. CONCLUSION  I conclude that a proper and logical interpretation of the terms of the Learner Agreement, combined with the payments made by the respondent in excess of R339 000,00, as well as the undertaking provided by the respondent to the Swiss Embassy, (annexure “LA12”), all lead to only one reasonable conclusion. That is that, the respondent bound itself to pay all the applicant’s costs to enable him to complete the four year degree at the EHL. In fact, clause 3, Part A, (the terms and conditions of agreement) of the Learner Agreement, describes the rights of the learner as including, to “be educated and trained in terms of this Agreement; have access to the required resources to receive training in terms of the programme … , receive a certificate upon successful completion of the learning …”. It is rather compelling that three judges of this division ignored the respondent’s interpretation when they ordered the respondent to comply with its contractual obligations in terms of the Learner Agreement, pending the determination of its counter-application for the review of the decision to grant the bursary to the applicant. Up to this stage of the proceedings, nothing at all has altered the position, and the interim orders ought to be final. It will be grossly unfair and unjust to expect of the applicant who has recently completed the four year Bachelor of Science Degree, to repay an amount of approximately R1,5 million, immediately after his studies, and before commencement of his professional career in the hospitality industry.  It is common cause that the applicant has at all material times complied with all his obligations in terms of the Learner Agreement. It is in fact the respondent that breached the agreement in September 2015. In my view, the applicant was perfectly entitled to exercise his options by approaching the court to compel the respondent to comply with its obligations under the Learner Agreement, and by way of specific performance. This, in the light of the respondent’s continuous mutually destructive and inconsistent defences and claims made throughout. See for example Kragga Kamma Estates CC and Another v Flanagan 1995 (2) SA 367 (A), where one party was in mora. In Farmers’ Co-op Society (Reg) v Berry 1912 (A) 343, the Court said: “Prima facie every party to a binding agreement who is ready to carry out his own obligations under it has a right to demand from the other party, so far as is possible, a performance of his undertaking in terms of the contract. As remarked by Kotze CJ in Thompson v Pullinger (1894) 1 OR at p 301, ‘the right of a plaintiff to specific performance of a contract where the defendant is in a position to do so is beyond all doubt’. It is true that Courts will exercise a discretion in determining whether or not degrees of specific performance will be made. They will not, of course, be issued where it is impossible for the defendant to comply with them. And there are many cases in which justice between the parties can be fully and conveniently done by an award of damages. But that is a different thing from saying that a defendant who has broken his undertaking has the option to purge his default by the payment of money. For in the words of Storey (Equity Jurisprudence), sec. 717(A), ‘it is against conscience that the party should have a right of election whether he would perform his contract or only pay damages for the breach of it’. The election is rather with the injured party, subject to the discretion of the court.” See also Tamarillo (Pty) Ltd v BN Aitken (Pty) Ltd 1982 (1) SA 398 (A), for when an order of specific performance will be approved. See also Christie’s Law of Contract in SA, 8ed, pages 616-619.  In the present matter, the respondent did not raise the defence of impossibility of performance, but instead raised all sorts of spurious defences and claims. On each occasion, the Court found specific performance to be an appropriate order. However, the respondent defied the court orders, and the helpless applicant was compelled to return to the court for intervention. In the end, the inevitable conclusion is that the respondent has not made out a case at all for neither a declaration of rights, nor a claim for any repayment of amounts by the applicant. The respondent had to be compelled by the court to fulfil its obligations under the Learner Agreement. The counter-application in all its facets or forms must be dismissed. On the other hand, the applicant has succeeded in making out a case, on a balance of probabilities, for the relief sought in the founding papers. As a logical consequence, the interim orders made by Victor J and Modiba J ought to remain extant, and ought to be made final orders in the circumstances of this matter. COSTS  There remains the issue of costs, including all reserved costs, which is a discretionary matter. The matter has a long history of protracted litigation between the parties necessitated exclusively by the conduct of the respondent. As mentioned above, the defences and claims advanced and made by the respondent were not bona fide. The applicant whilst a student, was compelled on two occasions to approach the court by means of urgent applications in order to compel the respondent to simply comply with its contractual obligations under the Learner Agreement. There is no credible reason advanced why the costs should not follow the result. It has always been plain that the respondent, whether on its own, or by court order, paid an amount in excess of the interpreted limit amount of R339 000,00. The respondent in the proceedings, at least before me, enjoyed the services of senior counsel. The applicant has argued for an order of costs on the scale as between attorney and own client. However, in my view, the costs should be on the scale as between attorney and client only. ORDER  In the result the following order is made: 28.1 An order is granted in favour of the applicant in terms of the notices of motion in the two urgent applications of 11 September 2015 and 25 August 2016. 28.2 The interim orders made by Victor J and Modiba J are hereby made final. 28.3 The respondent shall pay the costs of the applications, including all the reserved costs. Such costs shall be on the scale as between attorney and client.
28.4 The respondent’s counter-application is dismissed with costs. Such costs shall be on the scale as between attorney and client. ________________________________________
Counsel for the applicant J A du Plessis Instructed by Lorna Ferguson Inc Counsel for the respondent D T R du Plessis SC Instructed by Mncedisi, Ndlovu & Sedumedi Inc Date of hearing 30 January 2018 Date of judgment 20 April 2018