Coral Lagoon Investments 194 (Pty) Ltd and Another v Capitec Bank Holdings Limited

The appellants, Coral Lagoon Investments 194 (Pty) Ltd and its holding company Ash Brook Investments 15 (Pty) Ltd, entered into a series of B-BBEE related agreements with Capitec Bank Holdings Limited in 2006, including a subscription agreement under which Coral acquired a significant shareholding in Capitec subject to selling restrictions. In 2017, Coral sought Capitec’s consent to sell part of its shares to Petratouch (Pty) Ltd. Capitec consented subject to conditions, recorded in a written consent agreement containing a clause (pactum de non petendo) by which the appellants undertook not to institute legal proceedings against Capitec relying on the 2017 Petratouch transaction. In 2020, the appellants nevertheless instituted an action claiming damages exceeding R1 billion, alleging that Capitec’s conduct forced them to sell the shares at a substantial discount. Capitec applied to enforce the pactum and compel withdrawal of the action. The High Court upheld Capitec’s claim, and the appellants appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs on an attorney and client scale, including the costs of two counsel, and the High Court’s order compelling withdrawal of the 2020 action was upheld.

The case confirms the enforceability of pacta de non petendo in anticipando, including permanent agreements not to sue, in South African law. It clarifies that contractual clauses labelled as 'warranties' may constitute binding undertakings and affirms that specific performance may be granted to enforce an agreement not to litigate. The judgment is significant for commercial contracting and dispute settlement practice.