Case  CCT 48/18
[2026] ZACC 12

Hearing Date:  27 May 2025

 Judgement Date: 08 April 2026

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On 08 April 2026, the Constitutional Court handed down a unanimous judgment in proceedings concerning the determination of profits derived from a contract for the payment of social grants, which had previously been declared unlawful and the appropriate just and equitable remedy following that declaration of invalidity.

This matter formed part of the long-running litigation arising from the unlawful award of a tender for the countrywide payment of social grants. The litigation originated more than a decade ago in AllPay Consolidated Investment Holdings (Pty) Ltd v CEO of SASSA (AllPay I), where the Constitutional Court declared the award of the tender by the South African Social Security Agency (SASSA) to Cash Paymaster Services (Pty) Limited (CPS) constitutionally invalid. Subsequent litigation followed. In AllPay II, the resulting contract was also declared invalid, but the declaration was suspended to ensure the continued payment of social grants. That suspension was later extended in further judgments of this Court, including in Black Sash I and in subsequent proceedings in 2018. During these periods, CPS continued to render services. The Court ordered that CPS’s income, expenses and profits be audited and certified, while leaving open the question whether any profits should be repaid.

The present proceedings arose from an application by Freedom Under Law NPC seeking to compel CPS to furnish information required by National Treasury to determine whether, and in what amount, CPS had made a profit from the unlawful contract. The application also sought consequential relief relating to information held by Lesaka Technologies (Pty) Limited, and an order requiring Treasury to determine CPS’s profit.

Before the matter was heard, CPS was placed in liquidation at the instance of SASSA.

This development became central to the proceedings, as it bore directly on the practical utility of determining CPS’s profits and the nature of any relief that might follow. The Court noted that CPS’s liquidation gave rise to a concursus creditorum, with the effect that the rights of creditors were fixed and had to be pursued within the insolvency process. This had implications for the structuring of relief, including that set-off between claims arising before and after liquidation was generally not permissible.

In earlier proceedings, this Court had directed that a process be followed to enable Treasury to determine CPS’s profit, including independent verification by RAiN Chartered Accountants. Disputes arose regarding the adequacy, relevance and availability of information required for that exercise. A proposal to appoint a referee under section 38 of the Superior Courts Act to resolve these disputes was initially pursued but later abandoned due to practical and administrative difficulties. The matter was then re-enrolled for hearing.

In advance of the hearing, the Chief Justice directed CPS’s liquidator to provide a report on the status of the liquidation, including CPS’s assets and liabilities, prospects of recovery and the status of the liquidation enquiry. The liquidator reported that CPS’s uncontroversial assets amounted to approximately R50 million, while its liabilities substantially exceeded that amount. Significant claims had been proved by SASSA, and further substantial claims had been submitted by the South African Revenue Service. The report indicated that concurrent creditors might receive only a limited dividend, or none at all. Following receipt of the report, the Court issued directions requiring the parties to address the implications of the liquidation and whether it would be in the interests of justice to bring the matter to finality. The Court raised the possibility of determining CPS’s profit on the basis of the audited “certified profit” reflected in reports prepared by KPMG and Mazars, subject to necessary adjustments.

The Court first considered whether it was competent, in proceedings that had initially concerned the provision of information, to determine the ultimate issue of CPS’s profit and whether repayment should be ordered. As none of the parties objected, the Court held that it was empowered to determine this issue, relying on its wide remedial powers under section 172(1)(b) of the Constitution.

The Court noted that the declaration of invalidity in AllPay I had been based on failures by SASSA in the procurement process, rather than wrongdoing by CPS. However, subsequent orders of this Court had made clear that CPS had no entitlement to benefit from an unlawful contract without public scrutiny, and that it was required to account for its gains.

The Court considered the jurisprudence of the Supreme Court of Appeal, including the judgments in Venus Rays Trade, Phomella and Mafoko, concerning whether an innocent contractor may retain profits under an invalid contract. While accepting that an innocent contractor may in some circumstances retain benefits, the Court held that the present case was distinguishable. CPS had performed a public function of constitutional importance and had been held to be an organ of state for purposes of the contract. The continuation of the contract had been ordered to ensure the uninterrupted payment of social grants, not to preserve CPS’s private rights. In that context, the Court held that any benefit derived from the unlawful contract had to be subject to public scrutiny, and that it was just and equitable to consider repayment of profit.

The Court further distinguished this matter from cases such as State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd and Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd, where relief had been crafted to protect the accrued rights of innocent contractors and to prevent organs of state from benefiting from their own delay. By contrast, this case concerned the supervised implementation of an unlawful contract in the public interest, where accountability for public funds was central.

Turning to the factual position, the Court noted that audited reports prepared by KPMG and Mazars reflected a combined certified profit of approximately R252 million. A further verification exercise conducted by RAiN raised concerns regarding the accuracy of that figure and identified areas requiring further investigation. Disputes remained regarding the underlying information and methodology, and Treasury indicated that it was unable to determine a final profit without additional information.

In light of these disputes, and given CPS’s liquidation, the Court considered whether to adopt the certified profit as a baseline. The Court held that this was a sensible and practical approach, as a full factual enquiry would be lengthy, complex and of doubtful utility in circumstances where CPS was insolvent.

The Court then considered the necessary adjustments to the certified profit. It first addressed a High Court judgment delivered by Tsoka J, in terms of which CPS had been ordered to repay approximately R316 million to SASSA, together with interest. The Court found that this amount had not been taken into account in the certified profit and held that the certified profit had to be reduced by the capital amount together with interest. This adjustment was necessary to avoid double recovery.

Secondly, the Court considered retrenchment costs and found that the provision had not been incurred and had to be reversed, resulting in an upward adjustment. Thirdly, the Court considered Broad-Based Black Economic Empowerment expenditure. It accepted the concessions made by CPS’s liquidator and held that the certified profit had to be increased by amounts that were unsupported or improperly allocated. Fourthly, the Court considered SASSA’s claim for payment of services not rendered and held that this amount had to be deducted from the certified profit.

The Court declined to determine whether additional profits had been derived by Lesaka through intra-group transactions or whether there had been impermissible profit shifting, as this would have required a detailed factual enquiry not warranted in these proceedings.

The Court also considered pending litigation in which CPS sought an upward price adjustment from SASSA. It held that, if CPS succeeded, the additional amount would increase CPS’s profit, but CPS would not be required to repay that additional amount as profit to SASSA.

Having regard to all relevant adjustments, the Court concluded that the appropriate adjusted certified profit was R81 286 177.

As to costs, the Court held that the conduct of the parties did not warrant a costs order in favour of any party and ordered that each party bear its own costs.

The Court granted the following order:

• 1. CPS was ordered to refund the adjusted certified profit of R81 286 177 to SASSA, in respect of which SASSA was granted leave to prove a concurrent claim.
• 2. It was declared that, if CPS succeeded in its pending action against SASSA for an upward price adjustment, CPS would not be required to refund any increased price as additional profit.
• 3. Each party was to bear its own costs. 

The Full judgment  here