The general principles of contractual interpretation (remembering that an insurance policy is a form of contract) summarised by the Supreme Court of Appeal in this recent judgment are worth repeating, and remembering:

“[27] The principles to be applied in interpreting written documents are now well settled, but it would be useful for present purposes to rehearse them. The approach to interpretation of documents, broadly stated, is to give consideration: 

‘…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 these facts. The process is objective and 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 document itself”, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.

[28] That was said by Wallis JA more than a decade ago in Endumeni. Endumeni has consistently been followed by this court ever since, and endorsed by the Constitutional Court.

[29] Hot on the heels of Endumeni, in Bothma-Batho Transport, Wallis JA made plain that his statement in Endumeni quoted in para 27 above ‘reflected developments in regard to contractual interpretation espoused in Masstores (Pty) Ltd v Murray & Roberts Construction Ltd. (Pty) Ltd and Another. He went on to emphasise that ‘the process of interpretation does not stop at a perceived literal meaning of those words [employed in the document being interpreted], but considers them in the light of all relevant and admissible context, including the circumstances in which the document came into being.’ And, with reference to foreign authority, Wallis JA went on to say that ‘Interpretation is no longer a process that occurs in stages but is “essentially one unitary exercise”.’

[30] Two years earlier, and in the course of construing a pension fund rule, Lewis JA noted that:

‘The principle that a provision in a contract must be interpreted not only in the context of the contract as a whole, but also to give it a commercially sensible meaning, is now clear. It is the principle upon which Bekker NO [Bekker NO v Total South Africa (Pty) Ltd 1990(3) SA 159 (T) at 170G0H] was decided, and, more recently, Masstores (Pty) Ltd v Murray & Roberts (Pty) Ltd [Masstores (Pty) Ltd v Murray & Roberts (Pty) Ltd 2008 (6) SA 654 (SCA)] was based on the same logic. The principle requires a court to construe a contract in context – within the factual matrix in which the parties operated. In this regard see KPMG Chartered Accountants v Securefin [KPMG Chartered Accountants v Securefin [2009] ZASCA 7; 2009 (4) SA 399 (SCA) ([2009] All SA 523) para 39].’

We are astute, of course, to the consideration that those remarks do not afford a court authority to construe an agreement at odds with its language so as to improve it or make it fairer. They do, however, convey that where the language is ambiguous or unclear, context and commercial sense play an important part in divining the intended import of the text.

[31] In addition, it is apposite to make reference to a passage in Hillas & Co Ltd v Arcos Ltd [1932] referred to with approval by Hoexter JA in Murray & Roberts Construction Ltd (Pty) Ltd v Finat Properties (Pty) Ltd [1991] in which Lord Wright pertinently observed:  

‘Business men often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is accordingly the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects.’

[32] Whilst those observations were made as cautionary remarks against any inclination by the courts to render business agreements ineffectual by subjecting them to a too nice or exacting linguistic analysis, they tacitly also carried the more general import that the interpretation of commercial agreements should be undertaken mindful of the evident business intentions of the contracting parties.

[33] To conclude, a further foreign decision also merits brief reference. It is Rainy Sky SA v Kookmin Bank [2011], in which Lord Clarke SCJ similarly observed that interpretation is no longer a process that occurs in stages but is ‘essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, . . . would have understood the parties to have meant.’ Lord Clarke SCJ proceeded to quote a passage from the Society of Lloyd’s v Robinson [1999], where the following was stated:

‘Loyalty to the text of a commercial contract, instrument, or document read in its contextual setting is the paramount principle of interpretation. But in the process of interpreting the meaning of the language of a commercial document the court ought generally to favour a commercially sensible construction. The reason for this approach is that a commercial construction is likely to give effect to the intention of the parties. Words ought therefore to be interpreted in the way in which a reasonable commercial person would construe them. And the reasonable commercial person can safely be assumed to be unimpressed with technical interpretations and undue emphasis on niceties of language.’”

ABSA Bank Limited v Rosenburg and Another (1255/2022) [2024] ZASCA 58 (24 April 2024) (saflii.org)