The Appellant, the South African Football Association (hereinafter referred to as “SAFA”), and the Respondent, Fli-Afrika Travel (Pty) Ltd (hereinafter referred to as “Fli-Afrika”) had a long-standing commercial relationship, in terms of which Fli-Afrika was SAFA’s travel agent. The subject of the appeal was two agreements concluded between the parties, namely a Service Level Agreement (hereinafter referred to as “the SLA”) concluded on 23 January 2009, and a subsequent agreement which was drafted as a settlement agreement (hereinafter referred to as “the settlement agreement”) concluded on 16 April 2010.
The effect of the SLA was to form a joint venture between SAFA and Fli-Afrika for the Federation Internationale de Football Association World Cup (hereinafter referred to as “the 2010 FIFA World Cup”). Clause 3.1 of the SLA required Fli-Afrika to source and supply 2 500 (two thousand five hundred) 2010 FIFA World Cup “Packages”, per week. The Packages were intended for and on behalf of SAFA, its VIPs and various international football federations. Clause 3.2 of the SLA provided the “Packages” were to include accommodation, tickets to the 2010 FIFA World Cup matches and return transport from the accommodation provided to the stadium in which a particular match was to be played. Clause 3.3 of the SLA provided that SAFA irrevocably undertakes to supply 2 500 (two thousand five hundred) tickets per week to various matches to Fli-Afrika. Clause 4 of the SLA provided, inter alia, that Fli-Afrika was responsible for the day-to-day running of its financial and administrative affairs.
Subsequent to the signing of the SLA, but prior to SAFA having provided any tickets, Fli-Afrika began booking hotel rooms with a view to completing the Packages. Fli-Afrika spent R27 698 839.26 on hotel rooms, however SAFA failed to deliver a single ticket because SAFA was precluded from doing so by virtue of the terms of the Organising Association Agreement. The Organising Association Agreement was concluded between SAFA and FIFA in terms of which FIFA granted SAFA and South Africa the right to host the FIFA 2010 World Cup subject to certain terms and conditions. One of the terms and conditions of the Organising Association Agreement, was that only FIFA and its agent, Match, were entitled to sell tickets. The result of SAFA’s failure to provide the tickets was that no “Packages” could be sold and thus Fli-Afrika was left with a number of hotel bookings.
A dispute between SAFA and Fli-Afrika thereafter arose, wherein Fli-Afrika demanded SAFA comply with its obligation to supply tickets. Leslie Sedibe (hereinafter referred to as “Mr Sedibe”), SAFA’s newly appointed Chief Executive Officer, was not fully aware of all of SAFA’s contractual obligations and, therefore, requested a copy of the SLA from Fli-Afrika, to which Fli-Afrika refused.
The dispute between SAFA and Fli-Afrika continued for some time until Match attempted to resolve the dispute. A proposal was made, to both SAFA and Fli-Afrika by Match, to bring the dispute to an end (hereinafter referred to as “the Proposal”). Paragraph 4 of the Proposal referred to 2 (two) annexures, namely an agreement between Fli-Afrika and Match whereby Match would supply tickets to Fli-Afrika and the second annexure referred to an agreement which was headed “Full and Final Settlement” (hereinafter referred to as “the settlement agreement”) in respect of the dispute between Fli-Afrika and SAFA. Fli-Afrika signed the agreement between themselves and Match, and both SAFA and Fli-Afrika signed the settlement agreement. The most relevant terms of the settlement agreement stipulated that, upon execution thereof, all commitments for the provision of tickets by SAFA to Fli-Afrika were waived and the parties, therefore, released each other from any obligations implied or otherwise which may exist in connection with any such commitments.
Despite the aforesaid, Fli-Afrika instituted legal proceedings against SAFA claiming SAFA was under an express obligation, in terms of clauses 3.2 and 4 of the SLA, to both provide Fli-Afrika with tickets and to pay for the accommodation and travel arrangements for which Fli-Afrika had already paid. In the alternative, Fli-Afrika further alleged that it was a tacit term of clause 3.2 and 4 of the SLA that SAFA would pay for the accommodation paid for by Fli-Afrika. SAFA denied it was under such an obligation and claimed that Fli-Afrika had erroneously interpreted the aforementioned clauses. SAFA further alleged that the settlement agreement, when properly construed, constituted a “mutual termination/cancellation” of the SLA or a waiver on the part of Fli-Afrika of any right to claim from SAFA. The court a quo disagreed and found that SAFA had breached the SLA and was therefore ordered to pay damages to Fli-Afrika.
The SCA reiterated the approach to the interpretation of written documents and stated that regard must be had to the context of the provision and the language used in light of the ordinary rules of grammar and syntax. Where more than one meaning is possible, each possibility must be weighed against the light of all of these factors and a sensible meaning is preferred to an insensible or an “unbusinesslike” one, or one which undermines the purpose of the document.
In applying the aforesaid approach, the SCA held that clauses 3 and 4 of the SLA did not expressly provide that, prior to SAFA supplying tickets, Fli-Afrika was obliged to spend money on accommodation and other travel arrangements. Fli-Afrika’s primary obligation, under clause 3 of the SLA, was to provide packages to SAFA, its VIPs and football governing bodies of SAFA’s choice. It could only do so once it had tickets, to which it could then match the accommodation and transport. The court stated that clause 3.2 of the SLA merely defined the packages and clause 4 did no more than provide payment in respect of unsold packages.
The court held that a tacit term must be inferred by the court from the express terms of the contract and the surrounding circumstances. The court held that it could see no reason why the unexpressed common intention of the parties when they defined “Packages” in clause 3.2 of the contract was that SAFA would reimburse Fli-Afrika for wasted accommodation booked by Fli-Afrika in the event SAFA was unable/failed to supply the tickets. The court held that, as a result of the interpretation of the aforementioned clauses, Fli-Afrika had not established a basis for the recovery of money expended by it in anticipation of SAFA supplying tickets. This conclusion was dispositive of the appeal, however, the SCA nevertheless addressed the effect of the settlement agreement.
The court found that the settlement agreement described itself as an agreement as “Full and Final Settlement.” The settlement agreement settled the dispute relating to SAFA’s obligation to supply Fli-Afrika with tickets and clause 3 provided that the parties release each other from any obligation implied or otherwise that may exist in connection with any such commitments. The SCA further referred to the agreement between Fli-Afrika and Match, which imposed an obligation on Fli-Afrika to settle its dispute with SAFA. When Fli-Afrika entered the agreement with Match it agreed to the aforementioned obligation and entered into the settlement agreement on the same day. The court held that the settlement agreement settled the dispute between SAFA and Fli-Afrika and therefore it did indeed constitute full and final settlement of all obligations that had arisen, including any claims for damages. The appeal by SAFA was therefore upheld.
This decision serves to illustrate that when interpreting written agreements, the court will have regard to the context provided by reading the particular provision/s in light of the document as a whole and the circumstances attendant upon its coming into existence.
Consideration will be given to the language used in light of the ordinary rules of grammar and syntax, the purpose to which the provision is directed, and the material know, to those responsible for its production.
This decision further provides that the express intention of the parties will be given effect first before a tacit term is implied.
Written by Shaun Piveteau and Jarrod Van Der Heever