Spar Group Limited and Others v Twelve Gods Supermarket (Pty) Ltd and Others

The SPAR Group and related entities had a long‑standing contractual relationship with the Giannacopoulos Group, retailers operating multiple SPAR stores under membership agreements and credit facilities agreements. Clause 5 of the credit facilities agreement granted SPAR a discretion to vary or terminate credit facilities without notice. After a breakdown in the relationship, failed ex parte attempts to perfect notarial bonds, and concerns about the respondents’ financial position and compliance issues, SPAR unilaterally reduced credit periods, imposed limits on drop shipment facilities, and later purported to terminate the respondents’ Guild membership. The Giannacopoulos Group challenged the validity of these actions in the High Court. Barnard AJ set aside the credit variations, drop shipment restrictions, and termination decisions, holding that SPAR had not acted in good faith or reasonably. The full court dismissed SPAR’s appeals. SPAR’s application for special leave to appeal to the Supreme Court of Appeal was refused, and SPAR then sought reconsideration of that refusal under s 17(2)(f) of the Superior Courts Act.

The application for reconsideration of the refusal of special leave to appeal was dismissed with costs, including the costs of two counsel where employed.

The case confirms and reinforces South African law on the control of unilateral contractual discretions, particularly in ongoing commercial relationships. It affirms that even broadly worded discretionary clauses in commercial contracts are subject to the arbitrio boni viri standard unless clearly intended to be unfettered, and that appellate reconsideration under s 17(2)(f) of the Superior Courts Act is reserved for truly exceptional cases.