Sizazonke Electrical CC v Eskom Holdings SOC Limited

Sizazonke Electrical CC was a service provider listed on Eskom’s database and performed work under bulk and specific contracts governed by the NEC3 Engineering and Construction Contract and Eskom’s safety and procurement policies. On 9 July 2010 Sizazonke transported fourteen employees in a vehicle designed to carry far fewer passengers, without adequate seating or seat belts, in breach of Eskom’s Vehicle and Driver Safety Management Procedure and Health and Safety Standards. The vehicle overturned, causing the deaths of two employees and injuries to others. Eskom issued a temporary work stoppage, conducted a preliminary safety investigation, and later a formal disciplinary and commercial investigation. Following a disciplinary enquiry, Sizazonke was found guilty of serious safety breaches and was suspended from Eskom’s database for five years, resulting in the termination of all existing contracts. Sizazonke’s suspension was later reviewed and set aside as harsh, but without reinstatement of contracts. Sizazonke sued Eskom for damages for loss of profits, alleging that Eskom repudiated the contracts.

The appeal was dismissed with costs. Sizazonke was ordered to pay the costs of the October 2016 postponement, including the costs of two counsel.

The case clarifies the distinction between lawful cancellation following serious contractual breach and repudiation in South African contract law. It affirms that a party acting within contractual and regulatory powers, particularly in response to grave safety violations, does not repudiate a contract. The judgment also reinforces the principle that a party cannot claim damages for loss of profits arising from its own material breach.