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2020-07-27

Giannacopoulos family win back full control of 41 Spar outlets

Powerful businesspeople, the Giannacopoulos family, have regained full control of the 41 countrywide Spar outlets they operate after receiving favourable judgment in a threefold court battle last week.


Mervyn Naidoo | IOL

The Spar Group Ltd had previously seized control of their stores, claiming that the Giannacopoulos family’s business practices brought the brand into disrepute, labour laws were flouted and they also traded in expired goods.

But Acting Judge Louis Barnard was dismissive of Spar’s action. He also ruled their move to restrict the Giannacopouloses credit purchases, while the matter was still being decided, was “unlawful and invalid”, when he handed his strongly worded judgment at the Pietermaritzburg High Court.

He has since ordered that the family’s stores, 10 of which are KZN based, be reinstated into the Spar Guild, which is the multinational supermarket entity’s governance and decision-making body.

The legal wrangling between the parties began in earnest on October 15 when Spar resolved at a disciplinary hearing, which the Giannacopouloses were not invited to, that their membership be terminated.

Spar followed up with ex parte applications at the Pretoria and Pietermaritzburg high courts on October 16, as the family’s stores were mainly located in those regions. Both orders were granted, and in perfecting the bonds of security Spar held over the family’s stores, they immediately seized control of all 41 outlets.

The family hit back two days later. They disagreed with Spar’s allegations and sought to regain control and have their membership with the guild reinstated. Their legal team, headed by Saul Shoot of law firm Fluxman Attorneys, secured temporary reinstatement of the Giannacopouloses membership in Pretoria as they were able to substantiate in court that Spar had not made full disclosure of facts, as required in law, in making the application.

The Giannacopouloses regained control of their respective stores in that region. They also got back temporary control in KZN, even though the matter was not completed at the Pietermaritzburg High Court, on the same day. That matter was eventually finalised by Barnard last Friday. But before that, Spar limited the quantity of stock the family could order from third parties and also reduced significantly the credit facilities the Giannacopouloses had held for more than 20 years.

The family applied to court and had their purchases limit with the third parties increased to R40 million per week, but they were still required to make payment within seven days. Previously, they were allowed to make purchases with third parties to their satisfaction and pay in 30 days, which Spar facilitated, as per their contractual agreement.

In March, the family once again received termination letters from Spar, which they challenged again in court. Barnard’s judgment emphasised the “validity” of the family’s membership termination with the guild was the main issue.

He said Spar’s decision to hold the hearing to determine the fate of their membership, in their absence, was not “just and fair”, especially since they were assured, in April last year, of their inclusion. Fluxman Attorneys had directed a letter to the guild in September about the hearing scheduled for October and raised their discontent with the composition of the panel, comprising Spar’s directors, to handle the hearing.

In court, Spar argued that the objection to the panel, via the letter, constituted a repudiation of the hearing. Therefore, they proceeded without the family. But Barnard disagreed. He said Spar could have handled the dispute over the panel at the hearing.

Barnard believed the guild was “obliged to afford a fair hearing” regarding the Giannacopouloses membership as the outcome “impacted heavily on their rights”. He ruled both termination notices (2019 and 2020) were invalid.

About the “unlawful credit terms”, Barnard found the family had honoured their commitments for 20 years and did not believe they would “suddenly” compromise those terms. He said he got the impression Spar’s new credit terms had the same effect as a termination notice, was not done “in good faith” and ruled it be set aside.

In the second matter relating to Spar perfecting the security bonds held over the Giannacopouloses' stores, which they instituted after the ex parte orders were initially granted, he found that the granting of those orders hinged on the termination of the family’s membership with the guild. Barnard noticed that Spar did not disclose they had staged a “full-blown hearing” in the “absence” of the family in their ex parte applications.

“I have no doubt that if all was disclosed by Spar, the ex parte application would have failed,” said Barnard.

Regarding “drop shipments”, where Spar severely restricted the quantity of stock the family could order from third party suppliers, Barnard ruled it was “unlawful and invalid”. In all three matters he ruled Spar was liable for the family’s legal costs.

In response, Mandy Hogan, Spar’s secretary, said they would be seeking leave to appeal the decision.

“Spar has reviewed the judgments in consultation with its team of senior counsel and believes that these, including the termination of the Giannacopolouses' membership of the guild, will be overturned on appeal.”

Hogan said the termination of the Giannacopolouses' retail memberships in October followed a meeting in October 2018 where the family were given an opportunity to address the guild.

This was followed by attempts over the course of a year by the guild to hear why their memberships should not be terminated, considering the serious allegations against them.

“Spar’s focus remains on upholding the integrity of the brand in the interest of our entire membership of more than 900 retailers.

"We will continue to act in the best interests of our stakeholders in resolving this dispute,” Hogan said.

Sunday Tribune

 


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