Gobela Consulting CC v Makhado Municipality

Gobela Consulting CC submitted an unsolicited proposal to Makhado Municipality to provide anti-corruption training services. The municipal manager accepted the proposal without following an open tender process and without proper authorisation under applicable procurement laws. Gobela undertook preparatory steps but never performed the training after being instructed to halt due to internal municipal issues. Gobela later invoiced the municipality for the full contract amount and sued for damages for breach of contract. The municipality defended the claim by alleging that the contract was invalid and unlawful as it contravened s 217 of the Constitution, the Municipal Finance Management Act, and its Supply Chain Management Policy.

The appeal was dismissed with costs, and the High Court’s decision dismissing Gobela’s claim was upheld.

The case clarifies that courts may entertain collateral challenges to unlawful public procurement contracts in enforcement proceedings, even where the organ of state has not brought a formal review. It reinforces the primacy of s 217 of the Constitution and affirms that contracts concluded in breach of procurement prescripts are invalid and unenforceable.