- The Supreme Court of Appeal has ruled that security service contracts concluded without PSIRA registration are illegal.
- Millennium Bodyguards lost its claim for unpaid security fees because the contract was unlawful from the outset.
- Kapa Bokoni did not automatically recover R411 173.26, with that repayment dispute now returning to trial for evidence.
The Supreme Court of Appeal has ruled that companies cannot lawfully conclude contracts to provide security services for reward unless they are registered under the Private Security Industry Regulation Act.
The judgment arose from a commercial dispute between AD All CC, trading as Millennium Bodyguards, and Kapa Bokoni Trading and Projects 10 CC, but it establishes a legal principle that affects security companies and clients across South Africa.
The court found that an unregistered security provider cannot enforce a contract for payment because the agreement is illegal from the outset.
Judge DN Unterhalter delivered the unanimous judgment, with Judge GG Goosen, Judge TV Norman, Judge B Vally, and Acting Judge M Bloem concurring.
A routine security agreement became a major legal dispute
Millennium Bodyguards entered into a written service level agreement with Kapa Bokoni in January 2019 to provide security services. The agreement was for twelve months and automatically renewed after Kapa failed to give the required notice to terminate it.
Millennium continued providing guards during 2020, and Kapa paid for services rendered in January and February. The relationship changed when Kapa asked Millennium to confirm that it was registered as a security service provider. Millennium declined to provide that confirmation, and Kapa stopped paying invoices issued for services provided between March and August 2020.
Millennium sued for outstanding contractual payments, while Kapa challenged the legality of the agreement and sought repayment of R411 173.26 that it had already paid.
The court says PSIRA registration is the legal gateway
The central question before the Supreme Court of Appeal was whether the lack of registration merely made the contract unenforceable or whether it made the agreement illegal.
Judge Unterhalter rejected the argument that registration was simply an administrative requirement. He held that Parliament intended to prohibit contracts concluded by companies providing security services for reward without registration.
“Parliament intended to prohibit contracts that are inconsistent with Section 20(1)(a),” Judge Unterhalter wrote. The court found that the legislation exists to protect the public by ensuring that South Africa’s extensive private security industry operates within a trustworthy and accountable regulatory framework.
Judge Unterhalter added, “There is a legitimate and compelling public interest in the control of the large and enormously powerful private security industry.”
Millennium loses its payment claim
The Supreme Court of Appeal upheld Millennium’s appeal in part, but not in the way the company sought. The court confirmed that Millennium could not enforce the security agreement because it was illegal.
It replaced the earlier court orders with one dismissing Millennium’s claim for unpaid security fees with costs. The judges made it clear that an illegal contract cannot be used to recover payment for services rendered, even where those services were actually provided.
The R411 173 fight is not over
Kapa argued that it paid Millennium believing the agreement was valid and claimed the company had been unjustly enriched by receiving R411 173.26.
The Supreme Court of Appeal found that the lower courts had wrongly decided that issue without hearing evidence. Questions about what each party knew, whether they were equally at fault and whether repayment would be fair could not be resolved on agreed facts alone.
“These are important questions to answer. But they require findings of fact that can only be made after a trial,” Judge Unterhalter said.
The court therefore referred Kapa’s counterclaim back to the trial court, where evidence will determine whether the money already paid under the illegal agreement must be repaid.
The result leaves both parties with unfinished business. Millennium cannot recover the unpaid contractual fees, while Kapa must still prove that it is entitled to reclaim the R411 173.26 it has already paid.
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