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[2013] ZAKZPHC 46
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Khwela and Another v Dhlamini (AR 213/2013) [2013] ZAKZPHC 46 (23 September 2013)
1
REPORTABLE
IN THE KWAZULU-NATALHIGH COURT, PIETERMARITZBURG
REPUBLIC OF SOUTH AFRICA
CASE NO:AR 213/2013
In the matter between:
FANO LUCKY BOY KHWELA
.................................................
First
Appellant
ZODWA DOREEN KHWELA
...............................................
Second
Appellant
and
WELLINGTON DHLAMINI
............................................................
Respondent
___________________________________________________________
JUDGMENT
___________________________________________________________
GORVEN J
This matter hasnegotiated a long and winding road.It
has been sent down blind alleys and has at times attempted to
retrace its
steps. I am tempted to say that it has been a comedy of
errors except that, because people’s lives and money are
involved,
there is no room for humour. I shall refer in this
judgment to the respondent as the applicant and the appellants as
the respondents
respectively. This is how the parties were referred
to in the two applications which gave rise to the two judgments
which form
the subject matter of the appeal.
The journey began with a written agreement (the
property agreement) for the purchase and sale of an immovable
property (the property)
that was signed by the parties on 29 August
2008. On the face of the property agreement, the respondents
purchased the property
from the applicant. It is common cause that
the respondents obtained occupation of the property pursuant to the
property agreement.
Since then, the matter hastravelled along
various roads in the Durban Magistrates’ Court (the court) in
various applications.
The first of these involved an
ex parte
application, brought for authorisation by the court to serve a
notice in terms of s 4(2) of the Prevention of Illegal Eviction
from and Unlawful Occupation of Land Act 19 of 1998 (the PIE Act).
The order was granted and the notice in question was duly
served on
the respondents.This order is not appealed against.
Thenext junction reached involved anapplication for the
eviction of the respondents (the original application). The
applicant
claimed that the respondents had failed to perform their
obligations under the property agreementand that he had cancelled it
as a result. Thisapplication was opposed and was set down for
hearing on 26 September 2011. On that day, both sets of parties
were
represented by legal practitioners. It was recorded by the
magistrate, in terms of Rule 27(6) of the Magistrates’
Court
Rules, that the matter had become ‘settled as per Draft Order’
(the settlement agreement).
1
The
applicant, in a further step along the journey,subsequently sought a
ruling on whether the settlement agreement was merely
recorded in
terms of Rule
27(6)or was made an order of
court. The court pronounced on this issue on 9 March 2012 to the
effect that what had been effected
was the recordal of the
settlement agreementand that it had not been made an order of court.
That recordal in terms of Rule 27(6)
is not appealed against
and has not been set aside on any other basis.
It will be helpful to set out in full the contents of
the settlement agreement. Although it refers to the plaintiff and
the defendants,
the references should clearly be to the applicant
and the respondents respectively. It was headed ‘Draft Order
in Terms
of Rule 27(6)’ and read as follows:
‘
THE MATTER BEING SETTLED, IT IS HEREBY
ORDERED AS FOLLOWS:
1. The first and second defendant and all those claiming occupation
through them shall vacate the premises situated at A242 Old
Main
Road, Amanzimtoti on or before the 31
st
December 2011.
2. In the event that the first and second defendant fail to vacate
the premises on the date set out in paragraph 1 hereof the sheriff
of
the court is hereby authorised to evict the first and second
defendant and all those claiming occupation through them on the
1
st
January 2012 or any date thereafter.
3. It is recorded that in the event that the 1
st
and 2
nd
Defendant are able to raise sufficient cash, bank guarantee or bond
before the 31
st
December 2011 the Plaintiff shall enter
into an agreement of sale with them in order to sell the property
situated at A242 Old Main
Road, Amanzimtoti to the 1
st
and
2
nd
Defendant.
4. The Plaintiff will be entitled to retain the funds paid by the
first and second Defendant as damages and compensation for the
use of
the premises at a rate of R2500.00 per month, escalating annually at
a rate of 10%, from the 1
st
August 2008. The balance of
any funds paid to the Plaintiff by the 1
st
and 2
nd
Defendant pursuant to the agreement shall be refunded to them.
5. The first and second Defendant shall pay R3000.00 to the Plaintiff
each month as consideration for the use of the premises for
the
months of October, November and December 2011. Such payment will be
made to the Plaintiff on the 15 day of each of the listed
months.
6. In the event that the first and second defendant default on any of
the terms of this agreement, the sheriff of the court is
hereby
authorised to evict them and any person claiming occupation through
them from the premises immediately, without further
notice.
7. The above agreement shall be recorded in terms of Rule 27(6) of
the rules of the above Honourable Court and shall be in full
and
final settlement of both the action and application in terms of the
Prevention of Eviction and Unlawful Occupation of Land
Act under the
above case number.’
2
The next step taken along the journey was an
application brought in March 2012 for the settlement agreement
to be made an
order of court pursuant to the provisions of
Rule 27(9) (the Rule 27(9) application). In support of
this relief the
applicant claimed a breach of the settlement
agreement by way of the failure of the respondents to ‘raise
sufficient cash,
bank guarantee or bond before the
31
st
December 2011’as provided for in
paragraph 3 thereof.The respondents opposed the application.
Significantly, they
did not deny that the original application had
been settled, or that the settlement agreement had been concluded in
the terms
reflected therein. Nor did they deny that they had
consented to the settlement agreement being recorded in terms of
Rule 27(6).
They did not deny that they had failed to perform
some of the terms of the settlement agreement. They limited their
defence to
an assertion that the settlement agreement was not signed
by both parties.
The significance of this assertionis stated by the
respondents as follows. Because ‘the Applicant did not lodge a
statement
of the terms of settlement signed by all the parties to
the action as envisaged in Rule 27(8)’,
3
‘
the
present application cannot succeed’.
4
This
point requires a brief overview of Rule 27 and a brief analysis of
Rules 27(7), (8) and (9).The clear underlying rationale
for
Rule 27 is that where litigious matters are settled, a
mechanism is provided for judgements to be granted in terms of
the
settlement without having to begin
ab initio
with an action based on the settlement agreement. If
the rule was not in place, a matter which had been settled by way of
a compromise,
and where a party did not reserve the right to proceed
on the original causes of action, would require the party concerned
to
commence a new action to sue on the settlement agreement. I will
deal below with the requisites for a compromise. This is because
the
settlement agreement would constitute a fresh cause of action. The
Rule provides a means to obtain an expeditious judgement
where the
terms of a settlement agreement have not been complied with. In the
circumstances dealt with under the Rule, judgement
can be granted on
a settlement agreement which has compromised the original cause of
action pursuant to the provisions of Rule 27(9)
without a fresh
action being instituted.
I now turn to a brief analysis of Rule 27 (7), (8) and
(9). Their material terms read as follows:
‘
(7) An application referred to in subrule
(6) shall be on notice, except when the application is made in court
during the hearing
of any proceeding in the action at which the other
party is represented or when a written waiver (which may be included
in the
statement of the terms of settlement) by such other party of
notice of the application is produced to the court.
(8) At the hearing of an application referred to in subrule (6) the
applicant shall lodge with the court a statement of the terms
of
settlement signed by all parties to the action and, if no objection
thereto be made by any other party, the court shall note
that the
action has been settled on the terms set out in the statement and
thereupon all further proceedings in the action shall,
save as
provided in subrules (9) and (10), be stayed.
(9)(a) When the terms of a settlement agreement which was recorded in
terms of subrule (6) provide for the future fulfilment by
any party
of stated conditions and such conditions have not been complied with
by the party concerned, the other party may at any
time on notice to
all interested parties apply for the entry of judgement in terms of
the settlement.…’
Within the context of Rule 27 and the Rule 27(9)
application, the following is the effect of these sub-rules. First,
Rule 27(7)
was complied with in the present case because the
original application had been set down for hearing on the day the
recordal was
made. Rule 27(8) requires the lodging of a
statement signed by all the parties at the hearing of an application
in terms of
Rule 27(6). The respondents say that no such
statement was lodged. Within the context of the Rule 27(9)
application,
this was not contradicted by the applicant in reply. On
the face of it, therefore, the recordal in terms of Rule 27(6)
should
not have been made for want of compliance with the provisions
of Rule 27(8). However, Rule 27(9) does not itself require
the settlement agreement to have been signed by the parties. It
simply requires a prior recordal to have been made under Rule 27(6).
That recordal was made on 26 September 2011.
The only defence raised by the respondents is to the
effect that the recordal under Rule 27(6) was not competent for
want
of compliance with Rule 27(8). This provides no defence to
the Rule 27(9) application. This is because, in fact, the settlement
agreement had been recorded under Rule 27(6), whether rightly
or wrongly. That jurisdictional fact was all that was required
to
entitle the court to consider an application under Rule 27(9).
The court hearing the Rule 27(9) application was not entitled
to
consider whether the recordal of the settlement agreement under
Rule 27(6) had been properly made. Unless and until that
recordal is set aside, it remains binding. This is so regardless of
the nature of a recordal in terms of Rule 27(6). If
the
recordal is regarded as an administrative measure, it is valid until
set aside according to the principles set out in
Oudekraal
Estates (Pty) Ltd v City of Cape Town & others
.
5
If it is regarded as a judgment, it is valid until set
aside according to the principles set out in
Jacobs
& others v Baumann NO & others
.
6
For the purposes of this appeal it is not necessary to
decide whether such a recordal amounts to an administrative act or a
judgment
although I incline to the latter. The crucial fact is that
the respondents have not even to date appealed or brought under
review
or in any other way set aside the recordal of the settlement
agreement in terms of Rule 27(6). That recordal then stands as a
jurisdictional fact upon which the court was entitled to rely for
the purposes of the Rule 27(9) application.
It is therefore unnecessary to analyse in detail
precisely what is required before the court is entitled to make a
recordal in
terms of Rule 27(6). It may be that the recordal
would have been vulnerable to a challenge. I say may because it is
not
necessary to make a finding that such a challenge would have
succeeded and I therefore do not do so. The issue of whether the
parties did or did not sign the settlement agreement was therefore
irrelevant to the Rule 27(9) application and did not constitute
a defence to it.
As mentioned, accordingly, Rule 27(9) requires
only two jurisdictional facts before an application may be brought
and an
order can be granted. The first is the recordal of a
settlement agreementin terms of Rule 27(6). The second is the
failure
of one of the parties to comply with the stated conditions
in the settlement agreement. The first requirement is clearly
satisfied
bythe recordal of the settlement agreement consented toby
the parties on 26 September 2011. I turn, therefore, to
consider
whether the applicant made out a case that the respondents
had failed to comply with one of the stated conditions of the
settlement
agreement.
There are difficulties both with thesettlement
agreement and with the breach relied on by the applicant. Paragraph
3 of the settlement
agreement amounts to a
pactum
de contrahendo
or, in lay terms, an
agreement to conclude an agreementat some future date. I say this
because paragraph 3 indicates that if the
respondents comply with
certain terms on or before 31 December 2011, the applicant
‘shall enter into an agreement
of sale with them in order to
sell the property’. A
pactum de
contrahendo
is binding on the parties. In
order for it to be binding, however, it ‘is required to comply
with the requisites for validity,
including requirements as to form,
applicable to the second or main contract to which the parties have
bound themselves…’.
7
Since
the second or main contract to be concluded relates to the sale of
immovable property, the
pactum
contained in paragraph 3 must be reduced to writing and
signed by both parties.
8
It
must also contain all the material terms of such agreement.
Paragraph 3 of the settlement agreement clearly does not comply.
It
was not signed by the parties and did not contain at least one of
the material terms of the agreement, namely the purchase
price. An
entirely new agreement is clearly envisaged by paragraph 3. There is
no reference to the property agreement. It cannot
be said,
therefore, that the terms of the property agreement relating, inter
alia, to price, are to be read as being incorporated
by reference in
the
pactum
. Paragraph
3 of the settlement agreement therefore amounts to an
unenforceable
pactum de contrahendo
.
The failure to comply with its terms does not give rise to an
actionable breach. It cannot therefore found the relief claimed
under Rule 27(9).
This does not mean that the applicant did not establish
that the respondents had failed to comply with one of the conditions
of
the settlement agreement.It is common cause that the respondents
had failed to vacate the property on or before 31 December 2011.
They were therefore clearly in breach of paragraph 1 of the
settlement agreement. Since there was no other defence proffered
to
the application, the applicant was entitled to an order under
Rule 27(9). The court granted an order (the first judgment)
on
12 July 2012 in the following terms:
‘
There is to be entry of judgment against
the first and second respondents, who are the first and second
defendants in this matter,
on the terms set out in the agreement of
settlement recorded at court on the 26 September 2011.
The issue of eviction and issues relating to PIE are adjourned
sine
die
and can be addressed with the Court at a later stage.
The first and second respondents are to pay the cost of this
application on the opposed scale, including costs of preparation.’
The first judgment is the first of the twojudgments
appealed against. The grounds of appeal deal with issues which all
hinge on
the original application or the validity of the recordal of
the settlement agreement. The original application will be dealt
with below. I have already dealt with the fact that the recordal has
not been appealed against. I should also mention that it was
not a
ground of appeal that the first judgment contravened the provisions
of s 4(7) of the PIE Act. In any event, since
the settlement
agreement consented to the respondents vacating the property, the
first judgment did not enforce an eviction as
defined in the PIE
Act. This requires a deprivation of possession against the will of
the occupier whereas the respondents had
agreed to vacate.As will be
seen below, the grounds of the appeal against the first judgment
relating to the original application
have no merit.
Having said that, however, the order granted in the
first unnumbered paragraph of the first judgment was not appropriate
in the
circumstances. This purported to grant judgment in the terms
contained in the settlement agreement. There are terms of the
settlement
agreement which are not susceptible of forming part of an
order. Certain paragraphs should not have been included. I have
already
dealt with paragraph 3 which contained an unenforceable
pactum de contrahendo
. Paragraph 5 had run its course dealing
as it did with payments up to the end of December 2011 which had, by
then, passed. Paragraph
6 virtually repeated paragraph 2 and
paragraph 7 dealt with the fact that the agreement settled the
issues arising from the original
application and the PIE Act.
Thefirst unnumbered paragraph of the first judgment should have been
limited to making paragraphs
1, 2 and 4 of the settlement agreement
an order of court. It is therefore appropriate that the first
judgment be amended on appeal
to that effect.
The grant of the first judgment was not the end of the
matter. The applicant attempted to retrace his steps by setting down
the
original application for determination. The issues relating to
compliance with the PIE Act and the
locus standi
of the
applicant to launch the original application were traversed. The
matter was presumably set downas a result of the second
unnumbered
paragraph of the first judgment. A different magistrate dealt with
this argument and, on 1 October 2012, the court
granted an order for
the eviction of the respondents and all persons claiming occupation
through them, suspending the order until
31 October 2012 and
awarding costs to the applicant (the second judgment). The matter
was adjourned until 31 October 2012
for proof of the
availability of other land or accommodation. There is no indication
in the appeal record as to what, if anything,
took place on
31 October 2012. Presumably nothing happened because the record
ends there and because the notice of appeal
was lodged with the
magistrate on 2 November 2012. That notice, amended at a later
stage, appeals against both the first
and second judgments. I
therefore turn to consider the appeal against thesecond judgment.
Unfortunately, it appears that neither of the counsel
who appeared before us got to grips with the matter. Their heads of
argument
revolved almost entirely around issues raised in the
original application concerning the
locus
standi
of the applicant and the identity of
the parties to the agreement of sale. The position is as follows.
The settlement agreement
which was recorded on
26 September 2011amounts to a
transactio
.
This is often referred to by the English law name of compromise. The
test for whether an agreement is a
transactio
was dealt with in
Cachalia v Harberer&
Co
9
where Solomon J said the following:
‘
Now what is a
transactio?
I take the definition given by Grotius, who defines it as an
agreement between litigants for the settlement of a matter in
dispute.’
10
He went on to assess whether an agreement amounted to a
transactio
in the
following manner:
11
‘
If, however, we examine the terms of the
arrangement which was come to, it appears to me to contain all the
essentials of a compromise
of a lawsuit. Each party in this
arrangement abated some of his previous demands. Each party receded
to some extent from the position
formerly taken up.’
In the present matter, both parties abated previous
demands. The applicant abated his demand for immediate eviction. The
respondents
abated their demand to continue occupying the property
beyond 31 December 2011. They also abated any rights accorded to them
by
the PIE Act by consenting to vacate on the conditions set out in
the settlement agreement. The settlement agreement therefore meets
the test for a
transactio
.
Since the settlement agreement did not reserve the right of the
parties to rely on their original rights, they cannot be relied
upon.
12
Compromise
has the same effect as
res judicata
.
13
The
compromise is, in any event, made clear in clause 7 of the settlement
agreement. The settlement agreement is stated to be in
full and final
settlement of the issues under the original application, including
the issues under the PIE Act.
The cause of action in the original application had
therefore been compromised and could not be relied on. This includes
the eviction
relief and the issues under the PIE Act. In addition,
the issue of eviction had become
res
judicata
by virtue of the first judgmentand
could not be revisited.
14
In
the result, the original application should never have been set down
for argument. The second judgment, having been granted
pursuant to
the original application, was not competent.This in turn means that
the second unnumbered paragraph of the first
judgment was
incorrectly granted. There were no remaining live issues of eviction
or issues relating to the PIE Act that could
be adjourned to be
dealt with at a later stage. They had been subject to the
transactio
concluded between the parties. The eviction had, in
addition, been finally pronounced upon in the first judgment.
The appeal against the second judgment must accordingly
be upheld and the second judgment set aside. As regards costs, the
respondents
are entitled to the costs of setting down the original
application which gave rise to the second judgment. The applicant
submitted
that he had been misled by the second paragraph of the
first judgment which purported to adjourn certain relief from the
original
application. He also submitted that the respondents raised
spurious defences to this application. Even so, the fact remains
that
setting down the application was not competent and caused the
respondents to incur unnecessary costs. The applicant, as the party
who set down the application, must bear the responsibility for those
costs.
The appeal against the first judgment, granted on 12
July 2012 must be upheld in part. The order must be amended to
provide that
only paragraphs 1, 2 and 4 of the settlement agreement
are made orders of court. It must also be amended by deleting the
second
unnumbered paragraph. The costs order granted in the third
unnumbered paragraph must stand. As indicated, the appeal against
the second judgment must be upheld and the order substituted with an
order dismissing the application with the applicant to pay
the costs
attendant on its having been set down for hearing which resulted in
the second judgment.
The applicant is entitled to costs of the appeal since
the substance of the relief dealt with in the appeals is whether the
court
was entitled to order the eviction of the respondents. Thisis
provided for in paragraphs 1 and 2 of the settlement agreement which
appropriately form part of theamended order of 12 July 2012.
The applicant has therefore enjoyed substantial success
on appeal.
The following order accordingly issues:
1. The appeal against the order granted on 12 July 2012
is upheld in part and the order is amended to read as follows:
‘
(a) Paragraphs 1, 2 and 4 of
the settlement agreement recorded in terms of Rule 27(6) on 26
September 2011 are made orders of court.
(b) The first and second respondents are to pay the
costs of this application on the opposed scale, including costs of
preparation.’
2. The appeal against the order granted on 1 October
2012 is upheld and that order is set aside and substituted with an
order that
the application is dismissed with the applicantto pay the
costs attendant on its having been set down for hearing which
resulted
in the second judgment.
3. The respondents are directed to pay the costs of the
appeals.
___________________________
GORVEN J
I agree:
___________________________
POYO-DLWATI AJ
DATE OF HEARING: 16September 2013
DATE OF JUDGMENT: 23September 2013
FOR THE APPELLANTS: MI Mkhizeinstructed by KUNENE
ATTORNEYS.
FOR THE RESPONDENT: ME Stewart instructed by MEUMANN
WHITE, locally represented by ER BROWNE INCORPORATED.
1
Rule
27(6) provides as follows: ‘Application may be made to the
court by any party at any time after delivery of notice
of intention
to defend and before judgment to record the terms of any settlement
of an action without entry of judgment agreed
to by the parties:
Provided that if the terms of settlement so provide, the court may
make such settlement an order of court.’
2
The
grammar has not been corrected.
3
Para
8 of the second respondent’s answering affidavit, p 56 of the
record.
4
Para
9 of the second respondent’s answering affidavit, p 57 of the
record.
5
2004
(6) SA 222
(SCA) para 31.
6
2009
(5) SA 432
(SCA) para 20.
7
Per
Corbett JA in
Hirschowitz v Moolman& others
1985 (3) SA
739
(A) at 766D-E.
8
Section
2(1)
of the
Alienation of Land Act 68 of 1981
;
Venter v Birchholtz
1972 (1) SA 276
(A) at 284C-D. Although
Venter
dealt with the
predecessor of this Act, the reasoning applies equally to the new
Act.
9
1905
TS 457
at 462.
10
For
the purpose of this judgment this definition suffices but Caney
explains, with reference to the old authorities, that it is
not
necessary for a lawsuit to have commenced. An existing dispute is
sufficient. LR Caney:
A Treatise on the Law relating to Novation,
including Delegation, Compromise and Res Judicata
, Juta, Cape
Town, 1992 at 54.
11
At
462.
12
Van
Zyl v Niemann
1964 (4) SA 661
(A) at 669H-670A;
Jonathan v
Haggie Rand Wire Ltd & another
1978 (2) SA 34
(N) at
38G-39A.
13
Niemann
loc
cit.
14
In
Mitford’s Executor v Ebden’s Executors & others
1917 AD 682
at 686, Maasdorp JA referred to three requirements for a
plea of
res judicata
in the following terms, ‘To
determine that question it will be necessary to enquire whether that
judgment was given in
an action (1) with respect to the same subject
matter, (2) based on the same ground, and (3) between the same
parties’.
In
Commissioner of Customs v Airton Timber Co Ltd
1926CPD 351 at 359,Watermeyer J adopted the explanation from
Spencer-Bower (
Res Judicata
sec. 162)to the following effect;
‘Where the decision set up as a
res judicata
necessarily involves a judicial determination of some question of
law or issue of fact, in the sense that the decision could
not have
been legitimately or rationally pronounced by the tribunal without
at the same time, and in the same breath, so to speak,
determining
that question or issue in a particular way, such determination,
though not declared on the face of the recorded decision,
is deemed
to constitute an integral part of it as effectively as if it had
been made so in express terms…’