Over R100m damages claim against Spur goes to arbitration

The multimillion-rand high court damages claim instituted against Spur Corporation by a South African subsidiary of the global GPS Food Group will now be decided through an arbitration process.

GPS Food Group has also amended its claim against the JSE-listed multi-brand restaurant franchisor, which is related to a rib supply and processing facility that the GPS Food Group established in Cape Town in about 2017.

Read: R183m damages claim against Spur Corp to be heard in October

The damages comprise alleged capital expenditure, start-up losses and projected operating losses for a five-year period to the end of November 2022.

Spur Corporation revealed in its latest financial statements that the quantum of GPS’s claim was amended on 11 July 2023 as follows:

• Claim A: GPS Food Group claims damages of R167 million, alternatively R146.8 million, further alternatively R119.9 million, comprising accumulated counterfactual profits less accumulated actual losses for the term of the alleged joint venture of 15 years; alternatively 10 years; further alternatively five years.
• Alternative Claim B: A delictual claim of approximately R95.8 million, comprising GPS’s alleged accumulated losses to the date of the claim.

GPS Food Group (RSA) (Pty) Ltd initially instituted a R183.3 million high court damages claim against Spur Corporation when it served two Spur group companies with a summon on 24 December 2019.

The damages claim was set down to be heard over three weeks in October this year.

Spur Corporation CEO Val Nichas said last week in response to a list of questions emailed to the company by Moneyweb that the parties planned to refer the high court damages claim to arbitration.

The arbitration has since commenced. Nichas said the market will be updated through the Stock Exchange News Service (Sens) when the arbitration has been concluded.

Spur Corporation has refused to provide Moneyweb with access to the public documents that were filed for the damages claim.

It claimed the original court documents have been superseded due to:

• GPS Food Group revising their submissions in July 2023.
• The arbitration proceedings commencing.

Spur Corporation added: “The case, as presented during that [arbitration] process, is what is now most relevant. Arbitration proceedings are confidential between [the] parties.

“We will update the market through Sens as soon as appropriate,” it said.

Attempts to obtain comment from GPS Food Group have been unsuccessful.

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Spur Corp facing R183m damages claim [April 2022]

The damages claim relates to an alleged oral agreement concluded between GPS Food Group and Spur Corporation in terms of which the parties would, among other things, establish a joint venture to acquire, develop and manage a rib processing facility.

Complicating factor

However, Spur Corporation claims that no written agreement was ever executed with GPS Food Group. A possible complicating factor for GPS Food Group in attempting to prove its claim is the death of former CEO Pierre van Tonder on 9 May 2021.

Spur Corporation reported in May 2021 that Van Tonder, who was MD and CEO of the Spur group for 24 years and retired in December 2020, had shot himself at his home in Cape Town.

Read: Former Spur Corporation CEO Pierre van Tonder passes away

GPS Food Group established a rib supply and processing facility in about 2017 after acquiring premises in Cape Town. It is believed the intention was that the facility would be an exclusive supplier to Spur Corporation and its franchised outlets.

However, the facility stopped production in 2020, with the premises and the assets subsequently sold and the remaining staff retrenched.

The facility is believed to have employed up to 100 people in peak season.

GPS Food Group further alleges that Spur Corporation over a period repudiated the alleged oral agreement, thereby giving rise to a breach of contract and damages.

The group alternatively alleges that, in the event of it being found that Spur Corporation did not become bound by the oral joint venture agreement, Spur Corporation’s conduct represented that they regarded themselves as bound by the agreement and that GPS could rely on such representations and implement its contribution to the alleged joint venture, thereby giving rise to a delictual claim for damages.

Spur Corporation has defended the claims and denied the allegations made by GPS Food Group and “pleaded certain defences, including that the discussions held with the plaintiff [GPS Food Group] did not amount to the conclusion of a joint venture”.

It added that any joint venture would have been subject to the approval of the boards of the respective Spur Corporation group companies and subject to the agreements being reduced to writing.

‘Unenforceable agreement’

“Neither of these events transpired and the terms of the alleged joint venture agreement constituted an unenforceable agreement to agree,” it said.

Spur Corporation added that its attorneys, together with counsel, assessed and presented a review of the merits of the case and prospects of success, which concluded “that it is more likely than not that the defendants [Spur] will be able to successfully defend the claims”.

“Supported by the opinion of its legal advisers, the board considers that the probability of the occurrence of the claimed losses, at this point in the legal proceedings, is therefore not likely.

“No liability has accordingly been raised… [at end-June 2023] regarding the matter,” the group said.

Spur Corporation’s share price