SAP gets reprieve in R12bn lawsuit by SA software developer

Multinational software giant SAP is off the hook for now in a R12bn lawsuit after the Supreme Court of Appeal upheld an application that the high court judge who had ruled against the group should recuse himself.

In a case dating back to 2008, Peter Tattersall’s company System Applications Consultants (SAC), trading as Securinfo, is pursuing SAP System Integration (SI) for allegedly reneging on a deal entered into between the parties in 2004. SAP is being sued in its capacity as the parent company.

The SCA last week set aside a high court order in SAC’s favour after finding that an application by SAP at the trial court for the presiding judge to recuse himself after showing signs of “impatience” should have been granted.

SAP’s recusal application against judge Moroa Tsoka came after the judge abruptly disengaged from the process — proceedings were held virtually — when SAP was cross-examining one of SAC’s witnesses, stating to counsel: “When you’ve finished you’ll let me know. I’m taking a break.”

The SCA found that SAP had proved that Tsoka’s conduct merited his recusal.

“While, no doubt, judicial officers can and do form provisional views, including perhaps even in respect of the credibility of a witness, it remains the fundamental duty of every presiding officer not to close their mind to changing those provisional impressions, until the last word has been spoken. After all, a cornerstone of any legal system is the impartial adjudication of disputes that come before the courts,” the SCA said in its unanimous judgment.

“What is required is not only that the trial be conducted open-mindedly, impartially and fairly, but that such conduct be manifest to all those who are concerned in the trial and its outcome. In this regard, language is important, and in this case the language employed is in some respects rather unfortunate.”

Reneged midstream

Attempts to contact Peter Tattersall for comment on whether he intends to appeal failed.

According to court papers filed by SAC, SAP SI was responsible for promoting SAC’s software that was compatible with its software and computer programs. SAC further alleges that SAP reneged on the deal midstream and instead opted to promote and sell another product, Compliance Calibrator, owned by American entity Virsa Systems.

In 2006, SAP announced it would buy Virsa Systems as part of its creation of a new business unit to provide customers with end-to-end solutions.

SAC said this development caused SAP SI consultants to cease selling and promoting its products, in breach of the 2004 agreement, leading to losses of €609.8m (about R12.5bn).

The long litigation depleted SAC’s funds,  and it turned to Ungani Investments for further funding to enable it to continue its legal action against SAP.

The trial court expressed itself on SAC’s argument that SAP was using its vast resources to drag the matter through the courts to deplete its limited resources.

“That SAC’s contention has some semblance of truth is evidenced by the blunderbuss approach as to how this litigation was conducted, the number of documentary exhibits produced, the numerous emails discovered, the various unmeritorious applications launched, as well as the numerous unfounded and unmeritorious objections raised and decided against SAP,” the trial court said in its 2021 finding that SAP was in breach of its contract with SAC — a ruling that has now been set aside.

khumalok@businesslive.co.za