NORTONS SUCCESSFULLY REPRESENTS SAP IN USD68 MILLION CONTRACTUAL DISPUTE AGAINST TTCS

Nortons represented SAP South Africa Region (Pty) Ltd (“SAP”) in a contractual dispute against Twenty-Third Century Systems (Pty) Ltd and Twenty-Third Century Systems Global (Pty) Ltd (collectively “TTCS”), in which TTCS had instituted an action against SAP for alleged loss of profits in the sum of approximately USD68 million (as well as interest and costs) pursuant to the termination of the contract.

SAP raised two special pleas against TTCS’s action. It argued that the contract precluded a claim for damages for loss of profits, and that it limited the time period within which a party may institute a claim against the other to one year. TTCS had issued summons approximately 18 months after the contract was terminated. TTCS argued that SAP had repudiated the contract and that it was therefore not permitted to rely on the exclusion of damages and time bar clauses (i.e TTCS argued that SAP was not permitted to approbate and reprobate).

The special pleas were upheld by the High Court, and TTCS appealed to the Supreme Court of Appeal, South Africa. SAP denied that it had repudiated the contract but argued that, even if it had, it was still permitted to rely on the exclusion of liability and time bar clauses, on the basis that only the primary obligations of the parties came to an end on termination of the agreement, and that it was permitted to rely on the clauses that survived termination (the secondary obligations of the parties), including the two clauses which were the subject of the special pleas.

The SCA held that TTCS’s argument that SAP could not rely on any of the clauses, including those that were specifically listed in the contract as clauses that would survive the agreement being “terminated, rescinded or ended in any other way”, would undermine the purpose of several of the clauses in the contract or lead to unbusinesslike results. Accordingly, the SCA dismissed TTCS’s appeal and awarded SAP costs.

Nortons Team: Anthony Norton, Michelle Rawlinson, Melissa Steele