Brief Summary

Social grants — Judicial review — Unlawful tender award — Cash Paymaster Services (Pty) Limited ordered to refund R81,286,177 to the South African Social Security Agency — Court determining that the profits from an invalid contract must be assessed and potentially refunded, with implications for ongoing liquidation proceedings — Public interest in ensuring accountability and transparency in social grant disbursement.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter was an application for direct access in the Constitutional Court, arising out of the long-running litigation concerning the unlawful award and continued performance (under court-ordered suspensions of invalidity) of the national social grants payment contract concluded between the South African Social Security Agency (SASSA) and Cash Paymaster Services (Pty) Limited (CPS).

The applicants were Black Sash Trust and Freedom Under Law NPC (FUL). The principal respondents relevant to the operative dispute were the Minister of Social Development, the Chief Executive Officer of SASSA, SASSA, the Minister of Finance, National Treasury (Treasury), and CPS (by this stage in liquidation). A number of additional parties were joined, including auditing firms involved in the profit-certification process, and Corruption Watch NPC (RF) and the South African Post Office SOC Limited participated as amici.

The immediate procedural posture was that FUL sought orders compelling CPS (and, if necessary, Lesaka Technologies (Pty) Limited) to deliver information demanded by Treasury so that Treasury could determine whether CPS had made a profit from the unlawful contract, and if so in what amount. However, by the time of hearing, CPS had been in liquidation for several years, a statutory liquidation enquiry had been completed, and the Court directed the parties to address whether it remained practically and legally useful to continue with the information-focused proceedings, or whether the Court should bring finality by determining CPS’s profits (and the repayment thereof) on the basis of the certified profit already audited by KPMG and Mazars, with limited adjustments.

The general subject-matter of the dispute thus shifted from an interlocutory contest about information production to the substantive question of whether and in what amount CPS should refund profits earned while performing an invalid public contract during the court-authorised suspension periods, and how liquidation-related constraints (including the concursus creditorum) affected the feasibility and form of relief.

2. Material Facts

The underlying tender for the countrywide payment of social grants was declared constitutionally invalid in AllPay I. In AllPay II the resultant contract was declared invalid, but the declaration was suspended to avoid disruption of social grant payments, and CPS was required to continue rendering services during the suspension. That suspension endured for the original five-year term (ending 31 March 2017) and was then extended in subsequent litigation, first for 12 months and later for a further six months, with CPS continuing to perform under the Court’s orders.

As part of the remedial framework in the earlier Constitutional Court orders, CPS was required to produce audited statements of income, expenses, and net profit for the relevant periods, and SASSA was required to obtain an independent verification. The audits produced the following results. KPMG reported a net profit of R705 322 484 for the first suspension period. Mazars reported a net profit of R104 260 291 for the second suspension period and a net loss of R556 992 623 for the third suspension period. On CPS’s calculation this yielded a net certified profit of R252 590 152 across the periods.

SASSA appointed RAiN Chartered Accountants Incorporated (RAiN) to conduct the independent verification required by the Court’s orders. RAiN’s work, and Treasury’s ability to approve it and determine profit, became contentious. Treasury filed an explanatory affidavit stating it could not approve RAiN’s updated verification report and identifying additional information it said it required to determine CPS’s profit, including (among other items) information relevant to interest earned, bulk re-registration costs, royalty payments, profit allegedly earned by Lesaka, B-BBEE expenses, and retrenchment costs.

A significant supervening fact was that CPS was placed in final winding-up on 16 October 2020, after SASSA launched liquidation proceedings. In directions issued before the 2025 hearing, the Chief Justice required CPS’s liquidator to report on the state of the winding-up. The liquidator reported that CPS’s “uncontroversial assets” totalled approximately R50 981 820, with further “controversial assets” including, relevantly, a pending action by CPS against SASSA for an alleged upward price adjustment (reported in the liquidation context as R358 196 928), and other contested claims.

On liabilities, the liquidator reported that claims proved at the first meeting of creditors totalled R778 511 264, dominated by SASSA’s proved claim of R632 894 722 flowing from a High Court judgment (Tsoka J) ordering CPS to repay approximately R316 million plus interest, and a further SASSA proved claim of R74 786 892 described as “payment of services not rendered”. The liquidator also reported that SARS had submitted substantial claims based on post-liquidation assessments, which CPS was reviewing, and warned that if SARS’s claims stood they could be preferent and could eliminate any dividend to concurrent creditors.

The liquidation enquiry under sections 417 and 418 of the Companies Act 61 of 1973 had concluded in June 2023, and the record (including accompanying documentation) was made available electronically to Treasury, SASSA, RAiN, Lesaka, and witnesses.

In response to post-hearing directions, the parties largely accepted that the certified profit could serve as a baseline, but disputed the extent and direction of adjustments. The Court identified, among others, potential adjustments for a provision for retrenchment costs (R107 033 718) said not to have been incurred, disputed B-BBEE expenditure (R437 093 795), the effect of the Tsoka J judgment on the certified profit, and the treatment of SASSA’s proved claim for services not rendered. The parties also addressed the impact of CPS’s pending price-adjustment action and the implications of liquidation for set-off.

3. Legal Issues

The central legal questions were whether the Constitutional Court could, in proceedings originally framed as a dispute about furnishing information to Treasury, nonetheless determine the ultimate issue of CPS’s profit and order its repayment to SASSA, particularly in circumstances where CPS was in liquidation and the concursus creditorum had been established.

Closely connected to that were questions about the Court’s remedial competence under section 172(1)(b) of the Constitution to craft a just and equitable order not confined to the specific notice-of-motion relief, and how that competence interacted with the Court’s prior remedial regime in the AllPay/Black Sash line of decisions.

A further legal issue concerned the appropriate understanding of the Court’s earlier statements about CPS having “no right to benefit” from an unlawful contract, and whether those statements established a rigid “no-profit-no-loss” rule or instead required a context-sensitive just and equitable determination. This issue entailed a legal assessment of how AllPay II should be distinguished from cases such as Buffalo City and Gijima, and how to situate divergent Supreme Court of Appeal authority on profit retention in invalid-contract cases.

The dispute also required the application of law to fact in determining whether, and to what extent, the certified profit should be adjusted on matters treated by the Court as sufficiently established (or conceded) to allow a final determination without a trial-like process. This included a value judgment about practical utility, judicial economy, and whether further factual inquiry would be disproportionate or futile given liquidation.

Finally, the Court addressed the liquidation-related question whether, if CPS succeeded in its pending price-adjustment litigation, the concursus creditorum would prevent set-off between SASSA’s payment obligation and CPS’s refund obligation, and how that should be accommodated in the Court’s order.

4. Court’s Reasoning

The Court located its power to reach finality in section 172(1)(b) of the Constitution, emphasising that it may make any order that is just and equitable, and that it is not confined to the precise relief framed in pleadings when crafting such a remedy. It relied on Constitutional Court authority indicating that section 172(1)(b) confers wide remedial latitude, including for complex or exceptional situations. The Court also noted that in earlier proceedings (including FUL’s 2020 application) relief seeking a declaration of CPS’s liability to repay profits had been sought and deferred, rather than being conceptually foreign to the litigation history.

On the substantive question of profit repayment, the Court distinguished the present matter from cases in which courts preserve the accrued rights of an innocent private contractor (as in Gijima and Buffalo City) to prevent organs of state from exploiting their own delay or procedural failures to avoid paying for benefits received. In those cases, the remedial rationale was to avoid unjust enrichment by the state and to preserve vested rights notwithstanding invalidity.

By contrast, the Court characterised the AllPay/Black Sash framework as uniquely concerned with ensuring continued social grant payments during suspension of invalidity, and with CPS’s performance as part of a constitutional remedial scheme, not the protection of its contractual rights as a private actor. The Court recalled that in AllPay II CPS had been treated, for the purposes of the contract, as an organ of state, and that the earlier orders required CPS to account publicly for gains and losses under the invalid contract. The Court viewed this history as supporting the permissibility, and in the circumstances the appropriateness, of ordering repayment of profit earned under the suspension regime.

The Court acknowledged the Supreme Court of Appeal’s later debate about whether AllPay II established a strict “no-profit-no-loss” principle and accepted that, generally, an innocent contractor might in a fact-specific case be permitted to retain profit under a just and equitable remedy. However, it stressed that the present case was not being treated as a general precedent about all invalid procurement contracts, and it emphasised that none of the parties before it objected in principle to a repayment order in these circumstances.

A decisive theme in the Court’s reasoning was the need for finality and the efficient use of scarce judicial resources. It held that resolving the numerous contested factual and accounting disputes (including possible profit shifting between CPS and Lesaka) would require a full trial with complex oral and documentary evidence, and would be disproportionate and potentially futile given CPS’s liquidation and the risk that concurrent creditors might receive nothing, particularly if SARS proved preferent claims. The Court considered that the earlier attempt to appoint a referee under section 38 of the Superior Courts Act had collapsed due to practical disagreements, and that even a referee process would be costly, intrusive, and time-consuming.

The Court therefore adopted a “robust” approach: using the certified profit as a baseline and making only those adjustments it regarded as sufficiently established on the papers, including by concessions. It reasoned that KPMG and Mazars were reputable auditing firms and that there was no concrete evidential foundation, in these proceedings, to justify embarking on an expansive forensic enquiry aimed at uncovering further profit. The Court also regarded the extensive liquidation enquiry record—made available to Treasury and RAiN—and the liquidator’s conclusion that there were no prospects of recoveries from related or third parties for voidable dispositions or irregularities as undermining the utility of further litigation.

Applying this approach, the Court adjusted the certified profit upwards by adding back amounts treated as improperly deducted. It accepted the parties’ common cause position that the retrenchment provision (R107 033 718) should be reversed because those costs were not incurred. On B-BBEE expenditure, despite sharp disagreement between SASSA/RAiN (favouring reversal of the full claimed B-BBEE amounts) and Lesaka (contending no adjustment), the Court relied on the liquidator’s concessions as a justified minimum adjustment in a refund order directed against CPS, adding back R325 443 704 in B-BBEE-related amounts that the liquidator said were unsupported on the available evidence or otherwise not properly treated as CPS expenses.

The Court also made downward adjustments to avoid what it regarded as effective double recovery by SASSA, given SASSA’s proved liquidation claims. It held that the KPMG/Mazars certified profit did not account for the Tsoka J repayment obligation, and it therefore reduced the certified profit by R528 994 505, consisting of the capital amount (R316 447 361) plus simple interest (calculated at 15.5% from June 2014 to September 2018, the terminal date of the profit periods). It further reduced the baseline by R74 786 892 in respect of SASSA’s proved claim for “services not rendered”, treated as an overpayment that reduced the profit properly attributable to CPS.

This yielded an adjusted certified profit of R81 286 177, which the Court ordered CPS to refund to SASSA, but in a manner cognisant of liquidation by granting SASSA leave to prove that amount as a concurrent claim.

Finally, the Court addressed CPS’s pending price-adjustment litigation against SASSA. It accepted that if CPS succeeded, that would increase CPS’s profit, and that liquidation principles would prevent set-off after concursus creditorum. To accommodate this, the Court issued a declaration that if CPS’s price-adjustment action succeeded in full or part, CPS would not have to refund to SASSA (as additional profit) any increased price SASSA was ordered to pay and did pay. The Court thereby left the question of any such adjustment to be addressed in that pending litigation, while preventing the refund order from automatically extending to that possible future amount.

On costs, the Court took the view that multiple parties had contributed to delay and acrimony and that the fairest outcome, in the exercise of its discretion, was that each party bear its own costs.

5. Outcome and Relief

The Constitutional Court ordered CPS to refund to SASSA the adjusted certified profit of R81 286 177, and granted SASSA leave to prove a concurrent claim in that amount in the liquidation.

The Court declared that in CPS’s pending action against SASSA for an upward price adjustment of R316 447 361, if CPS succeeded in full or part, CPS need not refund to SASSA (as additional profit) any increased price which SASSA was ordered to pay and did pay to CPS.

The Court made no punitive costs order and directed that each party bear its own costs.

Cases Cited

AllPay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer of the South African Social Security Agency [2013] ZACC 42; 2014 (1) BCLR 1 (CC); 2014 (1) SA 604 (CC).

AllPay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer, South African Social Security Agency [2014] ZACC 12; 2014 (4) SA 179 (CC); 2014 (6) BCLR 641 (CC).

AllPay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer of the South African Social Security Agency [2015] ZACC 7; 2015 (6) BCLR 653 (CC).

Black Sash Trust v Minister of Social Development [2017] ZACC 8; 2017 (3) SA 335 (CC); 2017 (5) BCLR 543 (CC).

Black Sash Trust v Minister of Social Development [2017] ZACC 20; 2017 (9) BCLR 1089 (CC).

South African Social Security Agency v Minister of Social Development [2018] ZACC 26; 2018 (10) BCLR 1291 (CC).

Black Sash Trust v Minister of Social Development [2018] ZACC 36; 2018 (12) BCLR 1472 (CC).

Freedom Under Law v Minister of Social Development [2021] ZACC 5; 2021 (6) BCLR 575 (CC).

RAiN Chartered Accountants Incorporated v South African Social Security Agency [2021] ZACC 27; 2021 (11) BCLR 1225 (CC).

Cash Paymaster Services (Pty) Limited v Freedom Under Law NPC [2022] ZACC 2; 2022 (6) BCLR 661 (CC).

Corruption Watch (NPC) (RF) v Chief Executive Officer of the South African Social Services, unreported judgment of the High Court of South Africa, Gauteng Division, Pretoria, Case No 21904/2015 (23 March 2018).

Central Energy Fund SOC Ltd v Venus Rays Trade (Pty) Ltd [2022] ZASCA 54; 2022 (5) SA 56 (SCA).

Special Investigating Unit v Phomella Property Investments (Pty) Ltd [2023] ZASCA 45; 2023 (5) SA 601 (SCA).

Mafoko Security Patrols (Pty) Ltd v Mjayeli Security (Pty) Ltd [2025] ZASCA 179.

Caledon River Properties (Pty) Ltd t/a Magwa Construction v Special Investigating Unit [2026] ZASCA 5.

Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd [2019] ZACC 15; 2019 (4) SA 331 (CC); 2019 (6) BCLR 661 (CC).

State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd [2017] ZACC 40; 2018 (2) SA 23 (CC); 2018 (2) BCLR 240 (CC).

Shabangu v Land and Agricultural Development Bank of South Africa [2019] ZACC 42; 2020 (1) BCLR 110 (CC); 2020 (1) SA 305 (CC).

Electoral Commission v Mhlope [2016] ZACC 15; 2016 (5) SA 1 (CC); 2016 (8) BCLR 987 (CC).

Economic Freedom Fighters v Speaker of the National Assembly [2017] ZACC 47; 2018 (2) SA 571 (CC); 2018 (3) BCLR 259 (CC).

S.O.S Support Public Broadcasting Coalition v South African Broadcasting Corporation (SOC) Ltd [2018] ZACC 37; 2018 (12) BCLR 1553 (CC); 2019 (1) SA 370 (CC).

Minister of Tourism v Afriforum NPC [2023] ZACC 7; 2023 (6) BCLR 752 (CC).

Legislation Cited

Constitution of the Republic of South Africa, 1996, section 172(1)(b), section 195, and section 217.

Superior Courts Act 10 of 2013, section 38.

Companies Act 61 of 1973, sections 417 and 418.

Insolvency Act 24 of 1936, sections 44, 45, and 102.

Promotion of Administrative Justice Act 3 of 2000, section 7(1) and section 9.

Prescribed Rate of Interest Act 55 of 1975.

Rules of Court Cited

No specific rules of court were expressly cited in the judgment.

Held

The Constitutional Court held that it was empowered under section 172(1)(b) of the Constitution, and in light of the litigation history, to bring the matter to finality by determining CPS’s profits and ordering repayment, notwithstanding that the proceedings originated as a dispute about the furnishing of information to Treasury.

The Court held that the appropriate and practically workable course—given CPS’s liquidation, the complexity and contestation surrounding further forensic accounting issues, and the need for finality—was to adopt the profit already certified by KPMG and Mazars as a baseline and to adjust it only on matters sufficiently established on the papers (including concessions and proved claims).

On that basis, the Court held that the baseline certified profit should be adjusted upwards to reverse a retrenchment provision and certain B-BBEE expenditure items (to the extent conceded by the liquidator), and adjusted downwards to account for the Tsoka J repayment obligation (capital plus interest to the end of the certified periods) and SASSA’s proved claim for services not rendered, resulting in an adjusted certified profit of R81 286 177.

The Court further held that in relation to CPS’s pending price-adjustment action against SASSA, if CPS succeeded in full or in part, CPS need not refund to SASSA, as additional profit, any increased price that SASSA was ordered to pay and did pay to CPS.

LEGAL PRINCIPLES

The judgment applied the principle that section 172(1)(b) of the Constitution confers wide remedial powers on a court deciding a constitutional matter, enabling it to craft any order that is just and equitable, and that this remedial discretion is not rigidly confined to the specific relief formulated in the notice of motion where justice and equity require a different remedial form.

In assessing whether profit should be repaid, the judgment applied the AllPay/Black Sash remedial framework, including the ideas that benefits derived under an invalid public contract in these circumstances should not be beyond public scrutiny, and that the remedy may require a balance whereby no party should profit from the infringement or threatened infringement of rights, while also recognising the necessity of ensuring continued performance to avoid disruption of constitutionally protected entitlements.

The judgment applied an approach to remedial decision-making that prioritises practical utility, the responsible use of judicial resources, and finality, particularly where further adjudication would require extensive factual inquiry into complex and disputed accounting material, and where the respondent entity is in liquidation such that further litigation may yield limited or no practical benefit.

The judgment applied the interpretive principle that court orders are intended to provide effective relief and should be interpreted in a manner consistent with their purpose, while recognising the limits on rewriting clear orders by reference to subjective intention.

In relation to liquidation consequences, the judgment proceeded on the basis that once the concursus creditorum is established, set-off may not operate in the ordinary manner as between the liquidated estate and creditors, and it crafted declaratory relief to address the consequences of pending litigation that could increase the contract price without automatically enlarging the profit refund obligation.

Black Sash Trust and Another v Minister of Social Development and Others (CCT48/17) [2026] ZACC 12 (8 April 2026)