S A Breweries Limited v Shoprite Holdings Limited

In 1997 South African Breweries Ltd (SAB) sold the entire share capital of OK Bazaars and an associated company to Shoprite Holdings Ltd. The sale agreement required the preparation of closing date accounts (CDAs) as at 31 October 1997, reflecting ordinary shareholders’ funds and ceded claims of R540 million. If the amount fell short, SAB had to fund the difference. Disputes arose regarding accounting adjustments, particularly provisions for trade creditors and fixed assets. The agreement provided that disputes would be referred to Arthur Andersen as expert (not arbitrator), whose determination would be final and binding save for manifest error. A senior partner, Mr Oblowitz, made a determination in 2000. Shoprite was dissatisfied, contending that the expert failed properly to determine the disputes and produced a determination incapable of implementation. Shoprite applied to the High Court, which granted relief against SAB. SAB appealed to the Supreme Court of Appeal.

The appeal was upheld. The order of the Cape High Court was set aside and replaced with an order dismissing Shoprite’s application.

The case is a leading South African authority on expert determination in commercial contracts. It affirms the strong principle of finality where parties agree to refer disputes to an expert rather than arbitration or litigation, and limits judicial interference in expert determinations.