The Provincial Government of the Eastern Cape and Others v Contractprops 25 (Pty) Ltd

In June 1996 the Eastern Cape Department of Education, Culture and Sport purported to conclude two leases of immovable property with Contractprops 25 (Pty) Ltd without any involvement of the Eastern Cape Tender Board established under the Tender Board Act 2 of 1994. The Department took occupation of the premises and paid rent for approximately three years. When the Department later sought to terminate the leases, the respondent disputed its right to do so. The Provincial Government then contended that the leases were void ab initio because they were concluded without compliance with section 4(1) of the Tender Board Act, which vests the sole power to arrange the hiring of property in the Tender Board. The High Court granted a declaratory order that the leases were valid, prompting an appeal to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the High Court was set aside and replaced with an order dismissing the respondent’s application with costs.

The case is a leading authority on the invalidity of public contracts concluded without compliance with statutory procurement frameworks. It affirms the central role of Tender Boards in provincial procurement, clarifies that non-compliance with exclusive statutory powers renders contracts ultra vires and void, and confirms that estoppel cannot be used to validate unlawful public contracts concluded contrary to legislation enacted in the public interest.