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[2016] ZAGPJHC 187
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Member of the Executive Council for Health And Social Development of the Gauteng Provincial Government b Mathebula and Others (2012/22469) [2016] ZAGPJHC 187 (4 July 2016)
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2012/22469
In
the matter between –
THE MEMBER OF THE
EXECUTIVE COUNCIL
FOR HEALTH AND
SOCIAL DEVELOPMENT
OF
THE GAUTENG PROVINCIAL
GOVERNMENT
..................................................
APPLICANT
And
MATHEBULA
,
AGREEMENT on behalf of
N
S
M
.........................................................................................................................
1
ST
RESPONDENT
LEKABE
,
KGOSI
GUSTAV
...................................................................................
2
ND
RESPONDENT
PHOKOWANE
,
KHUDUGA
.................................................................................
3
RD
RESPONDENT
THE
MINISTER FOR THE DEPARTMENT OF
JUSTICE
& CONSTITUTIONAL
DEVELOPMENT
.......................................
4
TH
RESPONDENT
THE
SHERIFF FOR THE DISTRICT OF
JOHANNESBURG
CENTRAL
.............................................................................
5
TH
RESPONDENT
JUDGMENT
BORUCHOWITZ J:
[1]
This is an application for the rescission of an order granted by
Victor J, ostensibly by agreement between the parties,
on 26
August 2015 in terms of which the applicant was directed
to pay an amount of R22 786 293.58
in respect of delictual damages to the
first respondent in her representative
capacity on behalf of her minor child, Ns M.
[2]
The applicant is the Member of the Executive Council for Health and
Social Development of the Gauteng Provincial Government.
Five
respondents have been cited, namely Mrs A Mathebula, the
first respondent, who is cited in her aforementioned representative
capacity; the second respondent, Mr Kgosi Gustav Lekabe, a State
Attorney in Johannesburg, who is alleged to be at the centre
of the
issue forming the subject of the application; the third respondent,
Mr Khuduga Phokwane, a senior assistant state attorney
who is
responsible for the matter in the office of the State Attorney,
Johannesburg. The fourth respondent is the Minister
of Justice
& Constitutional Development, cited in his official capacity as
nominal respondent responsible for the actions of
the second and
third respondents respectively; and the fifth respondent is the
Sheriff of the District of Johannesburg. The
application was
opposed by the first to fourth respondents, who were represented by
both senior and junior counsel. An order
for costs on the
attorney and client scale is sought against those respondents who
have opposed the application.
[3]
The circumstances giving rise to the application are largely common
cause and can be briefly stated.
[4]
On 30 July 2012, the first respondent issued summons against the
applicant claiming damages on behalf of N in an amount of R4 982 625,
alleging that as a result of negligence on the part of the
applicant’s employees at the Thembisa Hospital she sustained
severe brain damage, cerebral palsy, mental retardation and
epilepsy. The applicant disavowed liability on the ground that
N’s condition was a result of negligence on the part of the
first respondent who had failed to obtain any anti-natal treatment
until October 2010, when she was about eight months’ pregnant.
[5]
The question of merits and quantum was separated. On 1 August
2014, Francis J, delivered judgment on the issue of
liability,
in which the applicant was held to be 100% liable for the first
respondent’s proven damages. After delivery
of the
judgment the first respondent amended her particulars of claim so as
to increase the quantum of damages to R42 047 182.70.
[6]
The quantification of the first respondent’s claim was set down
for hearing on 20 August 2015. As the matter was
of long
duration involving some thirty-six experts, it was stood down for
hearing until 24 August 2015. As there were no
judges
immediately available the matter was again stood down until 25 August
2015. On that day, the parties utilised the
time available to
actively engage in settlement discussions, and the trial stood down
further until 26 August 2015. During
these discussions the
first respondent made a number of concessions resulting in a
reduction of the total amount claimed to R22 786 293.58.
In the afternoon of 25 August 2015, the first respondent’s
junior counsel was contacted telephonically by the applicant’s
counsel and requested to prepare a draft order on the basis discussed
and agreed at Court. This was duly done and a copy
of the
proposed draft order was forwarded to the applicant’s counsel
and the third respondent by email.
[7]
The agreed draft was made an order of court in the chambers of
Victor J on the morning of 26 August 2015.
[8]
The applicant alleges that the second respondent settled the quantum
of damages contrary to the instructions of officials of
the
Department of Health, and that by consenting to the draft order the
second respondent and applicant’s counsel acted contrary
to
their instructions and the interests of the applicant. The
third respondent, who dealt with the matter on behalf of the
applicant throughout the trial, seemingly also acted contrary to the
instructions of the applicant.
[9]
What went on between the legal representatives of the applicant and
the officials of the Department during the period 24 to
26 August
2015 is extensively dealt with in the affidavits filed by the
applicant and the second to fourth respondents.
[10]
Essentially, what emerges from these affidavits is the following.
On 24 August 2015, counsel for the applicant prepared
a settlement
memorandum (Annexure LKG2 to the second to fourth respondents’
answering affidavit) in which he recommended
a settlement amount of
R22 828 293.58. The applicant alleges that it was
made known by officials of the Department
to the second and third
respondents that the settlement figure was unacceptable. In
their view, the available actuarial reports
indicated that there was
a difference of R11- to R12 million which would be awarded to
the first respondent in respect of
future medical expenses to which
she might not be entitled.
[11]
The applicant contends that on 26 August 2015 two officials of the
Department, Tsoka and Nkwayana, acting on the instructions
of the
chief director for legal service, attended at Court and specifically
instructed the second respondent and applicant’s
counsel to
obtain a postponement in order to acquire an amended actuarial report
and if that was refused, to argue the question
of quantum. When
the applicant’s legal team attended at the Victor J’s
chambers Tsoka and Nkwayana were
under the impression that the matter
would be stood down as they were awaiting a revised actuarial
report. But when counsel
returned they were informed that the
proposed settlement amount had been made an order of court, contrary
to their instructions.
[12]
The second respondent disputes the applicant’s allegations.
He contends that he forwarded the settlement memorandum
to the
applicant for consideration but no instructions were forthcoming.
He then contacted the Director-General in the office
of the Premier
for assistance but waited in vain for instructions. The second
respondent formed the view that none of the
officials of the
applicant was prepared to take responsibility for the matter.
Consequently, he had no alternative but to
protect the applicant’s
interests by entering into the settlement agreement which he
considered to be reasonable. He
claims that in concluding the
settlement he acted in his capacity as the State Attorney, relying on
the provisions of s 3
of the State Attorneys’ Act, 56 of
1957 (the Act), and that his mandate as the State Attorney included
the authority to settle
and compromise the first respondent’s
claim.
[13]
The first respondent states that at all material times throughout the
trial her legal representatives believed that the second
and/or third
respondents acted for and on behalf of the applicant and with the
latter’s express or tacit authority.
It was never
intimated to the first respondent’s legal representatives by
either applicant’s counsel, the second or
third respondents or
the officials of the Department who were present at court that the
applicant’s instructions were to
stand the matter down in order
to obtain an amended actuarial report or to argue the question of
quantum. At no stage did
the first respondent’s legal
representatives speak to the two officials who were at court.
They at all times laboured
under the impression that the second and
third respondents had the authority to settle the first respondent’s
claim.
[14]
The first respondent contends further that if it be found that the
second and third respondents were not so authorised, then
the
appointment of the second respondent to act as the applicant’s
legal representatives constituted a representation which
induced the
first respondent’s legal representatives to believe that they
were in fact authorised to settle the matter.
Accordingly, the
applicant is estopped from denying that the second and third
respondents had authority to represent the applicant
and to conclude
the settlement agreement in the terms that they did. Reliance
in this regard was placed on the decision in
MEC for Economic
Affairs, Environment and Tourism, Eastern Cape v Kruizenga and
another
2010 (4) SA 122
(SCA) at paras 16-21.
[15]
The applicant seeks to rescind the court order granted on the basis
of Rule 42 and on common-law grounds. The only basis
upon which
the application can be considered is the common law. The
applicant does not on the facts pleaded bring itself
within the
parameters of Rule 42.
[16]
Rule 42 provides as follows:
“
(1)
The court may, in addition to any other powers it may have,
mero
motu
or
upon the application of any party affected, rescind or vary:
(a)
an
order or judgment erroneously sought or erroneously granted in the
absence of any party affected thereby;
(b)
an order or judgment in which there is an ambiguity or a patent error
or omission, but only to the extent of such ambiguity,
error or
omission;
(c)
an order or judgment as the result of a mistake common to the
parties.
(2)
Any party desiring any relief under this rule shall make application
Therefor
upon notice to all parties whose interests may be affected by
any
variation sought.
(3)
The court shall not make any order rescinding or varying any order or
judgment
unless satisfied that all parties whose interests may be
affected
have notice of the order proposed.
”
[17]
In terms of Rule 42, a court may only rescind an order or judgment
where the following jurisdictional facts are established:
(a) The order is erroneously sought or granted in the
absence of a party; (b) There is an ambiguity or patent
error
or omission in the order; and (c) The order is the
result of a mistake common to the parties. None
of these
jurisdictional facts has been established.
[18]
A judgment or order may be set aside at common law on any of the
grounds on which
restitutio in integrum
would be granted
such as fraud,
justus error
or some other just cause (
iusta
causa
).
[19]
It is settled law that a judgment entered into by consent may be set
aside where there is an absence of a valid agreement to
support the
judgment. A consent judgment depends for its existence upon the
validity of the underlying agreement. Such
judgment may be
assailed when it is shown that through fraud, error or some other
cause true consent between the parties was vitiated.
This
principle was emphasized in
MEC
for Economic Affairs, Environment and Tourism v Kruizenga and another
2008
(6) SA 264 (Ck)
[1]
para
[37], where the following was stated by Van Zyl J:
“…
In
the
Childerley
case
De Villiers Judge President stated obiter, with reference
to a passage in Voet and an earlier decision in
De Vos
v Calitz and De Villiers
that, except for fraud, ‘judgments by consent may be set aside
under certain circumstances on the ground of
justus
error’
.
It is doubtful in
De
Vos
the court recognised that any order or judgment made by consent may,
generally speaking, be set aside upon any ground which would
invalidate an agreement between the parties, and that a mistake of
fact may provide a ground for relieving a litigant from a judgment
entered into by the attorney’s consent. In
Gollach
& Gomperts v Universal Mills & Produce Co
the court similarly stated that a consent judgment could be set aside
on grounds that would justify rescission of the agreement
to consent
to judgment. The principle to be extracted from this, and the
statement of Voet quoted in para [36] above,
is twofold:
The first is that a consent judgment is founded on contract, and like
any other contract, defects such as fraud
and error would entitle an
innocent party to avoid the agreement because his consensus, though
real, was improperly obtained.
For this reasons, cases where a
party to a consent judgment seeks to resile therefrom on the ground
that consensus was induced
by error, must be approached along the
same lines and judged according to the same principles as cases where
a party may resile
from an agreement on the ground of
justus
error
.
Secondly, and flowing from this, is that the absence of a valid
agreement between the parties to support the judgment, is
capable at
law of constituting lawful ground or reason (
iusta
causa
)
which justifies an order of restitution in respect of the judgment.
”
[20]
In
Gollach & Gomperts v Universal Mills & Produce Co (Pty)
Ltd and others
1978 (1) SA 914
(A) (at 922H-923A) which is
referred to in the above extract from
Kruizenga
the court
emphasized that
justus error
was a sufficient ground for the
setting aside of a consent judgment, provided that such error
vitiated the true consent and did
not merely relate to motive or to
the merits of a dispute which it was the very purpose of the parties
to compromise.
[21]
It has also been held that the absence of authority on the part of an
attorney to settle or compromise a claim has also been
held to be a
sufficient ground to entitle a client to
restitutio in integrum
(see
De Vos v Calitz and De Villiers
1916 CPD 465
, also
referred to in the above passage in
Kruizenga
).
[22]
The central issue to be decided in the present case is whether the
State Attorney had actual or apparent authority to conclude
the
agreement of settlement that underlay the court order granted on 26
August 2015.
[23]
As mentioned above, it is the second respondent’s contention
that s 3 of the Act confers on the State Attorney the
unfettered
discretion and authority to act on behalf of the applicant in its
best interests and includes the authority to enter
into settlement
agreements on behalf of the applicant.
[24]
Counsel for the applicant rightly submitted that the State Attorney
could have no authority to settle or compromise a claim
where he is
acting against the express instructions of the client.
Section 3(1) of the Act provides that the function
of the office
of the State Attorney and of its branches is the performance in any
court of such work on behalf of the Government
of the Republic as is
by law, practice or custom performed by attorneys, notaries and
conveyancers. Section 4 deals with
the rights, privileges and
duties of an attorney, notary or conveyancer lawfully performing the
functions described in s 3(1)
and provides that they include any
of the rights, privileges and duties possessed by or imposed on an
attorney practising in the
High Court where such functions are
performed.
[25]
Attorneys generally do not have authority to settle or compromise a
claim without the consent of the client. However,
the
instruction to an attorney to sue or defend a claim may include the
implied authority to do so, provided the attorney acts
in good
faith. A court may set aside a settlement or compromise
that does not have the client’s authority where,
objectively
viewed, it appears that the agreement is unjust and not in the
client’s best interests. In
Kruizenga
the Supreme
Court of Appeal in
Kruizenga
held (in para 11) that the office
of the State Attorney, by virtue of its statutory authority as a
representative of the Government,
has a broader discretion to bind
the Government to an agreement than that ordinarily possessed by
private practitioners, though
it is not clear just how broad the
ambit of this authority is.
[26]
In the present case it is unnecessary to decide whether the State
Attorney was in fact authorised to conclude the settlement
agreement;
and.nor is it necessary to decide whether the applicant is to be
estopped from denying the authority of the State Attorney
to conclude
the settlement. If the State Attorney exceeded his actual
authority or acted contrary to the express instructions
of the
applicant, the latter may nevertheless be contractually bound to the
settlement on the basis of the State Attorney’s
apparent or
ostensible authority.
[27]
In
Makate
v Vodacom (Pty) Limited
[2016] ZACC 13, the Constitutional Court highlighted the
jurisprudential differences between apparent authority and agency
by
estoppel. The court referred to the following dictum of Lord
Denning MR in
Hely-Hutchinson
v Brayhead Limited and another
[1968] 1 QB 549
(CA).
“
Actual
authority may be express or implied. It is express when it is
given by express words, such as when a board of directors
pass a
resolution which authorises two of their number to sign cheques.
It is implied when it is inferred from the conduct
of the parties and
the circumstances of the case, such as when the board of directors
appoint one of their number to be managing
director. They
thereby impliedly authorise him to do all such things as fall within
the usual scope of that office.
Actual authority, express or
implied, is binding as between the company and the agent, and also as
between the company and others,
whether they are within the company
or outside it.
Ostensible
or apparent authority is the authority of an agent as it appears to
others.
It often coincides with actual authority. Thus, when the board
appoint one of their number to be managing director,
they invest him
not only with implied authority, but also with ostensible authority
to do all such things as fall within the usual
scope of that office.
Other people who see him acting as managing director are entitled to
assume that he has the usual authority
of a managing director.
But sometimes ostensible authority exceeds actual authority.
For instance, when the board appoint
the managing director, they may
expressly limit his authority by saying he is not to order goods
worth more than £500 without
the sanction of the board.
In that case his actual authority is subject to the £500
limitation, but his ostensible
authority includes all the usual
authority of a managing director. The company is bound by his
ostensible authority in his
dealings with those who do not know of
the limitation. He may himself do the ‘holding-out’.
Thus, if he
orders goods worth £1,000 and signs himself
‘Managing Director for and on behalf of the company,’ the
company
is bound to the other party who does not know of the £500
limitation, see
British
Thomson-Houston Co Ltd v Federated European Bank Ltd,
which was quoted for this purpose by Pearson LJ in
Freeman
& Lockyer
.
Even if the other party happens himself to be a director of the
company, nevertheless the company may be bound by the ostensible
authority
.
Suppose the managing director orders £1,000 worth of goods from
a new director who has just joined the company and
does not know of
the £500 limitation, not having studied the minute book, the
company may yet be bound. Lord Simonds
in
Morris
v Kanssen
,
envisaged
that sort of case, which was considered by Roskill J in the present
case.
”
[28]
The Constitutional Court emphasized, with reference to the above
dictum of Lord Denning that apparent authority is the agent’s
authority as it appears to others. The concept of apparent
authority was introduced into law for purposes of achieving justice
in circumstances where a principal had created an impression that its
agent had authority to act on its behalf. If this appears
to be
the position to others and an agreement that accords with that
appearance is concluded with the agent, then justice demands
that the
principal must be held liable in terms of the agreement (
Makate
paragraph 65).
[29]
The appointment of someone to a position of authority and with all
the trappings pertaining to the post is a factor that is
not to be
underestimated in considering whether there is apparent or ostensible
authority (see
NBS Bank Limited v Cape Produce
2002 (1) SA 396
(SCA) at para 25; and
Glofinco v Absa Bank Limited t/a
United Bank
2002 (6) SA 470
(SCA) para 14; see also the
judgment of the Supreme Court of Appeal in
Kruizenga
paragraph 20).
[30]
Based on the aforegoing, it is my conclusion that by appointing the
State Attorney to represent it in resisting the first respondent’s
claim, the applicant represented that the State Attorney had the
authority to settle the claim. There was no intimation to
the
first respondent’s legal representatives that the settlement
reached was against the express instructions of the applicant
and for
that reason they must reasonably have believed that the State
Attorney and counsel had the requisite authority to settle
the
claim. The applicant is accordingly bound to the settlement
agreement on the basis of the State Attorney’s apparent
authority.
[31]
It follows that the agreement of settlement which underlay the court
order granted by Victor J on 26 August 2015 was validly
concluded and the applicant cannot obtain a rescission of the court
order.
[32]
What remains to be determined is the question of costs. There
is sufficient justification to order the applicant to pay
the first
respondent’s costs on the scale as between attorney and
client. The applicant has acted unreasonably in the
manner in
which the proceedings have been conducted. The applicant was aware on
26 August 2015 that it was obligated in terms of
the court order to
pay an amount of R22 786 293.58. Yet it took no steps
to rescind the judgment until the Sheriff
of Court arrived at its
doorsteps to execute on the order, that is, some forty-seven days
after the order had been granted.
The first respondent has had
to incur substantial costs including the appointment of senior and
junior counsel in order to resist
the application for rescission.
[33]
Given the enormity of the claim and complexity of the issues raised,
it was a wise and reasonable precaution for the first
respondent to
employ the services of two counsel. Justice dictates that the
first respondent be fully compensated in respect
of all of the costs
incurred by her in order to resist the application (see, in this
regard,
In re Alluvial Creek Limited
1929 CPD 532).
[34]
Different considerations apply to the costs payable by the applicant
vis-à-vis
the second to fourth respondents. There
is an irreconcilable factual dispute between the applicant and the
second and third
respondents in regard to the question as to whether
the settlement agreement was entered into contrary to the express
instructions
of the applicant; if that were indeed the case,
the second respondent would have had no authority to settle or
compromise
the claim. In the light of this material factual
dispute, it would be inappropriate to direct that one or other of the
applicant
or second and third respondents pay the wasted costs.
[35]
Both the applicant and the fourth respondent are Organs of State.
In
Uthukela District Municipality and
others v President of the Republic of South Africa and others
[2002] ZACC 11
;
2003 (1) SA 678
CC, the Constitutional Court emphatically stated that
Organs of State have a constitutional duty to foster cooperative
government
as provided for in Chapter 3 of the Constitution.
This entails that they must avoid legal proceedings against one
another
and, where possible, disputes should be resolved at a
political level rather than through adversarial litigation. It
is not
understood why the fourth respondent was joined as a party to
the application. Clearly, the applicant launched the present
application without making any effort to settle the dispute by means
of the mechanisms and procedures provided for in Chapter 3
of the
Constitution and breached its constitutional duty.
[36]
The second, third and fourth respondents, who have briefed two
counsel, have asked that the applicant be ordered to pay their
costs,
including the costs occasioned by the employment of two counsel. The
difficulty that I have with this request is twofold:
First, it is
unclear whether the second and third respondents acted contrary to
the express instructions of the applicant in settling
the matter.
If they did, this would be a sufficient reason to deprive them of
their costs. Secondly, the applicant
and the second to fourth
respondents are essentially Organs of State and the litigation is at
the expense of the public purse from
which they derive their funding
(see, in this regard,
Minister of Police
and others v Premier of the Western Cape and others
2014 (1) SA 1
CC, para 64). Having regard to these
considerations, I am of the view that the applicant and the second to
fourth respondents
should each pay their own costs.
[37]
In the result, the following order is made.
(1)
The application is dismissed with costs.
(2)
The applicant is to pay the first respondent’s costs on the
attorney and client scale, which are to include the costs
consequent
upon the employment of two counsel.
/(3)
Each of …
(3)
Each of the applicant, the second, third and fourth respondents is to
pay its own costs.
BORUCHOWITZ
J
JUDGE
OF THE HIGH COURT,
GAUTENG
LOCAL DIVISION,
JOHANNESBURG
DATE OF HEARING :
27 April 2016
DATE
OF JUDGMENT : 04 July 2016
ON
BEHALF OF
THE
APPLICANT : ADVOCATE N MANAKA
INSTRUCTED
BY : NGCEBETSHA MADLANGA ATTORNEYS
Ref:
JSN/RP/ar/MATHEBULA
ON
BEHALF OF
THE
1
ST
RESPONDENT : ADV N VAN DER WALT SC
with
Adv M COETZER
INSTRUCTED
BY : WIM KRYNAUW ATTORNEYS Ref: J Coetzer/MEC0006/DC
ON
BEHALF OF THE
2
ND,
3
RD
AND
4
TH
RESPONDENTS: ADVOCATE D NTSEBEZA SC
with
Adv A MOFOKENG
INSTRUCTED
BY : THE STATE ATTORNEY, JOHANNESBURG
Ref:
V Dhulam/6358/12/P50/jm
[1]
This
matter was confirmed on appeal in
MEC
for Economic Affairs, Environment and Tourism, Eastern Cape v
Kruizenga and another
2010 (4) SA 122
(SCA) referred to in para 14 of this judgment.