THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No:025/2024 & 024/2024
In the matter between
CALEDON RIVER PROPERTIES (PTY) LTD
T/A MAGWA CONSTRUCTION FIRST APPLICANT
PROFTEAM CC SECOND APPLICANT
and
THE SPECIAL INVESTIGATING UNIT FIRST RESPONDENT
THE NATIONAL DEPARTMENT OF PUBLIC WORKS
AND INFRASTRUCTURE SECOND RESPONDENT
Neutral citation: Caledon River Properties (Pty) Ltd t/a Magwa C onstruction and
Another v Special Investigat ing Unit and Another (025
&024/2024) [2026] ZASCA 05 (16 January 2026)
Coram: MATOJANE, MOLEFE and COPPIN JJA and BASSON and
NORMAN AJJA
Heard: 21 November 2025
Delivered: This judgment was handed down electronically by circulation to the
parties' representatives by email, publication on the Supreme Court of Appeal website
and released to SAFLII. The date and time for the handing down of the judgment are
deemed to be 11h00 on 16 January 2026.
2
Summary: Constitutional law – reconsideration application – s 17(2)(f) of the Superior
Courts Act 10 of 2013 – refusal of leave to appeal – procurement irregularities –
contract declared invalid – just and equitable remedy under s 172(1)( b) of the
Constitution – nature of the discretion – whether contractors entitled to profit –
appropriateness of remedy where contractors are not completely blameless.
3
___________________________________________________________________
ORDER
___________________________________________________________________
On application for reconsideration : referred in terms of s 17(2) (f) of the Superior
Courts Act 10 of 2013:
1 The application for reconsideration of the decision refusing special leave to
appeal is dismissed.
2 The applicants are ordered to pay the first respondent's costs, including the
costs of two counsel where so employed.
JUDGMENT
___________________________________________________________________
Matojane JA (Molefe and Coppin JJA, Basson and Norman AJJA concurring):
Introduction
[1] This application is brought in terms of s 17(2)(f) of the Superior Courts Act 10
of 2013 (the Act) 1 for the reconsideration of an order of two judges of this Court
refusing a petition for special leave to appeal under s 17(2)(b). The petition was
directed against a judgment of the Gauteng Division of the High Court, Pretoria,
delivered by Van Nieuwenhuizen and Strijdom AJJ and Mudau J, sitting as a full court.
That court dismissed an appeal against an order of the Special Tribunal declaring
invalid certain contracts concluded during the COVID-19 national state of disaster and
directing repayment of amounts paid in excess of actual expenditure.
[2] In reconsideration proceedings, this Court is required to place itself in the
position of the judges who determined the petition and to decide afresh whether the
statutory threshold for special leave to appeal has been met. While reasonable
1 ‘The decision of the majority of the judges considering an application referred to in paragraph (b), or
the decision of the court, as the case may be, to grant or refuse the application shall be final: Provided
that the President of the Supreme Court of Appeal may, in circumstances where a grave failure of
justice would otherwise result or the administration of justice may be brought into disrepute, whether
of his or her own accord or on application filed within one month of the decision, refer the decision to
the court for reconsideration and, if necessary, variation.’
4
prospects of success are a necessary requirement, they are not, without more,
sufficient. In the absence of special circumstances—such as the raising of a significant
legal question or the risk of a grave failure of justice—the application cannot succeed2.
[3] The proposed appeal concerns the remedial consequences flowing from a
declaration of constitutional invalidity under s 172(1)(a) of the Constitution. The
applicants contend that, notwithstanding the invalidity of the contracts, justice and
equity require t hat they be permitted to retain the full contract price, including profit,
for the construction of a 40 km border fence at the Beitbridge Border Post. Both the
Tribunal and the full court held that the applicants were entitled only to reimbursement
of proven and reasonable expenditure.
Factual Background
[4] The material facts are largely common cause. On 15 March 2020, the President
declared a national state of disaster under the Disaster Management Act 57 of 2002
(the Disaster Management Act). The following day, the Minister of Public Works and
Infrastructure issued a directive in terms of s 27(2)(I) of the Disaster Management Act
authorising emergency procurement for border fencing, with priority given to the
Beitbridge border post.
[5] On 17 March 2020, officials from the Department of Public Works and
Infrastructure ( the Department) met the applicants and other contractors on site.
Specifications for the fencing were discussed. The applicants, Magwa Construction
(Pty) (Magwa) and Profteam CC (Profteam), were selected on the basis that they were
already on site performing work under a separate contract relating to the Beitbridge
Border Post (the Beitbridge Border Post/RAMP contract). The fencing project was
treated as a variation of the existing contract rather than as a new procurement
process, with the consequence that no competitive bidding took place as required by
section 217(1) of the Constitution.
section 217(1) of the Constitution.
[6] The applicants were appointed on 18 March 2020 and instructed to commence
work immediately. Within days of the appointment, Magwa invoiced and received an
5
advance payment of R21 819 878.28 and Profteam an advance payment of R1 843
004.92—amounts representing approximately 60 per cent of the respective contract
values. These payments were made before any substantial performance had taken
place. The necessary deviations were not recorded in accordance with the applicable
Treasury Regulations.
[7] Despite the declaration of a hard lockdown on 26 March 2020 and attendant
operational difficulties, the applicants proceeded with the work and completed the
fence by 20 April 2020. Certificates of practical completion were thereafter issued.
Proceedings in the courts below
[8] The Special Investigating Unit (SIU) instituted proceedings in the Tribunal ,3
seeking to review and set aside the appointments of the applicants and recover
irregular payments. The applicants ultimately conceded the merits, agreeing to an
order in terms of s 172(1)(a) of the Constitution declaring the contracts invalid due to
non-compliance with s 217 of the Constitution and the prescribed procurement
procedures in terms of Treasury Regulations 16A.6.1 and 16A.6.4, and Regulation 11
of the Disaster Management Act regulations.
[9] In determining what relief was just and equitable, the Tribunal treated the matter
as one of legal principle and did not engage with the extensive witness statements
and expert reports filed by the applicants. It ordered that the applicants be divested of
all profits derived from the unlawful contracts and limited their recovery to reasonable
expenses, to be determined by way of a debatement of accounts.
[10] On appeal, the full court accepted that the Tribunal erred in failing to engage
with the evidential material. It accordingly undertook a detailed analysis of the
pleadings, witness statements and expert evidence. After doing so, it exercised the
discretion conferred by s 172(1)(b) of the Constitution and reached the same
substantive outcome: the applicants were not entitled to retain any profit, but were
substantive outcome: the applicants were not entitled to retain any profit, but were
entitled to reimbursement of reasonable and proven expenditure.
3 A statutory body established in terms of s 2 of the Special Investigating Units and Special Tribunal s
Act 74 of 1996 (‘the SIU Act’).
6
The nature of the discretion under Section 172(1)(b)
[11] The central question is whether the full court properly exercised the discretion
vested in it by s 172(1)(b) of the Constitution. That discretion is not mechanical, nor is
it circumscribed by rigid rules. As explained in Trencon Construction (Pty) Ltd v
Industrial Development Corporation of South Africa Ltd (Trencon),4 it is a discretion in
the true sense, requiring a value-laden judgment informed by all the relevant facts and
by constitutional principle. The court is enjoined to fashion a remedy that is just and
equitable in the particular circumstances, striking a careful balance between correcting
constitutional invalidity, vindicating the rule of law, and avoiding outcomes that would
themselves be unjust.
[12] The exercise of such a discretion necessarily admits of more than one
permissible outcome. For that reason, appellate interference is tightly constrained. As
reaffirmed in Special Investigating Unit v Phomella Property Investments (Pty) Ltd , 5
an appellate court may not substitute its own view merely because it would have
exercised the discretion differently. Interference is justified only where the discretion
was not exercised judicially, was influenced by a material misdirection on the law or
the facts, or produced a result that no reasonable court, properly directing itself, could
have reached. This standard reflects respect for the institutional role of the court of
first appeal and recognises that remedial choices under s 172(1)(b) are inhe rently
context-specific.
No vesting right in invalid contracts
[13] The applicants submit that the fence was constructed in accordance with the
agreed specifications, that the Department received what it required within the
stipulated timeframe, and that no evidence was led to establish financial loss to the
State. On that footing, they argue that it would be unjust and inequitable to deny them
State. On that footing, they argue that it would be unjust and inequitable to deny them
the full contract price, including profit, and place reliance on State Information
4 Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another
[2015] ZACC 22, 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC).
5 Special Investigating Unit v Phomella Property Investments (Pty) Ltd and Another [2023] ZASCA 45;
2023 (5) SA 601 (SCA) para 11 (Phomella).
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Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd 6 to bolster their submission
that the invalidity of a contract does not necessarily deprive a contractor of its profit.
[14] That reliance is misplaced. In Gijima, the contractor relinquished pre -existing
and otherwise valid rights pursuant to a settlement agreement later declared invalid.
Preserving those rights was necessary to avert manifest injustice. In the present
matter, the applicants had no pre -existing entitlement to construct the border fence.
The project arose from an unlawful procurement process that stood apart from any
prior contractual relationship.
[15] The g overning principle, restated by the Constitutional Court in Buffalo City
Metropolitan Municipality v Asla Construction ,7 is that no party should profit from
unlawful conduct. While an innocent tenderer acting in good faith may, in appropriate
circumstances, be permitted to retain some benefit, the “no profit, no loss” approach
often represents the proper balance between compensating for actual expenditure and
vindicating the constitutional requirements of legality and fiscal discipline.
[16] As explained in AllPay Consolidated Investment Holdings (Pty) Ltd and Others
v Chief Executive Officer, South African Social Security Agency ,8 an invalid tender
does not give rise to a right to benefit from an unlawful contract. The absence of such
a right does not, however, compel a court to strip all benefits in every case. Section
172(1)(b) preserves a discretion to permit retention of benefits where justice and equity
so require. Any such retention is not contractual in nature , but a remedial indulgence
grounded in constitutional fairness.
[17] The respondents submit that even an innocent tenderer may not be permitted
to profit from an unlawful contract and that the applicants should therefore be confined
to the recovery of verified expenses. This reflects the so -called “no loss, no gain”
principle.
principle.
6 State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd [2017] ZACC 40; 2018
(2) BCLR 240 (CC); 2018 (2) SA 23 (CC) para 54.
7 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd [2019] ZACC 15; 2019 (4) SA
331 (CC) paras 104-105.
8 AllPay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African
Social Security Agency (No 2) [2014] ZACC 12; 2014 (6) BCLR 641 (CC); 2014 (4) SA 179 (CC) para
67.
8
[18] In Phomella and, more recently, in Mafoko Security Patrols (Pty) Ltd and Others
v Mjayeli Security (Pty) Ltd and Others (Mafoko),9 it was emphasised that the dictum
in Allpay II does not lay down a rigid rule that excludes the retention of profit .10 While
an innocent tenderer has no accrued right to benefit from an unlawful contract, the
Court enjoys a broad discretion to permit the retention of such benefits where justice
and equity so demand. As held in Mafoko, the public good is not inherently opposed
to private gain; indeed, legitimate public procurement relies on the normative
benchmark of a competitive return for the service provider.
[19] The applicants cannot be characterised as innocent tenderers. While there is
no finding of fraud or corruption, they were experienced participants in public
procurement. Profteam acted as principal agent, a role carrying professional
obligations to ensure regulatory compliance. The acceptance of advance payments
amounting to approximately 60 per cent of the contract value, within days of
appointment and before any meaningful performance, occurred in circumstances
where the prohibitions contained in the PFMA and the Treasury Regulations were well
known. The full court was entitled to regard this conduct as indicative of at least
acquiescence in an irregular process. To accept such payment on the mere assurance
of 'offices closing', when electronic banking remained functional during lockdowns,
constitutes, at best, wilful blindness.
[20] This conduct conceivably places the applicants on the culpable end of the
spectrum. Unlike a tenderer who is merely the passive recipient of an unlawful state
decision, the applicants were active participants in a process that bypassed
fundamental procurement safeguards . Consequently, the normative benchmark of a
competitive commercial return, which protects the innocent tenderer, could reasonably
be found not to apply here. Permitting the applicants to retain profits derived from a
be found not to apply here. Permitting the applicants to retain profits derived from a
process that it helped distort could justifiably be considered to be contrary to the public
interest and the principle of legality. Justice and equity in such instances require that
the applicants be denied any benefits derived from the unlawful contract.
9 Mafoko Security Patrols (Pty) Ltd and Others v Mjayeli Security (Pty) Ltd and Others (590/2024)
[2025] ZASCA 179 (28 November 2025).
10 Ibid para 11.
9
Advance payment and claimed innocence
[21] Counsel for the applicants argues that the full court erred in finding a 'lack of
innocence' or equating them to 'ostriches with heads in the sand' without oral evidence.
They contend that the advance payment was merely a 'practical solution' to the
looming lockdown, not evidence of corruption. The full court was entitled to infer, from
the objective and common cause facts—specifically, a multimillion-rand tender award
in 24 hours without bidding, followed by a massive upfront payment for work not done
that the applicants were participants in the irregularity. A 'practical solution' to a
lockdown does not override statutory prohibitions on the use of public funds. To justify
interference by this Court, the applicants had to show that the full court did not exercise
its discretion judicially. They did not.
Expert evidence and urgency
[22] The criticism that the full court ignored expert evidence on pricing is unfounded.
The relevance of that evidence depended on whether the applicants had
demonstrated a misdirection in the exercise of discretion. They did not. Although the
State of Disaster created operational urgency, it did not displace the procurement
requirements applicable to government expenditure. The urgency of erecting a fence
does not justify paying R21 819 878.28 upfront for work not yet done, without
safeguards, for work not yet performed.
Conclusion
[23] The applicants have failed to demonstrate any basis for this Court to interfere
with the order of the full court. The debatement of accounts strikes an appropriate
balance: it prevents unjust enrichment of the State by ensuring reimbursement of
proven cost s, while upholding the rule of law by denying profit derived from an
unconstitutional process. Merely because this Court d isagrees with the permissible
option chosen by the full court does not justify this Court’s interference.11
[24] The discretion under s 172(1)(b) was exercised judicially, on correct principle,
[24] The discretion under s 172(1)(b) was exercised judicially, on correct principle,
and with proper regard to all relevant considerations. No grave failure of justice has
11 Phomella para 11.
10
been shown, and there are no reasonable prospects that another court would reach a
different conclusion.
Order
[25] The following order is made:
1 The application for reconsideration of the decision refusing special leave to
appeal is dismissed.
2 The applicants are ordered to pay the first respondent's costs, including the
costs of two counsel where so employed.
__________________
K E MATOJANE
JUDGE OF APPEAL
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Appearances
For the first appellant: GJ Scheepers SC and KK Maputla
Instructed by: Louw le Roux Inc, Pretoria
Webbers Attorneys, Bloemfontein
For the second appellant: EL Theron SC
Instructed by: Alant Gell & Martin Inc, Pretoria
McIntyre Van Der Post Inc, Bloemfontein.
For the first and second respondent: I Semenya SC and N Mayet SC
Instructed by: State Attorney, Pretoria
State Attorney, Bloemfontein.