Sudan 1

Nando’s wins its fight over toxic dye Sudan 1

Nando’s has won its prolonged legal attempt to recover its costs and settle with Freddy Hirsch Group over the millions in damages it incurred when the latter supplied spices containing the toxic dye Sudan 1.

The case goes back to the Sudan Red scandal of 2004, when UK Health authorities tested for and found positive traces of globally-banned toxic Sudan 1 in Nando’s extra hot peri-peri sauce, with the seasonings supplied by Freddy Hirsch Group.

The costs had become considerable after this unfortunate test result, as Chickenland (Nando’s wholly-owned subsidiary) was ordered by the Food Standards Agency of the UK to put advertisements in newspapers nationally in the UK telling consumers what was found in its sauces and withdrawing any contaminated products within 48 hours. Chickenland believed the whole operation came to around R12 million in costs and damage.

In the meantime, Freddy Hirsch began to step up pressure for R1.36 million, which it said was the outstanding amount owed to it for the deadly spices, and issued summons against Chickenland for the amount. Nando’s refused to pay Hirsch on the basis of the flawed product and the subsequent costs incurred, but Hirsch argued that a clause in the contract allegedly indemnified them against such incidents. First the High Court, and now the Appeal Court (SCA) in Bloemfontein, rejected this argument.

Hirsch relied on its standard contract one clause, which the company believed would allow it to deny any liability for any type of negligence or other cause for contractual problems – and which resulted in a roasting by Appeal Judge V M Ponnan, who wrote the judgement.

Explaining the problems with the clause which purported to exclude Hirsch’s company from the effects of statutory law, the judgement said: “The following postulation illustrates the point: The relevant statute here not only prohibits the delivery of foodstuff that contains a prohibited substance, but also makes it an offence for one to do so.

“That notwithstanding, can Hirsch nonetheless adopt the stance that it can because the contract permits it to do so? The answer has to be ‘surely not’.”

He then quotes the judge in the High Court (Judge Blieden) dealing with the same issue and saying: “Counsel for the defendant referred to this clause as ‘draconian’. I would say this is an understatement”.

The Appeal Court judgement goes on to emphasise this point: “In my view the provision is so gratuitously harsh and oppressive that public policy could not tolerate it.”

The judgement then says: “…on the view that I take of the matter, it was plainly improper and unconscionable for Hirsch to purport to contract out of liability in that fashion.”

Having then established as fact that Hirsch was aware of the potential for problems, the judgement said: “Hirsch was clearly guilty of negligence in the discharge of its contractual obligation … What was delivered by Hirsch was not simply an inferior or defective product but one not fit for human consumption and more fundamentally, dangerous and indeed, illegal.”

Hirsch’s appeal against the High Court findings of damages of R7.5 million was dismissed with costs incurred in the High Court and SCA. Nando’s was exempted from paying the outstanding R1.3m to Hirsch. The judgment also opened the door to a claim for all the monies paid to Hirsch.

Source: Beeld and LandingIT