Caledon River Properties (Pty) Ltd t/a Magwa Construction and Another v Special Investigating Unit and Another

Following the declaration of a national state of disaster on 15 March 2020, the Minister of Public Works and Infrastructure authorised emergency procurement for border fencing at the Beitbridge Border Post. On 17 March 2020, officials from the Department met the applicants—Caledon River Properties t/a Magwa Construction (Magwa) and Profteam CC (Profteam)—who were already on site under a separate contract. They were appointed on 18 March 2020 without competitive bidding, the project being treated as a variation of the existing contract and thus bypassing the procurement requirements of s 217(1) of the Constitution and applicable Treasury Regulations. Within days, advance payments of approximately 60% of the contract values were made (R21 819 878.28 to Magwa and R1 843 004.92 to Profteam) before any substantial performance. Despite the COVID-19 hard lockdown, the applicants completed the 40 km fence by 20 April 2020. The Special Investigating Unit (SIU) subsequently approached the Special Tribunal to review and set aside the appointments and recover the irregular payments. The applicants conceded the merits, agreeing to an order declaring the contracts invalid under s 172(1)(a) of the Constitution. The Tribunal ordered that the applicants be divested of all profits and limited recovery to reasonable expenses. On appeal, the Gauteng full court undertook a detailed analysis of the evidence and exercised the discretion under s 172(1)(b) of the Constitution to reach the same substantive outcome: the applicants were entitled only to reimbursement of reasonable and proven expenditure. Two judges of the Supreme Court of Appeal refused special leave to appeal, prompting the present reconsideration application under s 17(2)(f) of the Superior Courts Act 10 of 2013.

• Whether the requirements for reconsideration under s 17(2)(f) of the Superior Courts Act were met, given that reasonable prospects of success alone are insufficient without special circumstances such as a significant legal question or risk of a grave failure of justice.
• Whether the full court properly exercised its discretion under s 172(1)(b) of the Constitution in fashioning a just and equitable remedy by limiting the applicants to reimbursement of reasonable and proven expenditure rather than permitting retention of profit.
• Whether contractors who are not 'innocent tenderers' but active participants in an irregular procurement process are entitled to retain profits derived from an invalid contract.
• Whether the full court misdirected itself in inferring a lack of innocence on the part of the applicants and equating their conduct to wilful blindness without hearing oral evidence.
• Whether the full court ignored expert evidence on pricing and whether the urgency of the State of Disaster displaced procurement requirements and justified advance payments.

1. The application for reconsideration of the decision refusing special leave to appeal is dismissed. 2. The applicants are ordered to pay the first respondent's costs, including the costs of two counsel where so employed.

In reconsideration proceedings under s 17(2)(f) of the Superior Courts Act 10 of 2013, reasonable prospects of success are necessary but not sufficient; an applicant must demonstrate special circumstances such as a significant legal question or a risk of grave failure of justice. When a court exercises the discretion under s 172(1)(b) of the Constitution to fashion a just and equitable remedy for invalid public procurement contracts, it may deny profit to contractors who are not innocent tenderers but are active, experienced participants in the unlawful process, particularly where they accepted substantial advance payments in contravention of known fiscal safeguards. The 'no profit, no loss' approach—limiting recovery to reasonable and proven expenditure—is a permissible and often appropriate remedy in such circumstances. An appellate court may not substitute its own view merely because it would have exercised the discretion differently; interference is justified only where the discretion was not exercised judicially, was influenced by a material misdirection on the law or facts, or produced a result that no reasonable court, properly directing itself, could have reached.

The Court observed that State Information Technology Agency v Gijima Holdings was distinguishable on the basis that the contractor there relinquished pre-existing and otherwise valid rights pursuant to a settlement agreement, whereas the applicants had no pre-existing entitlement to construct the border fence. The Court quoted with approval from Mafoko Security Patrols that the public good is not inherently opposed to private gain and that legitimate public procurement relies on the normative benchmark of a competitive return for the service provider, although this benchmark did not apply on the facts. The Court also remarked that a 'practical solution' to a looming lockdown does not override statutory prohibitions on the use of public funds; that the urgency created by the State of Disaster did not displace the procurement requirements applicable to government expenditure; and that accepting payment on the mere assurance of 'offices closing' when electronic banking remained functional during lockdowns constituted, at best, wilful blindness.

The judgment reinforces the high threshold for reconsideration applications under s 17(2)(f) of the Superior Courts Act, clarifying that reasonable prospects alone are insufficient. It affirms the broad, context-specific nature of the remedial discretion under s 172(1)(b) of the Constitution in invalid procurement cases and restates that the 'no profit, no loss' principle is an appropriate outcome where contractors are culpable participants in procurement irregularities. It distinguishes between 'innocent tenderers' (who may, in appropriate cases, retain some benefit) and experienced contractors who acquiesce in or are wilfully blind to unlawful processes, holding that the latter are not entitled to a commercial return. The decision also underscores the constrained standard of review applicable to appellate interference with remedial orders under s 172(1)(b).