Shoprite Checkers (Edms) Bpk v Grobbelaar JJ L en Andere

Shoprite Checkers (Edms) Bpk instituted action against three former directors/employees of Sentra Koop Handelaars Bpk and Megasave (Edms) Bpk for damages arising from alleged breach of restraint of trade agreements. The restraints were signed in 1996 when Shoprite Checkers Enterprises Bpk (SCEB) purchased the businesses of Sentra and Megasave. Following a group restructuring within the Shoprite group in 1998, the business, assets and rights of SCEB were transferred to OK Bazaars (1929) Bpk, later renamed Shoprite Checkers Bpk (the appellant). The respondents resigned and allegedly solicited members of Sentra and Megasave to join a competing buying organisation they established, resulting in the loss of eleven members and financial damages. The respondents denied liability and challenged the appellant’s locus standi to enforce the restraint agreements.

The appeal succeeded with costs. The order of absolution from the instance was set aside and replaced with an order dismissing the application for absolution. The matter was remitted to the trial court for continuation of the trial.

The case is significant for South African company and contract law as it clarifies that section 228 of the Companies Act does not require formal compliance where a sole shareholder has consented to the disposal of assets. It also affirms that restraint of trade agreements may form part of the goodwill of a business and be transferable, depending on the intention of the parties, and that such issues are generally unsuitable for determination at absolution stage.