Brief Summary

Damages — Breach of contract — Claim for loss of profit — Plaintiff's onus to prove saved expenses — Comprehensive disclosure of operational costs required — Absence of evidence of saved expenses leading to dismissal of damages claim. The North West Provincial Department of Agriculture, Conservation, Environmental and Rural Development awarded a tender for stock fencing to Bosigo Investment and Trading CC and Keewave Trading 191 CC, but failed to issue orders for work during the first year. Bosigo claimed damages for breach of contract after the Department re-advertised the tender without consulting them. The legal issue was whether Bosigo could substantiate its claim for damages by proving saved expenses that should be deducted from the contract price. The Supreme Court of Appeal upheld the appeal, finding that Bosigo failed to provide the necessary evidence of saved expenses, resulting in the dismissal of its damages claim.

Comprehensive Summary

Summary of Judgment

1. Introduction

This was an appeal and cross-appeal before the Supreme Court of Appeal of South Africa concerning a contractual damages claim for loss of profit allegedly arising from the breach of a public procurement contract for the construction of large and small stock fencing in the North West Province. The appeal was brought by the North West Provincial Department of Agriculture, Conservation, Environmental and Rural Development and the Member of the Executive Council responsible for that Department. The principal respondent was Bosigo Investment and Trading CC (also the cross-appellant), with Keewave Trading 191 CC cited as a further respondent but not participating in the litigation.

The procedural history began with Bosigo instituting action in the North West Division of the High Court, Mahikeng, after discovering that the Department had re-advertised fencing tenders during the contractual period and allegedly diverted work to other service providers. The High Court (Mtembu AJ) found that the Department breached the contract and awarded Bosigo damages of R7 060 907.12, together with interest and costs (including two counsel). Leave to appeal and cross-appeal was granted by the High Court. The matter then came before the Supreme Court of Appeal.

Before the merits could be determined, the Supreme Court of Appeal had to deal with the fact that the appeal had lapsed due to late filing of the notice of appeal, late filing of the record, and late filing of a replying affidavit in the reinstatement application. The appellants accordingly sought condonation and reinstatement of the appeal.

The general subject-matter of the dispute concerned whether Bosigo had proved contractual damages for loss of profit where the alleged breach consisted of the Department placing fencing work with other contractors, and, crucially, whether Bosigo had discharged its onus to prove quantifiable damages by proving the expenses saved by not performing the work.

2. Material Facts

In July 2006 the Department invited tenders under Bid Number 13 ACE 218/06 for the construction of large and small stock fencing “as and when required” over a period of 24 months, from 1 November 2006 to 31 October 2008. On 31 July 2006, Bosigo and Keewave submitted bids. On 31 October 2006, the Department awarded the tender to Bosigo and Keewave as joint service providers for the two-year period.

Bosigo received a letter of appointment confirming acceptance of its offer at R25 012.74 and stating that the appointment was for construction of fencing in the four regions of the Province “on rotation basis” and “as and when the need arises”. The letter expressly stated that it was not an official order, and that no delivery should occur until an official order had been received. Attached to the letter was Annexure “A”, listing identified fencing projects across districts for a total of 926.2 km.

It was not disputed that no official orders were given to Bosigo or Keewave in the first year of the contract. In the second year, after Bosigo exerted pressure on the Department, Bosigo received official written orders for four projects in the Southern region reflected in Annexure “A”, and it completed those projects and was paid R1 469 498.47.

Bosigo alleged that, during the contract period, the Department re-advertised various bid invitations for fencing work and also appointed other contractors to do work which Bosigo contended fell under its contract. The High Court accepted that the Department breached the contract by placing orders with other service providers and calculated damages on the premise that the full 926.2 km in Annexure “A” would have been allocated (on a rotational 50/50 basis between Bosigo and Keewave), split across the first and second years, and priced with escalation in the second year.

On the evidence at trial, the Supreme Court of Appeal noted that of the tender invitations relied upon by Bosigo, the evidence established that the Department in fact awarded Bid 13 ACE 36/07 to Selehogoa Trading CC in 2008, and that Selehogoa received an appointment letter with an annexure identical to Annexure “A”. According to Mr Bosigo’s evidence, on 8 August 2008 the Department placed an order with Selehogoa to erect fencing over 36 km at Lower Majeakgoro in the Bophirima District, a project listed in Annexure “A”. That evidence, including that the work was completed and paid for, was not challenged.

The Supreme Court of Appeal emphasised that Bosigo did not produce evidence of the actual expenses it would have incurred (and thus would have saved) had it performed the allegedly diverted work, including the Lower Majeakgoro project. Instead, reliance was placed on a tender-related quantity list (referred to in the judgment as tender document 024) and on a pleaded “admission” said to establish expenses of R17 300 per km.

3. Legal Issues

The central issues for determination were, first, whether condonation should be granted and the appeal reinstated despite non-compliance with the Supreme Court of Appeal’s procedural time limits. This was an exercise involving the application of legal standards to facts relating to delay, explanation, prejudice, and prospects of success.

On the merits, the principal legal questions were, secondly, the proper interpretation of the contract constituted by the letter of appointment and its Annexure “A”, including whether Bosigo had a contractual entitlement to be allocated all projects listed in Annexure “A” (or half of them by rotation), or whether its entitlement was limited to performing only such work as would be included in official orders issued “as and when the need arises”.

Thirdly, assuming breach, the court had to determine whether Bosigo had proved contractual damages for loss of profit. This required deciding whether Bosigo discharged the onus of proving the quantum of its loss by showing the difference between what it would have received and what it would have spent, including the identification and proof of saved expenses. This was primarily a question of the application of law to fact, in particular the evidentiary requirements for quantifying damages.

4. Court’s Reasoning

On condonation and reinstatement, the court applied the Constitutional Court standard that the decisive enquiry is the interests of justice, assessed with reference to factors such as the extent and cause of delay, the reasonableness of the explanation, prejudice, the importance of the issues, and prospects of success. While the appellants’ explanations in relation to certain delays were criticised as inadequate (particularly regarding internal handling of documents while the attorney was on leave), the court weighed this against the prejudice to Bosigo and considered that any prejudice could be mitigated, including by the High Court’s interest order (mora interest from date of demand). The court also considered that the appeal had good prospects of success, and therefore condoned the defaults and reinstated the appeal.

On interpretation of the contract, the court stressed that contractual interpretation is a legal matter for the court, not for witnesses, and approached the letter of appointment textually, contextually, and purposively. The court emphasised that the letter appointed Bosigo and Keewave to provide fencing services “on rotation basis” and “as and when the need arises”, and expressly stated the appointment letter was not an official order. The presence of Annexure “A” meant that any orders, if issued, would relate only to listed sites/projects and distances; however, the tender was order-based, and work would be performed only upon issuance of an official order.

From this, the court concluded that Bosigo did not have a vested contractual right to perform fencing over the total distance of 926.2 km in Annexure “A” (nor half that distance). Instead, Bosigo’s right was limited to performing specific work only once an official order had been issued for a listed project when the need arose. The High Court was therefore held to have erred in concluding that Bosigo (together with Keewave) was entitled to do all projects in Annexure “A” and in basing damages on that premise.

The court nevertheless recognised that the Department remained contractually obliged, where the need arose for fencing in the listed areas and official orders were to be placed, to rotate orders between Bosigo and Keewave to the exclusion of other service providers. The critical point, however, was whether Bosigo proved a breach that translated into recoverable contractual damages on the pleaded and proved facts.

The High Court’s breach finding was held to be flawed because it did not identify which projects were improperly allocated, nor did it explain whether they fell within Annexure “A”. On the trial evidence, the Supreme Court of Appeal identified that the proved diversion of work related to Lower Majeakgoro (36 km) allocated to Selehogoa. Even on the assumption most favourable to Bosigo, any damages could only potentially relate to Bosigo’s loss of profit on that specific project, not the full Annexure “A” distances.

The court then focused on quantification. It reaffirmed principles that contractual damages must be proved on a balance of probabilities, cannot be presumed or estimated, and are calculated using the comparative method, placing the innocent party in the position it would have occupied had the contract been properly performed. In a loss of profit claim, the plaintiff must prove not only the revenue that would have been earned but also the expenses saved by not performing, which must be deducted as a benefit accruing to the plaintiff.

Applying these principles, the court held that Bosigo produced no evidence of the actual expenses it would have saved by not performing the Lower Majeakgoro project (or any other claimed work). It stated that the kind of proof expected would include accounting records and operational cost details (such as financial statements, payroll records, site establishment costs, fuel and transport, overheads, equipment hire, insurance, and finance costs). Bosigo did not provide this.

The court rejected the notion that tender document 024 constituted an agreement on saved expenses for purposes of a later damages claim. It analysed the document’s purpose within the tender process, describing it as requiring the tenderer to provide total material cost information for tender calculation rather than recording actual expenses that would later be “saved”. The presence of manuscript insertions and multiple versions in the record reinforced that it could not serve as reliable proof of saved expenses. The Department’s pleaded reference to the tender document was not construed as an admission that Bosigo’s saved expenses were established for quantification of damages. In the court’s view, Bosigo’s operational costs were within its knowledge, and it should have been able to produce evidence, particularly given that it had actually performed four projects under the contract and could have used that experience and documentation to prove loss.

Because Bosigo failed to discharge the onus of proving quantifiable damages, the High Court was held to have erred in awarding damages for breach of contract.

On the cross-appeal, Bosigo challenged the High Court’s finding that the contract was restricted to projects in Annexure “A”. The Supreme Court of Appeal held that this conclusion was correct: the appointment letter did not entitle Bosigo to fencing work across the entire North West Province beyond the listed projects, and the cross-appeal therefore failed.

5. Outcome and Relief

The Supreme Court of Appeal granted condonation for the late filing of the notice of appeal, the appeal record, and the replying affidavit in the reinstatement application, and ordered that the appeal be reinstated.

On the merits, the appeal was upheld with costs, including the costs of two counsel. The High Court’s order was set aside and replaced with an order dismissing Bosigo’s claim with costs, including the costs of two counsel.

The cross-appeal was dismissed with costs, including the costs of two counsel.

Cases Cited

Van Wyk v Unitas Hospital and Another (Open Democratic Advice Centre as Amicus Curiae) [2007] ZACC 24; 2008 (2) SA 472 (CC); 2008 (4) BCLR 442 (CC).

Truth and Reconciliation Commission v Mpumlwana [2001] 3 All SA 58 (Ckl).

Salviati & Santori (Pty) Ltd v Primesite Outdoor Advertising (Pty) Ltd 2001 (3) SA 766 (SCA); [2001] 3 All SA 172 (SCA).

Novick v Benjamin 1972 (2) SA 842 (A).

Freddy Hirsch Group (Pty) Ltd v Chickenland (Pty) Ltd [2011] ZASCA 22; 2011 (4) SA 276 (SCA); [2011] 3 All SA 362 (SCA).

Victoria Falls and Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1.

Transnet Ltd v Sechaba Photoscan (Pty) Ltd 2005 (1) SA 299 (SCA).

KPMG Chartered Accountants (SA) v Securefin Limited and Another [2009] ZASCA 7; 2009 (4) SA 399 (SCA); [2009] 2 All SA 523 (SCA).

Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA).

Capitec Bank Holdings Ltd and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA).

Mbambisa and Others v Nelson Mandela Bay Metropolitan Municipality [2024] ZASCA 151; (2025) 46 ILJ 277 (SCA); 2025 (3) SA 112.

Legislation Cited

No legislation was cited in the judgment.

Rules of Court Cited

Rule 8 of the Rules Regulating the Conduct of the Proceedings of the Supreme Court of Appeal of South Africa (updated 19 June 2023).

Held

The Supreme Court of Appeal held that it was in the interests of justice to grant condonation and reinstate the appeal despite procedural non-compliance, taking into account the explanation for delay, limited prejudice, and the appellants’ prospects of success.

On the merits, it held that the tender appointment created an order-based contractual relationship requiring an official order before any entitlement to perform arose, and that the High Court erred in treating Bosigo as having an entitlement to perform the full listed distance (or half of it) in Annexure “A”.

It further held that even if breach were assumed in respect of work given to another service provider, Bosigo failed to prove its loss of profit because it did not prove the saved expenses that had to be deducted from the contract price in quantifying damages, and tender documentation did not substitute for such proof.

It held finally that the cross-appeal failed because the contract did not entitle Bosigo to fencing work across the whole province beyond the scope of the listed projects in Annexure “A”.

LEGAL PRINCIPLES

Contractual damages for breach must be proved by the plaintiff on a balance of probabilities and cannot be presumed or estimated; the plaintiff must prove actual damages as best as possible on available evidence.

The measure of contractual damages is generally compensatory in the sense of placing the innocent party in the position it would have been in had the contract been properly performed, typically assessed using a comparative method between the actual post-breach position and the hypothetical position absent breach, where monetary compensation can achieve that result.

In a claim for loss of profit, the plaintiff must identify and prove the costs that would have been incurred in earning the contract revenue; saved expenses are a benefit that must be deducted in quantifying loss, and comprehensive disclosure of operational costs may be required to discharge the onus.

The interpretation of a contract is a matter of law for the court; interpretation begins with the text and considers context and purpose, but context does not permit meanings untethered from the contractual language.

Where a contractual appointment is expressly order-based and states that performance may occur only upon receipt of an official order “as and when the need arises”, the appointment does not confer a vested right to be allocated all potential work listed in an annexure; entitlement arises only upon issuance of the relevant orders, subject to the contractual mechanism such as rotation between appointed service providers.

Condonation is determined by the interests of justice, assessed with reference to the extent and cause of delay, the adequacy of explanation, prejudice, the importance of the issues, and prospects of success.

North West Provincial Department of Agriculture, Conservation, Environmental and Rural Development and Another v Bosigo Investment and Trading CC and Another (228/2024) [2025] ZASCA 191 (15 December 2025)