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[2022] ZAMPMBHC 78
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Capital Profound 3 (Pty) Ltd and Others v Guilt Food (Pty) Ltd t/a Guilt and Another (1454/2022) [2022] ZAMPMBHC 78 (18 October 2022)
FLYNOTES:
SETTLEMENT AGREEMENT MADE ORDERS OF COURT
Civil
procedure – Settlement agreement – Made order of court
– Litigation not commenced – Dispute
insufficient –
Issue must be properly before the court, and but-for the
settlement agreement, court would have entertained
that dispute.
IN
THE HIGH COURT OF SOUTH AFRICA
MPUMALANGA
DIVISION, MBOMBELA (MAIN SEAT)
CASE
NUMBER: 1454/2022
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: YES
REVISED
18
OCTOBER 2022
In
the matter between:-
CAPITAL
PROFOUND 3 (PTY) LTD
First Applicant
INYANGA
TRADING 497 PTY LTD
Second Applicant
JACANA
INVESTMENTS (PTY) LTD
Third Applicant
COFFEE
BREAK INVESTMENT CC
Fourth Applicant
and
GUILT
FOOD (PTY) LTD
t/a
GUILT
First
Respondent
JACQUELINE
MICHELLE BURNS
Second Respondent
JUDGMENT
GREYLING-COETZER
AJ
[1]
This application came
before the court as an unopposed motion. The applicants seek this
court to make the cancellation agreement,
concluded between the
applicants and the respondents, an order of court on the strength of
clause 18 to the agreement, which provide
that the parties agreed
that the agreement will be incorporated into and made an order of
court.
[2]
As will become
evident from that set out herein below, the relief is sought in
circumstances where no litigation is pending or has
been commenced
with between the parties. I therefore considerate necessary to
determine whether it is competent for this court
to make an
agreement, as reached between the parties absent litigation, an order
of court.
[3]
In the affidavit
supporting this application (deposed to by the attorney of record on
behalf of the applicants) it is alleged that
the applicants and the
first respondent concluded a one-year lease agreement, commencing on
1 April 2021 and expiring on 31 March
2022. Pursuant to the first
respondent providing the applicants notice of its intention to vacate
the leased premises before expiry
of lease, the cancellation
agreement was concluded on 26 October 2021.
[4]
In terms of the
cancellation agreement, the parties agreed on
inter
alia
f
re-instatement of the lease premises, hand over the keys to the lease
premises to the applicants, payment that the first respondent
would
be liable to make in respect of rental and other amounts due in terms
of the lease agreement, totaling R159 716.13. It was
agreed that the
aforesaid amount would be payable in monthly instalments of R5 000.00
for the period 30 November 2021 to March
2022, and thereafter in
installments of R10 000.00 per month as from 30 April 2022 until
the full outstanding amount has been
paid in full.
[5]
The second respondent
further bound herself in terms of the cancellation agreement as
surety and co-principal debtor for the due
and punctual payment of
all amounts and sums of money which may now or at any time
thereafter, and from time to time be and become
due, and for the due
fulfillment of all obligations which may now or at any time
thereafter and from time to time be or become
due by the first
respondent unto and in favour of the applicants.
[6]
In the papers before
court there is no suggestion that any litigation preceded the
conclusion of this Cancellation Agreement and
the consequential
relief to make same an order of court.
[7]
Prior to the hearing
of this matter, a directive was issued to the applicants, advising
them that at the hearing they will be required
to address the court
in respect of the principles set out in
Eke
v Parsons
2016 (3) SA 37
(CC)
and how it relates to the matter at hand.
[8]
At the hearing
counsel for the applicants, as was done in the practice note, placed
reliance on the unreported judgment of
Growthpoint
Properties Ltd v Makhonya Technologies (Pty) Ltd and Others
(67029/2011) [2013] ZAGPPHC 43 (12 February 2013)
submitting that it is competent for the court to make the
cancellation agreement an order of court.
[9]
It was further
submitted that the Constitutional Court in the
Eke
matter (
supra
)
clearly drew a distinction between direct and indirect issues or
lis
between the parties. It was submitted that the matter before court
relates indirectly to an issue or
lis
between the parties.
[10]
Not being persuaded
by counsel for the applicants’ submissions, judgment was
reserved and the applicants were granted an opportunity
to file
written heads of argument. Counsel for the applicants duly complied,
wherein helpful and insightful submissions were made.
Per the
submissions the court was urged to follow Van der Byl AJ in the
Growthpoint
matter (
supra
).
[11]
It was submitted that
in the matter at hand specific provision was made in the Cancellation
Agreement for the order to be made an
order of court and in terms of
Section 19
of the
Superior Courts Act 10 of 2013
, the High Court has
the power and jurisdiction to hear any and all matters that have not
been expressly excluded through means
of legislation. I pause to
point out that the aforesaid refence might have been a typing error,
as
Section 19
of the
Superior Courts Act 10 of 2013
does not provide
as such.
Section 19
relates to the power of the court on the hearing
of appeals. Upon closer scrutiny, it appears that the applicants
might have been
referring to
Section 19
of the repealed Supreme
Courts Act of 1959.
[12]
Consequentially, it
was submitted that no legislation prohibits the High Court from
granting applications for orders to make settlement
agreements orders
of court. But even so, the Constitutional Court in the
Eke
matter (
supra
)
in passing made an
obiter
remark that for a court to be able to make a settlement agreement an
order of court, it must in the first place relate directly
or
indirectly to an issue or a
lis
between the parties. It was submitted that in the present matter such
an issue or
lis
exists, and that issue or
lis
is the sole reason for entering into the Cancellation Agreement.
[13]
According to the
applicant the position adopted by Budlender AJ in
Avnet
South Africa (Pty) Ltd v Lesira Manufacturing (Pty) Ltd and Another
2019 (4) SA 541
(GJ)
wherein it was held that the intention of the Constitutional Court in
the
Eke
matter (
supra
)
clearly means that there had to be litigation between the parties
before the court could make a settlement agreement an order
of court,
is not correct. In substantiation for this submission, it was
argued that the Constitutional Court clearly made
a distinction
firstly between direct and indirect, and secondly between an issue
and a
lis
.
And so the argument went, should it be the case that the
Constitutional Court simply stated that there had to be litigation,
it would not have made the distinction, and specifically incorporated
“
indirect
issue
”,
as a possible way to acquire jurisdiction to hear a matter and grant
such an order. The Constitutional Court also did not
state that it
sought to limit the inherent power of the High Court. As such, it was
submitted the correct position is that set
out in the
Growthpoint
matter (
supra
).
[14]
The
Growthpoint
matter (
supra
)
similarly concerns an application wherein it was sought that an
agreement be made an order of court in circumstances where no
litigation was pending or preceded the application. Therein the
agreement was a settlement agreement. In the present matter the
agreement is termed a ‘Cancellation Agreement’. The
content speaks to an agreement wherein the parties arrange and
agree
on manner of discharging the obligations the respondent had in terms
of the lease agreement.
[15]
It
was argued in the
Growthpoint
matter (
supra
)
that the court lacked the necessary jurisdiction to make the
agreement an order of court as there was no prior litigation, and
that there is no provisionary rule in the Uniform Rules of Court for
such an order to be granted. Relying on Section 19 of the
Superior
Courts Act 59 of 1959
[1]
, the
judge held that the applicant sought an order to determine an
existing right.
[2]
[16]
As
is argued on behalf of the applicants in the matter at hand, the
court in
Growthpoint
(
supra
)
was of the view that the applicant was entitled to have either
launched an application based on the settlement agreement or
instituted
action, but to avoid litigation and cost to the parties,
elected to reduce the agreement to writing and make same an order of
court.
[3]
The court proceeded to
make the settlement agreement an order of court on the basis that if
the court had no jurisdiction simply
because of the reason that there
was no pending proceedings, it would lead to an unnecessary
duplication of legal proceedings.
“
The
term ‘inherent’ jurisdiction refers to the court’s
function of securing a just and respected process of arriving
at a
decision and is not a factor which determines what the order the
court may make after due process has been achieved
”.
[4]
[17]
That found in
Growthpoint
needs to
be accessed through the prism of that set out in the
Eke
matter (supra). The
Eke
matter (supra) did not concern a settlement agreement that had been
concluded without litigation having preceded it, however, Madlanga
J
dealt with the nature and circumstances in which a consent order can
be made. He held that:-
“
For
an order to be competent and proper, it must, in the first place
‘relate directly or indirectly to an issue or a lis between
the
parties.’
[5]
Parties contracting outside the context of litigation may not
approach a court and ask that their agreements be made an order of
court. On this Hodd says: ‘[i]f two merchants were to make an
ordinary commercial agreement in writing, and then were to
join an
application to court to have that agreement made an order of court,
merely on the ground that they prefer the agreement
to be in the form
of a judgment or order because in that form it provided more
expeditious or effective remedies against possible
breaches, it seems
clear that the court would not grant the application’.
[6]
This is so because the agreement would be unrelated to litigation.
”
[18]
It was submitted that
notwithstanding that held by the Constitutional Court, the remark was
obiter
and
that a distinction was drawn between direct and indirect, the matter
at hand, being such a matter as suggested by the Constitutional
Court
to be “
indirect
”.
[19]
Importantly, Madlanga
J was, in stating that
‘
relate
directly or indirectly to an issue or a lis between the parties’
was quoting from
the matter of
PL
v YL
2013 (6) SA 28
(ECG).
The
relevant sentence at paragraph [15] of the
PL
v YL
judgment contained a qualification. It reads: “…
must
relate directly or indirectly to an issue or lis between the parties
that
is properly before the court
.”
(own emphasis)
[20]
Madlanga J, also
qualified his reasoning in re the direct and indirect issue or
lis
between the parties by holding that parties contracting outside of
the context of litigation, may not approach a court and ask
that
their agreement be made an order.
[21]
The argument on
behalf of the applicants that the matter at hand falls within the
‘
indirect
issue’
range, can therefore not succeed as this argument does not address
the qualification set out above.
[22]
I am of the view that
on a proper construction of the
Eke
matter (
supra
),
the Constitutional Court, without any doubt, held that where
litigation had not yet commenced, a settlement agreement may not
be
made an order of court, on the strength of
PL
v YL
(
supra
).
[23]
Thus, there must be
not only a dispute between the parties that led to the settlement
agreement, but the issue or
lis
concerned must be properly before the court, and but-for the
settlement agreement, the court would have entertained that dispute.
[24]
Budlender AJ in
Avnet
(
supra
)
dealt extensively with this issue and the effect of
Eke
(supra) on that found in
Growthpoint
(supra).
It was inter alia held that:
“…
.The
primary function of the courts is to determine disputes between
parties.
[7]
The basis upon which a court C makes a settlement agreement an
order of court is therefore that there is a dispute
between the
parties which is already before the court and that, absent the
settlement agreement, the court would have to adjudicate
that
dispute.
[8]
[31]
When the parties resolve the dispute that is before the court, the
D court may then (after satisfying itself that the
settlement
agreement is a permissible one) make the settlement agreement an
order of court. Such an order of court becomes an order
of court
'like any other'
[9]
— there is no difference between such an order and one granted
by the court after dealing with the merits of the dispute.
[10]
This
is a coherent and consistent approach to the manner in which courts
adjudicate and give orders in the disputes before them.
[32]
It is quite a different matter to allow parties who are not engaged
in any litigation before the court at all to transform
their
agreement into a court order of this type..”
“
[34]……It
does not seem permissible or appropriate for parties to be free to
clothe their agreement with these consequences,
in circumstances
where the agreement is not resolving a matter already before the
court.”
“
[35.4] In
a case where a settlement agreement has been reached and H is
sought to be made an order of court,
there is inevitably no live
dispute A between the parties, but it is also difficult to
conceive what 'uncertain legal position'
could be applicable. The
very point of the application before me (and the application before
Van der Byl AJ in Growthpoint Properties)
is that the parties are not
in dispute or a state of uncertainty about the existence of their
agreement. It is on this basis that
I am asked to enforce the B
agreement via court order. It therefore seems to me that s 21 of the
Superior Courts Act
[11]
does not provide me with the necessary jurisdiction to make the
settlement agreement an order of court.”
“…
..the
settlement agreement between the parties before me is (absent some
challenge to it) already a legally binding agreement. If
the
respondents adhere to their obligations under the agreement, there
will be no need for legal proceedings or a court order at
all. If
they do not E adhere to their obligations, the applicant will
then be entitled to institute proceedings based on
the settlement
agreement and seek a court order requiring compliance with the terms
of the agreement.
[35.7] This
in my view does not produce any 'unnecessary duplication F of
legal proceedings'. Rather, it
ensures that legal proceedings and the
involvement of the court are confined to pronouncing on real disputes
between parties or
resolving legal uncertainty, but only if and when
such disputes or uncertainty arise.”
[25]
Substantially for the
reasons given by Budlender AJ in
Avnet
(supra) I consider that paragraph 25 in
Eke
(supra) correctly reflects the law and I should follow it.
[26]
I accordingly make
the following order:
1.
The application is dismissed.
GREYLING-COETZER
AJ
FOR
THE APPLICANTS:
Adv Jansen van Vuuren
Instructed
by
Fullards Mayer Morrison Inc
C/O
Doman Weitsz Attorneys
E-mail:
leendert@dwatt.co.a
[1]
This
Act being repealed and replaced by the
Superior Courts Act 10 of
2013
, wherein
Section 21
deals with jurisdiction of the High Court
[2]
Growthpoint
(
supra
)
par [8]
[3]
Growthpoint
(
supra
)
par [12] and [13]
[4]
Growthpoint
(
supra
)
par [14]
[5]
Quoting
PL
v YL
2013 (6) SA 28
(ECG) at par [15]
[6]
Quoting
Hodd
v Hodd; D-Aubrey v D-Aubrey
1942 (NPD) 198 at 204
[7]
National
Youth Development Agency v Dual Point Consulting (Pty) Ltd and
Another
GJ 6982/2016
[8]
PL
v YL
(supra)
par 15
[9]
Eke
(supra)
par 29
[10]
Moraitis
Investments (Pty) Ltd and Others v Montic Dairy (Pty) Ltd
2017
(5) SA 508
(SCA)
([2017]
3 All SA 485)
par 16.
[11]
The successor provision to s 19 of the Supreme Court Act.