Oil company denies P42m liability, breach of contract

Mpho Mokwape | Monday April 28, 2025 15:44

The oil company says there was no contractual breach between the parties after Sheer Cliff filed a lawsuit against the oil company on claims that the petroleum company unlawfully terminated their contract and in turn has future losses. Sheer Cliff, an oil delivery truck company was contracted by Kwa Nokeng for transportation of oil with its trucks until termination on April 3, 2025. In turn, the delivery truck company filed a lawsuit on two claims seeking compensation in the total sum of P42.7 million for unlawful termination of contract as depicted by the conduct of the defendant in their engagements and for loss of future earnings due to the defendant’s unlawful termination of the agreement. Kwa Nokeng in their replying papers said the agreement remained in place between the parties until at least April 3,2025, when it delivered the Termination Notice and it accepted the Sheer Cliff's repudiation and terminated the agreement lawfully. “In the alternative Kwa Nokeng (to such extent necessary) invoked clause 11.1 of the agreement and gave 30 days notice of termination.

The truck compnay is not entitled to payment of the amounts alleged or any amounts at all, or to payment for alleged loss of earnings, under any claim,” read the compnay’s documents. The oil company challenged the truck delivery company defendant to show proof of its alleged entitlement to payment and the quantification. It explained that although the agreement is to be considered in its entirety, some provisions of the agreement are of particular importance for purposes of its defence one that clearly states that it is under no obligation to proceed with or elect the plaintiff's tankers and accordingly, Kwa Nokeng would instruct the plaintiff as and when it required the use of its tankers. More over that Kwa Nokeng in terms of the same clause has acknowledged that it shall have no claim against the defendant, to have the latter nominate its tankers. The oil company further said it has never prohibited the trucks from providing its services to other fuel suppliers and that the plaintiff has accordingly misunderstood part of the agreement which is clear to provide the circumstances and manner in which the agreement may be terminated by either party. “It is only on April 3, 2025, that the company elected to terminate the agreement in accordance with clause 11 and for that reason denies that the plaintiff's claims are valid in law or substance.

In response, Sheer Cliff said it did not repudiate the agreement between the parties at any stage since the signing of the agreement but on the contrary, the defendant has terminated the agreement by unilaterally suspending the agreement and removing the plaintiff from the list of transport service providers which it had to nominate for work. “The process of suspension itself is not provided for in the agreement. The defendant had not at any stage, put the plaintiff on notice that the plaintiff was acting contrary to the agreement of the parties,” stated Sheer Cliff. The truck company explained that it was providing transportation services to the defendant and was accordingly paid and that the agreement between the parties was indefinite, and barring a vis majore and or lawful termination as per the agreement. It argued that it was the expectation of the plaintiff that the agreement will proceed into the future for a reasonable time period and that the plaintiff's records of payments and how much it made from the agreement of the parties is attached to its declaration.

The company denied allegations that it was providing other companies with transportation pointing out that the plaintiff did not transport any fuel for any of the defendant's competitors as it knew it would be contrary to their agreement. The defendant is put to strict proof of same. “The defendants conduct, through suspending the Service Level Agreement and closing the Plaintiff's account show a clear intention to permanently remove the Plaintiff from its list of transporters, thereby terminating the agreement without any official notice,” explained the truck company. It also submitted that in serving the notice of termination after the fact, the defendant's malicious intentions are now exposed to the plaintiff in that they are attempting to change the narrative to cover for their breach and that the plaintiff' intentions was to compel the defendants to adhere to the terms of the Service Level Agreement and continue to perform as per agreement. “It is admitted that in terms of the agreement, the defendant has no obligation to nominate the plaintiff's trucks. However, the defendant's discretion must be exercised without malice and lawfully. The defendant would be acting unlawfully if it fails to nominate the plaintiff's trucks without reasonable grounds,” In conclusion the truck company said it has therefore suffered losses and stands to suffer future loss of income on account of the defendant's conduct and it maintained that the defendant is indebted to it, for the monetary compensation claimed in the declaration. Meanwhile, according to the plaintiff’s court papers it claims that on February 10, 2024 the parties entered into Service Level Agreement. In terms of the agreement, Sheer Cliff Investments was engaged by Kwa Nokeng to provide fuel transportation/ delivery services to them, for an agreed fee. “The agreement between the parties contained a so called non-compete clause, which prevented the plaintiff from sourcing business elsewhere whilst its agreement with the defendant is still active. The effect of the non-compete clause is that it meant that the plaintiff could only use its trucks for purposes of the agreement between it and the defendant only.

The plaintiff cannot seek business anywhere else during the period of the agreement,” said Sheer Cliff court papers. The company explained that from the date of the agreement, it has consistently delivered fuel transportation services as per the agreement with payment averaging at least the sum of P700 000.00 monthly while the oil company has paid Sheer Cliff consistently as per the agreement between the parties. It submitted that since the signing of the Service Level Agreement to date, Kwa Nokeng Oil has paid them a total sum of approximately P8 million representing a period of 11 months. Sheer Cliff said the oil company unlawfully terminated the agreement between the parties in the following ways that on or around the 23rd January 23, 2025, Kwa Nokeng Oil, without lawful justification, communicated to them that all operations and all accounts relating to their company (Sheer Cliff) were to be suspended with immediate effect. Further, that their fuel delivery trucks were not to be nominated and all their fuel accounts at the oil company’s sites were to be closed and the email communication to them was sent on January 23, 2025, and originated from one Dries Oberholzer who was identified as a director of operations.