The Trustees, Bus Industry Restructuring Fund v Break Through Investments CC and Others

The Bus Industry Restructuring Fund was established under a tripartite agreement to assist bus operators with retrenchment benefits during industry restructuring. Kwa-Zulu Transport (Pty) Ltd (KZT), a participating operator, owed outstanding contributions to the Fund when it was placed in liquidation. Its liquidators sold KZT’s business as a going concern to Basfour 2488 (Pty) Ltd, which assumed KZT’s obligations, including the debt to the Fund. Basfour allegedly assigned its rights and obligations under subsidised transport contracts, as well as the obligation to pay the Fund, to the first, second, or third respondents with the consent of the Fund and the Department of Transport. The Fund sued the respondents for payment. The respondents raised exceptions, contending that clause 19.5 of the sale agreement prohibited Basfour from assigning obligations without the liquidators’ written consent, which had not been alleged.

The appeal was upheld with costs against the first and second respondents. The order of the court a quo was set aside and replaced: the first exception was upheld with leave to amend, the second exception was dismissed, and no order as to costs was made in the court a quo.

The case is significant for reaffirming principles of contractual interpretation in South African law, particularly the importance of context and commercial sense, and for clarifying the stringent standard applicable to exceptions. It illustrates that courts will not uphold an exception where a contractual provision is reasonably capable of an interpretation that sustains the claim.