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[2026] ZAGPJHC 443
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Amahlo Consulting Services CC v Gauteng Economic Propeller (A2024/27144) [2026] ZAGPJHC 443 (30 April 2026)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, JOHANNESBURG)
CASE
NO: A2024/027144
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED
30
APRIL 2026
FHD VAN OOSTEN
In
the matter between
AMAHLO
CONSULTING SERVICES CC
APPELLANT
and
GAUTENG ECONOMIC
PROPELLER
RESPONDENT
JUDGMENT
VAN OOSTEN J:
Introduction
[1]
This appeal arises from a successful application by the respondent,
Gauteng Economic Propeller (GEP), a provincial public entity
established in terms of s 2 of the Gauteng Enterprise Propeller Act,
5 of 2005, with the main objective, to provide financial support
and
business development services to small, micro and medium businesses
and co-operatives, for a self-review and setting aside
of three
decisions relating to the appointment, without a tender process, of
the appellant, Amahlo Consulting Services CC (Amahlo),
as the
co-ordinator of Project Vuthela (the project), a job creation
initiative launched by GEP in 2016, and the conclusion of
an
agreement relating thereto and the amendment thereof.
[2]
The court a quo found that the impugned decisions were unlawful and
therefore unconstitutional, which in terms of s 172(1)(a)
of the
Constitution, the court was enjoined to declare invalid. In regard to
consequential just and equitable relief under s 172(1)(b),
Amahlo was
ordered to pay back to GEP the amount of R52 343 964.00,
representing, as dealt with in the judgment, the amount of
R59 762
578.46 paid to Amahlo by GEP, less an (estimated) allowance for
payments made by Amahlo in respect of stipends of R1 500.00
per month
for 142 students, in the total sum of R7 418 614.46.
[3]
The court a quo in the judgment on leave to appeal, remarked that
Amahlo had sought leave to appeal only as far as the calculation
of
the amount it was ordered to pay back to GEP is concerned. On the
premise that there may have been an error in the calculation
of the
amount, the learned Judge a quo granted leave to appeal to this
court, ‘only on the issue of the calculation of the
amount’.
[4]
As a preliminary to the appeal, there is before this court an
application for re-instatement of the appeal and condonation
regarding Amahlo’s non-compliance with certain rules and
directives applicable to the prosecution of appeals.
The
basic facts
[5]
The illegality of the decisions was clear and indisputable. The
background facts are fully set out in the judgment of the court
a
quo, and I accordingly do not consider it necessary to traverse those
again. The illegality of the decisions was not challenged
either in
the court a quo, or before us. For the sake of clarity and context, I
propose to briefly refer to the basic facts relating
thereto, which
are not in dispute.
[6]
The impugned decisions were, first, GEP’s decision to appoint
Amahlo, as the project co-ordinator, in respect of which
an upfront
payment to Amahlo of
R2 400 000, for a pilot project, and in
addition thereto R65 963 817, were approved, for creation of
approximately 75 000 job opportunities
for the youth in Gauteng over
a period of three years, second, the conclusion of the resultant
memorandum of agreement (the MoA)
between GEP, without its
representative having the required authorisation, and Amahlo to
implement the project, and, third, the
conclusion of an addendum to
the agreement, in terms of which the number of job opportunities were
reduced to 5 000, without a
corresponding adjustment of the grant.
[7]
In 2020 complaints of non-payment of stipends by students involved in
the project, were received which prompted GEP to commission
a
forensic investigation relating to the project, in respect of which a
report was delivered in January 2022. The report, in sum,
contains a
description of the nature and extent of the investigation, the
factual findings relating to allegations of irregularities
and
wasteful expenditure, and recommendations.
Re-instatement
and condonation
[8]
The history of this matter, from the date of granting leave to
appeal, sets the scene for what led Amahlo to launch an application
for reinstatement of the appeal and condonation.
[9]
Amahlo failed to comply with a number of the Uniform Rules of Court
and the provisions of this Court’s Practice Manual
and the
Revised Consolidated Practice Directive, in that the notice of appeal
was filed late, the submission of the date application
form and
delivery of the record, likewise, were well out of time, resulting in
the appeal
ex lege
deemed to have lapsed in terms of Uniform
Rule 49(7)(d).
[10]
Amahlo further failed to file the required heads of argument and a
practice note simultaneously with the application for a
hearing date
and delivery of the record, which prompted GEP to launch an
application for a declarator that the appeal had lapsed,
alternatively, an order compelling Amahlo to file its heads of
argument and a practice note. A notice of substitution of attorneys
of record on behalf of Amahlo, and Amahlo’s intention to oppose
the application, signed by Amahlo’s present attorneys
of
record, was filed one day before this application was to be heard. At
the hearing of the application, counsel instructed by
Amahlo’s
present attorney, appeared, and the matter was removed from the roll.
[11]
Amahlo thereafter brought the application for re-instatement of the
appeal ‘insofar as the appeal has lapsed’,
and
condonation, to which I have already referred. The application was
opposed by GEP and a full set of affidavits was filed. An
affidavit
deposed to by Amahlo’s former attorney of record, in which the
reasons for the delays before termination of her
mandate, was
obtained, and annexed to the founding papers. Regarding the period
thereafter, the affidavit of Amahlo’s present
attorney of
record, Ms Lomax, as well as a supporting affidavit deposed to by the
sole member of Amahlo, form part of the founding
papers, to which GEP
has replied.
[12]
In essence, the blame for the delays is put squarely on the shoulders
of Amahlo’s erstwhile legal team, in particular
the conduct of
counsel instructed by the former attorneys of record. Regarding
prospects of success, the submission was advanced
that the remedy
ordered by the court a quo, in requiring Amahlo to repay all amounts
paid to it, save for deductions of estimated
stipends, is ‘plainly
not just and equitable’, that this court on appeal has the
power to set aside the remedy and
in substitution thereof, not grant
any remedy in terms of s 172(1)(b) of the Constitution.
[13]
The standard for considering an application for condonation is the
interests of justice, which the Constitutional Court in
Maleka v
Boyce N.O. and Others
(CCT 175/23)
[2026] ZACC 7
(24 February
2026), re-stated as follows (para [45] – [46]):
‘
This Court has
previously stated that the standard for considering an application
for condonation is the interests of justice. This
would of course
depend on the facts and circumstances of each case. There are a host
of factors that are relevant to this enquiry
including, but not
limited to, the nature of the relief sought; the extent and cause of
the delay; the effect of the delay on the
administration of justice
and other litigants; the reasonableness of the explanation for the
delay; the importance of the issue
to be raised in the intended
appeal; and the prospects of success. Indeed, what is required of a
court when considering an application
for condonation is a balancing
act of these various factors depending on the facts before the court.
The scale will, however, often
tip against the granting of
condonation upon consideration of the explanation furnished for the
delay and the prospects of success.
As such, an applicant seeking
condonation must give a full explanation for the delay. The
explanation must not only account for
the entire period of delay but
it must also be reasonable. The applicant must also enjoy reasonable
prospects of success on consideration
of the merits. This accords
with what this Court said in
Grootboom
([2013] ZACC 37;
2014
(1) BCLR 65
(CC);
2014 (2) SA 68
(CC) paras 20-4) that condonation is
not for the mere asking.’
[14]
Applied to the facts of this case, two considerations are decisive.
First, GEP’s delay in launching this application
six years
after the project was completed and in respect of which the court a
quo granted condonation, and juxtaposed thereto,
the delay caused by
Amahlo’s non-compliance with the rules, of some six months. The
merits of the appeal and consequent re-consideration
by this court
whether the order of the court a quo complies with the Constitutional
imperative of a just and equitable remedy under
s 172(1)(b) of the
Constitution, to which I shall revert, in my view, decisively tips
the scale in favour of this court granting
condonation and an order
for re-instatement of the appeal.
[15]
Against this background I now turn to a consideration of the merits
of the appeal.
Merits
of the appeal: the litigation in the court a quo
Pre-hearing
[16]
The issues in the appeal are considerably wider than what the eye
meets upon a reading and consideration of the affidavits
filed in the
main application, and notably changed significantly as the matter
progressed. This was primarily caused by Amahlo
changing the
goalposts from the time of opposing the matter in its initial stages,
until as late as at the hearing of the appeal
before this court.
[17]
In its answering affidavit in the main application, Amahlo does not
challenge the unlawfulness of the impugned decisions, but
adds that
it was not involved or aware of GEP’s internal decision making
processes that were followed. Except for challenging
the lateness of
GEP bringing the application six years after the project was
launched, and the admissibility of the forensic report
on the ground
of it containing hearsay evidence, it is stated that Amahlo has
complied with all its obligations in terms of the
agreement to create
job opportunities, and that all funds received from GEP, totalling
R62 162 578.56, were authorised by GEP and
utilised for the intended
purpose. Monthly feedback reports were submitted to GEP as to the
progress made, and the project terminated
in March 2019, resulting in
the agreement having been duly fulfilled. In the concluding paragraph
of the answering affidavit, an
order for the dismissal of the
application with a punitive costs order against GEP is sought.
[18]
After service of the answering affidavit, GEP filed a notice in terms
of Uniform rule 35(12), requiring Amahlo to produce the
documents
referred to in Amahlo’s answering affidavit, and more fully
described in 29 numbered paragraphs. In response Amahlo
indicated
that it was no longer in possession of the documents referred to in 8
of the paragraphs of the Rule 35(12) notice, and
regarding the
remaining documents requested, attached a plethora of documents to
the reply, thereby contributing the bulk of the
papers to the appeal
record before this court.
[19]
In GEP’s replying affidavit Amahlo is accused of complicity in
the wrongdoing of GEP regarding the impugned decisions
and the
execution thereof. Reference is made to the agreed reduction of job
opportunities from 75 000 to 5 000 without any concomitant
reduction
of the contract price, Amahlo’s submission of invoices for
payment prior to the conclusion of the agreement, its
failure to
submit all required monthly reports and the inability to show that
jobs were in fact created. Amahlo’s financial
statements,
attached to the answering affidavit, are moreover criticised for a
number of inconsistencies and irregularities, which
it is alleged,
disentitles Amahlo from retaining any monies received or profits
made.
[20]
I should indicate that the replying affidavit does not refer to, or
deal with the rule 35(12) documents: although the rule
35(12) notice
was served on Amahlo prior to the filing of the replying affidavit,
the record does not indicate the date upon which
the reply thereto
with the attached documents, was delivered to GEP.
The
hearing
[21]
At the hearing of the application in the court a quo, counsel then
appearing for Amahlo, in accordance with the earlier heads
of
argument, addressed GEP’s delay in bringing the application
without seeking condonation, which prompted counsel to submit
that
the delay was unreasonable and that the application on that ground
alone, should be dismissed. Regarding GEP’s prayer
that Amahlo
be ordered to refund all monies received, counsel submitted that
Amahlo has demonstrated in the answering affidavit
and the rule
35(12) reply ‘that various expenses were paid by the
respondent’. Counsel made no further reference to
those
documents, and proposed that the agreement not be set aside, in order
to preserve Amahlo’s rights, and that no order
be made for the
repayment of any amount. The issues concerning ordering a just and
equitable remedy in the event of setting aside
the impugned
decisions, and the calculation of the amount to be repaid, were
raised by the learned Judge
a quo
with counsel for GEP in
reply, who without more ado, persisted with the submission that all
monies were to be repaid by Amahlo.
Leave
to appeal
[22]
The ambit of the leave to appeal granted by the court a quo was hotly
debated before this court. The opposing contentions are,
on the one
hand, counsel for GEP contending that leave to appeal was granted on
the limited issue relating to the arithmetical
calculation, in order
to arrive at the amount reflected in paragraph 2 of the order, and on
the other, counsel for Amahlo, premised
on the remark of the learned
Judge a quo, I shall presently deal with, that a second bite of the
cherry was afforded to Amahlo,
submitted thereby opening the
proverbial door for extending the scope of the leave to appeal,
warranting the inference that this
court has jurisdiction to
entertain the appeal on all aspects relating to the order that was
made, including the arguments raised
in counsels’ heads of
argument.
[23]
The order reads as follows:
‘
1. Leave to appeal
is granted on the issue of the calculation of the amount in paragraph
2 of the order in the main judgment, to
the Full Bench of this
Division.
2. Costs are costs in the
cause.’
[24]
In the judgment on leave to appeal, the learned Judge in the opening
sentence states:
‘
The applicant
seeks leave to appeal my order in this matter only as far as the
calculation of the amount it was ordered to pay back
to the
respondent is concerned’.
and
continues:
‘
While there is an
element in this application for leave of the respondent now having a
second bite of the cherry, in that it declined
to engage with the
amount in great detail in the matter before me, I am satisfied that
there may be an error in calculation and
that another court may come
to a different conclusion as far as the calculation of the amount to
be paid back is concerned’.
Analysis:
Jurisdiction of this court on appeal
[25]
The determination of this issue requires as a starting point, an
interpretation of the order of the court a quo. In
HLB
International (South Africa) (Pty) Ltd v MWRK Accountants (Pty) Ltd
2022 (5) SA 373
(SCA) para 24-26, the SCA dealt with the
significant developments in the law relating to interpretation of
documents, since the
milestone judgment in
Firestone v Genticuro
1977 (4) SA 298
(A), and with reference to the modern approach set
out in
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18;
Bothma-Batho Transport v S
Bothma & Seun Transport
2014 (2) SA 494
(SCA) para 12, and
Finishing Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South
Africa Ltd and Others
2013 (2) SA 204
(SCA) para 13, concluded as
follows (para 27):
‘
The manifest
purpose of the judgment is to be determined by also having regard to
relevant background facts which culminated in
it being made. For as
was said in
KPMG Chartered Accountants (SA) v Securefin Ltd and
Another
(2009 (4) SA 399
(SCA) 409), ‘context is
everything.’
[26]
The context in which the order must be considered, comprise a
consideration of the grounds relied upon in Amalo’s application
for leave to appeal, the heads of argument submitted by the parties
in the application for leave to appeal, the judgment and order
of the
court a quo, and lastly, Amahlo’s notice of appeal.
[27]
In the notice of application for leave to appeal, and relevant for
present purposes, the primary ground in support of the application,
is directed at the court a quo’s ‘finding’ that
Amahlo was to repay the sum of R52 343 96.00 to GEP, ‘in
circumstances where the undisputed evidence shows, that Amahlo had
concluded various agreements with service providers, proof of
such
invoices were submitted by [Amahlo] and can be seen from annexures
’G1’ to ‘G33’, so annexed to [Amahlo’s]
reply to [GEP’s] notice in terms of rule 35(12)’, and,
‘that ‘various payments to service providers of
[Amahlo],
which were necessary costs pursuant to the contract so being
concluded between [Amahlo] and [GEP]’. A further ground
relied
on is simply directed at the court a quo’s calculation of the
stipends ‘so paid by [Amahlo] to be the sum of
R7 418 624.40’,
without any further clarification on the nature of the alleged
error.
[28]
In the heads of argument in the application for leave to appeal,
counsel for Amahlo extensively dealt with the amount of the
order and
the reasons for challenging the correctness thereof. In particular,
the court a quo’s calculation of the stipend
deduction, with
reference to the underlying figures, is dealt with, culminating in
the submission that the correct amount should
have been R7 668 000.00
and not
R7 418 614.40. In addition hereto, arguments are raised
that the court a quo failed to consider Amahlo’s financial
statements,
and the rule 35(12) documents.
[29]
Upon a consideration of the totality of the notice of application for
leave to appeal, it must have been abundantly clear to
all concerned
that Amahlo’s grounds of appeal were directed at the full
amount that was ordered, and not only the amount
of the stipend
calculation. At the hearing of the application for leave to appeal,
counsel for Amahlo, in response to a question
directed by the learned
Judge a quo, indicated that the appeal is directed against prayer 2,
‘and that is the monetary amount
Amahlo, is ordered to pay
back’ to GEP, being R52 343 964. The exchange between the
learned Judge and counsel then proceeded
as follows:
‘
COURT:
Yes. Okay, and it is only the amount?
MR KLOEK:
That is
correct, M’Lady.
COURT:
So, it is
not the principle of the payback, it is the calculation?
MR KLOEK:
Calculation, M’Lady.
COURT:
Alright,
Well, I am inclined to grant that. So let me hear Ms Haskins first.’
[30]
Counsel for GEP then proceeded to address the calculation of the
surplus, which came to R52.3m, less the stipend that was paid.
In
reply, counsel for Amahlo referred to a ‘factual error’
in the calculation the learned Judge had made regarding
the stipend
of R1 500 per month, that was paid to 142 students over that
particular time period, which counsel submitted was more
than the
amount of R7 418 624.40 referred to in the judgment in
respect of stipends, to which counsel added:
‘
Secondly, all the
expenses demonstrated… [intervenes]
COURT
: But the
expenses are not justified. We do not know what the expenses are and
I said I am not taking the expenses into account.
MR KLOEK:
Yes. But
only on the calculation, the difference between the R7 668 000 and
the amount that was subtracted, there is an error, a
factual error.
COURT
: Yes. There
is a difference of like R200 000 or something.
MR KLOEK:
Be that
as it may, there was no Rule 42 application brought to correct the
amount, M’Lady and whether it is R200 000 or R100
000 that is
not the test. The test is simply if there is prospect of success on
appeal and we submit there are.’
[31]
I consider a few comments appropriate. It is difficult to understand
what the learned Judge referred to in using the words
‘the
principle of the payback’. The principle the learned judge was
alive to, is the requirement of just and equitable
as to the remedy.
Counsel was informed in no uncertain terms, of learned Judge’s
firm stance that the expenses were not justified
and that she had
already made it clear that expenses would not be taken into account.
This prompted counsel to deal with the stipend
error in the learned
Judge’s calculation. The exchange between counsel and the bench
in any event, occurred during argument
and although counsel
emphasised certain aspects of the argument, there was not at any
stage an abandonment of the any of the grounds
set out in the
application for leave to appeal. The learned Judge’s remark
that Amahlo ‘declined to engage with the
amount in great detail
in the matter before me’, can only be considered as a reference
to the full amount and not only the
stipend amount, which as it
apparent from the exchange quoted above, was fully explained to the
court.
[32]
This brings me to the reasoning of the learned Judge which I have
alluded to. The ‘error in calculation’ referred
to by the
learned Judge is clearly to the stipend calculation error which
counsel once again had addressed in argument, which significantly
was
not challenged by counsel for GEP. Had it been the intention of the
learned Judge to limit the leave to appeal she proposed
to order, to
only the stipend calculation, she obviously would have mentioned
exactly that, and nothing else, in particular as
it was clearly
circumscribed and unchallenged. But, she goes further and finds that
another court may come to a different conclusion
as far as the
calculation
of the amount to be paid back
is concerned. In
making the finding, the learned Judge extended the scope of the order
she proposed to make, to the whole amount
to be paid back, and not
limited to the stipend calculation error, which it seems, eventually
persuaded the learned Judge to grant
leave to appeal. The learned
Judge, moreover was acutely acquainted with the difference, on the
facts of this matter, between the
amount to be paid back and the
amount of the stipend deduction. Within this context the learned
Judge’s reference to a second
bite of the cherry, for the
reason that it that declined to engage with
that
amount in
great detail, is not capable of any interpretation other than that a
second opportunity was afforded to Amahlo to challenge
the full
amount to be paid back on appeal to the full court.
[33]
I am moreover, in agreement with counsel for Amahlo’s
submission, which decisively seals the interpretation, that the
calculation is the quantification limb of the just and equitable
remedy: the court cannot determine the just and equitable requirement
of the quantified amount without determining the remedial basis on
which the amount is to be quantified. Once this is applied,
the
conclusion is inevitable: the leave to appeal granted on the
calculation of the amount in prayer 2, includes the remedy of
just
and equitable relief, on which it is based.
[34]
The order made by the learned judge is in all respects consonant with
the interpretation above. Once again, the reference is
made to the
calculation of ‘the amount’ in paragraph 2 of the order.
Had it been the intention of the learned Judge
to limit the leave
granted to the stipend calculation, one would have expected specific
words to that effect in the order, of which
there are none.
[35]
In conclusion, Amahlo’s notice of appeal is directed against
the whole amount of prayer 2 of the order, and a substitution
of the
order with an order that Amahlo is not ordered to pay back to GEP any
amount is sought.
[36]
Amahlo’s initial heads of argument in this appeal, challenge
first, the ‘default basis’ on which the court
a quo
exercised its discretion in terms of s 172(1)(b) of the Constitution,
being that an innocent party may not benefit from the
unlawful
contract and that this must be corrected by an order for re-payment,
second, that the learned judge should have applied
the
Plascon-Evans-
rule in the determination of the issues, and,
third, that the learned judge failed to consider the inadmissible
hearsay allegations
contained in the ENS report as well as the
limitations under which it was compiled. In conclusion, it was
submitted that the court
a quo should have declined to grant any
remedy in terms of s 172(1)(b). In the heads of argument of counsel
for GEP, the point
is taken that the arguments raised on behalf of
Amahlo impermissibly seek to expand the ambit of the appeal if regard
is had to
the order that was granted in the application for leave to
appeal. The refusal of leave to appeal in respect of those issues, it
is further submitted, confines Amahlo to the issue pertaining to the
calculation of the stipend amount. For the reasons I have
mentioned,
I do not agree with the argument.
[37]
In conclusion on this issue, I agree with counsel for Amahlo that the
order, properly interpreted, was granted on the whole
amount referred
to in the order.
The
judgment of the court a quo
[38]
In its consideration of a just and equitable remedy, the court a quo,
with reference to
Central Energy Fund SOC Ltd and Another v Venus
Rays Trade (Pty) Ltd and Others
2022 (5) SA 56
(SCA) at
[42], and
Allpay Consolidated Investment Holdings (Pty) Ltd and
Others v Chief Executive Officer of the South African Social Security
Agency
and Others
2014 (4) SA 179
(CC) (
Allpay 2
),
proceeded on the premise that ‘If Amahlo is an innocent party,
it still may not benefit from the unlawful contract’.
[39]
The dictum in
Allpay 2
relied upon by the court a quo, reads
as follows (para [67]:
‘
It is true that
any invalidation of the existing contract as a result of the invalid
tender should not result in any loss to Cash
Paymaster. The converse,
however, is also true. It has no right to benefit from an unlawful
contract. And any benefit that it may
derive should not be beyond
public scrutiny’
In
Mafoko Security Patrols (Pty) Ltd and Others v Mjayeli Security
(Pty) Ltd and Others
(590/2024)
[2025] ZASCA 179
(28 November
2025), Unterhalter JA, writing for the court, coined the
Allpay 2
dictum as the two-truths dictum, which simply put, encompasses the
principle: no loss, but no gain, the correctness of which, in
re-affirming the SCA judgment in
Special Investigating Unit v
Phomella Property Investments (Pty) Ltd and Another
[2023] ZASCA
45
;
2023 (5) SA 601
(SCA) paras 14-16, was rejected, as not correctly
reflecting the position adopted in
Allpay 2
, and being
inconsistent with the remedial latitude the Constitutional Court has
applied to other cases in which it has made a just
and equitable
order. The judgment continues (paras 26):
‘
Allpay II
held that the award of a tender found to be unlawful and declared
invalid does not give rise to a right to benefit from an unlawful
contract. What this means is simply this: without a right, there is
no duty resting upon a court exercising its just and equitable
discretion to order that the benefit of the unlawful contract must be
conferred. But the absence of such a right and its correlative
duty
does not mean that the court in the exercise of its discretion may
not permit a party to enjoy the benefit of a contract,
including the
profits that may accrue.
The
mistake made by certain courts that have sought to understand Allpay
II is to equate the absence of a right to benefit from
an unlawful
contract with the exclusion of such benefit from the exercise by the
court of its just and equitable discretion. Allpay
II does not say
this. Indeed, it simply holds that any benefit derived ‘should
not be beyond public scrutiny’. This
means that any benefit
derived from an unlawful contract falls to be scrutinised in order to
determine how the court should exercise
its just and equitable
discretion. It does not mean that the benefit of an unlawful contract
is excluded from remedial consideration,
for then the benefit would
indeed be beyond public scrutiny because it would fall outside the
very exercise the court undertakes
to weigh relevant considerations
so as to arrive at a just and equitable order.
What is required is an
exercise of the court’s discretion that will result in a just
and equitable order. Such an order cannot
proceed from the a priori
position that what is just and equitable excludes the retention of
any profit by Mafoko.’
(See also,
Caledon
River Properties (Pty) Ltd t/a Magwa Construction and Another v The
Special Investigation Unit and Another
(025&024/2024)
[2026]
ZASCA 05
(16 January 2026) para [18]).
[40]
Applied to the facts of this case, the court a quo’s adherence
to its mistaken interpretation of
Allpay 2
, excluded from the
exercise of its discretion, Amahlo’s right to benefit from the
unlawful contracts, even if Amahlo is an
innocent party.
[41]
The learned Judge reasoned that Amahlo has not shown any reason why
the repayment in full should not be granted, that it has
not taken
the court into its confidence regarding profits that were made or,
absent any factual support, what it actually expended
and to whom.
The learned Judge finally concluded that there was ‘no reason’
to make an order other than Amahlo to repay
the money it had
received, less the stipends paid. No reasons are given for singling
out the stipends for deduction or such principle
as there may be, in
regard thereto. The calculation ‘in Amahlo’s favour’,
she held, is that this was paid every
month to 142 students, and that
is the basis on which the amount will be determined’.
[42]
It is necessary to consider the amounts that were used by the learned
Judge a quo, in arriving at the final amount reflected
in the order.
The learned Judge, based on the ENS report, accepted that the total
amount of R59 762 578.46 was paid by GEP to Amahlo
in respect of the
project, which corresponds with the amount in prayer 2 of the notice
of motion in respect of which an order for
pay back is sought. The
ENS report indeed reflects that this amount was paid to Amahlo,
pursuant to 29 invoices for payment presented
by Amahlo to GEP, from
30 September 2016 to 29 March 2019. But, so the ENS report also
reflects, the initial grant of R2 400 000,
in respect of the pilot
project to raise 52 job opportunities in Eldorado Park, was paid to
Amahlo on 31 March 2016, thus apparently
falling outside the period
mentioned. It accordingly seems that this amount was not included in
the total amount of R59 762 578.46.
[43]
The stipend deduction factored in by the learned Judge, is likewise
incorrect. I have already alluded to the erroneous calculation
of the
stipend, which was not challenged in this court. The alleged
discrepancy, if factored into the equation, results in an amount
of
R249 376 less than the amount ordered to be repaid, which brings the
total amount to R52 094 578.46.
[44]
At the hearing in this court, counsel for Amahlo, took a completely
different stance, in seeking an order in essence for the
remittal of
this matter to the high court for determination of the just and
equitable remedy, limited to the qualification/calculation
of the
amount to be repaid by Amahlo. This occurred in response to my note
sent to counsel shortly before the hearing of the appeal,
alerting
them to the recent judgment of the Supreme Court of Appeal in
Caledon.
In support of the alternative relief sought, reliance
was placed on the SCA’s approval of the Full Court’s
detailed
analysis of the pleadings, witness statements and expert
evidence, for the purpose of exercising a discretion conferred by s
172(1)(b)
of the Constitution. The SCA accordingly held:
‘
The debatement of
accounts strikes an appropriate balance: it prevents unjust
enrichment of the State by ensuring reimbursement
of proven costs,
while upholding the rule of law by denying profit derived from an
unconstitutional interference’.
[45]
Central to the alternative relief now sought by Amahlo, are the rule
35(12) documents. The draft order proposed by Amahlo is
based on a
statement and debatement of the rule 35(12) documents, in accordance
with the following procedure: the documents must
be provided to the
auditor, for compiling a report, then debatement thereof by the
parties, and finally, acceptance by the court
eventually adjudicating
the matter. The documents received scant attention in the court a
quo: they were not referred to in the
answering affidavit, they were
requested by GEP, in the rule 35(12) notice I have alluded to, and
once the documents were delivered
as attachments to Amahlo’s
reply to the rule 35(12) notice, no further steps were taken by
Amahlo to elevate them into evidence,
or to explain the documents, or
put them into context.
[46]
Notably, the documents were referred to, albeit sporadically, but no
objection as to admissibility was raised. The parties
referred to the
documents in the heads of argument as well as in argument before the
court a quo. The court a quo further criticised
certain aspects
relating to the financial statements attached to Amahlo’s
answering affidavit, as if the documents had properly
been admitted
into evidence. On examination of the financial statements, the
learned Judge commented as follows:
‘
20. An examination
of the financial statement for the year ending February 2018 shows
that on the income statement, income from
‘sales’ for
2018 is listed as almost R25 million, while ‘cost of sales’
is over R5 million. Gross profit
is listed as over R19 million For
the year ending February 2017 listed on the income statement as a
comparator, ‘sales’
is over R48 million, while ‘costs
of sales’ is just over R23 million. Gross profit is listed as
over R25 million. The
biggest expenditure in each of those years is
‘salaries and wages’. However the names of employees and
what they were
paid is not disclosed.
21. The financial
statements for 2018 and 2019 show similar patterns. Prima facie
Amahlo has retained far more than it has expended,
even taking into
account that it may have received money from more sources than GEP.
It certainly does not show that it has expended
the amounts it ought
to have done in pursuance of Project Vuthela, had it properly carried
it out’.
The
results of the learned Judge’s examination of the financial
statements referred to in the judgment are analogous to results
usually obtained following a statement and debatement. The
appropriateness thereof, without having heard evidence or submissions
of the parties thereto, in my view, cannot be endorsed. But, the
results bring to the fore that expenses were made, in substantial
amounts. Although
ex facie
the financial statements certain
aspects may well justify discovering uncertainties, final views in
making a s 172(1)(b) order
can and should be reserved until a proper
statement and debatement has been conducted.
[47]
This brings me to the content of and weight to be attached to the ENS
report. Amahlo contends, not without justification I
should add, the
report is primarily based on hearsay evidence concerning the vital
aspects necessary to consider a just and equitable
remedy, which
prompted Amahlo in the answering affidavit already, to object to its
admissibility. Amahlo, was not involved in providing
any information
for purposes of the report, for which it was and may well be
criticised, but that does not add to its evidential
weight. The
report is moreover, in any event, premised on the self-declared
limitations recorded therein,
inter alia
, the absence of
financial documents and reliance on unsubstantiated information
received in interviews with certain students and
in brief telephone
conversations held with a number of erstwhile students of Amahlo.
[48]
Regarding the stipends that were paid by Amahlo to students, it is
stated in the ENS report (paragraph 6.16.3):
‘
As part of the MOA
(Memorandum of Agreement), Amahlo was allegedly contracted to place
students into learnerships. If this was correct,
Amahlo only paid the
R1 500 stipends from the GEP’s payments, which would have
resulted in a massive surplus of funds.’
The
reservation as to the correctness of the allegation impacts
negatively on the conclusion. Statements, conclusions and views
expressed in the report are often vague and unverified, for example,
in paragraph 6.23 thereof: ‘The allegation made by several
EEC
students was that they were unaware of the stipend and/or did not
receive any payments’, and in paragraph 6.24: ‘It
is also
alleged that a number of EEC students did not receive the stipends
for 6-12 months’ (emphasis added). The report
states that
Amahlo’s invoices show that 4 332 students were trained. The
ineluctable inference to be drawn however’,
is that the
training must have involved expenses. In argument before this court,
counsel for Amahlo referred to an exercise performed
by junior
counsel, in calculating the expenses reflected in Amahlo’s
invoices forming part of the rule 35(12) documents,
showing,
inter
alia
payments made to students of more than R12 million and
payment to service providers of some R2.5 million.
[49]
The court a quo, on the papers before the court, in my view, was not
in a position to properly consider a just and equitable
remedy. The
fact of other expenditures than payment of stipends was evidently
overlooked. The learned Judge a quo criticised Amahlo
for not
providing any reason why the full amount should not be refunded, by
inference casting an onus on Amahlo, which cannot be
reconciled with
the duty of the court, on the evidence before it, to fashion a just
and equitable remedy. The question may well
be asked what options
were available to the court a quo, in the absence of duly admitted
documents or, more importantly, not having
heard oral evidence.
Placing myself in the position of the court a quo, I would have
referred the determination of the amount to
be repaid by Amahlo,
based on the dictum in
Caledon
and the order granted by the
SCA in
Mafoko
, by way of statement and debatement of the
amount, and the court’s approval of the result thereof, for the
purpose of ensuring
that the remedy to be ordered, will be just and
equitable.
Culpability
of Amahlo
[50]
In
Mafoko
the culpability of the tenderer was prominently
dealt with by the SCA. In this regard, the court held [para 15 and
[20]]:
‘
The exclusion of
benefit, and more particularly profit, from remedial consideration
could also have perverse and undesirable consequences.
The conduct of
a person awarded a tender that is found to be unlawful falls within a
spectrum of culpability. Such a person may
be complicit in the
unlawful conduct or innocent of it, with degrees of turpitude or
blamelessness between these polarities.
But
I consider the just and equitable discretion is better conceived as
the Constitution intended, without preconception as to depravity
that
has befallen its promise. This said, once there is evidence that a
tenderer is not blameless, or worse, actively complicit
in the
illegality that has rendered the award of the tender invalid, then
courts will be astute to apply the age-old maxim that
such a tenderer
cannot profit from its own wrongdoing.’
Although
the SCA in
Mafoko
accepted, without finding, that Mafoko is
positioned on the blameless end of the spectrum that was postulated,
one of the matters
requiring consideration to make an order that is
just and equitable, in the circumstances of that case, is whether
Mafoko was entirely
blameless for the unlawful award of the tender to
it.
[51]
The culpability of Amahlo does arise in this matter. The court a quo
in dealing with the facts underpinning the third impugned
decision,
inter alia
refers to the MoA, which, as I have alluded to,
initially provided for the creation of 75 000 job opportunities for
which it would
be paid R65m, which was by way of an addendum, was
reduced to 5 000 job opportunities, whilst the contract price
remained unchanged.
Amahlo’s representative who signed the
addendum, and also deposed to the answering affidavit, explained that
Amahlo was unable
to perform in terms of the MoA, but the learned
judge continued, no explanation was given ‘of why being unable
to perform
already, two months into the contract period, Amahlo
should be given such an advantageous amendment to the terms,
particularly
that the amount being paid by (sic) should remain the
same’. I should add that Amahlo’s representative in the
answering
affidavit, agrees that the number of job opportunities was
reduced to 5 000 in the addendum, which he states, Amahlo complied
with
within three years. He further states that GEP ‘should
know’ that the original target was beyond the reach of Amahlo.
Although the third decision was reviewed and set aside, the learned
Judge did not make any finding as to the culpability of Amahlo
in
regard thereto. While I am in agreement that the questions posed and
reservations raised by the learned Judge a quo to which
I have
alluded, are relevant, they are in my view not decisive. The issue as
to culpability is multifaceted: it cannot be determined
superficially
on inferences and uncorroborated evidence: once found to be present,
the culpability must be positioned within a
spectrum of culpability,
having regard to degrees of turpitude or blamelessness between these
polarities, in order to ensure a
just and equitable order. The court
a quo was not sufficiently informed of all relevant evidence to
determine culpability; it made
no finding on culpability and this
court is unable on the record before it, to properly do so.
Conclusion
[52]
In
Caledon
the SCA expounded on the discretion to be exercised
in terms of
s 172(1)(b), as follows:
‘
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
([2015] ZACC 22,
2015 (5) SA 245
(CC)), 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.’
It
is my finding that the court a quo has not properly exercised its
discretion in ordering the repayment in paragraph 2 of the
order.
‘Justice and equity are capacious concepts. Its boundaries may
be uncertain, but it is designed to render a nuanced
judgment as to
what order will be just and equitable’ (
Mafoko
, para
[28]). Such an order was not rendered by the court a quo. The order
cannot stand.
[53]
The court is required to consider a number of matters, having been
informed of the relevant evidence and arguments. The evidence,
where
appropriate, as in this matter, may consist of oral evidence as well
as documentary evidence, as in an ordinary civil suit.
The matter
must accordingly, be remitted to the high court, before a differently
constituted bench, for such determination and
finalisation. The order
I propose to make will make provision for the determination of
culpability prior to and separately from
the determination of a just
and equitable order, for the reason that a finding on culpability may
be dispositive of the remainder
of the issues.
Costs
[54]
Except for the costs of the condonation and re-instatement
application which must be borne by Amahlo, in accordance with its
tender to pay those costs, the remainder of the costs of the appeal
will be reserved.
Court
Record on CaseLines
[55]
I am constrained to comment on the confusion caused by the record of
this appeal, which regrettably was ineptly uploaded onto
CaseLines.
For some unknown reason, two records were uploaded, one the original
and the other an updated record. Some documents
only appear in the
original record, which resulted in continuous shuttling between two
records to search for and find the document
required. The odd
numbering of documents, likewise, was seemingly incorrect and the
search function proved to be of no assistance.
At the hearing before
us, much time was wasted in searching and finding documents referred
to by counsel necessitating third party
on-screen directions to
documents. Practitioners are once again reminded of the duty to
verify the correctness of the record on
CaseLines, prior to the
hearing of matters, failing which, adverse orders may be expected.
Order
[56]
In the result the following order is made:
1.
The appellant’s application for
condonation and re-instatement of the appeal is granted.
2.
The appellant shall pay the costs of the
application to compel and the application for condonation and
re-instatement of the appeal,
on scale C.
3.
The appeal is upheld.
4.
The costs of the appeal are reserved for
determination by the court making and final order in this matter.
5.
The matter is remitted to the high court,
before a differently constituted Bench, to determine the orders it
should make in terms
of section 172(1)(b) of the Constitution, after
securing such production of evidence from the parties as the high
court considers
warranted and inviting further submissions from the
parties.
6.
The High Court may issue such further
directions as may be considered necessary for a proper determination
of the issues.
7.
The High Court seized with the hearing of
the matter, shall determine the issue of culpability, as set out in
this judgment, separately
before determination of a just and
equitable remedy.
FHD
VAN OOSTEN
JUDGE
OF THE HIGH COURT
I
agree.
R
STRYDOM
JUDGE
OF THE HIGH COURT
I
agree.
RMJ
MOULTRIE
JUDGE
OF THE HIGH COURT
COUNSEL
FOR APPELLANT
ADV
S VIVIAN SC
ADV
J BHIMA
APPELLANT’S
ATTORNEYS
TRACEY
LOMAX ATTORNEYS
COUNSEL
FOR RESPONDENT
ADV
MZ GWALA
RESPONDENT’S
ATTORNEYS
EDWARD
NATHAN SONNENBERGS INC
DATE
OF HEARING
DATE
OF JUDGMENT
25
FEBRUARY 2026
30
APRIL 2026