Erf 1026 Tygerberg CC t/a Aspen Promotions SA v Pick 'n Pay Retailers (Pty) Ltd

Aspen Promotions sued Pick 'n Pay for damages arising from an alleged breach of contract concerning the supply of 300 000 sunflower-printed bandanas. Aspen Promotions alleged that Pick 'n Pay repudiated the contract and that it accepted the repudiation. Aspen Promotions claimed two categories of damages: first, its own loss of profit; and second, R429 000 representing the loss of profit allegedly suffered by its subcontracted manufacturer, Andrew Spann t/a DFH Interiors, for which Aspen Promotions alleged it was liable. Pick 'n Pay excepted to the particulars of claim. At the hearing, it abandoned the first ground of exception and persisted only with the exception to the second claim, contending that Aspen Promotions had not yet suffered recoverable damage in respect of DFH Interiors' alleged loss, and that the pleading was vague, embarrassing, and lacking averments necessary to sustain a cause of action.

• Whether a plaintiff in a contractual damages claim may plead, as part of its loss, liability to a third-party subcontractor for that subcontractor's loss of profit arising from the defendant's breach.
• Whether Aspen Promotions' particulars of claim disclosed a cause of action for damages based on DFH Interiors' alleged loss of profit.
• Whether the claim was premature because DFH Interiors had not yet sued Aspen Promotions or obtained judgment against it.
• Whether the particulars of claim were vague and embarrassing due to alleged inconsistency between pleading that DFH Interiors was 'holding' Aspen Promotions liable and alleging that Aspen Promotions had already suffered damages.
• What form a response to a notice in terms of Rule 23(1) may properly take.

The exception was dismissed with costs.

A particulars of claim in a contractual damages action are not excipiable merely because one component of the alleged loss consists of liability to a third party arising from the defendant's breach. Where such loss is pleaded as damages suffered or flowing from the breach, objections that the third-party claim is unliquidated, not yet reduced to judgment, or presently contingent ordinarily concern proof, causation, and quantum for trial, rather than absence of a cause of action. Accordingly, a pleaded claim for such indemnity-type loss can disclose a valid cause of action and is not necessarily vague and embarrassing.

The court observed that, in responding to a Rule 23(1) notice, amendment of the impugned pleading is preferable to furnishing further particulars by way of reply, and suggested that a party effectively has two sensible options: amend or stand by the pleading and face exception. The court also remarked that inclusion of argumentative matter in a reply to a Rule 23(1) notice is wholly inappropriate. These procedural comments were not essential to the dismissal of the exception.

The case is significant for South African contract and procedural law because it recognises, at pleading stage, that a plaintiff may claim damages reflecting exposure to third-party liability caused by the defendant's breach, conceptualised as an indemnity interest. It also illustrates the narrow role of an exception: issues concerning whether such loss has in fact crystallised, and questions of causation and proof, are generally matters for trial rather than for disposal on exception. The judgment additionally gives guidance on Rule 23(1), indicating that amendment is the preferable method of curing a complaint, although a reply may in some circumstances suffice.