THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case No:   456/2010

In the matter between:

CELLULAR INSURANCE MANAGERS (PTY) LTD
Appellant

and

FOSCHINI RETAIL GROUP (PTY) LIMITED
Respondent

Neutral citation:
CIM  v FOSCHINI (456/2010) [2011] ZASCA 85
(27 May 2011)
Coram:
Nugent, Malan, Tshiqi and Seriti JJA and Petse AJA
Heard:
18 May 2011
Delivered:
27 May 2011

Summary:
Termination of agreement – accrued rights – term implied by
law.

______________________________________________________________
ORDER
On appeal from: Western Cape High Court, (Cape Town) (Fourie J sitting as
court of first instance):
The appeal is dismissed with costs including the costs of two counsel.
________________________________________________________________
JUDGMENT
MALAN JA (Nugent, Tshiqi and Seriti JJA and Petse AJA concurring)
[1] This is an appeal against the judgment of Fourie J in the Western Cape
High Court (Cape Town) who ordered the appellant, Cellular Insurance
Managers (Pty) Ltd (CIM), to pay over to the respondent, Foschini Retail Group
(Pty) Limited (Foschini), some R6 million with interest, being administration fees
collected by CIM in respect of cellular phone insurance policies sold by Foschini;
to provide a monthly accounting to Foschini; and to pay the costs. The appeal is
with the leave of the court below.
[2] Foschini’s claim is based on an oral agreement between the parties
concluded in 2001 pursuant to which Foschini would market insurance policies
covering cellular phones sold by it to its customers on behalf of CIM. The
premiums due under the policies were to be paid by the customer to CIM by way
of monthly debit orders. Foschini’s staff would assist the customer in completing
the application form for the policy and forward it to CIM. It would also assist the
customer with any queries and claims, undertake the necessary head office
claims verification and reconciliation functions, and manage the cellular phone
replacement procedure and collection of any excess at the time of a claim. The
policy would remain in force while the customer continued to pay the premiums.

[3] It is not in dispute that it was an express term of the agreement that in
respect of each policy sold, CIM was obliged to pay to Foschini an amount of
R5,00 (later increased to R R7,00, R8,50 and eventually R10) as an
administration fee upon receipt of each and every premium paid by the customer
to CIM. However, CIM pleaded as follows to the express term of the oral
agreement:
‘The defendant alleges that it was a material, express, alternatively implied, further alternatively
tacit, term of the oral agreement concluded between the defendant and the plaintiff, that the
defendant was obliged to pay the plaintiff an amount upon receipt of each and every premium
paid by the customer to the defendant, only for so long as the oral agreement between the parties
remained in force.’
[4] It is not in dispute that the oral agreement, which was silent as to its
duration, was terminable by either party on reasonable notice.1 The oral
agreement between the parties was terminated by Foschini by notice with effect
from 2 April 2007. Foschini’s claim is for the total amount of the administration
fee due after termination of the oral agreement and a monthly accounting. The
only issue is whether it was an implied term of the oral agreement that the
administration fee would be payable only for as long as the oral agreement
remained in force. CIM has abandoned all reliance on an express or a tacit term.
There was no express agreement between the parties supporting the term relied
upon by CIM. As CIM’s only witness, Mr J de Klerk, testified: ‘We certainly didn’t
discuss any terms and conditions of that nature.’ This is supported by Mr A D M
Liquito who was called as a witness by Foschini. The appellant argues that the
term relied upon by themselves is a term imported by law,2 and in particular the

1 Putco Ltd v TV & Radio Guarantee Co (Pty) Ltd & other related cases 1985 (4) SA 809 (A) at
827I-J.
2 Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA 506 (A) at
531D-533E.

rule of law that on termination of an agreement ‘there is no longer any debt or
right of action in existence’.3
[5] In a careful and reasoned judgment Fourie J found that the oral
agreement contained an express provision that, in respect of each policy sold to
a Foschini customer, CIM was obliged to pay to Foschini the agreed
administration fee upon receipt by CIM of each and every premium paid by the
customer to CIM. Since no limitation of time was agreed upon, the administration
fee remained payable for the duration of each policy sold. Fourie J accepted that,
although termination of an agreement usually puts an end to the rights and
obligations of the parties thereunder, this usually applies only to the executory
portion of the contract unless the parties have agreed otherwise. The learned
judge further relied on Maw v Grant4 where it was stated that where  ‘executory’
or ‘running’ contracts are terminated, ‘either party can recover from the other the
contra prestation for those portions of the contract he has performed’. What the
contra prestation in a particular case is depends on the construction of the
agreement. Fourie J found, and it was common cause, that the marketing of the
policies prior to termination of the oral agreement created rights for Foschini, that
is the entitlement to payment of the administrative fee upon receipt by CIM of
each and every premium paid by the customer. The learned judge therefore
declined to import the term contended for into the oral agreement because it
would have deprived Foschini of the benefits of the rights that have accrued to it.
Fourie J also had a ‘much shorter’ answer; stating that a term normally implied by

3 Atteridgeville Town Council & another v Livanos t/a Livanos Brothers Electrical 1992 (1) SA 296
(A) at 304H-I.
4 Maw v Grant 1966 (4) SA 83 (C) at 87A-C. See further Walker Fruit Farms Ltd v Sumner  1930
TPD 394 at 401; Crest Enterprises (Pty) Ltd v Rycklof Beleggings (Edms) Bpk 1972 (2) SA 863 at
870G-H; Shelagatha Property Investments CC v Kellywood Homes (Pty) Ltd; Shelfaerie Property
Holdings CC v Midrand Shopping Centre (Pty) Ltd 1995 (3) SA 187 (A) at 193H-I .

law is excluded where it would be in conflict with the express terms of the
agreement.5
[6]  Foschini’s particulars of claim contain no reference to the termination of the
oral agreement. In its particulars of claim it alleged the facts set out above and
continued that it sold insurance policies on behalf of CIM, completed the various
forms on their behalf ‘and complied with all of its obligations in terms of the
agreement in respect of each policy sold by it’. Termination of the oral agreement
thus forms no part of its cause of action; nor was there any need to allege that
the agreement was terminated. CIM admitted that Foschini sold the insurances
but pleaded that Foschini by giving notice of termination repudiated the oral
agreement which repudiation was accepted by CIM. Because the agreement had
been terminated, CIM was no longer obliged to perform in terms of it. CIM,
however, does not rely on the repudiation or breach of the agreement any more
but only on its termination with the consequences implied by law referred to
above. The principles are the same, whatever way the agreement is terminated.6
[7] The entitlement to the administration fees payable after termination had
accrued to Foschini prior to termination of the oral agreement. Foschini
established an ‘accrued right’, that is a ‘right which is accrued, due, and
enforceable as a cause of action independent of any executory part of the
contract.’7 I have not been persuaded that anything ‘executory’ remained on
which payment of the administration fee depended. The case of CIM was that
payment of the administration fee depended on continued marketing of the
policies. But the term entitling Foschini to payment is not expressed as being
reciprocal to its continued marketing of the policies. Continued marketing is not

5 Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA 506 (A) at
531E-F; Group Five Building Ltd v Minister of Community Development 1993 (3) SA 629 (A) at
653F-G.
6 Thomas Construction (Pty) Ltd (in liquidation) v Grafton Furniture Manufacturers (Pty) Ltd  1988
(2) SA 546 (A) at 564B-C.
7 Crest Enterprises (Pty) Ltd v Rycklof Beleggings (Edms) Bpk 1972 (2) SA 863 (A) at 870G-H;
Thomas Construction (Pty) Ltd (in liquidation) v Grafton Furniture Manufacturers (Pty) Ltd  1988
(2) SA (A) at 561A-B.

the contra prestation to Foschini’s entitlement to the administration fee.
Moreover, there is nothing in the reference to Maw v Grant8 to ‘running contracts’
that detract from this conclusion. Indeed, that decision supports the conclusion of
the court below. In Maw’s case the appellant’s right to payment was not
dependent upon his undertaking further work. However, his right to ‘payment’,
that is his right to have his name coupled with that of his contracting party as
architects on a builders’ signboard, had accrued but was postponed until a time
after the consensual termination of the agreement, if and when the building was
constructed.
[8] After argument was heard in this matter the appellant directed a letter to
the Registrar with the request that a further written submission be considered by
this court. The submission arises from a question put to counsel for CIM by the
court during argument. It is not only improper to place further submissions to the
court after argument but particularly so where the other side has refused, as it did
here, to consent to it. I have nevertheless considered the argument put forward
on behalf of CIM in this submission. As I have said earlier, what the contra
prestation for Foschini’s right to the administration fees is depends on the
construction of the agreement. To my mind, the submission does not add to the
contentions already advanced on behalf of CIM. I am in agreement with the
judgment of the court below and the reasons advanced for its decision. It follows
that the appeal should be dismissed.
[9] The appeal is dismissed with costs including the costs of two counsel.

________________
F R MALAN
JUDGE OF APPEAL

8  Maw v Grant 1966 (4) SA 83 (C) at 87B-D.

APPEARANCES:
For Appellant:

L J Morison SC

P R V Strathern

Instructed by:

Brian Kahn Inc

Johannesburg

Claude Reid Inc

Bloemfontein

For Respondent:

R W F MacWilliam  SC, and

L B urger SC

Instructed by:

C K Friedlander Shandling Volks Inc

Cape Town

Webbers

Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
27 May 2011

Status:
Immediate

Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal.

CIM v FOSCHINI

The Supreme Court of Appeal today dismissed an appeal by
Cellular Insurance Managers (Pty) Ltd against the judgment of the
Western Cape High Court ordering it to pay to Foschini Retail
Group Ltd an amount of some R 6 million with interest, being
administration fees collected by CIM in respect of cellular phone
insurance sold by  Foschini to its customers; to provide a monthly
accounting to Foschini; and to pay the costs. Foschini’s claim was
based on an oral agreement concluded in 2001 pursuant to which
Foschini would market insurance policies covering cellular phones
to its customers on behalf of CIM. The premiums due under the
policies were to be paid by debit order by the customer to CIM.
CIM was obliged to pay the monthly administration fee in respect
of each and every policy sold to Foschini if and when it received

the premiums from the customers. When Foschini terminated the
oral agreement in 2007 the question arose whether it remained
entitled to the administration fees after termination. The Western
Cape High Court held that it was on two grounds: the first is that a
court would not import a term into a contract if it would be in
conflict with the express terms of the contract. The term CIM relied
upon was a term implied by law and it was in conflict with the
express term relating to payment of the administration fees. The
other basis of the judgment was that Foschini had acquired rights
to the administration fees that survived the termination of the
agreement. The Supreme Court of Appeal dismissed the appeal
and confirmed the judgment and order of the Western Cape High
Court.