Mekan Engineering Services (Pty) Ltd v Gateway Airport Authority (SOC) Ltd (4587/2018 ; 7729/2019) [2025] ZALMPPHC 160 (28 August 2025)

Case Note

Mekan Engineering Services (Pty) Ltd v Gateway Airport Authority (SOC) Ltd
Case No: 4587/2018; 7729/2019
Date: 28 August 2025

Reportability

This case is reportable due to its implications on the enforceability of contracts involving state entities and the interpretation of administrative law principles, particularly regarding the unilateral termination of contracts and the application of the Promotion of Administrative Justice Act (PAJA). The judgment clarifies the limitations of state entities in self-review applications and emphasizes the importance of adhering to procedural fairness in administrative actions.

Cases Cited

• Merafong City Local Municipality v AngloGold Ashanti Limited (CCT106/15) [2016] ZACC 35; 2017 (2) BCLR 182 (CC); 2017 (2) SA 211 (CC) (24 October 2016).
• State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited (CCT254/16) [2017] ZACC 40; 2018 (2) BCLR 240 (CC); 2018 (2) SA 23 (CC) (14 November 2017).
• German Shepherd Federation of South Africa v The Registrar of Animal Improvement: Department of Agriculture, Forestry and Fisheries and Others (016084/2019) [2020] ZAGPJHC 121 (11 May 2020).
• Buffalo City Metropolitan Municipality v Asia Construction (Pty) Limited 2019 (4) SA 331 (CC).

Legislation Cited

• Promotion of Administrative Justice Act, 2000 (Act No. 3 of 2000).
• Value-Added Tax Act 89 of 1991.

Rules of Court Cited

• None specified.

HEADNOTE

Summary

The High Court of South Africa, Limpopo Division, adjudicated two interrelated applications involving Mekan Engineering Services (Pty) Ltd and Gateway Airport Authority (SOC) Ltd. Mekan sought payment for outstanding invoices and damages following Gateway's unilateral termination of their service contract. Gateway, in turn, sought to declare the contract void ab initio, citing irregularities in the tender process. The court dismissed Gateway's review application and ordered it to pay Mekan the outstanding amounts along with interest and costs.

Key Issues

The key legal issues addressed in this case include the validity of the contract between Mekan and Gateway, the implications of Gateway's unilateral termination of the contract, the applicability of PAJA in self-review applications by state entities, and the quantification of damages for loss of income due to the contract's termination.

Held

The court held that Gateway's review application was invalid as state entities cannot rely on PAJA to review their own decisions. The court further found that Mekan was entitled to payment for services rendered and damages for loss of income due to the premature termination of the contract.

THE FACTS

Mekan Engineering Services was appointed by Gateway Airport Authority to provide facility management services at Polokwane International Airport for a three-year period starting from August 2016. The total contract value was R14,160,409.67 (ex VAT). Mekan issued monthly invoices for services rendered, which Gateway failed to pay. In March 2018, Gateway attempted to terminate the contract, claiming it was awarded irregularly. Mekan contested this termination, leading to the current applications.

THE ISSUES

The court had to decide whether Gateway's termination of the contract was valid, whether Mekan was entitled to payment for the outstanding invoices, and whether Gateway could successfully rely on PAJA to review its own decision to terminate the contract.

ANALYSIS

The court analyzed the contractual obligations of both parties, emphasizing that Gateway's unilateral termination was not justified. It highlighted that the contract remained valid despite Gateway's claims of irregularity. The court also addressed the procedural shortcomings in Gateway's reliance on PAJA, noting that state entities cannot self-review their decisions under this legislation. The court found that Mekan had provided sufficient evidence to support its claims for payment and damages.

REMEDY

The court ordered Gateway to pay Mekan the outstanding invoices totaling R4,213,690.80 (including VAT), along with damages for loss of income amounting to R1,420,225.00 (including VAT), plus additional claims of R39,204.28 and R11,125.44 (both including VAT). Interest on these amounts was also awarded, along with costs of the applications on a punitive scale.

LEGAL PRINCIPLES

The judgment established that state entities cannot unilaterally terminate contracts without following proper legal procedures, particularly when such actions may infringe on the rights of the other party. It also clarified that PAJA does not apply to self-review applications by state entities, reinforcing the need for adherence to procedural fairness in administrative actions. The court underscored the importance of timely action in legal proceedings, particularly in the context of administrative reviews.