Cox Yeats

Mongezi Mpahlwa, Partner, Cox Yeats and Tshilidzi Mudau, Candidate Legal Practitioner, Cox Yeats unpack the growing number of cyber-attacks in South Africa in 2025 and beyond, in comparison with previous years, as well as the current trends in the ever-evolving digital world.South Africa remains one of the most targeted countries in the world when it comes to cyberattacks. Interpol's Africa Cyberthreat Assessment Report of 2025 (4th Edition) identifies South Africa as a particularly significant target, especially in the finance and government sectors.According to recent data published by Kaspersky, it was reported that, in the first half of 2025, South Africa experienced more than six million online attack attempts and 10.3 million malware-related incidents including ransomware, banking trojans, spyware, and infostealers.While backdoor attacks surged by 123%, banking trojans and password stealers increased by 136% and 122% respectively compared to 2024[1].The financial toll is staggering. According to the Annual Crime Statistics published by South African Banking Risk Information Centre, banking customers suffered losses in the region of R1.8 billion in 2024 alone.These alarming statistics are backed up by data obtained by the Council of Scientific and Industrial Research, which had previously estimated that cybercrime costs South Africa over R2.2 billion a year. This figure is widely regarded as conservative. Seemingly, small and medium-sized enterprises (SMEs) continue to be the low hanging fruit, with businesses experiencing attempted intrusions on a near-daily basis.Tactics: Old tricks, new sophisticationThe tools of cybercrime remain familiar: phishing, ransomware, business email compromise (BEC), but the execution has become far more sophisticated.Criminals are now using artificial intelligence (AI) to generate phishing emails that are virtually indistinguishable from real correspondence. Deepfake audio and video are being used to impersonate executives on calls, bypassing voice-verification and authorising fraudulent payments[2].BEC remains the most financially damaging cybercrime category in South Africa. Attackers now monitor email chains for weeks, learning the language and approval processes of their targets before striking.Ransomware-as-a-Service (RaaS) has made launching attacks easier than ever. RaaS is an illicit subscription base model where cybercrime developers lease out pre-built ransomware tools and infrastructure to other hackers. Criminal groups sell ready-made toolkits on the dark web, complete with customer support. The result is more attacks by less skilled but highly motivated actors targeting South African businesses.The accessibility of Distributed Denial‑of‑Service (DDoS) – an attack where a large number of devices send huge amounts of traffic or requests to a website, server or network at the same time, overwhelming it and making the service slow or unavailable to legitimate users – and the proliferation of unsecured internet-connected devices (that have weak/default passwords, outdated software, unpatched vulnerabilities, or inadequate security controls) have further widened the attack surface. Criminals no longer need deep technical expertise. They need only a credit card and a target[3].A shift in targeted sectorsFinancial services and government remain prominent targets, but the threat is no longer confined to traditional high-value sectors. Telecommunications, energy and utilities, education and other organisations holding valuable operational or personal data are increasingly exposed[4].Government departments and municipalities have been hit hard, with attacks disrupting service delivery and exposing citizen data. Logistics companies are targeted because taking one down causes cascading disruption across multiple industries. Universities, holding valuable research and personal data on tight budgets, have become soft targets.Energy and utilities have also emerged as a concern, with critical infrastructure attacks drawing attention from both criminal syndicates and state-sponsored actors.The legal landscape tightensThe regulatory environment around cybercrime is tightening, and businesses that are not keeping pace face real consequences. The Cybercrimes Act 19 of 2020 is gaining traction. While the Act has been in force since December 2021, its practical application when it comes to enforcement is maturing.It imposes reporting and preservation obligations on electronic communications service providers and financial institutions in respect of specified offences, requiring reporting to the Beyond direct financial losses, a cyber incident may have wider legal, regulatory and reputational implications for organisations, particularly where personal information is involved.But it is the civil courts that are sending the loudest message to South African businesses and banking customers.If you fail to verify before you pay, you bear the lossThe recent decision by Supreme Court of Appeal (SCA) in Intengo Imoto (Pty) Ltd t/a Northcliff Nissan v Zoutpansberg Motor Wholesalers CC t/a Hyundai Louis Trichardt[5] is now the leading authority on BEC payment risk. In that case, a motor vehicle purchaser made payment by EFT into what turned out to be a fraudulent account after emails were intercepted and banking details altered. The SCA held that, on the facts of the case, the purchaser had failed to discharge its onus of proving payment. Payment into an unauthorised account, without verifying the seller's banking details, did not discharge the purchaser's payment obligation and Hyundai had neglected basic verification steps and failed to verify banking details before transferring funds. Crucially, the SCA rejected the High Court's reasoning that because the seller had chosen EFT and email as its payment and communication methods, it bore the inherent risk of those systems.This decision is underpinned by the SCA's earlier decision in Edward Nathan Sonnenberg Inc v Hawarden[6], where a purchaser transferred R5.5 million into a fraudster's account during a property transaction after intercepted emails altered the conveyancer's banking details. The SCA declined to recognise a general legal duty on creditors to warn debtors about BEC risks, holding that imposing such a duty would create "indeterminate liability" and that the purchaser could reasonably have protected herself by verifying the account details.These principles have been consistently applied across South African courts. In Manganye v National Education Health and Allied Workers Union and Another[7], the High Court stated plainly that "where payment is intercepted or misappropriated by a fraudster, the risk lies with the debtor. It is the debtor's duty to ensure that payment reaches the creditor." Furthermore, the court noted that "it is well-known amongst business professionals who utilize computer-based communication and payment methods that cybercrime is prevalent." While in Gripper & Co v Ganedhi Trading Enterprises CC[8], the court held that paying funds into a fraudster's account after receiving a spoofed email does not discharge the payer's obligations to prudently verify changed banking details.The pattern across all of these cases is unmistakable: if you fail to verify before you pay, you bear the loss. A simple phone call to confirm banking details could prevent millions in losses. Ignorance of the risk is no longer a defence - it is evidence of negligence.Criminals are adopting AI faster than businesses areAI is both the biggest threat and the best defence. Criminals use it to craft convincing attacks. Businesses use it for threat detection and automated response.The problem is that criminals are adopting AI faster than businesses are. SMEs in particular lack the resources to deploy defensive AI effectively, and this gap will only widen without investment in accessible cybersecurity solutions.What must changeCybercrime evolves faster than most defences. Building resilience requires action now:Verification protocols are non-negotiable: Promote basic hygiene like strong passwords, multi-factor authentication, callback verification on payments, and segregation of duties are baseline requirements.Test your incident response plan: A plan that has never been rehearsed will fail under pressure.Review cyber insurance annually: Policy wordings and exclusions must keep pace with the threat.Assess supply chain risk: Your vendors are an attack vector. Due diligence on their cybersecurity is essential.The bottom line is that cybercrime in South Africa has not plateaued, it has accelerated. The question is no longer whether your business will face a cyber incident, but whether it will survive one.The threat has evolved. Have you?

By Randhir Naicker, partner and Chantal Mitchell, partner, Cox Yeats   The question of when a medical scheme may terminate membership due to non-disclosure was considered relatively settled in South African law. However, the Constitutional Court’s decision in Carlo Swanepoel N.O v Profmed Medical Scheme [2024] ZACC 23 has revisited both the duty to disclose and the threshold for material non-disclosure, and for many observers, the Court’s reasoning raises an uneasy question: does it fully reflect the practical realities within which medical schemes operate?   The legislative background   The ability of a medical scheme to terminate membership must be understood within the broader framework of the Medical Schemes Act, 1998, which tightly regulates both access to membership and the terms on which it is granted.   The Act is founded on the principle of open enrolment, requiring medical schemes to admit any applicant who submits a properly completed application. Membership cannot be refused based on age, health status, or claims history, ensuring that access is not influenced by medical risk.   How member contributions are determined   The Act further constrains medical schemes through section 29(1)(n), which regulates how member contributions are determined. Contributions may only be determined based on the chosen benefit option, the number of dependents, and, for certain benefit options, the member’s income, or a combination of these factors. These factors must then be applied consistently across all members within the same benefit option who meet the relevant criteria. Crucially, medical schemes may not differentiate contributions based on age, past or present health, or anticipated healthcare funding needs, nor may medical schemes charge different contributions to members on the same benefit option unless the contributions differ because of income or number of dependents.   A medical scheme is permitted to impose waiting periods   Section 29A addresses the risk of anti-selection, where a person joins a medical scheme in anticipation of imminent medical treatment costs. To mitigate this, a medical scheme is permitted to impose waiting periods in specified circumstances, such as where an applicant has not previously been a member of a medical scheme or has experienced a break in coverage. These waiting periods include a general waiting period of up to three months and a condition-specific waiting period of up to twelve months, depending on the applicant’s prior medical scheme membership history.   If an applicant has not been a beneficiary of a medical scheme for at least 90 days before applying, a medical scheme may exclude cover for prescribed minimum benefits (PMBs) during the applicable waiting period. In all other cases, a medical scheme is required to cover PMBs despite the imposition of waiting periods. This distinction is significant. Where there has been a break in membership of less than 90 days, waiting periods may only be applied in respect of non-PMB conditions. Accordingly, even if a PMB condition is disclosed, a medical scheme remains obliged to provide cover for that condition, whereas cover for non-PMB conditions may be subject to waiting periods. Therefore, under these circumstances, only non-PMB conditions are relevant and material for the purpose of imposing waiting periods.   Historic approach to termination and non-disclosure   In an open enrolment environment and taking into account the limited ability medical schemes have to manage risk and apply traditional underwriting measures, the Council for Medical Schemes historically adopted a pragmatic approach to the non-disclosure of material information. Intention was not considered, and the inquiry was focused narrowly on whether the non-disclosure was material within the narrow scope of the medical scheme’s restricted underwriting ability.   Materiality was assessed with reference to whether the information would have influenced the medical scheme’s underwriting decisions, such as the imposition of waiting periods or late-joiner penalties. If an applicant had not been a beneficiary of a medical scheme for at least 90 days, all conditions (including PMB conditions) were regarded as relevant and required disclosure for underwriting purposes. In all other circumstances under section 29A, only non-PMB conditions were treated as material for underwriting purposes.   The Steyn judgement   Ms Mignon Adelia Steyn (Ms Steyn) applied for membership of Profmed Medical Scheme and was asked whether she or any of her dependants had ever suffered from, or received treatment, advice, or medication for gastric ulcers. She answered “no”, despite having undergone a gastroscopy and colonoscopy that resulted in a diagnosis of gastritis. Her membership commenced on 1 January 2016 but was terminated in November 2016 for non-disclosure of material information.   Both the Council for Medical Schemes and the Appeal Board upheld the termination, finding that the non-disclosure was material as gastritis was a non-PMB condition and the failure to disclose prevented Profmed from imposing a waiting period under section 29A.   The Court was required to determine whether a medical scheme needs only to establish that non-disclosure was objectively material, or whether it must also prove that the non-disclosure induced the scheme to enter into the contract.   Disclosure arises only where the undisclosed condition is truly material   On materiality, the Court held that a duty of disclosure arises only where the undisclosed condition is truly material. But the Act does not define material non-disclosure or set out how materiality should be assessed. The Court noted that this gap is left to medical schemes to regulate through their own rules. While Profmed’s rules referred to cancellation for material non-disclosure, and the application form defined material information relating to the disclosure of medical conditions, the Court was critical that the rules failed to articulate a clear standard for materiality. The Court also rejected the Appeal Board’s rationale that non-PMBs needed to be disclosed in this case as fundamentally flawed.   Crucially, the Court rejected the idea that materiality alone is enough. Section 29(2)(e), it held, does not remove the common-law requirement of inducement. In other words, a medical scheme must still show that the non-disclosure influenced its decision to grant membership. This approach, the Court said, aligns with the Act’s broader purpose of widening access to medical cover.   The Court also stressed that Profmed led no evidence of how it would have treated applicants with similar medical histories who had made full disclosure.   This marks a significant shift in that termination for non-disclosure now requires not only proof of objective materiality, but also evidence that the disclosure would have changed the scheme’s decision-making.   The judgment leaves some uncertainty as to the extent to which broader features of the medical schemes’ statutory environment, including open enrolment, limits on contribution setting, the interaction between PMBs, and waiting periods, were fully factored into the analysis.   How to terminate membership now?   A medical scheme seeking to terminate membership based on non-disclosure will be required to: clearly specify, in its application form and rules, the information it regards as material; and establish the materiality of the non-disclosure, including how it was induced to enter into the contract on those terms; and demonstrate how it would have treated an applicant with a similar medical history who made full disclosure.   ENDS   About Chantal Mitchell   About Randhir Naicker   About Cox Yeats    

State contracts are frequently set aside by courts because proper procurement procedures were not followed. What happens to the contractor who has already done the work in good faith? Can it recover payment, including a profit margin? These questions came before the Constitutional Court in a judgment delivered on 27 May 2026. The Zeal Health Judgment In January 2015, the Department of Military Veterans advertised a tender for the provision of healthcare and wellness services to approximately 16 000 military veterans over three years. Zeal Health Innovations (Pty) Ltd ("ZHI") was awarded the tender on 21 May 2015. The contract value was approximately R198 million over three years. ZHI would receive a fixed monthly fee per registered veteran, regardless of whether each veteran actually sought treatment. ZHI commenced providing services on 1 June 2015. It established a managed healthcare network comprising general practitioners, specialists, pharmacies and other healthcare providers. ZHI submitted its first invoice in July 2015 for approximately R5.2 million. However, the Department failed to pay. The evidence revealed that there had been a change of leadership at the Department and the Minister instructed that ZHI should not be paid because she considered the contract too expensive. On 11 August 2015, the Department informed ZHI that it intended to seek judicial review of the procurement process. ZHI suspended its services the following day. Three invoices totalling R15.7 million were never paid. The High Court The High Court declared both the interim and main contracts unlawful and invalid from the outset. The Court found that the contract price far exceeded the available budget, in breach of public finance legislation. Importantly, the High Court found that there was no evidence that ZHI was complicit in any irregularities. However, having declared the contracts invalid, the High Court did not go on to consider what remedy would be fair to compensate ZHI for services it had already rendered as an innocent contractor. The Supreme Court of Appeal The SCA agreed that the contracts were invalid but found that ZHI, as an innocent party that had rendered services, should not simply walk away empty-handed. It made an order preserving ZHI's contractual rights, meaning that despite the contract being set aside, ZHI could still pursue payment for work done. The Constitutional Court The Department took the matter to the Constitutional Court, arguing that ZHI should be limited to recovering its actual expenses without any profit. The Department relied on what it termed the "no profit, no loss" principle. The Constitutional Court (Mathopo J, with eight justices concurring) upheld the appeal in part. Kollapen J wrote a separate dissenting judgment. Can A Contractor Claim Profit on an Invalid Contract? The Department contended that the "no profit, no loss" principle flowing from the AllPay judgement meant that an innocent contractor should not be out of pocket but equally should not profit from an unlawful arrangement. The Constitutional Court rejected this as a blanket rule. While there is no automatic right to profit from an invalid contract, that does not mean a court cannot allow a contractor to keep the benefit of the contract, including profit, where the circumstances justify it. The Court drew on the SCA's recent decision in Mafoko which confirmed that the "no profit, no loss" principle was developed for a very specific situation. It does not apply across the board to all cases where a state contract is set aside. What Must the Contractor Prove? The Constitutional Court identified six factors that will weigh in favour of a contractor seeking to be paid at the agreed contract rate, including a profit margins. First, that the contractor was an entirely innocent party and was not complicit in any procurement irregularities. Second, that the contractor actually rendered services and the organ of state obtained the benefit of those services. Third, that the contractor incurred costs in performing, including costs of setting up the necessary infrastructure to deliver the services. Fourth, that the conduct of the organ of state was not exemplary, for example where it approved the contract and allowed performance to continue before seeking to have it set aside. Fifth, that the organ of state created a reasonable expectation of payment by allowing the contractor to continue performing. Sixth, that the alternative arrangements the organ of state made to replace the contractor's services proved more expensive or less effective. Distinguishing Between Work Performed and Not Performed The Constitutional Court drew a critical distinction between the period when ZHI actually did the work and the period when it did not. For the period during which ZHI actually rendered services (1 June to 12 August 2015), the Court found it fair to preserve ZHI's right to be paid at the agreed contract rate, including the profit margin. For the period after 12 August 2015, when ZHI was no longer providing the full range of services, the Court refused to preserve its contractual rights. Allowing ZHI to claim lost profits for 33 months of non-performance would be a windfall, not compensation. However, the Court left the door open for ZHI to claim its actual expenses incurred in maintaining limited emergency capacity during a brief transitional period, without any profit margin, to be determined in separate proceedings. The August 2015 invoice was pro-rated to cover only the 12 days during which full services were provided. Expect Your Claim to Be Scrutinised Kollapen J, in a dissenting judgment, agreed that the SCA's order should be set aside but disagreed with the majority on the question of remedy. He cautioned that simply allowing the contractor to keep its full contractual benefits without properly examining whether those benefits were reasonable amounted to treating the matter as an ordinary contract dispute, when in fact it involved public money and required a higher level of scrutiny. In his view, the Court did not have enough evidence to carry out that scrutiny and the matter should have been sent back to the High Court for a proper enquiry. Whilst Kollapen J was in the minority, contractors should be aware that a court may well interrogate the reasonableness of the contract price, the profit margin and the relationship between the services invoiced and the services actually delivered. The stronger the evidence a contractor can produce on these points, the better. Practical Steps for Contractors The judgment confirms that an innocent contractor is not automatically limited to recovering only its expenses when a state contract is set aside. A court may permit the contractor to be paid at the agreed contract rate, including a profit margin, for work actually done. There is no automatic right to such a benefit, but equally there is no blanket exclusion. Each case will be assessed on its own facts. Contractors working on state projects should keep detailed records of all work done, costs incurred and communications with the state entity. Document the services delivered, the resources deployed and the expenses paid to subcontractors and suppliers. Record all correspondence with the organ of state, particularly any approvals, instructions to proceed and confirmations of the work performed. If a contract is challenged, the contractor's claim will turn on its ability to demonstrate that it was innocent of any irregularity, that it actually performed, that the organ of state accepted and benefited from the performance and that it incurred real costs in doing so. The distinction between the period of actual performance and the period of non-performance is important. A contractor who can prove what it did, that it acted in good faith and what it cost will be in the strongest position to recover at the contract rate.

By Claudelle Pretorius, partner, Cox Yeats Most standard form construction contracts contain comprehensive default and termination clauses. However, not all default and termination clauses allow a party to terminate the contract due to the other party’s repudiation thereof. A question which often arises is: where parties have the right to terminate for very specific reasons under a contract, does the common law right to terminate due to a party’s repudiation of the contract still survive? Repudiation frequently arises where a party demonstrates, through words or conduct, an unequivocal intention to no longer be bound by the contract. The JBCC (Joint Building Contracts Committee), NEC (New Engineering Contract), GCC (General Conditions of Contract) and FIDIC (International Federation of Consulting Engineers) suite of contracts all contain default and termination clauses. Those clauses contain exhaustive lists of circumstances entitling the parties to terminate the contracts. The GCC is the only standard form contract which allows a contractor to terminate the contract due to the employer’s repudiation. The other contracts do not list repudiation as a reason for termination. It is often argued, albeit unsuccessfully, that the default and termination provisions in the JBCC, NEC and FIDIC suite of contracts comprehensively and solely regulate cancellation. Our Constitutional Court has held otherwise. The judgement by Marais J in First National Bank of Southern Africa Ltd v Rosenblum [2001] ZASCA 77 provides guidance on the broader relationship between contractual rights and the common law. It was stated that: “In matters of contract the parties are taken to have intended their legal rights and obligations to be governed by the common law unless they have plainly and unambiguously indicated the contrary. Where one of the parties wishes to be absolved either wholly or partially from an obligation or liability which would or could arise at common law under a contract of the kind which the parties intend to conclude, it is for that party to ensure that the extent to which he, she or it is to be absolved is plainly spelt out”. This principle was quoted with approval by Mathopo J in his minority judgement in Fujitsu Services Core (Pty) Limited v Schenker South Africa (Pty) Limited (CCT 32/22) [2023] ZACC 20. The practical consequence is that the termination clause may not be the whole story. Even where a standard-form contract lists specific termination events and does not expressly mention repudiation, the common law right to terminate for repudiation may still survive unless the contract clearly and unambiguously excludes it. For parties administering live projects, this means that the wording of the contract must be tested before termination: does the common law right survive, and what contractual termination procedure must still be followed? For contract drafters, the message is equally important. If the intention is for the contractual termination regime to be exclusive, that intention should be stated plainly rather than left to implication. Parties should therefore consider the contractual wording and the common law together, rather than assuming that one automatically displaces the other. ENDS Issued by: Done By Design (DBD) on behalf of Cox Yeats Media contact Lesiba Sethoga Founder and Chief Servant Officer Email: [email protected] Website: www.donebydesign.co.za About Claudelle Pretorius Claudelle is a Partner in the Construction, Engineering and Infrastructure Law team. She specialises and has extensive experience in all aspects of Construction, Engineering and Infrastructure law, as well as Procurement Law and Commercial litigation. Claudelle also has a background in Employment Law. Claudelle has represented a variety of building contractors, subcontractors, professionals and developers in respect complex adjudication, arbitration and litigation proceedings, and has an in-depth understanding of the JBCC, NEC, GCC and FIDIC suite of contracts. Claudelle aims to find innovative, cost-effective solutions to complex legal disputes. More details about Claudelle here. About Cox Yeats Founded by Graham Cox in 1964, Cox Yeats is a full-service South African law firm with offices in Durban, Johannesburg, and Cape Town. The firm is known for its partner-led, collaborative approach and its ability to deliver legal advice closely aligned with clients’ commercial objectives. The firm and several of its professionals have also been recognised in national, continental, and international legal directories, including Legal 500, PMR Africa, the African Legal Awards, and Best Lawyers®. This includes being named the 2023 Insurance Law Firm of the Year by Best Lawyers®. Through its membership of TAG Alliances, Cox Yeats also supports clients on cross-border matters across more than 100 jurisdictions worldwide. Visit www.coxyeats.co.za or follow the firm on LinkedIn for more information.

By Richard Hoal, partnerThe principle of “pay now, argue later” is the cornerstone of construction adjudication. An adjudicator’s decision is binding unless and until revised by a tribunal, and the losing party must comply with it promptly, regardless of whether it intends to challenge the decision in later proceedings. Without prompt compliance, the cash-flow preservation that adjudication exists to achieve is defeated, and the process becomes no more than an expensive advisory opinion.In practice, however, employers often seek to resist paying adjudication awards. One increasingly common tactic is to argue that the contractor is financially precarious – a shell company, a foreign entity, a firm with no assets and that if the employer pays the award but later succeeds in arbitration, it will never recover the money. The argument has a superficial commercial logic: why pay a substantial sum to a party that might not be able to repay it? But the legal question is whether that risk however real, entitles an employer to refuse to comply with a binding contractual obligation.The Gauteng Division of the High Court recently addressed this question, in a judgment that makes the position clear and should be a warning to employers who may be tempted to try that strategy.China Coal No 5 Construction SA (Pty) Ltd v Bakubung Minerals (Pty) Ltd and Others, Case No. 2024-138173 (Gauteng Division, Johannesburg, Mali J, 1 September 2026)BackgroundChina Coal No 5 Construction SA (Pty) Ltd (“the Contractor”) and Bakubung Minerals (Pty) Ltd (“the Employer”) concluded a construction contract on 28 November 2017 in the NEC3 form, incorporating Z4 and W1 core clauses. The contract was for the mining development, engineering and construction of capital waste infrastructure, ore reserve development and related equipping at the Bakubung Platinum Mine, situated on two farms south of the Pilanesberg Complex. The Contractor was a private company, foreign-owned, established specifically for this project.Various disputes arose during the performance of the contract. Some were resolved through addenda, but fresh disputes emerged in the latter stages of the works. In early 2024, the Contractor referred the outstanding disputes to adjudicator Mr Francois Spies. The adjudicator completed his decision on 18 September 2024, but the publication of the award was delayed until 24 October 2024 because the Employer had failed to pay its share of the adjudicator’s fees. The Contractor was compelled to pay the Employer’s share in order to obtain the decision, as the adjudicator exercised a lien over it.The award was substantial: over R200 million in total. The Employer refused to comply with the award. The Contractor brought an application to enforce it.The Employer’s resistanceBakubung resisted enforcement on multiple grounds. Its primary argument was that the Contractor was a foreign shell company with no assets, no ongoing operations in South Africa, no employees (all having been retrenched), and no South African bank account. Its turnover per CIPC records was less than R1 million as at 2025. The Employer contended that if it paid R201 million and later succeeded in having the adjudicator’s decision revised in arbitration, it would have no realistic prospect of recovering the money. It proposed instead that the award be paid into an attorney’s trust account pending the outcome of arbitration or review proceedings.Beyond the financial-risk argument, the Employer raised several further objections. It contended that the relief claimed in respect of low-performance damages had not been properly made out in the Contractor’s notice of motion – arguing that the adjudicator had made no specific finding on the quantum of “remaining low-performance damages” and had therefore exceeded his mandate. It also contended that the Contractor had failed to join the adjudicator as a party to the proceedings, which it argued was fatal to the application. Finally, the Employer launched a counterapplication seeking a stay of enforcement pending a review application it said it intended to bring.The Court’s reasoningMali J dismissed the Employer’s arguments. The Court commenced from the well-established principle that courts should be reluctant to interfere with an adjudicator’s determinations. Drawing on Hudson’s Building and Engineering Contracts (13th edition), the Court affirmed that adjudication is a form of “rough justice” – a rapid, interim, cash-flow-preserving mechanism in which errors, even serious ones, do not of themselves entitle the losing party to refuse compliance.The Court traced the development of the “pay now, argue later” principle through the leading authorities. In Framatome v Eskom Holdings SOC Ltd, the Supreme Court of Appeal confirmed that an adjudicator’s decision under the NEC3 form is binding and enforceable pending arbitration, and that errors of fact or law do not entitle a party to refuse to give effect to it. In effect the parties, by choosing the NEC3 form, intended to exclude judicial interference in the interim.In Radon Projects v NV Properties, the Supreme Court of Appeal – citing the English decision in Macob Civil Engineering v Morrison Construction – described adjudication as an interim measure designed to keep money flowing, with the dissatisfied party’s remedy being to proceed to arbitration, not to resist the decision. In Ekurhuleni West College v Segal, the Supreme Court of Appeal held that a dissatisfied party should proceed to arbitration rather than bringing piecemeal review proceedings, and that review should be entertained only where it is necessary to prevent grave injustice.The Court also considered Murray & Roberts v SASOL, which confirmed that a court has no appellate jurisdiction over an adjudicator, and Amanz’Abantu v Coega Development Corporation, which applied Framatome and held that interrogating the merits of an adjudicator’s reasoning is impermissible at the enforcement stage.On the central question of whether the Employer’s fear of non-recovery justified its refusal to pay, the Court relied on Ethekwini Municipality v CMC di Ravenna, the Supreme Court of Appeal’s authority on point, and confirmed that a fear of non-payment cannot justify non-compliance with a binding adjudication award. The Court quoted with approval the Constitutional Court’s reasoning in Beadica on the sanctity of contracts: the Employer had entered into a contract with the Contractor knowing exactly who the Contractor was – a foreign-owned, single-project entity – and could not now invoke those very characteristics as a basis for refusing to honour a contractual obligation arising from the dispute resolution mechanism it had agreed to. The mere existence of a risk of non-recovery does not relieve the Employer of its obligation to pay.Mali J also noted that the compensation events portion of the award – R71 million – was entirely unchallenged. The Employer did not dispute that this amount was owing, yet it expected the Contractor to bear the burden of non-payment while the Employer pursued review proceedings it had not even commenced. This, the Court found, was untenable.The counterapplication for a stay was refused. The Court observed that the Employer had been threatening to bring review proceedings since 2024 but had not in fact launched any such application. Granting a stay in those circumstances would prejudge the Contractor’s enforcement rights. Nor would the Court order payment into an attorney’s trust account: to do so would fundamentally undermine the purpose of interim payment through adjudication, which is to put the money in the hands of the party entitled to it under the binding decision, not to park it indefinitely pending further proceedings.The Court’s order was comprehensive. The Employer was directed to forthwith give effect to the adjudicator’s decision and to pay over R71 million in compensation events and R129 million in repayment of low-performance damages as well as smaller amounts and interest at the prescribed rate from 24 October 2024. The orders were to endure until revised by settlement or arbitral award. Costs were awarded on the attorney-and-client scale – a punitive costs order reflecting the Court’s displeasure at the Employer’s conduct.CommentThis judgment reinforces the “pay now, argue later” principle in circumstances that many employers will recognise - a contractor whose financial position makes recovery uncertain. Mali J’s reasoning makes clear that the principle applies with full force even where the contractor is a foreign shell company with no assets, no employees and no ongoing operations in the jurisdiction. An employer’s fear of non-recovery, however legitimate as a commercial concern, is simply not a defence to a binding adjudication award.Employers cannot use a contractor’s financial status to avoid paying a binding award. If the employer entered into the contract knowing the contractor’s identity and corporate structure – as Bakubung did here – it cannot later rely on those very features to resist compliance. The Court’s reliance on the Constitutional Court’s reasoning in Beadica reinforces this - the sanctity of contractual obligations extends to dispute resolution mechanisms.The punitive costs order on the attorney-and-client scale is itself noteworthy. It shows the Court’s clear displeasure at what it regarded as delay tactics by the Employer. An employer that refuses to pay a binding award, threatens review proceedings for years without actually launching them, and then seeks a stay of enforcement on the basis of a risk it assumed at the outset of the contractual relationship, invites precisely this kind of costs sanction.The Employer’s failure to launch review proceedings despite threatening to do so since 2024 significantly undermined its position. Courts will look with scepticism at a party that invokes the prospect of review as a shield against enforcement while doing nothing to actually pursue that review. Coupled with the fact that the compensation events of R71 million were unchallenged – meaning the Employer accepted it owed at least that amount but still refused to pay anything at all - the Employer’s position was, as the Court evidently concluded, indefensible.The outcome is clear - if an employer is dissatisfied with an adjudicator’s award, the only proper course is to comply with the decision and pursue arbitration promptly.

Residents across South Africa face chronic infrastructure failures. Flooding, exposed sewer lines, collapsing riverbanks and stormwater mismanagement are increasingly common. When residents approach their local municipality for help and are met with nothing more than buck-passing between government departments, what can they do? Can they obtain a court order compelling the state to act? And if so, which state entity is responsible? These questions were considered first by the Supreme Court of Appeal (SCA) in a judgment delivered on 22 March 2024, and then on remittal by the High Court in a judgment delivered on 29 May 2026. The Featherbrooke Estate Case Featherbrooke Country Estate is a residential complex situated in the Mogale City Local Municipality in the western part of Gauteng. The Muldersdrift se Loop River traverses through the Estate and ends in the Hartbeespoort Dam. What was historically a manageable stream became a torrent after heavy rains due to increased urban development, hard surfaces, climate change and inadequate stormwater management by the relevant municipalities. Since approximately 2010, Featherbrooke experienced increasingly frequent and severe flooding. The flooding exposed sewer infrastructure, underground power cables and caused the collapse of riverbeds and embankments. Featherbrooke's security fence was left hanging "by a thread" and residents faced risks of electrocution, exposure to sewage, property damage and security threats. A previous occasion when the fence came down resulted in a resident being shot by robbers and a R35 million damages claim against the Homeowners Association (HOA). For over ten years, Featherbrooke sought assistance from the Department of Water and Sanitation, Mogale City and the City of Johannesburg. No steps were taken by any department except to shift the blame from one to another. The Application In May 2020, Featherbrooke launched an application in the High Court against six respondents: Mogale City, City of Johannesburg, the minister of Water and Sanitation, the MEC for Agriculture and Rural Development, the Johannesburg Roads Agency, and the West Rand District Municipality. Featherbrooke sought a structural interdict compelling the respondents, jointly and severally and in the alternative, to repair the riverbeds and embankments, insert gabions, moderate the volume and flow of stormwater, repair exposed State-owned infrastructure, and draft a stormwater management plan. Every Respondent Denied Responsibility Each state entity pointed the finger at someone else. Mogale City argued that managing floods was not within its competence and that Featherbrooke should look to the minister under the National Water Act. The City of Johannesburg and Johannesburg Roads Agency argued that since the Estate was in Mogale City's jurisdiction, they had no role to play. The minister argued that the damage was due to poor planning by the developers and that Featherbrooke was required to apply for a water licence at its own expense. The High Court's Initial Order The High Court found that there was a constitutional duty on all spheres of government to prevent and mitigate disaster situations. However, it inexplicably made an order only against Mogale City, without deciding the case against the other respondents. The Full Court Mogale City appealed. The Full Court upheld the appeal, set aside the order entirely and dismissed Featherbrooke's application with costs. It reasoned that Featherbrooke was required to obtain a water licence from the department and, having failed to do so, its case had to fail. The Supreme Court of Appeal The SCA (Makgoka JA, with the full bench concurring) upheld Featherbrooke's appeal, set aside the Full Court's order, and remitted the matter to the High Court. The SCA was critical of both courts below. It held that Featherbrooke had carefully cast its net wide to include all relevant state entities and had asserted a case against each one in the alternative. The High Court was obliged to resolve the dispute in respect of each of those entities and its failure to do so was "bafflingly inchoate." The SCA did not decide the merits. It directed the High Court to determine whether, in addition to Mogale City, any of the originally cited state entities was responsible for the remedial work, and to make an appropriate order against each. The High Court on Remittal The matter returned to the High Court (Mahalelo J) and judgment was delivered on 29 May 2026. This time, the court found against multiple respondents. The court found that there was very little contradictory evidence to Featherbrooke's version. None of the respondents had taken any positive or immediate steps to address the situation, apart from bald denials. On Mogale City, the court found that it had clear constitutional and statutory obligations to manage stormwater and promote a safe and healthy environment. It was contravening its own precinct plan and had no stormwater management plan for the area. On the City of Johannesburg and the Johannesburg Roads Agency, the court rejected the argument that they owed no duty because the Estate was not in their jurisdiction. Stormwater originating from the City of Johannesburg's jurisdiction flowed into the river and contributed to the flooding. The principle of cooperative government required the City of Johannesburg to coordinate its actions with neighbouring municipalities. It could not simply ignore stormwater originating from its jurisdiction because the impact was felt across a municipal boundary. On the minister, the court found that the river was owned by the minister and that the National Water Act imposed a clear duty to take reasonable measures to prevent pollution of water resources. Critically, the court pointed to evidence that at a meeting on 24 March 2016, department officials had themselves recommended issuing a directive to Mogale City and the City of Johannesburg to address the very problems before the court. To date, the department had failed to issue that directive. The minister could not simultaneously acknowledge the need for intervention and then argue she owed no legal duty to act. The court held that Featherbrooke satisfied all the requirements for a final interdict: a clear right, an injury committed or reasonably apprehended, and the absence of any other remedy. The Order The court ordered Mogale City, the City of Johannesburg and the Johannesburg Roads Agency, jointly and severally, to repair, underpin, remediate and manage the riverbeds and embankments, including inserting gabions and moderating the flow of water through attenuation dams and culverts. Mogale City and the City of Johannesburg were ordered to draft and implement a stormwater management plan. The minister was ordered to mitigate, remediate and prevent flooding, including moderating the flow from the Walter Sisulu Botanical Gardens and preventing erosion of the riverbank.  All parties were ordered to repair exposed state-owned sewer and power infrastructure. Costs were awarded against the respondents. Conclusion This case reinforces the principle that courts will intervene where the state fails to discharge its constitutional obligations to maintain critical infrastructure and protect residents from environmental harm. It is not sufficient for government departments to point fingers at one another. The duty of cooperative government means that where stormwater and flooding cross municipal boundaries, all relevant state entities bear responsibility and may be compelled to act. Residents and homeowners' associations facing chronic infrastructure failures should take note. It is not necessary to wait for a disaster to occur. The Disaster Management Act adopts a forward-looking approach focused on managing future risks. Where residents can show extensive complaints, years of inaction and real threats to life, health and property, the courts will grant orders compelling the state to act, regardless of budgetary excuses or attempts to shift responsibility.

By Richard Hoal, Partner, Cox YeatsIt is not uncommon in disputes involving municipalities and other organs of state for the question of the validity of the underlying agreement to arise. Some contracts may not be concluded following a proper and lawful public procurement process in terms of Section 217 of the Constitution. Where the parties have agreed to refer their dispute to arbitration, does the arbitrator have the power to declare that agreement constitutionally invalid? This question came before the Supreme Court of Appeal in a judgment delivered on 4 December 2025.The NAD Property Income Fund JudgmentOn 16 February 2016, NAD Property Income Fund (Pty) Ltd ("NAD") and the Bushbuckridge Local Municipality concluded a construction agreement in terms of which NAD would build three driveway roads and water supply infrastructure to service a shopping mall known as the Dwarsloop Mall. NAD would fund the construction, and the Municipality would refund NAD from its budget in the following financial year or years. Both parties knew at the time of contracting that the Municipality did not have money in its budget to pay for the works.When the Municipality failed to pay, NAD launched an action in the High Court claiming approximately R23.5 million. The Municipality raised a number of defences, including that the agreement contravened section 217 of the Constitution and the provisions of the Municipal Finance Management Act (MFMA) because no competitive bidding process had been followed. The Municipality also argued that its municipal manager had never been authorised to conclude the agreement and that no consensus had been reached on price. It filed a conditional counterclaim seeking an order that the agreement be declared unlawful and set aside.The ArbitrationRather than proceed to trial, the parties agreed to refer the dispute to arbitration and retired Judge President Bernard Ngoepe was appointed as the arbitrator. The critical initial issue raised was whether the Arbitrator was empowered to make a finding of constitutional invalidity in relation to the agreement.The Arbitrator found that he was competent to do so. He reasoned that it would "be idle to suggest that being an arbitrator as opposed to being a court", he should countenance the enforcement of an agreement that was invalid and unlawful. He declared the construction agreement invalid, unlawful and unenforceable for non-compliance with the constitutional and statutory procurement framework. He further found that the Municipality had been unduly enriched by the construction of one of the three driveways and that NAD was entitled to payment for that road.The High Court ReviewNAD brought review proceedings in the Mpumalanga Division of the High Court, arguing that the Arbitrator had exceeded his powers under section 33(1)(b) of the Arbitration Act 42 of 1965. The High Court dismissed the review. Mashile J held that the arbitration agreement, read with section 2 of the Arbitration Act, conferred power on the Arbitrator to deal with the constitutional invalidity of the agreement and that the arbitration agreement did not specifically bar the Arbitrator from dealing with the central issue in dispute.The Supreme Court of AppealThe SCA upheld NAD's appeal and set aside the arbitration award. The Court found that the Arbitrator had exceeded his powers.The Court acknowledged that an arbitrator's powers are derived from the arbitration agreement concluded between the parties. However, those powers are not unlimited. Section 33(1)(b) of the Arbitration Act provides that an arbitration award may be set aside where the arbitrator has exceeded his or her powers. The SCA confirmed that, following its earlier decision in Close-Up Mining v Boruchowitz NO, an arbitral determination of any constitutional matter is excluded from arbitration.The Court turned to section 172 of the Constitution, which provides that when deciding a constitutional matter, a court must declare any law or conduct inconsistent with the Constitution to be invalid and may make any order that is just and equitable. The keyword is "court." Only a court can make such a declaration.The SCA drew on the Constitutional Court's decision in Department of Transport v Tasima, which stated that the constitutionality of a contract falls outside an arbitrator's mandate. As the Constitutional Court put it: "Our Constitution confers on the courts the role of arbiter of legality."The SCA found that the Arbitrator's reliance on the decision in Gobela Consulting CC v Makhado Municipality was misplaced. In Gobela, it was a court that declared the contract unlawful and invalid; that case never held that an arbitrator is endowed with such a power. The Court emphasised that public procurement is not simply a matter of contract law. When the Municipality contracted with NAD, it was exercising its public powers as an organ of state. Municipalities are bound by section 217 of the Constitution and the determination of whether procurement principles have been complied with must be undertaken before the courts, not in private arbitration proceedings.The SCA further noted that section 109(2) of the Local Government: Municipal Systems Act expressly provides that a municipality may submit to arbitration any matter "other than a matter involving a decision on its status, powers or duties or the validity of its actions or by laws."Importantly, the SCA rejected the High Court's reasoning that NAD's consent to the referral conferred jurisdiction on the Arbitrator. The Court held that NAD's consent or acquiescence could not confer on the Arbitrator a power he did not have in law. Because the Arbitrator lacked the power to declare the agreement invalid, the consequential relief he granted on unjust enrichment and lack of authority could not stand either.The SCA declined to make a referral order under section 20 of the Arbitration Act, leaving it to the parties to engage one another as to how they wish to proceed.Conclusion The judgment is an important reminder for arbitrators and professionals in the built environment that an arbitrator's powers, whilst derived from the agreement between the parties, are subject to hard constitutional limits.An arbitrator may not declare a state contract invalid for non-compliance with section 217 of the Constitution or procurement legislation. Only a court may do so and only a court may grant just and equitable relief under section 172. The consent of the parties cannot expand an arbitrator's jurisdiction beyond what the law permits and municipalities are expressly prohibited by statute from submitting the validity of their actions to arbitration.Where a question of constitutional invalidity arises during arbitration, the proper course is for the arbitrator to invoke section 20 of the Arbitration Act and refer the question of law to the court for its opinion. Getting this wrong, as this case demonstrates, can result in years of costly litigation and an award that is ultimately set aside in its entirety.ENDSAbout Richard Hoal Richard is a lead partner in the construction and insurance law teams. He has practised as an admitted attorney in South Africa for over 25 years and has an extensive litigation and business law experience. He has developed a unique speciality in construction and project work, as well as complex insurance casualty claims. He has advised clients on a range of project development, construction and engineering contracts, including major infrastructural projects undertaken in Southern Africa. He has represented clients in litigation and arbitration proceedings relating to building, engineering and commercial contracts and insurance contracts. He has also represented and assisted main contractors and subcontractors in putting together tenders, reviewing contractual conditions, contract risk assessments and claims formulation, as well as contract and project negotiations with employers. He has also advised a range of clients on commercial transactions and acquisitions.As a result of this expertise in the construction industry, Richard has been appointed by national insurance companies to advise on issues relating to Occupational Health and Safety investigations, large casualty claims and professional indemnity claims. He has investigated a number of structural collapses and appeared in formal Inquiries. His insurance practice includes professional indemnity work in the built environment as well as general professions and director and officer liability. He also deals with complex indemnity and recovery claims.He is a committee member of the Association of Arbitrators Southern Africa and conducts adjudications and arbitrations in the field of construction and engineering law as well as insurance law and professional indemnity claims. He is a member of the International Bar Association Committee on International Construction Projects. He is also a Commissioner in the Small Claims Court. Find out more about Richard here: https://coxyeats.co.za/people/richard-hoal/About Cox Yeats Founded by Graham Cox in 1964, Cox Yeats is a full-service South African law firm with offices in Durban, Johannesburg, and Cape Town. The firm is known for its partner-led, collaborative approach and its ability to deliver legal advice that is closely aligned to clients’ commercial objectives. The firm and several of its professionals have also been recognised in national, continental, and international legal directories such as Legal 500, PMR Africa, the African Legal Awards, and Best Lawyers®. This includes being named the 2023 Insurance Law Firm of the Year by Best Lawyers®. Through its membership of TAG Alliances, Cox Yeats also supports clients on cross-border matters across more than 100 jurisdictions worldwide. Visit www.coxyeats.co.za or follow us on LinkedIn for more information.

Cox Yeats has appointed Natasha Brand as an Associate in its Business Rescue, Restructuring, Insolvency and Insurance (BRI) practiceBased in the firm's Sandton office, Brand brings 17 years of legal experience spanning commercial litigation, banking and finance, corporate and commercial law, and dispute resolution.Her appointment further strengthens the firm's capabilities across business rescue, restructuring, insolvency, and complex commercial disputes.Johannesburg, South Africa – 25 August 2026 – Leading South African law firm, Cox Yeats is pleased to announce the appointment of Natasha Brand as an Associate in its Business Rescue, Restructuring, Insolvency and Insurance (BRI) practice. Based in the firm's Sandton office, Brand joins a growing multidisciplinary practice that advises clients on business rescue, restructuring, insolvency, debt recovery, corporate investigations, fraud, cybercrime and complex commercial disputes.Brand brings 17 years of legal experience gained across commercial litigation, banking and finance, corporate and commercial law, and dispute resolution. She was admitted as an attorney of the High Court of South Africa in 2024 and has developed significant experience in helping clients navigate complex legal and commercial challenges."We are delighted to welcome Natasha to Cox Yeats," says Gareth Cremen, Partner and Head of the Johannesburg BRI practice. "Her broad litigation and commercial experience, combined with her practical approach to problem-solving, will add significant value to our clients and strengthen our growing presence in the Business Rescue, Restructuring, Insolvency and Insurance space."Brand began her legal career as a paralegal while completing her BCom and LLB degrees through the University of South Africa. She completed her articles at an international law firm before joining a local law firm in Johannesburg, where she gained extensive experience in banking and finance disputes, credit agreement matters, settlement negotiations and commercial dispute resolution.Her professional interests include business rescue, insolvency and commercial disputes, areas in which she is passionate about helping clients find practical, commercially focused solutions during times of financial and operational pressure."I am excited to join Cox Yeats and to be part of a team that is recognised for its technical excellence and collaborative culture," says Natasha Brand. "I look forward to contributing to complex business rescue and insolvency matters while continuing to grow my expertise and help clients navigate challenging legal and commercial situations."The appointment forms part of Cox Yeats' continued investment in its BRI practice, which advises creditors, boards, business rescue practitioners, liquidators, turnaround specialists and listed companies on matters ranging from informal workouts and business rescue proceedings to restructuring, insolvency, corporate investigations and recoveries.ENDSIssued by: Done By Design (DBD) on behalf of Cox YeatsMedia contactLesiba SethogaFounder and Chief Servant OfficerEmail: [email protected]: www.donebydesign.co.za About Cox Yeats Founded by Graham Cox in 1964, Cox Yeats is a full-service South African law firm with offices in Durban, Johannesburg, and Cape Town. The firm is known for its partner-led, collaborative approach and its ability to deliver legal advice closely aligned with clients’ commercial objectives. The firm and several of its professionals have also been recognised in national, continental, and international legal directories, including Legal 500, PMR Africa, the African Legal Awards, and Best Lawyers®. This includes being named the 2023 Insurance Law Firm of the Year by Best Lawyers®. Through its membership of TAG Alliances, Cox Yeats also supports clients on cross-border matters across more than 100 jurisdictions worldwide. Visit www.coxyeats.co.za or follow the firm on LinkedIn for more information.