The Supreme Court of Appeal recently reinforced the necessity of carefully setting out your cause of action should you need to sue in terms of an agreement. In the case of Masterspice (Pty) Ltd v Broszeit Investments CC –
The Supreme Court of Appeal today dismissed an appeal brought by a Cape Town company, Masterspice (Pty) Ltd, against a judgment of the Full Bench of the Cape High Court, which held that it was not entitled to a winding-up order against a Cape Town close corporation, Broszeit Investments CC.
In the winding-up application the appellant alleged that it had cancelled a contract in terms of which it had bought a spice blending business from Broszeit Investments and that it was entitled to return of the purchase price in an amount of not less R3.4 million, which, it said, Broszeit Investments was unable to pay. Mr Justice BM Griesel granted the application but his judgment was overturned on appeal to the Full Bench of the Cape High Court, which held that Masterspice (Pty) Ltd had not shown that it was entitled to cancel the agreement. This was because a clause in the agreement which provided that it could only be cancelled in the event of breach if the breach was incapable of being remedied by payment of money.
The Full Bench held that, though the agreement had been breached because certain recipes to which Masterspice (Pty) Ltd was entitled could not be transferred to it because some belonged to Todays Frozen Foods, a division of Pioneer Foods (Pty) Ltd while others belonged to the insolvent estate of one of the members of Broszeit Investments CC, it had not been shown that this breach was incapable of being remedied by a monetary payment.
In a judgment delivered by Mr Justice IG Farlam, with whom the President of the Court Mr Justice CT Howie, and Justices FDJ Brand, CN Jafta and M Maya concurred, the Supreme Court of Appeal said that it agreed with the Full Bench of the Cape High Court that the appellant had not brought its case within the cancellation clause in the agreement and that the appeal had to be dismissed with costs.
It is not sufficient that simple allegations of a breach of contract are made, particularly where there are restrictive clauses that you may seek to rely upon.