University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13.

The University of Johannesburg (UJ), the applicant, is the owner of property in Auckland Park, which it had acquired through expropriation for campus expansion purposes. UJ entered into a co-operation agreement with Auckland Park Theological Seminary (ATS), the first respondent, in 1993, to provide theological training to students.

In 1995, UJ and ATS negotiated for ATS to acquire property for a theological college. UJ sought and obtained permission from the Minister of Education to lease the property to ATS for this purpose. In December 1996, UJ and ATS entered into a long-term lease agreement for 30 years, with ATS paying a once-off rental fee. The lease stipulated that the property was to be used for educational, religious, and related purposes, specifically for the construction of a campus for education, teaching, research, training, offices, and student facilities.

ATS did not establish a theological college on the leased premises. Instead, in March 2011, ATS ceded its rights under the lease to Wamjay Holdings Investments (Pty) Limited (Wamjay), the second respondent, without notifying UJ or seeking its permission. Wamjay intended to build a faith-based school on the premises. Upon discovering the cession, UJ viewed it as a repudiation of the lease agreement, as the rights were considered personal to ATS and incapable of cession (delectus personae). UJ canceled the lease agreement and sought to evict ATS and Wamjay from the property.

The High Court and Full Court found in favor of UJ, holding that the rights were personal to ATS and the lease could not be ceded without UJ's consent. However, the Supreme Court of Appeal overturned these decisions, holding that the lease was not personal in nature and that the rights could be ceded without UJ's consent.

This quote encapsulates the crux of the Court's decision, emphasizing the critical role of context in interpreting contracts and determining the nature of the rights and obligations that arise from them. It underscores the Court's departure from a purely textual interpretation of contracts and highlights the necessity of considering the broader circumstances surrounding a contract to ascertain the true intentions of the parties involved.

UJ appealed to the Constitutional Court of South Africa, challenging the Supreme Court of Appeal's decision and arguing that the rights under the lease were indeed personal to ATS and that the cession was impermissible.

The Constitutional Court's held that:
1. Rights in a contract, including those in a long-term lease agreement, can be personal in nature (delectus personae) and therefore incapable of cession without the consent of the other contracting party. This is determined by whether the contract is so personal in character that it would make a reasonable or substantial difference to the other party whether the original party or a cessionary is entitled to enforce it.

2. The determination of whether rights are delectus personae requires a contextual interpretation of the contract, taking into account the language used, the context in which the provision appears, the apparent purpose of the contract, and the material known to those responsible for its production. This approach is objective and must be undertaken holistically, considering the text, context, and purpose of the contract from the outset.

3. The parol evidence rule, which generally precludes the admission of extrinsic evidence to contradict, alter, add to, or vary the terms of a written contract, does not prevent the admission of contextual evidence for the purpose of interpreting the contract. Contextual evidence is relevant and admissible to shed light on the nature of the rights and to demonstrate that they are personal and not freely cedable.

4. A party's cession of rights that are personal in nature to another entity without the consent of the other contracting party can amount to a repudiation of the contract, justifying the other party's cancellation of the contract if the repudiation is material and of a sufficiently serious nature to warrant rescission.

5. Defenses such as waiver and estoppel require clear and unequivocal evidence of an intention to abandon a right or to mislead another party to their detriment, respectively. These defenses are not lightly presumed and must be proven by the party asserting them.

In essence, the Court's decision emphasises the importance of context in contractual interpretation, the admissibility of contextual evidence in determining the nature of contractual rights, and the protection of parties from the unauthorised cession of rights that are personal to them.

In its reasoning process, the Constitutional Court of South Africa relied on several cases. Here are some of the cases with their full citations:

1. Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) (Endumeni).
2. KPMG Chartered Accountants (SA) v Securefin Ltd [2009] ZASCA 7; 2009 (4) SA 399 (SCA) (KPMG).
3. Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA 176; 2014 (2) SA 494 (SCA).
4. Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd [2015] ZASCA 111; 2016 (1) SA 518 (SCA) (Novartis).
5. Propell Specialised Finance (Pty) Ltd v Attorneys Insurance Indemnity Fund NPC [2018] ZASCA 142; 2019 (2) SA 221 (SCA) (Propell).
6. Sasfin (Pty) Ltd v Beukes [1988] ZASCA 94; 1989 (1) SA 1 (A) (Sasfin).
7. Goodwin Stable Trust v Duohex (Pty) Ltd 1998 (4) SA 606 (C) (Goodwin Stable Trust).
8. Eastern Rand Exploration Co Ltd v A J T Nel, J L Nel, S M Nel, M M E Nel’s Guardian and D J Sim 1903 TS 42 (Eastern Rand Exploration).
9. Densam (Pty) Ltd v Cywilnat (Pty) Ltd [1990] ZASCA 120; 1991 (1) SA 100 (A) (Densam).

These cases were instrumental in shaping the Court's understanding and application of the principles of contractual interpretation, the delectus personae doctrine, the admissibility of contextual evidence, and the parol evidence rule.