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[2021] ZALMPPHC 9
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HGM Steelboys CC v Moepathutse Property Management and Others (6305/2018) [2021] ZALMPPHC 9 (11 March 2021)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
LIMPOPO DIVISION,
POLOKWANE
CASE
NUMBER:6305/2018
In
the matter between:
HGM
STEELBOYS CC
PLAINTFF
And
MOEPATHUTSE
PROPERTY MANAGEMENT
AND
COSTRUCTION
FIRST
DEFENDANT
MONI
FLORA MAGONGWA
SECOND
DEFENDANT
MATSOBANE
JOSEPH MANALA
THIRD
DEFENDANT
PUDIYABATHO
FOURTH
DEFENDANT
JUDGEMENT
KGANYAGO
J
[1]
During October 2018 the plaintiff has instituted action against
defendants claiming
R889 223-69. The action against the first
defendant was based on goods sold and delivered. The second to the
fourth defendants
were sued on the basis of the surety agreement that
they have signed binding themselves as co-principal debtor, jointly
and severally
with the first defendant.
[2]
The defendants have defended the plaintiff’s action. On
entering an appearance to defend,
the plaintiff applied for summary
judgment. Before the summary judgment could be heard, the parties
negotiated and reached a settlement
agreement wherein the defendants
agreed to pay the plaintiff the sum of R700 000-00. The
plaintiff did not proceed with the
summary judgment application. The
settlement agreement was not made an order of court.
[3]
The defendants have failed to pay the plaintiff in terms of the
settlement agreement. The plaintiff
has applied for a default
judgment on the basis of the settlement agreement in terms of Rule
41(4) of the Uniform Rules of Court
(the Rules) on the same papers.
[4]
The plaintiff’s default judgment application was set down for
the 26
th
January 2021. The settlement agreement did not
make provision for parties to approach court on the same papers in
case of breach
of the agreement. On 26
th
January 2021 the
first question which the court had raised with the plaintiff’s
counsel was whether the plaintiff can approach
the court on the same
papers and apply for a default judgment even though the settlement
agreement did not make provision for that.
The second question was
whether the settlement agreement did not compromise the plaintiff’s
action since it was not made
an order of court. Counsel for the
plaintiff requested for an adjournment in order to enable her to file
short head of arguments.
[5]
In her head of arguments counsel for the plaintiff relies on
Rule
41(4)
of the Uniform Rules of Court, the cases of
Massey
Ferguson (South Africa) Ltd v Ermelo
Motors (Pty) Ltd 1973(4)
SA 206 (T)
and
Siebert & Honey v
Tonder 1981(Z) SA
146 (O).
It is the plaintiff’s contention that when the
plaintiff and defendants entered into the settlement agreement, their
intention
was to have the action finalised by way of settlement. That
Rule 41(4) does not have requirements regarding the settlement, but
that it simply amplifies the intention of the parties for the action
to be concluded on a manner as set forth in the settlement
agreement.
Further that the purpose of sub-rule 4 should help to reassure the
parties that their agreement is enforceable and avoid
further
unnecessary legal action.
[6]
The plaintiff further submits that under common law, application on
notice to the defendant is
required to be made to court relevant to a
settlement being made an order of that court. The plaintiff further
submits that in
this matter the attempt to make the settlement an
order of court was brought clearly within the provisions of Rule
41(4) in mind,
and not by way of confession to judgment or in terms
of the common law. It is the plaintiff’s contention that the
reference
in Rule 41(4) to the entitlement to apply for judgment
requires application on notice to all relevant parties, as stipulated
in
the Rules, and that all that is required is a notice to the other
side that an application will be brought on the date assigned
by the
registrar or directed by a Judge. The plaintiff therefore submit that
it has complied with the requirements for bringing
a proper
application in terms of Rule 6(1) by giving the defendants proper
notice of its intention to bring the application, based
on the
settlement to court for the appropriate order.
[7]
It is common cause that after the plaintiff has instituted action
against the defendants, both
parties have negotiated and ultimately
reached an agreement as to the settlement of the matter. The
agreement of both plaintiff
and defendants was reduced to writing and
both parties have signed the settlement agreement. According to the
plaintiff, the defendants
have failed to effect payment as per the
settlement agreement. The plaintiff has brought an application in
terms of Rule 41(4)
seeking a default judgment based on the signed
settlement agreement.
[8]
Rule 41(4) read as follows:
“
Unless such
proceedings have been withdrawn, any party to a settlement which has
been reduced to writing and signed by the parties
or their legal
representatives but which has not been carried out may apply for
judgment in terms thereof on at least five days’
notice to all
interested parties.”
[9]
The terms of the settlement agreement read as follows:
“
1. The first to
fourth defendants shall jointly and severally, one pays the other to
be absolved, pay to the plaintiff an amount
of R700 000-00(seven
hundred thousand rand) in full and final settlement of this action.
2. The amount referred to
in clause 1 hereof (R700 000-00) shall be paid by the defendants
to the plaintiff on or before close
of business on 04 May 2019.
3.The plaintiff and
defendants shall each be liable for their own costs incurred in this
matter as at the respective dates of signature
hereof.
4.The defendants
undertake to provide the Department of Cooperative Governance, Human
Settlements and Traditional Affairs with a
copy of this settlement
agreement within 5 (five) days of signature thereof, failing which
the plaintiff may do so.
5.The settlement is the
whole agreement between the parties in respect of settling the above
matter. None of the parties rely in
entering into this settlement
agreement on any warranties, representations, disclosures or
expressions of opinion which have not
been incorporated into this
settlement agreement. No amended, variation or novation of this
settlement agreement shall be valid
or enforceable unless such
amendment, variation or novation is reduced to writing and signed by
the plaintiff and the first to
fourth defendants.”
[10]
When the plaintiff and defendants negotiated the settlement,
concessions were made and that resulted in the
defendant’s
liability been reduced. Therefore, when the settlement agreement was
signed, it was a compromise of the dispute
that led to the plaintiff
instituting action against the defendants. The plaintiff is not
entitled to fall back on the original
cause of action in case of
breach unless the settlement agreement made an express or implied
provision for that. (
See
Weltmans Custom Office Furniture (In Liq) v Whistlers CC.
[1]
)
[11]
The defendants have failed to effect payments in terms of the
settlement agreement. The question is whether
the plaintiff since it
will not be able to fall back on the original cause of action, can it
be able to obtain a default judgment
in terms of Rule 41(4) based on
the settlement agreement signed by both parties.
[12]
The settlement agreement does not contain any provision of
enforcement in case of breach by either party.
It has no provision
for consent to judgment in case the defendants default with their
payments. It also does not have express or
implied provision that
entitle the plaintiff to return to court on same papers in case of
default by the defendants.
[13]
In Elke
v Parsons
[2]
Madlanga
J said:
“
[25] This in no
way means that anything agreed to by the parties should be accepted
by a court and made an order of court. The order
can only be one that
is competent and proper. A court must thus not be mechanical in its
adoption of the terms of a settlement
agreement. For an order to be
competent and proper, it must, in the first place, relate directly or
indirectly to an issue or lis
between the parties. Parties
contracting outside of the context of litigation may not approach a
court and ask that their agreement
be made an order of court…
[26] Secondly, the
agreement must not be objectionable, that is, its terms must be
capable, both from a legal and practical point
of view, of being
included in a court order. That means, its terms must accord with
both the Constitution and the law. Also, they
must not be at odds
with public policy. Thirdly, the agreement must hold some practical
and legitimate advantage.”
[14]
An agreement should be drafted in clear and unambiguous terms so that
it will not leave any room for doubt.
The plaintiff’s and
defendants’ agreement makes no provision for breach or failure
to comply with its terms. It therefore
does not appear in the
settlement agreement as to how many days must the defendants be given
in case of breach or failure to comply
with its terms. From the
papers filed, it does not appear that any demand for payment was ever
made to the defendants after the
4
th
May 2019 which will
have put the defendants in mora.
[15]
Clause 5 of the settlement agreement provides that none of the
parties rely in entering into this settlement
agreement on any
warranties, representations, disclosures or expressions of opinion
which have not been incorporated into the settlement
agreement. As I
have already pointed out in paragraph 12 supra, the settlement
agreement does not have provision for consent to
judgment in case of
breach or failure to comply with its terms. The settlement agreement
has also no provision for the plaintiff
to approach the court on same
papers in case of breach or failure to comply with its terms.
Therefore, in my view, the plaintiff
is not entitled to a default
judgment in the manner in which it is seeking. The function of the
courts is to adjudicate live disputes
between the parties and not to
be turned into debt collectors. Since the agreement was never made an
order of court, the route
which the plaintiff was supposed to follow,
was to institute a fresh action based on the alleged breach of the
settlement agreement,
or bring an application to have the settlement
made an order of court since it was reached during the cause of the
litigation.
[16]
In the result I make the following order
16.1 The
plaintiff’s application for default judgment in terms of Rule
41(4) is dismissed
16.2 There is no
order as to costs.
KGANYAGO
J
JUDGE OF THE HIGH
COURT OF SOUTH
AFRICA, LIMPOPO
DIVISION, POLOKWANE
APPEARANCES:
Counsel
for the plaintiff
:
Ms Maryke de Jager
Instructed
by
:
De Bruin Oberholzer Attorneys
Date
heard
:
28
th
January 2021
Date
delivered
:
11
th
March 2021
[1]
1999(3) SA 116 (SCA) at paras 15 & 16
[2]
2016(3) SA 27 (CC) at paras 25 & 26