The deal was sweet until an import-duty reduction from R2‚395 a ton to R318.90 a ton threw a spanner in the works.
Pearl Island demanded that Mukadam also reduce the price of his sugar. When he refused‚ it imported cheaper sugar from Brazil.
Mukadam took legal action‚ telling the high court he was paying R400‚000 a month for storage and had to extend the hedge on the rand/dollar exchange rate for a further three months at a cost of R500‚000 a month.
But Pearl Island director Irmo Rapsch said Mukadam had himself to blame. “The deal was put at risk as [Starways] refused to reduce the price in accordance with the reduction in the duty as it was contractually obliged to do‚” Rapsch said in papers.
The appeal court judgment‚ written by Judge Christiaan van der Merwe‚ rejected all three grounds of appeal put forward by Starways‚ adding that the company was placed in provisional liquidation shortly before the appeal was heard on November 19.