Minister of Transport v Prodiba (Pty) Ltd

In 1997 the Department of Transport awarded a tender for the production and administration of South African drivers’ licences. The contractual rights were ceded to Prodiba (Pty) Ltd and the contract was repeatedly extended, resulting in Prodiba providing the service until 28 February 2014. In February 2013, shortly before his term expired, the Director-General of Transport signed a so‑called “Third Addendum Agreement” with Prodiba, purporting to appoint it for a further five years to produce new smart‑card drivers’ licences, with estimated financial implications of approximately R1.097 billion. This agreement was concluded without a competitive tender process, without Cabinet or Ministerial approval, and in breach of Treasury and statutory requirements. The Acting Director‑General later cancelled the agreement, asserting lack of authority and illegality. Prodiba successfully sought enforcement of the agreement in the North Gauteng High Court, prompting an appeal by the Minister of Transport and the Acting Director‑General to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court order was set aside and replaced with an order dismissing Prodiba’s application, declaring the Third Addendum Agreement void ab initio, and ordering Prodiba to pay the costs of the counter‑application, including the costs of two counsel.

The case is significant for reaffirming strict constitutional and statutory controls over public procurement and public finance in South Africa. It confirms that senior officials cannot bind the state to major, policy‑laden contracts without proper authority and approval, and that unlawful procurement agreements are void. It also underscores the limits of estoppel against the state in cases involving illegality and constitutional procurement principles.