Court awards $10 million damages against Shoprite for breach of contract

Court awards $10 million damages against Shoprite for breach of contract

After seven years of legal battle, a Lagos High Court, Igbosere has awarded the sum of $10 million against South African retail giant, Shoprite Checkers (PTY) Limited and its business partner, Retail Supermarkets Nigeria Limited for a breach of contract entered with a Nigerian firm, AIC Limited in 1998.

In a landmark judgment delivered by Justice Lateef Lawal-Akapo, the court held that the defendants were in breach of the agreement when they (Shoprite and Supermarkets) went secretly behind AIC Limited promoted by Chief Harry Akande to establish Shoprite outlet in one of the locations earlier shown to them by the claimant.

The court also held that the claimant was duly entitled for compensation for such a breach and awarded the sum of N1million against Shoprite as cost of the action as well as an interest at the rate of 10 per cent per annum effective from the date of judgment until final liquidation of the entire sum.

According to the court, claimant has, as a follow up of South Africa meeting of April 16, 1998, incurred expenses, which included preparing and registering Shoprite-AIC Limited. Preparing feasibility reports, applying and procuring visas for the defendant’s representatives that visited Nigeria on May 27, 1998 as well as organizing another meeting at its own expense slated for its office in Victoria Island on May 27, 1998.

In the suit marked LD/488/2010, filed by AIC counsel, Prof Taiwo Osipitan (SAN), the company through its promoter, Chief Harry Akande has sought for a declaration that by virtue of its agreement with the first defendant (Shoprite Checkers Limited), for a joint venture to be formed by the claimant and the defendants is entitled to exclusively operate and manage the first defendant ‘s Shoprite brand in Nigeria and elsewhere in the coast of West Africa except Ghana.

The claimant among several claims, asked for an order of court for payment by the first defendant the sum of $2.23 million another N13.6 million as special damages and 50 per cent of $92.3 million as loss of profit it suffered as a result of the incorporation of Retail Supermarkets Nigeria Limited (second defendant) by the first defendant for the flagrant breach of the agreement for the period 2005 to 2009.

The claimant said that the agreement was breached when the first defendant sidelined it and incorporated the second defendant in flagrant breach of the contract.But the first defendant through their counsel, Funke Adekoya SAN, contended that there was no joint venture agreement between the claimant and the first defendant.

The defendant contended that the claimant has failed to discharge the burden of proof, but attempting to support its week case and argument by piecing disjointed material together.The defence, which called five witnesses, urged the court to dismiss the claims for the claimant’s failure to adduce concrete evidence of non-execution of a joint venture agreement.

In the suit, the defence in their addresses dated April 4, 2016 and adopted by counsel, formulated two issues for resolution, namely; has the claimant established the existence of a joint venture agreement or any other agreement between it and the first defendant.The court was also asked by the parties to resolve whether the claimant has established any claim against any of the defendants.

In the resolving two issues set before him, the trial judge in a 57 paged judgment held that there were business discussions between parties leading to meetings held both in South Africa on April 16, 1998 and at the claimant office in Victoria Island on May 27, 1998, which amounted to an agreement.

It was also the affirmation of the court that the first defendant sent representatives, who flew into Lagos in furtherance of the on-going business discussion and were conducted to some specific locations, like Lekki Roundabout, Lekki Peninsula, near Victoria Island, Trade fair Complex, Lagos National Theatre, Iganmu and others.

The court also looked at extracts from the meetings in South Africa and Lagos before reaching a conclusion that the two meetings took place in 1998 prior to the establishment of Shoprite out let in Nigeria in 2005.

The compliant has averred that sometime in 1997, it conceived of a business idea of developing and establishing mega stores/ retail supermarkets in Nigeria similar to Shoprite Chain Store Supermarket in South Africa and Sainsbury Supermarket of the United Kingdom for profit and further enhance its good will and reputation in the Nigerian Business community.

This led to several meetings between parties and entering into a joint venture agreement, which was to exclusively operate Shoprite Checkers’ brand in Nigeria and elsewhere in west coast of Africa except Ghana.