Sakhiwo Health Solutions (Limpopo) (Pty) Ltd v MEC of Health, Limpopo Provincial Government

The Limpopo Department of Health issued a Request for Proposals (RFP HEDP 849/08) in 2008 for an implementing agent to manage the construction, upgrading and post-commissioning maintenance of public health facilities. Sakhiwo Health Solutions was the successful bidder, and a service delivery agreement (SDA) was concluded pursuant to the RFP and bid award. The SDA provided for a 36‑month period, which was extended by a further 18 months to 30 March 2013. A dispute arose when the Department contended that all contractual obligations, including maintenance, terminated on that date. Sakhiwo contended that while the SDA governing construction expired, the maintenance obligations endured for five years after commissioning of each project, as stipulated in the RFP. The Department sought declaratory relief in the High Court that the contract had terminated, while Sakhiwo counterclaimed for continued performance and payment. The High Court held that the entire contract had terminated. Sakhiwo appealed to the Supreme Court of Appeal.

The appeal against the finding that the service delivery agreement expired was dismissed. The appeal against the further declaratory and ancillary orders was upheld with costs. The Court substituted the High Court’s orders with orders directing the MEC to allow Sakhiwo to continue providing facility maintenance services for five years after commissioning of each project, to comply with all contractual obligations, and to pay outstanding and future amounts due. Each party was ordered to pay its own costs in the High Court.

The case is a leading Supreme Court of Appeal authority on contractual interpretation in the context of public procurement. It confirms that an RFP, bid award and subsequent service delivery agreement must be read together as a single contractual matrix, and that courts must adopt a contextual, purposive and businesslike approach to interpretation. It also clarifies the limited application of the Shifren principle and the parol evidence rule in disputes concerning interpretation rather than variation.