Meridian Hygiene (PTY) Ltd v Head of the Department of Health, Mpumalanga and Another (3411/2020) [2021] ZAMPMBHC 40 (7 September 2021)

Key Facts

Transaction Type

Issues

• The court needed to determine both the existence of the alleged verbal agreement between Meridian Hygiene and the Mpumalanga Department of Health and its compliance with South African public procurement regulations. This involved assessing whether the agreement was valid in law and whether it was entered into in accordance with the constitutional and statutory framework governing public procurement.
• A second key issue was whether Meridian's R41.5 million claim could be classified as a liquidated amount, given that the terms of the verbal agreement and the amount owed were not explicitly set out in the particulars of claim. The department argued this lack of specificity rendered the claim ineligible for summary judgment.

Holdings

Remedies

• The first and second defendants are granted leave to defend the action
• The applicant shall pay the respondents' costs
• Summary judgment is refused

Contract Value

Legal Principles

• The court emphasized the plaintiff's burden to establish an unanswerable case for summary judgment. It noted that where a defendant raises a 'reasonable possibility of injustice' by demonstrating a triable issue (e.g., disputing the existence or validity of an agreement), the court should exercise discretion against granting summary judgment. This reflects the principle that the plaintiff must meet a high standard to justify summary dismissal of a defense.
• The court applied judicial review principles to assess the validity of a public procurement agreement, holding that administrative acts performed in violation of constitutional and statutory requirements are ultra vires and lack legal force. The judgment references Oudekraal Estates (Pty) Ltd v City of Cape Town, emphasizing that invalid administrative acts do not exist in law and cannot bind parties, even if they exist in fact until set aside. This aligns with the doctrine that public procurement must comply with strict regulatory frameworks, and deviations render agreements void ab initio.

Precedent Name

Cited Statute

• Constitution of the Republic of South Africa
• Public Finance Management Act, 1999

Judge Name

Passage Text

• [8] The department places both the existence and the validity of the alleged verbal agreement in dispute. There is therefore a real triable issue being the existence and the validity of the agreement. I echo what was set out in Maharaj v Barclays National Bank Ltd2 when I evaluate the department's answering affidavit against the particulars of claim: [88] On the contrary Oudekraal lays down a narrower principle that applies in specific circumstances only. That principle draws its force from the distinction between what exists in law and what exists in fact. An invalid administrative act that does not exist in law cannot itself have legal force and effect. Yet the act may still exist in fact, for example an administrative act performed without legal power. It exists in fact until set aside on review. However, since the act does not exist in law, it can have no binding effect.
• [13] ... if the department at trial succeeds in establishing that there was indeed a breach of prescribed processes relating to the alleged procurement from Meridian, Meridian would not be entitled to payment in terms of the verbal agreement. Its remedy, if the goods and services were indeed rendered lies somewhere else, possibly in a claim for enrichment.
• [12] In granting or refusing summary judgment, the court exercises a discretion. [88] ... the court should exercise a discretion against granting such an order where it appears that there exists 'a reasonable possibility that an injustice may be done if summary judgment is granted', the context in which that was said indicates that this precaution applies in situations where the court is not persuaded that the plaintiff has an unanswerable case.

Damages / Relief Type