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Game prevented from taking supermarket role in a shopping centre

| Legislation

Retailer Masstores‚ trading as Game‚ failed in its bid to overturn a high court judgment which prevented it from interfering with a contractual relationship that another retailer Pick n Pay entered into with its landlord.

The Supreme Court of Appeal (SCA) on Wednesday said the interference related to Masstores operating a general food supermarket at the Capegate shopping centre in Brackenfell‚ Western Cape.

In 2006‚ Pick n Pay signed a lease agreement with the joint venture which owned Capegate for the premises at the centre. One of the provisions was that‚ apart from its supermarket and Checkers‚ the landlord shall not permit other hypermarkets or supermarkets to operate in the centre.

Masstores also signed a lease agreement with the same landlord in 2006 for a retail business dealing in general merchandise. There was a provision in its lease that it would not trade as a general food supermarket.

However‚ late in 2009‚ Masstores began selling non-perishable food and grocery items on a limited scale. About a year later‚ Masstores introduced the Foodco concept in some of its Game stores‚ which entailed selling fresh fruit and vegetables and fresh pre-packed meat products.

In 2013‚ Foodco was introduced in the Game store at Capegate.

This prompted Pick n Pay to seek an interdict against Masstores‚ restraining it from interfering in the contractual relationship Pick n Pay had with then centre owner Hyprop by carrying on a business exclusively granted to Pick n Pay in terms of its lease agreement.

The high court in Pretoria held that Masstores was unlawfully preventing Pick n Pay from obtaining the performance it was entitled to in terms of its contractual exclusivity right.

In its judgment‚ the SCA said it was plain that Game was acting in breach of the restraint clause in the lease.

Judge of Appeal Stevan Majiedt said Masstores became aware of Pick n Pay’s rights to exclusivity by the latest on May 9 2014.

“It (Masstores) however continued to trade as a supermarket‚ contrary to the restraint contained in its lease and in defiance of the demand to cease trading as a supermarket.

“In doing so it acted wrongfully in preventing Pick n Pay from obtaining the performance to which it is entitled by virtue of its contractual right of exclusivity‚” Majiedt said. - TMG Digital/TMG Courts and Law

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