The Constitutional Court has partially upheld an appeal brought by the Department of Defence and Military Veterans concerning a healthcare services tender awarded to Zeal Health Innovations (ZIL).
The dispute originated in 2015, when the company was awarded a three-year contract to provide healthcare services to military veterans. While the High Court had previously declared the tender constitutionally invalid and unlawful, the Supreme Court of Appeals had ruled that the company should be compensated for out-of-pocket expenses as a just and equitable remedy.
In a majority judgment delivered by Justice Mathopo, the Constitutional Court examined whether ZIL was entitled to compensation for the period during which services were rendered. The tender had initially reserved 31.6 million rand, though the total projected cost over the three-year term was cited at approximately 198 million rand.
Justice Mathopo emphasized that while benefits arising from an unlawful or invalid contract may be considered when determining a just and equitable remedy, they cannot automatically be treated as an entitlement without independent assessment of all relevant facts. “Depriving innocent contractors of profits earned through legitimate performance may send undesirable message to the business community,” the judgment noted, while cautioning against unwarranted windfalls.
The Court found it would not be just and equitable to preserve ZIL’s contractual rights for the remainder of the three-year period. Such a ruling, the judgment stated, would potentially entitle the company to claim the full contract price or substantial lost profits for a 33-month period from August 2015 to May 2018, despite having rendered services for only two and a half months—a outcome the Court characterized as a windfall rather than compensation.
However, the judgment clarified that the order of constitutional invalidity does not divest ZIL of any rights to which it would have been entitled under the contract for the period from 1 June to 12 June 2015. Furthermore, for the period from 13 August 2015 to May 2018, the company may claim compensation for documented out-of-pocket expenses incurred in maintaining its capacity to provide services or in delivering emergency services to military veterans.
In related legal developments, the African Transformation Movement (ATM) has responded to the President’s application seeking to halt the National Assembly’s impeachment process. ATM leader Vuyo Zungula, who was cited as a respondent in a review application filed before the Western Cape High Court, has written to the President’s legal representatives alleging the use of “Stalingrad tactics” to delay proceedings.
Zungula contended that it would constitute contempt of court for the National Assembly to place the work of the newly established impeachment committee in abeyance pending the outcome of the review application. He emphasized that Parliament is obligated to give effect to the Constitutional Court judgment handed down on 8 May.
The ATM has proposed that the parties approach the Western Cape High Court to seek an expedited hearing date for the review application, suggesting 10–12 August 2026 as suitable dates for the matter to be ventilated before the Superior Court.
