Country Cloud Trading CC v Member of the Executive Council, Department of Infrastructure Development, Gauteng

The Gauteng Department of Infrastructure Development awarded a contract to iLima Projects (Pty) Ltd to complete the Zola Clinic hospital after an earlier joint venture collapsed. iLima lacked liquidity and obtained bridging finance of R12 million from Country Cloud Trading CC under a loan agreement, secured by conditions including repayment from the Department’s initial remobilisation fee. Tau Pride, the Department’s managing agent, undertook in writing to ensure payment to Country Cloud from that fee. Before any payment was made, the Department cancelled the completion contract with iLima, citing alleged misrepresentations regarding tax compliance and accreditation. As a result, iLima could not repay the loan and was later liquidated. Country Cloud sued the Department in delict for pure economic loss, alleging wrongful and intentional interference with its contractual rights under the loan agreement.

The appeal was dismissed. No order as to costs was made.

The case is a leading authority on wrongfulness in delict for pure economic loss, particularly in claims against the State. It clarifies the limited scope of intentional interference with contractual relations and reinforces policy-based limits on extending delictual liability for economic loss to third parties affected by state contractual breaches.