North West Provincial Department of Agriculture, Conservation, Environmental and Rural Development and Another v Bosigo Investment and Trading CC and Another

In July 2006, the North West Provincial Department of Agriculture issued a tender invitation for construction of large and small stock fencing on a rotational basis "as and when required" for 24 months. On 31 October 2006, Bosigo Investment and Trading CC and Keewave Trading 191 CC were jointly appointed as service providers for two years. The letter of appointment stated that it was not an official order and no work should be done until official orders were received. Annexure A listed various fencing projects totaling 926.2 km. During the first year, no orders were given. In the second year, Bosigo received orders for only four projects totaling 58.75 km. Bosigo discovered the Department had re-advertised the tender and awarded work to other service providers, including Selehogoa Trading CC which received an order for 36 km of fencing at Lower Majeakgoro (a project listed in Annexure A). Bosigo instituted action for breach of contract claiming damages of R18,793,629.66 based on alleged entitlement to all projects in Annexure A.

• Whether the contract entitled Bosigo to receive orders for all projects listed in Annexure A as a matter of course, or whether it was an order-based contract dependent on the Department's need
• Whether the Department breached the contract by awarding work to other service providers
• What is the proper method for calculating damages for loss of profit arising from breach of contract
• What evidence must a plaintiff produce to prove saved expenses in a loss of profit claim
• Whether the parties had agreed on the quantum of saved expenses

1. The late filing of the notice of appeal, record of appeal and replying affidavit in the reinstatement application was condoned and the appeal reinstated. 2. The appeal was upheld with costs including those of two counsel. 3. The high court order was set aside and replaced with: "The plaintiff's claim is dismissed with costs including those of two counsel." 4. The cross-appeal was dismissed with costs including those of two counsel.

In a claim for contractual damages based on loss of profit, the plaintiff bears the onus to identify, quantify and prove all saved expenses that must be deducted from the contract price to establish actual damages. Comprehensive disclosure of operational costs through accounting records, audited financial statements, and detailed expenditure documentation is required as a minimum. Saved expenses cannot be presumed, estimated, or established through tender bid documents that were not intended to reflect actual operational costs for damages purposes. An agreement on a tender price is not an agreement on saved expenses for calculating loss of profit. Where a plaintiff fails to produce evidence of saved expenses despite having exclusive knowledge of and access to such information, damages have not been proved on a balance of probabilities and the claim must fail. Furthermore, a tender appointment expressed as being "as and when required" with an express stipulation that the appointment letter is "not an official order" creates an order-based contract dependent on need, not an automatic contractual entitlement to perform all work contemplated in the tender.

The Court observed that the issue of whether Bosigo should have been awarded the orders that went to Selehogoa might be an administrative law issue involving considerations beyond pure contract law, but this was not the relief pursued in the action. The Court also noted that mora interest running from date of demand rather than date of judgment would mitigate any prejudice to the respondent from delays in prosecuting the appeal. On condonation applications, the Court reiterated that while an explanation for delay must be reasonable and cover the entire period, dilatory conduct by attorneys must be weighed against actual prejudice and prospects of success in the interests of justice.

This case establishes important principles regarding the proof of damages in contractual claims for loss of profit, particularly in the public procurement context. It clarifies that: (1) the onus is strictly on the plaintiff to prove saved expenses with comprehensive documentary evidence; (2) tender documents listing material costs are not admissions of saved expenses for damages calculations; (3) courts will interpret "as and when required" language in tender awards as creating order-based contracts, not automatic entitlements to perform all listed work; (4) the comparative method for calculating contractual damages requires rigorous proof of the hypothetical position the plaintiff would have been in but for the breach; and (5) damages cannot be presumed or estimated but must be proved on a balance of probabilities with available evidence. The judgment reinforces the evidentiary burden on plaintiffs in commercial damages claims and provides guidance on contractual interpretation in government procurement matters.