THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 1329/2021

In the matter between:
THE SPECIAL INVESTIGATING UNIT
APPELLANT

and

PHOMELLA PROPERTY INVESTMENTS
(PTY) LTD
FIRST RESPONDENT

REBOSIS PROPERTY FUND LIMITED                  SECOND RESPONDENT

Neutral citation: The Special Investigating Unit v Phomella Property Investments
(Pty) Ltd and Another (Case no 1329/2021) [2023] ZASCA 45
(3 April 2023)
Coram:
VAN DER MERWE, NICHOLLS, GORVEN, MATOJANE and
MOLEFE JJA
Heard:
22 February 2023
Delivered: This Judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of
Appeal website and release to SAFLII. The date and time for hand-
down is deemed to be on 10h00 on 3 April 2023.

Summary: Administrative law – lease declared unlawful – equitable relief under
s 172(1)(b) of the Constitution – true discretion – test for interference on appeal –
no misdirection on fact or law – no basis to interfere.

__________________________________________________________________
ORDER
______________________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Rabie J, sitting as
court of first instance):
The appeal is dismissed with costs, including the costs of two counsel where so
employed.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Gorven JA (Van der Merwe, Nicholls, Matojane and Molefe JJA concurring)
[1] This matter arises from a lease of the SALU building in Pretoria to
accommodate the Department of Justice and Correctional Services (the DOJ). It was
concluded between the Department of Public Works (the DPW) and the owner,
Phomella Property Investments (Pty) Ltd, the first respondent (Phomella). The
building and lease were subsequently transferred to the second appellant, Rebosis
Property Fund Limited (Rebosis). Phomella and Rebosis were part of the same group
of companies whose guiding mind was a certain Mr Ngebulana. The lease was
concluded on 22 September 2009 for a period of  9 years and 11 months. It was
concluded after utilising the procedure for a negotiated lease rather than an open
bidding process. Authority to conclude the lease was subject to the condition that,
prior to signature, an assessment of the space required by the DOJ was to be
conducted. Despite this not having been done, the lease was signed.

[2] In February 2017, the Special Investigating Unit (the SIU), the appellant,
launched an application in the Gauteng Division of the High Court, Pretoria (the
high court). The initial relief sought was that the lease be reviewed and set aside as
void ab initio. By the time the matter came before the high court, the lease had run
its course. As a result, the SIU did not persist in that relief. It simply sought an order
declaring the lease agreement to be unlawful. In addition, the SIU sought an order
that Phomella and Rebosis should jointly and severally pay the Minister of Public
Works the amount of R103 880 357.65. This was said to represent wasteful
expenditure incurred during the lease. It was contended that an area greater than was
needed by the DOJ had been leased. The figure represented the SIU’s calculation of
the rental which had been paid for that excess area.

[3] The declaration of unlawfulness was sought in terms of s 172(1)(a) of the
Constitution. Two bases for this relief were relied on. First, that the DPW had failed
to follow an open bidding process in concluding the lease. Secondly, and if it was
found that a negotiated lease was competent, the prior requirement of a needs
assessment of the space required by the DOJ had not been met. The prayer for
payment of R103 880 357.65 was sought under the provisions of s 172(1)(b) of the
Constitution.

[4] The high court, per Rabie J, declared the lease unlawful but dismissed the
further relief sought by the SIU under s 172(1)(b) of the Constitution. There is no
appeal against the declaration of unlawfulness which, accordingly, stands. The SIU
sought leave to appeal against the refusal to make an order under s 172(1)(b) of the
Constitution. That leave was granted by the high court. In essence, therefore, this
appeal concerns whether the high court’s application of the provisions of s 172(1)(b)
of the Constitution warrant interference by this Court.

[5] It is important to note the basis on which the high court granted the
declaration. Section 172(1)(a) of the Constitution reads:
‘When deciding a constitutional matter within its power, a court –
(a) must declare that any law or conduct that is inconsistent with the Constitution is invalid to the
extent of its inconsistency . . .’
The lease had to comply with the provisions of the Supply Chain Management
Policy of the DPW1 which give effect to constitutional prescripts. In certain
circumstances, it permits a negotiated process instead of an open bidding process.
Of the two grounds advanced by the SIU, the high court found that there was
insufficient evidence to conclude that a negotiated process had not been properly
decided upon. Accordingly, the failure to follow an open bidding process and the
utilisation of a negotiated process in concluding the lease could not be declared
unlawful. The high court granted the declaration because the approval to contract
was subject to a complete needs assessment being conducted prior to signature. As
mentioned above, this was not complied with and the conduct in concluding the lease
accordingly failed to comply with the Supply Chain Management Policy of the
DPW. This implicated s 172(1)(a) of the Constitution. The high court was thus
obliged to make the declaration of invalidity.2

[6] The peremptory requirement of s 172(1)(a) of the Constitution is to declare
that ‘law or conduct that is inconsistent with the Constitution is invalid to the extent
of its inconsistency’. No less, no more. Accordingly, any order which goes beyond
such a declaration is not one made under s 172(1)(a). The SIU, however, called in

1 This is found in Notice 1665 of 2005 published in Government Gazette Number 278985 of September 2005 and is
titled, ‘Department of Public Works: Space Planning Norms and Standards for Office Accommodation used by Organs
of State.’
2 The high court declared the lease to be unlawful whereas s 172(1)(a) requires a declaration of invalidity. Nothing
turns on the distinction.

aid the matter of South African Broadcasting Corporation SOC Ltd and Another v
Mott MacDonald SA (Pty) Ltd (Mott MacDonald), where Keightley J held:
‘I have found that the awarding of the consulting contract was done irregularly in contravention of
the SABC's regulatory procurement framework. As such, it undermines the principle of legality
and is unlawful. Under section 172(1)(a), I am enjoined to set it aside and to declare it to be void ab
initio.’3

[7] The dictum in Mott MacDonald conflated the two subsections of s 172(1) of
the Constitution: a declaration of invalidity under s 172(1)(a) and a just and
equitable order under s 172(1)(b). The setting aside and the declaration of voidness
are orders which fall under the latter section. The distinction between the two
subsections was explained in Bengwenyama Minerals (Pty) Ltd and Others v
Genorah Resources (Pty) Ltd and Others (Bengwenyama):
‘It would be conducive to clarity, when making the choice of a just and equitable remedy in terms
of PAJA, to emphasise the fundamental constitutional importance of the principle of legality,
which requires invalid administrative action to be declared unlawful. This would make it clear that
the discretionary choice of a further just and equitable remedy follows upon that fundamental
finding. The discretionary choice may not precede the finding of invalidity.’4

[8] The declaration of unlawfulness by the high court brought into play the
provisions of s 172(1)(b) of the Constitution. This reads:
‘(1) When deciding a constitutional matter within its power, a court–
. . .
(b) may make any order that is just and equitable including–
(i)  an order limiting the retrospective effect of the declaration of invalidity; and

3 South African Broadcasting Corporation SOC Ltd and Another v Mott MacDonald SA (Pty) Ltd [2020] ZAGPJHC
425 (GJ) (Mott MacDonald) para 87.
4 Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others [2010] ZACC 26; 2011 (4)
SA 113 (CC); 2011 (3) BCLR 229 (Bengwenyama) (CC) para 84.

(ii) an order suspending the declaration of invalidity for any period and on any conditions,
to allow the competent authority to correct the defect.’

[9] In State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd
(Gijima), the nature of the remedial power afforded to a court by s 172(1)(b) of the
Constitution was described:
‘…[U]nder s 172(1)(b) of the Constitution, a court deciding a constitutional matter has a wide
remedial power. It is empowered to make “any order that is just and equitable”. So wide is that
power that it is bounded only by considerations of justice and equity.’5
An example of the exercise of that power would be if, after declaring the lease
invalid, the high court had set it aside. It could, in addition, have declared it to have
been void ab initio. It could have preserved the lease if it had a few months to run
and there was insufficient time to conclude a new lease for the DOJ. These are but
some examples of orders which might follow a declaration of invalidity. The only
qualification is that any order made must be just and equitable in the particular
circumstances of the matter.

[10] Such an order clearly involves the exercise of a discretion. The nature of two
kinds of discretions has been decisively established:
‘A discretion in the true sense is found where the lower court has a wide range of equally
permissible options available to it. This type of discretion has been found by this court in many
instances, including matters of costs, damages and in the award of a remedy in terms of s 35 of the
Restitution of Land Rights Act. It is “true” in that the lower court has an election of which option
it will apply and any option can never be said to be wrong as each is entirely permissible.

5 State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited [2017] ZACC 40; 2018 (2)
BCLR 240 (CC); 2018 (2) SA 23 (CC) (Gijima ) para 53.

In contrast, where a court has a discretion in the loose sense, it does not necessarily have a choice
between equally permissible options. Instead, as described in Knox, a discretion in the loose sense
—
“means no more than that the court is entitled to have regard to a number of disparate and
incommensurable features in coming to a decision”.’6

[11] There are different tests for interference by an appeal court, depending on the
nature of the discretion exercised by a lower court. As regards a loose discretion:
‘. . . an appellate court is equally capable of determining the matter in the same manner as the court
of first instance and can therefore substitute its own exercise of the discretion without first having
to find that the court of first instance did not act judicially.’7
The approach on appeal against the exercise of a true discretion, however, is very
different:
‘When a lower court exercises a discretion in the true sense, it would ordinarily be inappropriate
for an appellate court to interfere unless it is satisfied that this discretion was not exercised —
“judicially, or that it had been influenced by wrong principles or a misdirection on the facts, or
that it had reached a decision which in the result could not reasonably have been made by a court
properly directing itself to all the relevant facts and principles”. [Footnote omitted.]
An appellate court ought to be slow to substitute its own decision solely because it does not agree
with the permissible option chosen by the lower court.’8

[12] This Court has confirmed that the discretion exercised under s 172(1)(b) of
the Constitution is a true one:
‘The exercise of a remedial discretion under s 172(1)(b) of the Constitution…constitutes a
discretion in the true sense. It may be interfered with on appeal only if [the appeal court] is satisfied

6 Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another [2015]
ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) (Trencon) paras 85 and 86.
7 Ibid para 87.
8 Ibid para 88.

that it was not exercised judicially, or had been influenced by wrong principles or a misdirection
of the facts, or if the court reached a decision which “could not reasonably have been made by a
court properly directing itself to all the relevant facts and principles”. Put simply, the appellants
must show that the high court’s remedial order is clearly at odds with the law.’9

[13] The high court, in the exercise of its true discretion, declined to make any
order under s 172(1)(b). Thus the question is whether the SIU has shown any of the
aforementioned grounds for interference with the exercise of that discretion.

[14] The first ground relied on by the SIU was a submission that the high court was
influenced by a wrong principle on the basis of another dictum in Mott MacDonald:
‘In the first place, as this Court found in Vision View, the principle is clear: even an innocent
tenderer has no right to retain what it was paid under an invalid contract. In procurement matters,
the public interest is paramount and the default position ought to be that payments made should be
returned, unless there are circumstances that justify a deviation.’10
The SIU submitted that because the high court had failed to apply that principle, this
Court was at large to reconsider the remedy claimed.

[15] The question is whether any such principle applies to the exercise of a
discretion under s 172(1)(b). In support of the dictum that ‘even an innocent tenderer
has no right to retain what it was paid under an invalid contract’, Keightley J cited
the full court judgment in Special Investigating Unit and Another v Vision View
Productions CC.11 In turn, that court cited as authority for the proposition Allpay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer,

9 Central Energy Fund SOC Ltd and Another v Venus Rays Trade (Pty) Ltd and Others [2022] ZASCA 54; 2022 (5)
SA 56 (SCA) (Central Energy Fund) para 43.
10 Mott MacDonald para 91.
11 Special Investigating Unit and Another v Vision View Productions CC [2020] ZAGPJHC 421 para 63.

South African Social Security Agency and Others (Allpay 2), where the
Constitutional Court said:
‘… It [Cash Paymaster] has no right to benefit from an unlawful contract. And any benefit it may
derive should not be beyond public scrutiny.’12

[16]  This requires careful evaluation. First, the dictum in Allpay 2 stopped well
short of what was held by Keightley J. She said, ‘even an innocent tenderer has no
right to retain what it was paid under an invalid contract’. But the full dictum in
Allpay 2 was:
‘It is true that any invalidation of the existing contract as a result of the invalid tender should not
result in any loss to Cash Paymaster. The converse, however, is also true. It has no right to benefit
from an unlawful contract. And any benefit it may derive should not be beyond public scrutiny.’13
A contextual reading of this dictum in Allpay 2 clarifies matters. The Constitutional
Court did not require Cash Paymaster Services (Pty) Ltd (Cash Paymaster) to repay
amounts paid to it under what was found to be an unlawful contract. In the exercise
of its discretion, the Constitutional Court ordered that a new tender be issued but
that:
‘If the tender is not awarded, the declaration of invalidity of the contract in para 1 above will be
further suspended until completion of the five-year period for which the contract was initially
awarded’.14
When the tender had not been awarded within the five year period, in the follow-up
matter of Black Sash Trust v Minister of Social Development and Others (Freedom
Under Law Intervening), the Constitutional Court granted an order further

12 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social
Security Agency and Others [2014] ZACC 12; 2014 (4) SA 179 (CC); 2014 (6) BCLR 641 (Allpay 2) para 67.
13 Ibid para 67.
14 Ibid para 4 of the order.

suspending the order of invalidity for a period of twelve months and requiring Cash
Paymaster to continue its services for that period, explaining:
‘…Our order below reflects that SASSA and [Cash Paymaster] should continue to fulfil their
respective constitutional obligations in the payment of social grants for a period of 12 months as
an extension of the current contract.’15 (My emphasis.)

[17] To that extent, Cash Paymaster benefited despite the initial contract having
been found to be unlawful. There was no order that the amounts paid and to be paid
should exclude the profits it had factored into its price when tendering. On the
contrary, in Allpay 2, the only order concerning those profits was that:
‘Within 60 days of the completion of the five-year period for which the contract was initially
awarded, Cash Paymaster must file with this court an audited statement of the expenses incurred,
the income received and the net profit earned under the completed contract.’16
Such an order was designed to give effect to that part of the dictum which held that,
‘… any benefit it may derive should not be beyond public scrutiny.’

[18] A careful and contextual reading of Allpay 2 thus shows that the Constitutional
Court did not hold that a party could derive no benefit from an unlawful contract.
The approach in Allpay 2 of allowing a party to retain payments, and thus to benefit,
under an unlawful contract has been echoed in a number of matters.17 One such
example is found in Buffalo City, where the majority in the Constitutional Court
held:
‘…I therefore make an order declaring the Reeston contract invalid, but not setting it aside so as
to preserve the rights to [which] the respondent might have been entitled. It should be noted that

15Black Sash Trust v Minister of Social Development and Others (Freedom Under Law NPC Intervening) [2017]
ZACC 8; 2017 (3) SA 335 (CC); 2017 (5) BCLR 543 (CC) para 50.
16 Allpay 2, paragraph 4.2 of the order.
17 See eg Gijima para 54.

such an award preserves rights which have already accrued but does not permit a party to obtain
further rights under the invalid agreement.’18
There, too, the contractor had performed its obligations under the contract. The
Constitutional Court held that the contractor was entitled to payment for the work
which had been done.

[19] Therefore, it must be said that the ‘principle’ relied upon by the SIU as set out
in Mott MacDonald is no principle at all. The same must be said of the following
dictum in Central Energy Fund:
‘The second guiding principle is the “no-profit-no-loss” principle which the Court articulated as
follows:
“It is true that any invalidation of the existing contract as a result of the invalid tender should not
result in any loss to Cash Paymaster. The converse, however, is also true. It has no right to benefit
from an unlawful contract.”’19
Deriving as it does from the same dictum in Allpay 2, it is clearly wrong and should
not be followed. Therefore, the failure of the high court to apply the ‘principle’ relied
upon by the SIU does not afford a basis to interfere with the true discretion exercised
by the high court in the present matter.

[20] Because there is a true discretion to be exercised under s 172(1)(b) of the
Constitution, it is unwise to elevate dicta dealing with the facts in past matters to
rules or principles. The discretion must be exercised on a case-by-case basis. This
was clearly articulated in Bengwenyama, where the Constitutional Court held:
‘I do not think that it is wise to attempt to lay down inflexible rules in determining a just and
equitable remedy following upon a declaration of unlawful administrative action. The rule of law

18 Buffalo City para 105.
19Central Energy Fund para 41.

must never be relinquished, but the circumstances of each case must be examined in order to
determine whether factual certainty requires some amelioration of legality and, if so, to what
extent.’20
This, of course, accords with the broad remedial powers with which courts are
clothed under s 172(1)(b) of the Constitution.

[21] The second basis on which the SIU relied was its contention that the high court
misdirected itself on fact. It submitted that paragraph 57 of the judgment of the high
court was factually incorrect. That paragraph reads:
‘During its investigation many years after the event, the applicant found minutes of meetings
referring to the requirement of a needs assessment which had to be done prior to the signing of the
lease agreement. I mentioned above that certain documents were found reflecting the needs of
some of the sections of the DOJ but no comprehensive document as was required according to the
applicant. The applicant then took it upon itself to compose such a needs assessment
retrospectively and on the basis thereof submitted that the DOJ only required approximately 75%
of the SALU building.’
The SIU objected to the last sentence in particular.

[22] The context of this paragraph is important. The high court had considered the
contention that the lease was rendered unlawful because an open bidding process
had not been followed. It had found that this case was not made out. It then turned
its attention to the second basis on which the SIU contended that the lease was
unlawful, namely, the fact that no needs assessment had been conducted prior to
signature of the lease. This paragraph considers that issue.

20 Bengwenyama para 85.

[23] The high court did not find that the DOJ actually required more than the 75
percent spoken of. It found that no composite needs assessment had been performed
prior to signature and held, on that basis, that the conclusion of the lease was
unlawful. That paragraph was directed to the enquiry conducted under s 172(1)(a)
of the Constitution. It is that finding which led to the peremptory declaration of
unlawfulness under that section. I can find no such factual misdirection in that
paragraph and, if there was any misdirection, it was certainly not material to the
exercise of the discretion under s 172(1)(b) of the Constitution. Paragraph 57 of the
high court judgment is thus no basis on which to interfere with the true discretion
exercised by the high court.

[24] Our courts distinguish between third parties who are complicit in corruption
or impropriety and those who are innocent parties.21 The SIU submitted that both the
extent of, and the manner in which, officials of the DPW committed breaches of
requirements reflected malfeasance. It submitted that the high court misdirected
itself in failing to find that the guiding mind behind Phomella and Rebosis,
Mr Ngebulana, was complicit in this malfeasance and knew that the conduct of the
officials in concluding the lease was unlawful. The primary thrust of this submission
was that he was aware of the need for an open bidding process. Since there is no
appeal against the finding that there was no evidence that such a process was
required in the circumstances, that contention cannot found complicity on the part
of Mr Ngebulana.

[25] The high court considered whether there was evidence that Phomella, Rebosis
or persons associated with them, or Mr Ngebulana himself, were aware of the

21 Central Energy Fund para 42.

requirement for a needs assessment prior to signature of the lease. It held that there
was no such evidence. That finding is manifestly correct. This was also no basis for
the high court to have inferred complicity on the part of the respondents. Its finding
in this regard cannot be faulted.

[26] The SIU also submitted that the high court ought to have found that there was
complicity on the part of the respondents due to the restructuring of the property
portfolio of Phomella and other entities under the control of Mr Ngebulana. The
various entities under his control transferred properties into Rebosis so as to facilitate
its listing on the Johannesburg Stock Exchange. As part of that exercise, Mr
Ngebulana requested that the DPW transfer the lease over the SALU building to
Rebosis. The various interlinking agreements which achieved the restructuring were
made subject to the consent of Mr Ngebulana. Prior to the listing, the Amatola
Family Trust (the Trust), of which Mr Ngebulana was the guiding mind, owned the
Billion Group which in turn held all of the shares in Phomella. The Trust also owned
100 percent of the shares in Rebosis prior to the listing. I cannot see how this in any
way leads to an inference of complicity. Businesses the world over restructure to
their advantage without nefarious purpose or knowledge. There is no evidence that
this restructuring exercise was any different.

[27] The refusal of the high court to exercise its discretion to order Rebosis to pay
the almost R104 million requested by the SIU was based on the following findings
and considerations. The respondents were unaware of any irregularities in the
conclusion of the lease. The respondents were unaware of any contention that the
DOJ required less than the entire SALU building. The DOJ in fact occupied the
entire building for the duration of the lease. The rental charged was a market-related
one. In order to prepare the building for occupation by the DOJ, Phomella had

cleared it of some 100 tenants. It had spent more than R81 million in refurbishing
the building. It had been informed by the DPW that all of the requisite formalities
for the conclusion of the lease had been complied with. No undue benefit was
received under the lease by Phomella, Rebosis or Mr Ngebulana.

[28] None of the findings of the high court can be faulted. The consideration of
those facts in the exercise of the high court’s discretion cannot be faulted. It
accordingly cannot be said the exercise of the high court’s true discretion is subject
to interference by an appeal court. For these reasons, there is no basis on which this
court can uphold the appeal.

The appeal is dismissed with costs, including the costs of two counsel where so
employed.

____________________
T R GORVEN
JUDGE OF APPEAL

Appearances

For the appellant:

R J Raath SC and J A Motepe SC
Instructed by:

The State Attorney, Pretoria
The State Attorney, Bloemfontein

For the respondents:
J Babamia SC (heads also prepared by
M Mbikiwa)
Instructed by:
Norton
Rose
Fulbright
South
Africa
Incorporated, Johannesburg
Webbers Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
3 April 2023
Status:
Immediate

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.

The Special Investigating Unit v Phomella Property Investments (Pty) Ltd and
Another [2023] ZASCA 45

Today the Supreme Court of Appeal dismissed with costs an appeal from a judgment
of Rabie J in the Gauteng Division of the High Court, Pretoria (the high court). The
matter arose from a lease of the SALU building in Pretoria to accommodate the
Department of Justice and Correctional Services (the DOJ). It was concluded
between the Department of Public Works (the DPW) and the owner, Phomella
Property Investments (Pty) Ltd, the first respondent (Phomella). The lease was
concluded on 22 September 2009 for a period of 9 years and 11 months. It was
concluded after utilising the procedure for a negotiated lease rather than an open
bidding process. Authority to conclude the lease was subject to the condition that,
prior to signature, an assessment of the space required by the DOJ was to be
conducted. Despite this not having been done, the lease was signed.

In February 2017, the Special Investigating Unit (the SIU) applied in the high court
for the lease to be declared unlawful and for an order that Phomella and Rebosis
pay to the DPW the sum of R103 880 357.65. This was said to represent wasteful
expenditure incurred during the lease. It was contended that an area greater than

was needed by the DOJ had been leased. The figure represented the SIU’s
calculation of the rental which had been paid for the supposed excess area. The high
court declared the lease unlawful on the basis that the condition to which signature
of the lease was subject had not been complied with. It declined, however, to order
payment of the amount claimed to represent wasteful expenditure.

The basis for the declaration was s 172(1)(a) of the Constitution which requires a
court to declare conduct invalid where it is inconsistent with the Constitution. A
discretion then arises under s 172(1)(b) whereby a court may make any order that
is just and equitable.

The Supreme Court of Appeal rejected the argument that, where the lease was held
to be unlawful, it was necessary to set it aside and declare it to have been void ab
initio. That is because the enquiries under these two subsections are discreet and
not to be conflated. Section 172(1)(a) obliged a court to declare conduct invalid. No
more no less. Any additional order fell such as setting aside a contract fell within the
ambit of s 172(1)(b).

The discretion exercised under s 172(1)(b) is a true one. As such, an appeal court
can interfere with it only if it is not exercised ‘judicially, or that it had been influenced
by wrong principles or a misdirection on the facts, or that it had reached a decision
which in the result could not reasonably have been made by a court
properly directing itself to all the relevant facts and principles’.

The SIU contended that where a contract has been declared unlawful, the party
concerned may not benefit from it. This, however, was based on an incorrect reading
of the dictum of the Constitutional Court in Allpay Consolidated Investment Holdings
(Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency
and Others (Allpay 2) relied upon by the SIU. Because the discretion is a true one,
it is not appropriate to lay down inflexible rules. The remedial power of a court is a
wide one, subject only to its being just and equitable. As such, it cannot be based on
a principle of no profit, no loss, but on a consideration of the pertinent facts of each

case.

After evaluating the grounds relied upon by the SIU, the Supreme Court of Appeal
held that the SIU had not shown that the true discretion exercised by the high court
met the threshold for interference on appeal. Its approach could not be faulted. As a
consequence, the appeal was dismissed with costs, including those of two counsel
where so employed.