Brief Summary

Compromise — Withdrawal from compromise — Road Accident Fund seeking to resile from a compromise reached with the plaintiff — Plaintiff asserting entitlement to enforce the compromise — Whether the Fund is entitled to withdraw from the compromise. The plaintiff, Mr. M, sustained severe injuries in a hit-and-run accident and his mother initiated a claim against the Road Accident Fund (the Fund). A compromise was reached regarding liability, but the Fund later sought to withdraw, citing issues of prescription and procedural non-compliance. The court found that the Fund's attempt to resile from the compromise was not justified, as the compromise had been validly established and the Fund was bound by it.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings took the form of an interlocutory application brought within an existing Road Accident Fund damages action. The defendant, the Road Accident Fund (“the Fund”), sought leave to withdraw from a compromise/settlement in terms of which it had conceded the merits at 100% in favour of the plaintiff, and (consequentially) sought leave to amend its plea to introduce a defence based on non-compliance and prescription in a hit-and-run claim.

The parties were M M (the plaintiff in the action, being the injured pedestrian) and the Road Accident Fund (the defendant). The judgment records that the action was initially instituted by the plaintiff’s mother, Ms L Sindi M, purportedly in a representative capacity, despite the plaintiff being a major at the time the action was instituted. The Fund did not challenge locus standi at the time, and as the litigation progressed the matter was treated as if Mr M was the plaintiff.

Procedurally, a compromise on the merits was reached after the Fund’s claims handler instructed its attorneys to concede liability, the compromise was reflected in pre-trial documentation, and the Fund subsequently delivered a Rule 34 offer of settlement on merits which was accepted. Despite this, later case management steps proceeded on the footing that merits remained in issue, and the Fund attempted to raise a special plea of prescription. After withdrawing and then reintroducing the issue through a further notice of intention to amend, the Fund launched the present application seeking leave to withdraw from the compromise and to amend its plea accordingly.

The general subject-matter of the dispute was whether, in a hit-and-run Road Accident Fund claim, the Fund could escape a binding settlement on merits by alleging a unilateral mistake (error) regarding prescription, and thereby re-open the issue of liability through an amendment.

Material Facts

On 15 July 2012, the plaintiff, a pedestrian, was struck by a motor vehicle on the Halfway Trust Main Road, Kabokweni, Mpumalanga. The identities of the driver and owner were not established, making the claim one falling under section 17(1)(b) of the Road Accident Fund Act 56 of 1996, read with Regulation 2 of the Road Accident Fund Regulations governing hit-and-run claims.

The action was instituted in this Division under case number 718/2016, with summons issued on 28 June 2016 and served on the Fund on 6 July 2016. The particulars of claim contained an incorrect date of birth which implied minority at the time of the accident, and it alleged that the plaintiff’s mother acted in a representative capacity. The judgment treats it as significant background that, whether one used the incorrect or the correct date of birth, the plaintiff was a major when the action was instituted, and that the mother had no automatic standing merely by being the plaintiff’s parent. The Fund nonetheless did not contest standing, and the case proceeded with the plaintiff treated as the litigant.

A material dispute existed on the papers as to whether the plaintiff had complied with the section 24 claim-lodgement procedure within the relevant period, and in particular on the date of lodgement of the RAF claim. The plaintiff’s side alleged that a claim was lodged on 30 September 2012, and alternatively that attorneys submitted the RAF1 on 17 November 2015; the Fund’s position was that the claim was lodged on 17 November 2015 and it denied lodgement in 2012. The court expressly stated that it could not resolve this factual dispute on the papers and that oral evidence would be required, but it also held that it was unnecessary to decide this issue for purposes of the application, given the conclusion reached on the compromise.

The Fund’s file was handled by a claims handler, Ms Mmakoma. On 7 December 2017, after receiving a request from the Fund’s attorneys to make an offer on the merits, she considered the matter largely by reference to the particulars of claim and concluded (incorrectly) that the plaintiff was a minor and that she therefore need not be concerned with prescription. She then instructed the Fund’s attorneys to concede liability on merits.

On 8 December 2017, at a judicial pre-trial conference, the pre-trial minutes/directives recorded that merits were settled. On 16 January 2018, the Fund delivered a Rule 34(1) and (5) offer stating a 100% concession in favour of the plaintiff on merits, together with a tender of costs to the date of the notice. On 17 January 2018, the plaintiff accepted that offer. The judgment treats this sequence as constituting a concluded compromise.

Notwithstanding the compromise, later case management steps (including directives in August 2018) recorded contemplated steps relating to a replication to a special plea and an amendment to particulars, and the Fund later sought to introduce special pleas alleging late lodgement and prescription. After procedural skirmishes, including Rule 30 steps by the plaintiff and a withdrawal by the Fund of an earlier special plea, the Fund renewed its attempt to amend and ultimately brought the present application on 15 October 2019 seeking leave to withdraw from the merits concession and to amend its plea.

A further relevant fact was that, on 17 June 2018 (after the compromise), the plaintiff amended the particulars of claim to correct the date of birth to an earlier year. The Fund did not object to that amendment. The court treated this as part of the context in assessing the Fund’s reliance on the “minor” allegation as the cause of the alleged mistake.

Legal Issues

The central legal question was whether the Fund was entitled to resile from a compromise (a transactio) on the basis that the concession of merits had been made under a unilateral mistake regarding prescription, and whether that mistake amounted to a justus error sufficient to set aside the compromise.

Closely connected to that was whether, if the compromise stood, the Fund could nonetheless be granted leave to amend its plea so as to re-open merits by introducing a special plea based on Regulation 2 and prescription, or whether the compromise operated with an effect equivalent to res judicata in relation to the settled merits.

The dispute primarily concerned the application of legal principles to facts: the legal consequences of a compromise and the narrow circumstances under which a unilateral mistake allows a party to avoid a concluded agreement, assessed against the conduct and explanations advanced by the Fund’s claims handler. The court also made evaluative findings on whether the error was reasonable or instead amounted to negligence, which is a value-laden assessment within the established legal framework.

A further issue arose incidentally in argument and in the court’s comments, namely the potential constitutionality of Regulation 2(2) in relation to persons under legal disability for whom compliance may be impossible. However, the court held that no declaration of invalidity was properly before it, and it did not decide that issue.

Court’s Reasoning

The court commenced by characterising the merits settlement as a compromise (transactio). Relying on appellate authority, it treated a compromise as an agreement aimed at ending or avoiding litigation and noted that it is closely equivalent to a consent judgment, carrying the effect of res judicata. On this approach, once a compromise is concluded, the issues compromised are not ordinarily open for re-litigation between the parties.

The court accepted that a compromise may be set aside on recognised grounds such as fraud or mistake, but emphasised that where a party relies on a unilateral error (in the absence of misrepresentation by the other party), the scope for escaping the contract is narrow. The party seeking to avoid the agreement must show that the mistake was reasonable (justus), and the enquiry includes whether the party’s conduct led the other party, as a reasonable person, to believe that the declared intention reflected the actual intention, and whether the other party was misled.

Against this legal framework, the court assessed the Fund’s explanation that its claims handler relied heavily on the particulars of claim, believed the plaintiff to be a minor, and therefore did not consider prescription. The court held that this belief was erroneous both as a matter of law and (on the information available) as a matter of fact, because even if minority had been correctly alleged, Regulation 2 in hit-and-run cases provides for prescription within two years irrespective of legal disability. The error therefore reflected a failure to apply the applicable statutory and regulatory scheme to the claim type.

The court further weighed the claims handler’s insistence that she had no reason to question the particulars of claim against the broader context, including the later amendment correcting the date of birth and the Fund’s lack of objection to that amendment. Importantly, the court treated the claims handler’s approach—restricting her attention mainly to the particulars of claim, and not properly considering the regulatory prescription regime—as negligent. On the court’s evaluation, negligence of this kind rendered the error unreasonable, with the result that the Fund failed to meet the threshold for a justus error that could justify setting aside the compromise.

Because the court found that the compromise remained binding and could not be avoided on the basis advanced, it followed that the foundational relief sought—leave to withdraw from the agreement conceding merits—had to fail. The court treated the amendment relief as consequential and dependent: only if the Fund could escape the compromise would it be necessary to consider leave to amend its plea to raise prescription.

In closing remarks, the court expressed a strong concern (in obiter terms) that Regulation 2(2), to the extent that it includes persons suffering from legal disability for whom compliance is impossible, may be inconsistent with constitutional rights including sections 9, 12 and 34 of the Bill of Rights. However, it declined to decide constitutionality because the issue was not pleaded, no declaratory relief was sought, and the Minister was not a party. The court also observed that, on the facts, the plaintiff had the assistance of his mother, while acknowledging that other vulnerable claimants may not.

Outcome and Relief

The court dismissed the Fund’s application to withdraw from the compromise (and therefore the consequential relief to amend the plea did not succeed). The Fund was ordered to pay the plaintiff’s costs.

Cases Cited

Gollach & Comperts (1967) (Pty) Ltd v Universal Mills & Produce Co (Pty) Ltd and Others 1978 (1) SA 914 (A).

Estate Erasmus v Church 1927 TPD 20.

Western Assurance Co v Caldwell's Trustee 1918 AD 262.

Van Zyl v Niemann 1964 (4) SA 661 (AD).

National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958 (2) SA 473 (A).

Sonap Petroleum (SA) (Pty) Ltd v Pappadogianis 1992 (3) SA 234 (A).

Road Accident Fund and Another v Mdeyide 2011 (2) SA 26 (CC).

Madalane v Van Wyk (87/2015) [2016] ZASCA 25 (18 March 2016).

The judgment also referred to “Cachalia’s case”, “Geldenhuys & Joubert” and “Gassner NO v Minister of Law and Order”, but the full citations for those matters were not set out in the text provided.

Legislation Cited

Road Accident Fund Act 56 of 1996 (including sections 2, 3, 17, 23, 24 and 26).

Children’s Act 38 of 2005 (section 17).

Constitution of the Republic of South Africa, 1996 (Bill of Rights, sections 9, 12 and 34).

Road Accident Fund Regulations, GNR 770 of 21 July 2008 (Government Gazette No. 31249), as amended by Notice R.347 in Government Gazette 36452 of 5 May 2013 (including Regulation 2).

Rules of Court Cited

Uniform Rules of Court, Rule 34(1) and Rule 34(5).

Uniform Rules of Court, Rule 28(4).

Uniform Rules of Court, Rule 30(1).

Uniform Rules of Court, Rule 30(2)(b).

Held

A concluded settlement on merits constituted a compromise (transactio) with an effect akin to res judicata in relation to the issues settled.

The Fund’s attempt to avoid the compromise was based on a unilateral mistake concerning prescription in a hit-and-run claim. The court held that the mistake was not reasonable and was attributable to negligent handling of the matter, including a failure properly to consider the applicable regulatory prescription regime.

Because the Fund failed to establish a justus error, it was not entitled to withdraw from the compromise. The application was dismissed with costs.

LEGAL PRINCIPLES

A compromise (transactio) is an agreement intended to end or prevent litigation and, once concluded, generally brings finality to the compromised issues with an effect comparable to res judicata.

A compromise may be set aside on recognised grounds such as fraud or mistake, but where a party relies on a unilateral error without any misrepresentation by the other party, the scope to escape the agreement is narrow.

To succeed on unilateral mistake as a basis to avoid a compromise, the party must show that the mistake was reasonable (justus error). The enquiry focuses on whether the mistaken party, by its manifested intention, led the other party as a reasonable person to believe the contract reflected true assent, and whether the other party was misled.

An error arising from negligent failure to apply the relevant legal framework to readily ascertainable facts will not ordinarily qualify as a justus error capable of undoing a compromise.

M M v Road Accident Fund (25/11/2019) [2019] ZAMPMBHC 11; Roelofse AJ (4 December 2019)