Special Investigating Unit and Another v Caledon River Properties(Pty) Ltd and Another (GP/17/2020) [2022] ZAST 6 (8 March 2022)

Special Investigating Unit and Another v Caledon River Properties(Pty) Ltd and Another (GP/17/2020) [2022] ZAST 6 (8 March 2022)

The Tribunal found that both parties failed to lead evidence to substantiate their pleaded cases regarding the remedy. The applicants' claim for full repayment of prepaid amounts was inconsistent with the established no profit no loss principle in government procurement invalidity cases. The respondents did not establish exceptional circumstances justifying retention of vested rights or profits. Applying the Constitutional Court's guidance, the Tribunal held that the just and equitable remedy is to divest the respondents of any profits earned under the invalid contracts, but not to leave them worse off. The respondents must account for their income and expenditure, and after setting off...

Citation
[2022] ZAST 6
Parties
Applicant: Special Investigating Unit; Applicant: National Department of Public Works and Infrastructure; Respondent: Caledon River Properties (Pty) Ltd t/a Magwa Construction; Respondent: Profteam CC
Court
Special Tribunal
Jurisdiction
South Africa
Judgment Date
8 March 2022
Case Number
GP/17/2020
Procedural Posture
Review Application / Remedy Phase After Review and Setting Aside of Contracts
Outcome
Applicants' main claim for full repayment dismissed; alternative claim for no profit no loss remedy upheld; respondents' counterclaims dismissed except to the extent consistent with the alternative claim.
Judges
L.T. Modiba
Legal Topics
Government Procurement, Just and Equitable Remedy, No Profit No Loss Principle, Section 172 Constitution, Public Interest, Contract Invalidity
Administrative Law Civil Procedure Commercial and Corporate Government Procurement Just and Equitable Remedy No Profit No Loss Principle Section 172 Constitution Public Interest +1 more

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Parties

Special Investigating Unit

Applicant

National Department of Public Works and Infrastructure

Applicant

Caledon River Properties (Pty) Ltd t/a Magwa Construction

Respondent

Profteam CC

Respondent

Procedural Posture

Review Application / Remedy Phase After Review and Setting Aside of Contracts

Legal Issues

  1. 1 What is the just and equitable remedy to be imposed under section 172(1)(b) of the Constitution after the contracts were declared invalid?
  2. 2 Should the defendants be ordered to repay the full prepaid amounts received under the invalid contracts?
  3. 3 Are the defendants entitled to retain any rights or profits vested under the invalid contracts?

Ratio Decidendi

The Tribunal found that both parties failed to lead evidence to substantiate their pleaded cases regarding the remedy. The applicants' claim for full repayment of prepaid amounts was inconsistent with the established no profit no loss principle in government procurement invalidity cases. The respondents did not establish exceptional circumstances justifying retention of vested rights or profits. Applying the Constitutional Court's guidance, the Tribunal held that the just and equitable remedy is to divest the respondents of any profits earned under the invalid contracts, but not to leave them worse off. The respondents must account for their income and expenditure, and after setting off...

Court Disposition

Applicants' main claim for full repayment dismissed; alternative claim for no profit no loss remedy upheld; respondents' counterclaims dismissed except to the extent consistent with the alternative claim.

Orders

  • Applicants' application for condonation for late filing of expert report is granted with costs against the applicants.
  • Applicants are liable for respondents' costs of the postponement application.