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Mascom Wireless Botswana (Pty) Ltd v Linda's Holdings (Pty) Ltd t/a Fones 4 U (Civil Appeal No. 13 of 204) [2004] BWCA 8; [2004] 2 B.L.R. 65 (CA) (27 July 2004)

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IN THE COURT OF APPEAL OF BOTSWANA
HELD AT LOBATSE
Court of Appeal Civil Appeal No. 13 of 2004 High Court Miscellaneous Civil Application No. 192 of 2004
In the matter between
MASCOM WIRELESS BOTSWANA (PTY) LTD       APPELLANT
AND
LINDA'S HOLDINGS (PTY) LTD t/a FONES 4 U         RESPONDENT
Mr. Slomowitz SC with Mr. S. Vivian and Mr. R. Desai for the
Appellant
Mr. T. W. Beckerling SC with Mr. Ziman and Mr. P. Gaoboi for the
Respondent
JUDGMENT
CORAM: ZIETSMAN J.A.
LORD SUTHERLAND J.A. MOORE J.A.
LORD SUTHERLAND J.A.
On 22nd April 2004 Collins J. on an urgent application interdicted and restrained the appellant from terminating the supply to the respondent of airtime on the appellant's mobile telecommunications network service against the respondent complying with its obligations in terms of an agreement concluded between the parties on 10th February 2003. This appeal is taken against that order.

The appellant operates a telecommunications network under licence from
the Botswana Telecommunications Authority. The respondent carries on
a portable pay-phone business under the name of the Fones 4 U. The
following extract from the respondent's managing director's affidavit
describes the way in which the business works.
"4.4 The operation of such mobile telecommunications network service, insofar as it relates to portable pay-phones (not to be confused with cellular telephones), is conducted, briefly in the following manner: -
4.4.1  
the operator, the Respondent in this case, enters into agreements with service providers, such as the Applicant, in terms of which the operator agrees to sell airtime and issue sim cards in respect thereof to a service provider for on-sale by it to its customers;
4.4.2  
the airtime is on-sold by the service provider to the customer for a margin over which it was purchased from the operator. Furthermore an agreed portion of the amount paid by the service provider to the operator is refunded to the service provider in consideration for the service provider having thereby derived income for the operator;
4.4.3  
each of the sim cards facilitate the use of such duration of airtime as is determined by reference to the amount of currency paid to the operator in respect of the sim card in question;
4.4.4  
the service provider solicits customers with whom it enters into contracts in terms of which, inter alia:
4.4.4.1 the service provider sells a portable pay-phone or pay-phones and airtime to the customer at an agreed price and supplies the customer with a sim card, issued by the operator, in respect of
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such airtime for each such portable pay-phone;
4.4.4.2 for the duration of an agreed period of time, as and when the customer exhausts the airtime capable of being used with such sim card, the service provider sells to the customers, who purchases from the service provider, additional airtime in respect of which such customer's sim card is renewed accordingly;
4.4.5  
as soon as such agreement is concluded between the service provider and its customer, the operator is notified of such sale, is informed of an identification number applicable to such portable pay-phone and the operator activates the customer's sim card to enable it to be used in the said portable pay-phone;
4.4.6  
the service provider thereupon activates the portable pay-phone to which the sim card relates, enabling the customer to commence to make telephone calls with the portable pay-phone in question;
4.4.7  
immediately that the airtime usage provided for by the sim card in question is exhausted, the customer is unable to make further use of his portable pay-phone until such time as he has purchased further airtime from the service provider;
4.4.8  
the customer does so by making payment of an additional sum to the service provider who thereupon communicates such payment to the operator and the latter re-activates the sim card in question;
4.4.9  
upon the operator doing so, the service provider re-activates the customer's portable pay-phone and the process commences afresh;
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4.4.10 the service provider is incapable of re-activating the operator's sim cards and the operator is similarly incapable of re-activating the portable pay-phones sold by the service provider to its customers."
In order to carry out this arrangement, an agreement was entered into on 10th February 2003. By letter dated 16th March 2004 the appellant purported to terminate the agreement with effect from 30th April 2004 in accordance with clause 10.3. The respondent declined to accept this purported termination, contending that on a proper construction of that clause it did not give the appellant the right to terminate unilaterally. That latter construction commended itself to the judge a quo.
The relevant clauses of the agreement which bear on this issue are as
follows:
"9. DURATION
This agreement shall subsist until terminated in terms of clause 10.
10. TERMINATION
10.1   
Mascom shall have the right to terminate this agreement forthwith by notice in writing to the Purchaser if Mascom ceases, for whatever reason, to be a mobile telecommunications network service provider.
10.2   
The Purchaser shall have the right to terminate this agreement forthwith by notice in writing to Mascom if the Purchaser is unable, for whatever reason, to accept any changes made to Annexure "A" or "B" hereto by Mascom.
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10.3   
Mascom and the Purchaser shall be entitled to terminate this agreement by giving to one another not less than 1 month's prior written notice.
10.4   
Either party shall have the right to terminate this agreement at any time in any of the following circumstances forthwith on written notice to the other party:

10.4.1 
if one party commits a breach of any of its obligations in terms of this agreement and fails to remedy same within 30 days of receipt of a written notice specifying the nature of the breach and calling for it to be remedied; or
10.4.2 
if Mascom or the Purchaser (where the Purchaser is a juristic person) is liquidated or placed under judicial management, in each case whether provisional or final, or if any resolution is passed by either party for its winding up; and/or
10.4.3 
if either party compromises or attempts to compromise with its creditors.
11. ALTERATIONS
No alteration, consensual cancellation, variation of, or addition hereto shall be of any force or effect unless reduced to writing and signed by the duly authorized representative of each party."
The principles of interpretation which are relevant to this dispute may be summarized as follows:
1. Language should be given its ordinary grammatical meaning, and if the result is clear and unambiguous it will be
5

assumed that it accurately reflects the intentions of the parties.
2.     
Words must be interpreted in the context of other provisions in the document and the nature and purpose of the transaction as a whole.
3.     
If giving words their ordinary meaning would lead to an absurdity or to a result which the parties could not have intended, the court can depart from the literal meaning in order to give effect to the parties' intention.
4.     
If the words read in context are capable of more than one meaning, background circumstances may be used to determine the probable common intention of the parties.
5.     
An interpretation will be preferred which prevents words from being tautologous or superfluous.
6.     
A difference in wording will be taken to indicate a change of intention.
Applying these rules of construction, the first step is to ascertain if there is an apparently clear and unambiguous meaning to be attached to the wording of clause 10.3. Looking at the language alone, without taking any other considerations into account, the most obvious and grammatical construction must be that both parties must give notice to each other, in other words there must be a reciprocal or mutual
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exchange of notices. This appears to me to be the only way in which proper content can be given to the words "to one another". The phrase "A and B give to one another" inevitably implies reciprocity. The phrase "A or B gives to the other" has an entirely different meaning, but it is that meaning which the appellant seeks, in my view wrongly, to ascribe to clause 10.3.
The next stage is to consider whether the apparently clear meaning is inconsistent with the terms of the rest of the document, or would lead to an absurdity. An important feature of clause 10 is that the draftsman has shown himself to be perfectly capable of dealing with the situation of unilateral termination. Clause 10.1 - "Mascom shall have the right to terminate .... by notice in writing to the purchaser..." Clause 10.2 - "The purchaser shall have the right to terminate ... by notice in writing to Mascom ..." Clause 10.4 - "Either party shall have the right to terminate ... on written notice to the other party..." That being so, if the intention of the parties was to give either party the right to terminate by given one month's notice, as the appellant contends, it must be assumed that clause 10.3 would have read "Either party shall have the right to terminate this agreement at any time by giving to the other party not less than one month's prior written notice." Because clause 10.3 is so differently worded, it must be assumed that this was not what the parties intended. This strongly reinforces the construction that what was
7

intended was indeed mutual or reciprocal termination by consent of both parties, and not the unilateral termination contended for by the appellant.
The appellant further contends that the reference to consensual cancellation in clause 11 renders clause 10.3 superfluous if it also is intended to deal with consensual cancellation, or alternatively if clause 10.3 deals with consensual cancellation the reference to that in clause 11 is superfluous. Regard however must be had to clause 9, which provides that the agreement shall subsist until terminated in terms of clause 10. There can therefore be no such thing as consensual cancellation under clause 11. Any consensual cancellation must therefore be under clause 10.3. In any event the reference to consensual cancellation in clause 11 would appear to be out of place as that clause is headed 'Alterations'. The proper place for any reference to cancellation would be in clause 10 which is headed Termination'. Why then do the words 'consensual cancellation' appear in clause 11 at all? The answer may lie in the fact that many modern contracts contain a standard clause to ensure that what is contained in the written contract cannot be varied, amended, added to, deleted from, waived or consensually cancelled other than in writing, the so called Shifren clause (SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren 1964 (4) SA 760). Clause 11 is a typical example of such a clause, which typically includes reference to
8

consensual cancellation. In the context of this agreement therefore, the words may simply be otiose and included per incuriam just as a matter of form. I do not consider that this is a factor which militates against the clear linguistic interpretation of clause 10.3.
Finally it was contended that the respondent's interpretation of clause 10.3 would give rise to a commercial absurdity. The concept of two parties wishing of consent to terminate an agreement having to serve on each other at least one month's prior notice is so cumbersome as to be absurd. Further, if clause 10.3 deals only with consensual termination, there is no provision in clause 10 for termination by either party on giving reasonable notice, which is a normal right at common law. Because of clause 9 however, termination can only be effected in terms of clause 10, and it therefore would follow that this contract could subsist in perpetuity, a highly unusual arrangement. In my opinion neither of these arguments is sufficiently strong to enable it to be said that the parties could not have intended this interpretation. I would agree that the mechanism provided for consensual termination is cumbersome, but there may have been some good commercial reason for it, and it is not for the court "to set itself up as an arbiter of business efficiency" - S.A. Warehousing Services (Ptv) Ltd v South British Insurance Co. Ltd. 1971 (3) SA 10. As far as the duration of the contract is concerned, while it may be unusual for unilateral termination by giving reasonable notice to
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be ruled out, it is certainly not unknown. Again the comment in S.A. Warehousing is pertinent. Having regard to the comparative complexity of the way in which the respondent's business is run with the need for substantial investment and the entering into of subcontracts with pay-phone suppliers and with its customers, it is not for this court to speculate as to the commercial desirability or otherwise of having a long term contractual relationship between the parties. I am therefore not satisfied that the respondent's interpretation of clause 10.3 leads to an absurdity or could not have been intended by the parties when the agreement was entered into.
For these reasons this appeal will be dismissed. The respondent is entitled to costs, which by agreement between the parties will include the costs of two counsel.
DELIVERED IN OPEN COURT AT LOBATSE THIS-?7DAY OF JULY
LORD R. I. SUTHERLAND JUDGE OF APPEAL
2004.
wc       .
I AGREE  N. W. ZIETSMAN
JUDGE OF APPEAL

PEAL
I AGREE  S.A. MOORE

JUDGE OF API
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