PRASA Corporate Real Estate Solutions v Community Property Company (Pty) Ltd and Another

Community Property Company (Pty) Ltd (CPC) acquired the Bridge City shopping centre business from Crowie Projects (Pty) Ltd under a sale of business agreement (SOB). Prior to the sale, Crowie Projects had concluded a Railway Co-ordination and Operation Agreement with PRASA (as successor to SARCC), regulating the construction and operation of an underground railway station beneath the shopping centre. Clause 17 of that agreement obliged PRASA to pay for electricity and other consumables used by it, with Crowie Projects entitled to recover such costs if it paid them on PRASA’s behalf. CPC later paid approximately R3.2 million to eThekwini Municipality for electricity consumed by PRASA between 2013 and 2017 and sought reimbursement from PRASA, alleging that the rights under clause 17 formed part of the business sold to it. Alternatively, CPC claimed PRASA was unjustifiably enriched by consuming electricity without payment. The High Court upheld CPC’s contractual claim (subject to partial prescription), and PRASA appealed.

The appeal was upheld with costs. The order of the KwaZulu-Natal Division of the High Court was set aside and replaced with an order dismissing CPC’s application with costs.

The case clarifies that rights under a contract do not pass to a purchaser of a business absent a clear and effective cession, especially where the parties have expressly contemplated formal cession mechanisms. It also reinforces the strict requirements for unjustified enrichment claims in South African law and cautions against reliance on vague or generalized enrichment allegations without proof of all essential elements.