Brocsand (Pty) Ltd v Tip Trans Resources (Pty) Ltd and Others

Brocsand (Pty) Ltd, a mining contractor, concluded an agreement in 2010 with Full Score Trading CC in terms of which it was appointed as mining contractor on the Red Hill property and granted a right of first refusal to enter into a new mining services agreement upon expiry in 2015. In January 2015, Full Score, Tip Trans Resources (Pty) Ltd, and Global Pact Trading 370 (Pty) Ltd concluded a new agreement appointing Tip Trans as mining contractor on Red Hill and, separately, on the Doornkraal property owned by Global Pact. Brocsand alleged that this agreement breached its right of first refusal and purported, by unilateral declaration invoking the Oryx mechanism and the doctrine of notice, to step into Tip Trans’s position under both aspects of the January 2015 agreement, including rights relating to Doornkraal. Tip Trans excepted to the particulars of claim on the basis that they disclosed no cause of action, particularly in relation to Doornkraal.

The appeal was dismissed with costs, including the costs of two counsel where employed.

The judgment authoritatively clarifies the limits of the Oryx mechanism and the doctrine of notice in South African contract law, confirming that these doctrines preserve existing preferential rights but cannot be used to create new contractual rights or expand the subject matter of a right of first refusal.