REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
CASE NO: 2023-011485
In the matter between:
TIBCO SOFTWARE (SOUTH AFRICA (PTY) LTD PLAINTIFF
and
TECHSOFT INTERNATIONAL (PTY) LTD FIRST DEFENDANT
TS INNOVATIONS (Pty) Ltd t/a Tibo Solutions SECOND DEFENDANT
JUDGMENT - Exception application
Manoim J
INTRODUCTION
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: NO
…………. ........ …3 February 2025
SIGNATURE DATE
2
[1] This case concerns an exception application that the two defendants have
brought in relation to the plaintiff ’s particulars of claim .
[2] The defendants are both subsidiaries of a large US based software company
known as Tibco Incorporated. Because the US company, although not a
defendant in the matter, plays a role in the events, I will refer to it as the Tibco
Parent.
[3] The Tibco Parent licences its affiliates worldwide, which in turn sublicence its
software rights to local intermediary companies. This is where the defendants
fit in. They are affiliates of the Tibco Parent, based in South Africa, and in turn
selected the plaintiff, Techsoft, as a sub -licensee of its products. Pl aintiff then
licenced Tibco products to its customers who were end users. Thus, the plaintiff
is an intermediary. It licences users for which it earns revenue and it in turn pays
royalties to the defendants. The relationship soured. The details are not of
concern at this stage. Suffice to say that the plaintiff alleges that the defendants
were in breach of the licensing agreement and in 2023 it elected to accept the
repudiation and cancel.
[5] It then brought a claim for damages both in contract and in de lict. The plaintiff
has made out four separate claims for damages. In a related application the
defendants have brought an application for the winding up of the plaintiff which
has not yet been heard. This judgment only concerns exceptions raised in the
damages claim.
BACKGROUND
3
[6] Over the course of the life of the damages claim the defendants have raised
various exceptions. On two occasions the plaintiff has amended its particulars
of claim in response these exceptions. However, this has not satisfied the
defendants. In the latest round of exceptions, the defendants raise five grounds
of exception to three of the four claims brought by the plaintiff. Since the plaintiff
does not consider these exceptions have any merit this dispute has to be
decided by me.
[7] In the damages action the plaintiff makes out four claims.
[8] In the first claim it seeks a refund of a balance paid. No exception is raised in
this connection, so it need not be considered further.
[9] In the second claim it seeks damages for b reach of contract. The claim arises
out of an agreement that plaintiff entered into with the first defendant in
November 2020. It was known as the Strategic Partnership Agreement (SPA)
and according to Techsoft, subject to various conditions being fulfille d, was set
to continue until 2033.
[10] Pursuant to this agreement the plaintiff entered into various agreements with
end user customers. These are known as End User Licence Agreements or
EULAS. The plaintiff entered into 106 such agreements. They are cla ssified
differently but that distinction is not material for present purposes.
[11] The parties fell out with one another. In September 2022, the defendant served
a notice of breach on the plaintiff and required it to rectify its breach within 30
days. Th e plaintiff has challenged the validity of this notice but in any event in
February 2023 announced that it had accepted the defendant ’s repudiation.
4
[12] Hence from this alleged unlawful breach and lawful repudiation, the plaintiff ’s
claim for damages ar ises.
[13] What the plaintiff alleges is, that but for the breach, its EULAS would have
continued for the entire d uration of the SPA until 2033, provided that it continued
to perform in terms of the EULA agreements. Put differently, as the intermediary,
the plaintiff would have continued to earn revenue from its customers , the end
users, as long as it, as the supplier, and the defendants, adhered to the SPA.
Once the defendants had breached the SPA , the Plaintiff alleges it suffered
damages in respect of th e loss of just over R 350 million.
[14] The third and fourth claims relate to damages owing to the alleged unlawful
termination of contracts that the plaintiff had with specific clients. The third claim
relates to a contract with Telkom and the fourth rel ates to a contract with
Nedbank. Both are similar in that the plaintiff alleges that these contract s,
originally with the Tibo Parent , were assigned to it with the consent of the two
respective customers but then terminated due to the alleged breach which
plaintiff alleges amounted to a repudiation of the respective agreements that it
had accepted. Each of these claims has attracted two objections, one relates
to whether the contracts were lawfully assigned to the plaintiff and if they were ,
the basis for alleging that they would have endured until 2033, which is the
same duration period as for the EULAS.
First objection: EULAS
[15] The plaintiff has only attached one of the EULA agreements. It pleads that it is
unable to attach the remaining 105, as these were all on a server controlled by
the defendants to which it (the plaintiff) no longer has access . Put simply it says
5
it has been blocked. However, it has attached one EULA, with Mediclinic, as
the end customer. It says the standard terms o f this EULA are the standard
terms of all the others.
[16] However, and this is where the first obje ction comes from the defendants . They
allege that the particulars read with the agreements attached, do not sustain
the allegation that the EULAS would hav e persisted until 2033. The defendants
point out that the EULA ’s comprise a standard form agreement ( called the
Master terms) and a separate document containing terms called an Order form.
The Order form, forms part of the contract and contains in its pr eamble that if
there is any conflict between its terms and that of the Master agreement, the
terms of the Order fo rm prevail. On the Mediclinic order form there is a table
which, inter alia, provides for the start date and the term end date. According to
this Order , the Mediclinic contract starts on 7 November 2019 and ends on 6
November 2022.
[17] Given the limited duration of the contract on this Order form the defendants
allege that no basis is set out in the contract for the allegation that the EULAS
(i.e. all 106 of them) would have continued until 2033. Thus, the conclusion is
that the order form, which forms part of the contract, and supersedes the terms
of the Master agreement, conflicts with the particulars of claim in respect of
duration and rende r it expiable .
[18] But the plaintiff argues that this is a misreading of the contracts. The order form
it argues simply provides for that is termed an ‘initial peri od’ notwithstanding the
words “Term end date ” found on the Mediclinic order form.
6
[19] Instead, the plaintiff argues one must read the terms of the Master agreement
which are complementary to and not contradict ory with the duration terms on
the Order form. In Annexure A of the Master agreement Clause 12.1 says the
agreement commences on the eff ective date reflected in the “initial order ” form
and shall remain in effect for a period of one year. Granted thus far this is
making the excipients ’ point. But in the next sentence it states that: “Subject to
… the parties may agree to renew the agreemen t for additional one year
periods subject to payment by the partner of the applicable annual fees. ”
[20] Then in Annexure B two provisions deal with continuity. The first is section 12(a)
which provides that the agreement remains in effect until terminate d. But the
more meaningful section is 12(c) which says:
“Following the end of the initial term for … the Term will automatically
renew continuously for the same length as the Initial term unless either
party gives written notice of at least 60 days prior t o the end of the initial
or any renewal term of its intention to terminate. ”
[21] The plaintiff argues that this provides that the contract between the parties is
one that continually rolls over despite the fact that it has an initial period and is
composed of several renewal period. On this interpretation of the Agreement
there is a reasonable interpretation that the contract remains in place subject
of course to contingencies for an indefinite period. Given that the plaintiff ’s
rights existed until 2033 in terms of the SPA , that would , on this interpretation ,
be a plausible end period.
[22] In this respect the exception fails. The provisions on the Order and the Master
agreement can be read to complement one another and not to contradict the
7
alleg ations made out in the Particulars of claim. As was held in the well -known
Sun Packaging decision where a contract is susceptible to several meanings
the courts are reluctant to make this determination at exception stage. 1
[23] More problematic is how t he plaintiff reaches the quantum of damages for this
claim. Here the assumption made by the defendants was that the amount was
realised using the Mediclinic fees as a proxy for all the others. This was a
reasonable assumption. However, during the hearing c ounsel for the plaintiff
advised that this was not the case, and each contract was different in this
respect. If that is the situation then it is necessary for the plaintiff to specifically
plead how these figures are arrived at. Granted a spreadsheet is p rovided of
the total figures for each year until 2033, but there is no breakdown for each
respective contract if these figures are different. These figures should be
provided. The plaintiff ’s response is that this was not an issue specific to the
exception and should not ordered. That may be so, but it is implicit in the
exception taken based as it was on a reasonable misunderstanding of the
pleading. Given that the plaintiff is going to have to go back to the drawing board
in respect of some of the excepti ons which I will uphold, it would be convenient
to order this now to avoid a further series of exceptions from the defendants –
precisely what the plaintiff has complained about.
Second Objection: The Telkom claim
[24] In its third claim the plaintiff cla ims damages from the defendants for repudiating
a contract between itself and Telkom which it alleged would have persisted until
2033. This repudiation took place in October 2022 when the second defendant
1 Sun Packaging Ltd v Vreulink 1996 (4) SA 176 (A) at 186J
8
withheld access to certain rights and services to t he plaintiff and approached
Telkom directly to provide the services. The plaintiff accepted the repudiation in
February 2023 and now sues for damages for loss of profit.
[25] The claim is based on a tripartite contract entered into between the second
defendant, Telkom, and the plaintiff in March 2020. The contract is annexed to
the particulars of claim.
[26] To found its claim under this head of damages the plaintiff relies on the following
clauses in the tripartite contract.
[27] A clause that reco rds that the parent company had a contract with Telkom in
terms of a Master agreement dated September 2007.
[28] Then a clause in which the second defendant assigns its rights and obligations
arising from the Master agreement to the plaintiff. There are t hen clauses in
which the plaintiff accepts the assignment and to which Telkom gives its
consent. Thus, the claim is based on the terms of this assigned agreement.
[29] But the exception is that there is a gap here. The Master agreement was with
the paren t. This is evident from clause 2.4. But 2.4 is phrased in this way under
a section headed recordal:
“Addenda 14 and 15 are governed by the terms of the Agreement No 091C/06
for the provision of Licensed Software Maintenance, Support and Services
entered into on 29 September 2006 with contract number SLSA4 877 between
Telkom SOC Limited and TIBCO Software inc. ("Master Agreement") as
assigned from TIBCO Software Inc [Tibco parent] to TS Innovations (Pty)
Limited [the second defendant] on 28 September 2007 .”
9
[30] Addenda 14 and 15 comprise the agreement allegedly then assigned on to the
plaintiff. But say s the second defendant , there is no allegation that these rights
were assigned by the parent company to the second defendant. The most that
can be said is an allegation by way of a recordal that they had been assigned
to the second defendant.
[31] But th is does not mean that the plaintiff has not made out a cause of action. It
relies on the tripartite agreement, and it alleges that the second defendant had
been assigned these rights by its parent in September 2007. Granted it does
not attach the agreement of assignment, but it alleges it had taken place. If
there was no such assignment and the second defendant could not lawfully
pass on these rights the plaintiff, then the defendants can plead that. The
plaintiff ’s cause of action here is made out clearly.
[32] I find that there is no basis to this objection, and it is dismissed.
Third Objection: Duration of the Telkom claim
[33] Recall that the claim is for the duration of the contract which the plaintiff alleges
would have persisted until 2033. In thi s objection the defendants allege there is
no basis to contend that the contract would have endured for this period.
[34] The pleaded case is that the agreement was in force for one year from the
effective date. However, in the miscellany of contracts tha t govern the Telkom
agreement is one referred to as 091C/06. That contains in paragraph E a clause
that states:
“Term and Termination. This initial term for the provision of Maintenance shall
be from the Effective Dale of this Agreement and thereafter may be renewed
annually upon payment of the applicable Maintenance Fee. Maintenance
10
Services may be terminated: (a) by either upon a default of the other, such
default remaining uncured for fifteen days from written notice from the non -
defaulting party; (b) up on the filing for bankruptcy or insolvency of the other
party, (c) by either party upon prior written notice at least sixty days prior to the
end of any annual Maintenance period. ”
[35] The plaintiff ’s argument here is the same as that with the EULAS; whilst there
is mention of an initial period, the contract contemplates an annual renewal
provided the conditions are met. Thus, the renewed annual provision subject to
the fulfilment of the conditions can be interpreted to provide a roll over provided
the plaintiff retains its rights from the second defendant. This it is alleged is
retained until 2033. Again, I find that a cause of action is disclosed here for the
period alleged. This exception must be dismissed.
Fourth Objection: the Nedbank contract: ass ignment
[36] Here the plaintiff alleges an assignment of a contract again of a key customer,
Nedbank. The plaintiff alleges that in October 2020 it entered into a three way
assignment agreement with a representative of the second defendant, as well
as Nedbank. This agreement is said to be verbal by which I understand this to
mean an oral agreement between the three parties. As a matter of law although
unusual , an assignment of an agreement does not require the formality of being
reduced to writing. But u nlike with the Telkom contract there is no agreement
annexed.
[37] Instead, what is attached is a consent from Nedbank dated 15 September 2020.
The document records that Nedbank had had a Master service agreement with
11
the Tibco Parent company since 2006. Thus far this is on all fours with the
Telkom situation. However here Nedbank in the consent states the following:
“Nedbank acknowledges that TIBCO intends to assign Agreements to
TechSoft International (Proprietary) Limited, Registration Number
2016/3651 52/07 (eTechSoft"). ”
[38] From this letter which is all that has been provided by the plaintiff there is an
allegation that the Tibco Parent company ( that is the Tibco contemplated in the
letter) will assign the agreements directly to the plaintiff. Here there is no
intermediate rol e for the second defendant, unlike there was with Telkom. Yet
in the particulars of claim the allegation is that it is the second defendant which
makes the assignment to the plaintiff. Thus, there is confusion and the
exception that there has been no assignment alleged is well taken. The plaintiff
needs to clarify this issue. Did the representative of the second defendant who
according to the particulars of claim agreed to the assignment, represent the
parent as well, or had the parent already assigned the agreement to the second
defendant and the Nedbank letter is mistaken on this point. The exception here
is upheld and the plaintiff must clarify its case on this point. The defendant is
entitled to know which entity is alleged t o have assigned these rights to the
plaintiff.
Fifth Objection: the Nedbank contract: duration
[39] The same allegation is made by the plaintiff that the Nedbank agreement would
have endured to 2033 but for the unlawful repudiation by the second defendant.
But given that I have upheld the exception in respect of the underlying
agreement it is premature t o decide this point. In anticipation of future
12
challenges , this challenge will be determined by the existence of same roll over
provision s as in the Telkom agreement . If that is on the same terms, then a roll
over would have been sufficiently pleaded. But if not, the outcome will depend
on the particularity that will be furnished.
Conclusion
[40] I have dismissed three exceptions, upheld one, partially upheld another (the
Eula quantification aspect) and have not been able to determine the one which
is co ntingent on the outcome of further pleading in respect of the objection I
upheld (the Nedbank duration). As no party has been completely successful
each should pay its own costs.
[41] Both parties agreed that if an exception was upheld the plaintiff was e ntitled to
be given an opportunity to amend its pleadings. I have done so.
ORDER: -
[42] In the result the following order is made:
1. Objection on is partially dismissed, but partially upheld . It is partially upheld
in respect the plaintiff failing to plead in what respect each respective claim
for damages for the Eulas is made up. The plaintiff is given 20 days to
amend its particulars of claim in this respect.
2. Objections two and three are dismissed .
3. Objection four is upheld. The plaintiff is given 20 days to amend its
particulars of claim in this respect.
4. Objection five is postponed, pending the outcome of the amendment of the
particulars in respect of objection four.
5. Each party is liable for its own costs.
13
________ ________________
N. MANOIM
JUDGE OF THE HIGH COURT
GAUTENG DIVISION
JOHNANNESBURG
Date of hearing: 04 December 2024
Date of Reasons: 3 February 2025
Appearances:
Counsel for the First and second defendant
(Excipient) : N J Graves SC
A Vorster
Instructed by: White and Case Inc.
Counsel for the Plaintiff
(respondent in exception) : A R Bhana SC
R R. Kirsten
Instructed by: Pather & Pather Attorneys Inc
14
15