Seagram Capital suffers setback in R18m generator dispute case

A leveraged real estate private equity and asset management firm, Seagram Capital, owned by Johan Folley, has suffered a legal setback in its bid to claim more than R18-million in damages.

The Western Cape High Court found that the case against Baybreak Properties, along with its director Graham Barnett and others, was too unclear to proceed.

This matter stems from a lease agreement under which Folley occupied a property owned by Baybreak Properties.

At the centre of the case is a generator back-up system that Seagram Capital claims was essential to its financial trading operations.

Trading activities disrupted

Folley alleged that the defendants either failed to maintain the system or intentionally shut it down without warning. This allegedly disrupted trading activities linked to global markets.

Seagram approached the courts claiming R376 254 for damaged equipment and R17.7-million in lost income, which was incurred between December 2023 and August 2024 due to power interruptions.

However, the court found that the claim was poorly constructed, particularly in how it described the agreement governing the generator system, which appeared to be separate from the written lease.

“The deficiencies identified strike at the root of the cause of action as regards the damages to the generator back-up system.

“It is also clear that the particulars are vague and embarrassing because the defendants are unable to plead to these allegations in any informed fashion,” reads the court document.

The main concern for the court was that Seagram Capital failed to clearly state whether its claim was based on breach of contract or on delict, creating uncertainty around the legal basis for the substantial financial losses being claimed.

Four of the five objections upheld

The court also examined the claim that the defendants had a duty to warn before shutting down the generator, highlighting that such an argument requires a clearly defined legal duty, especially where the alleged wrongdoing is based on an omission.

“The failure to forewarn is an omission, and as a result, the plaintiff is required to establish the existence of a legal duty owed by the defendants affected, including the third and fourth defendants; otherwise, their omission was not wrongful,” reads the court document.

Despite the scale of the financial claim, the court did not dismiss the case outright but instead upheld four of the five objections raised by the defendants and granted Seagram Capital 10 days to amend its claim.

The court did not reject the way the R17.7-million loss was calculated.

“It is no wonder that the defendants are at a loss regarding the nature of the claim. It is not enough for the plaintiff’s counsel to argue in his heads of argument that the claim is based only on contract while the pleadings point to potential reliance on delict without saying so and lack the necessary averments in that regard.

“The pleadings are evidently also vague and embarrassing,” reads the court document.

Seagram Capital was also ordered to pay the legal costs of the exception, including the costs of two counsel, underlining the court’s view that the shortcomings in the case were significant.

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