Zeal Health Innovations (Pty) Ltd v Minister of Defence and Military Veterans and Another

The Department of Defence and Military Veterans advertised a tender in January 2015 for the provision of healthcare and wellness services to military veterans. Zeal Health Innovations (Pty) Ltd was awarded the tender in May 2015 and concluded a three‑year contract with the Department, signed by the Acting Director‑General. Zeal Health commenced rendering services from 1 June 2015, but the Department failed to pay. Zeal Health approached the High Court for payment, while the Department counter‑applied to review and set aside the tender award, contract, memorandum of understanding, and a government order authorising payment, on the basis that the Acting Director‑General unlawfully committed the Department to expenditure far exceeding its approved budget, contrary to the Public Finance Management Act.

The appeal was upheld in part. The tender award, contract, and all consequential decisions were declared constitutionally invalid, but the declaration was limited so as not to divest Zeal Health of its rights to claim payment for services rendered. The respondents were ordered to pay Zeal Health’s costs in both the High Court and the appeal.

The case clarifies the application of section 172(1) of the Constitution in public procurement disputes, reaffirming that while unlawful contracts must be declared invalid, courts must also fashion just and equitable remedies. It reinforces the protection afforded to innocent service providers and underscores strict compliance with the PFMA and budgetary controls in state contracting.