South African Post Office v De Lacy and Another

The South African Post Office (SAPO) invited tenders for the provision of a biometric payment system for the payment of social grants in the North West Province. A consortium known as Kumo was awarded the contract. Cornastone, an unsuccessful tenderer, did not pursue the matter but ceded any rights it might have had to Brian Patrick De Lacy and Barry Jack Beadon. As cessionaries, they sued SAPO for damages, alleging that the tender was awarded to Kumo through dishonest and fraudulent conduct by SAPO officials. They claimed loss of profits (about R108 million), further profits allegedly lost in other provinces (about R406 million), and alternatively unjust enrichment. The High Court upheld part of the main damages claim, finding dishonesty in the tender process. SAPO appealed to the Supreme Court of Appeal.

The appeal was upheld and the cross-appeal dismissed with costs. The High Court’s orders were set aside and substituted with an order dismissing all the respondents’ claims with costs, including the costs of two counsel.

The case reaffirms and clarifies South African law on delictual liability arising from public procurement. It confirms that unsuccessful tenderers cannot claim damages for lost profits unless they prove dishonest or fraudulent conduct by officials, and not merely irregularities or negligence. The judgment reinforces the restrictive approach to claims for pure economic loss in tender disputes and underscores the high evidentiary burden for alleging corruption in procurement processes.