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[2024] ZAECMKHC 48
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Cloete v Van Zyl (3384/2017) [2024] ZAECMKHC 48 (2 May 2024)
FLYNOTES:
CIVIL PROCEDURE – Settlement agreement –
Cancellation
or withdrawal
–
Whether
defendants are bound by settlement agreement – Damages from
veld fire – Defendant 80% liable for damages
–
Defendants made offer and plaintiff accepted which resulted in
formulation of draft order – Defendants attempting
to
withdraw offer because insurer repudiated claim – Wording of
draft order binds both defendants – Settlement
agreement
concluded is binding and made an order of court.
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
CASE
NO.: 3384/2017
In
the matter between:
P
J
CLOETE
Plaintiff
and
H
VAN
ZYL
First Defendant
I
J VAN
ZYL
Second Defendant
JUDGMENT
MONAKALI
AJ
Introduction
[1]
Plaintiff instituted a claim for damages pursuant to a veld fire that
originated on property of the first and second defendants,
at the
farm Boomplaas, in the district of Molteno, Eastern Cape. The veld
fire spread to the property of the plaintiff, the farm
Weltervrede,
and the plaintiff suffered damages in the amount of R 1 398.132.00.
[2] On 18 March
2019, a day before the trial, the plaintiff contends that a
settlement was reached which was reduced to writing
in the form of a
draft order. He seeks for the settlement agreement, concluded on 18
March 2019, to be made an order of court.
Both defendants oppose the
matter and allege that the Settlement Agreement does not bind them.
[3] Adv. Van
Rensburg appeared for the plaintiff and Adv. De Sander represented
both defendants. Mr. van Biljon testified
on behalf of the
plaintiff, Adv. De Sander presented the evidence of Mr. Buchner, the
erstwhile attorney for the defendants and
Mr. Van Zyl, the first
defendant.
[4] On 19 of March
2019, the trial court was to proceed with the merits only. A day
before the trial, the parties reached
a settlement agreement which
was later cancelled by the defendants.
[5] The facts
leading to the damages constitute the following:
5.1 On or about
23
rd
and 24
th
of November 2015 there was a veld
fire which originated from the defendant's farm, Boomplaas and it
spread to the plaintiff’s
farm, Weltevrede. Consequently, the
plaintiff suffered damage in the amount of R1 398 132.00 to
his farm. The defendants
were insured by Hollard.
5.2 On 18 March
2019, a day before the trial, the parties entered into a settlement
agreement, which was later reduced to
writing in the form of a draft
order.
5.3 Both parties
agreed that, on19 March 2019. the draft order was to be made an order
of court.
5.4 At
approximately 18h00 the defendants withdrew their settlement
proposal.
5.5 When parties
concluded the settlement agreement, Mr. Biljon represented the
plaintiff, and the defendants were represented
by Mr. Buchner.
Summary of Evidence
[6] At the hearing,
Mr. van Biljon testified that on 18 March 2019, he was travelling
from Bloemfontein to Makhanda to attend
the trial, which was set down
for 19 March 2019. While on his way, the defendant’s attorney,
Mr. Buchner, contacted him and
made a settlement proposal. The
settlement entailed that the defendants would accept 80% liability of
the damages and that the
plaintiff would accept liability of the
remaining 20%.
[7] Mr. van Biljon
consulted with his client and received instructions to accept the
settlement proposal. He then contacted
Mr. Buchner and advised him
that the offer was acceptable and that he must prepare a draft order
to that effect. Subsequently,
Mr. Buchner sent an email with a draft
order. Exhibits A and B were handed in respectively by consent.
Exhibit A is the cover letter
addressed to Mr. van Biljon.
[8] The gist of the
letter was for Mr. van Biljon to confirm if he was satisfied with the
content of a draft order. Exhibit
B is the draft order which reads as
follows:
“
By
agreement between the parties the following order is made:
1.
The Defendants accept that they have contributed
to 80% (EIGHTY PERCENT) of the damages resulting from a veld fire
that originated
on the 23 and 24 November 2015 on the farm of the
First Defendant and subsequently spread to the plaintiff’s
farms.
2.
The plaintiff’s
locus
standi
and quantum of the claim is
postponed for further adjudication.
3.
The Defendants are liable for payment of the
plaintiff’s taxed or agreed costs in respect of the merits up
to and including
19 March 2019.”
[9] Mr. van Biljon
confirmed receipt of the email and was satisfied with the content of
the draft order. He contacted Mr Buchner
to confirm if he may return
home to Bloemfontein and to inform the counsel, who was at that stage
at the airport, to cancel his
flight, since the matter was settled.
It is his evidence that Mr. Buchner answered in the affirmative. He
advised him that he did
not doubt that the matter had become settled.
He returned home as his attendance was no longer necessary and
advised the counsel
accordingly.
[10] On the same
day, at about 18h00, in the evening, Mr. Buchner contacted him and
informed him that there was no settlement
anymore. Hollard had
repudiated the claim and defendants would have to pay out of their
pockets. Mr. van Biljon insisted that the
matter has been settled, as
per the draft order. On 19 March 2019, Mr. van Biljon addressed
an email to Mr. Buchner, that
is, Exhibit C, confirming their
telephonic conversation, and insisting the matter was settled and the
defendants were bound by
the settlement agreement.
[11] Under
cross-examination, Mr. van Biljon maintained that the defendants are
bound by the settlement agreement concluded
on 18 March 2019.
[12] Mr. Buchner
testified that he was instructed by Hollard to act as the attorney
for the defendants. On 18 March 2019,
while he was waiting for
Hollard to confirm the issue of liability, he contacted the first
defendant, who apparently was in a mall,
in a noisy area and
explained to him that Hollard had not yet confirmed liability. He
enquired if he could proceed with the settlement
proposal. The first
defendant instructed him to do what he deemed was best. He then
contacted the plaintiff’s attorney, Mr.
van Biljon and enquired
if he was amenable to a settlement. He explained to him that, in his
view, the merits may be settled on
an 80/20 basis, the defendants
accepting liability for 80% of the damages of the plaintiff and the
plaintiff accepting liability
for 20% of the damages, but the issue
of
locus standi
was to stand over for later determination. The
plaintiff accepted the proposal. He formulated a draft order which
was to be made
an order of court.
[13] During
cross-examination, he conceded that he first consulted with the first
defendant and thereafter made a settlement
proposal. He further
confirmed he had the authority to enter into a settlement agreement
on behalf of the first defendant and had
no instructions on behalf of
the second defendant. Later in the early evening, he received
instructions from the first defendant
not to settle the matter. It
was after the defendants realized that they might have to foot the
damages, as Hollard did not accept
their claim.
[14] Mr. van Zyl
supported the version of Mr. Buchner that he was in Queenstown, in a
mall when Mr. Buchner called him. He
testified that he
explained to him about the proposed settlement that they would be
liable for 80% of the plaintiff’s damages
and the plaintiff
would be liable for 20%. He instructed Mr. Buchner to do what was
best as he struggled to hear him and did not
understand him.
[15] Later in the
early evening, when he discussed with his wife, the second defendant,
what Mr. Buchner had explained to
him about the settlement agreement.
Both defendants understood at that stage that they would be
personally liable for 80% of the
damages. He contacted his attorney
and instructed him not to proceed with the settlement.
[16] Under
cross-examination, he conceded that they cancelled the settlement
agreement after Hollard had repudiated their
claim and had realized
that they would be personally liable for 80 % of the damages. He
averred that when Mr. Buchner contacted
him earlier during the day,
he was not acting on behalf of the second defendant. the second
defendant was not called.
[17] Due to time
constraints, both parties agreed to submit Heads of Arguments on or
before 15 January 2024.
Submissions by the
Parties
[18] The plaintiff
submits that the settlement agreement reached on 18 March 2019 is
binding to both parties. The defendant’s
attorney acted on the
mandate of the defendant. Mr. Bucher made an offer, and the plaintiff
accepted the proposed settlement. The
terms of the draft orders are
in line with the settlement agreement. He referred the court to the
case of
Makate v Vodacom Pty Ltd 2016 JDR 0072 CC and
argued
that if the principal had conferred the necessary authority either
expressly or impliedly, the agent is taken to have actual
authority.
Once actual authority has been proven, as set out in the evidence of
Mr. van Biljon, which was corroborated by
the evidence of Mr. Buchner
and Mr. van Zyl, therefore the defendants, as principal, cannot deny
the existence of the settlement
agreement.
[19] The defendants
argued that Hollard appointed Mr. Buchner in terms of the principle
of subrogation and such evidence remains
uncontested. The court
should accept the evidence that, on 18 March 2019, Hollard informed
the first defendant through Mr. Buchner
that his cover in terms of
the policy had not been confirmed. This left the defendants on their
own. Mr. Buchner had no authority
to settle the matter for the second
defendant. When Mr. Buchner telephoned the first defendant he could
not hear properly and as
a result advised him to do as he deemed fit
in the circumstances. It is patently clear that the first defendant
did not intend
to conclude the settlement as alleged and had no
intentions to accept liability where the insurer rejected its
liability. Therefore,
there was no valid and binding agreement. There
is no agreement capable of being enforced. The court must dismiss the
plaintiff’s
claim with costs.
[20] The issue for
determination is whether the defendants are bound by the Settlement
Agreement concluded on 18 March 2019.
Applicable Law
[21]
It is trite that the settlement agreement is legally binding between
the parties to a dispute. Whilst it is not a legal
requirement that
the agreement be reduced to writing, this does assist the parties to
not only have certainty but to prove the
terms of the agreement in
the event of a dispute. A court can only make an order that is
competent, proper and in accordance with
the Constitution and law. A
settlement agreement ought to be made an order of court if the
agreement can be enforced as an order
of court. Its wording must be
clear, and unambiguous, and the enforcement thereof. It must provide
closure.
[1]
Making a settlement
order of court changes the nature of the agreement in that it
provides the partners with a method to execute
thereon. Settlement
agreements are binding in nature. Parties are advised to be cautious
and to ensure that they fully understand
the terms of the agreement
they are signing, see
Ulster
v Standard Bank of SA Ltd
[2]
.
[22]
In
J.A.N
v N.C. N
[3]
the court stated that,
“
the
question is whether the settlement agreement was concluded with
proper understanding. Court must be satisfied that the parties
to the
agreement have freely and voluntarily concluded the agreement and
that they are ad idem as to the terms.”
[23]
This was also confirmed in
D.K
and Others v C.F
[4]
where J Adams stated as follows:
“
[8]
In my view, the real question to be asked is whether subjectively
there was a meeting of minds in relation to this aspect of
the
agreement and whether the parties were ad idem about this particular
term of the agreement. This question is asked at a fundamental
level
and relates to the basic general principle relating to contracts that
there must be consensus ad idem between the contracting
parties.”
[24]
The crux of the matter is whether Mr. Buchner was authorized to enter
into the settlement agreement by the defendants.
In
MEC
for
Economic
Affairs, Environment & Tourism, Eastern Cape v Kruizenga GA
[5]
,
where the court stated that:
“
To
summarize it would appear that our courts have dealt with questions
relating to the actual authority of an attorney to transact
on a
client ‘s behalf in the following manner: Attorneys generally
do not have implied authority to settle or compromise
a claim without
the consent of the client. However, the instructions to an attorney
to sue or defend a claim may include the implied
authority to do so
provided the attorney acts in good faith. And the courts have said
that they will 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. 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 it
ordinarily possessed by private practitioners,
though it is clear
just how broad the ambit of this authority is ”.
[6]
At
para “[16] It is well established that to hold a
principal liable on the basis of the agent’s apparent authority
the representation must be rooted in the words or conduct of the
principal and not merely that of his agents.”
[7]
[25]
Conduct may be expressed or inferred from the particular capacity in
which an agent has been employed by the principal
and from the usual
and customary powers that are found to pertain to such an agent as
belonging to a particular category of agents.
[8]
It may be inferred from the “aura of authority “
associated
with a position which a person occupies, at the principal’s
instance, within an institution”.
Analysis
[26] When Mr. van
Biljon was on his way to attend the trial Mr. Buchner, the erstwhile
attorney for defendants, contacted
him and made a settlement
proposal. The cover letter confirms their telephone conversation and
Mr. van Biljon confirmed that he
was satisfied with the content of
the draft order. The court accepts that, at that stage, Mr. van
Biljon had no reasonable basis
to question Mr. Buchner’s
authority. During cross-examination, Mr Buchner conceded that
he made the settlement proposal
after he had consulted with the first
defendant. He had the consent of his client. Therefore, it can
be inferred from his
words and conduct that Mr. Buchner had actual
authority to conclude the settlement agreement.
[27] Mr. van Biljon
accepted the proposed settlement, as the terms of the draft order
were unambiguous. The parties were ad
idem as to the terms of the
agreement.
[28] Hollard
Insurance is not a party to the proceedings, therefore, whether it
later denied liability or repudiated the defendant’s
claim is
irrelevant.
[29] The defendants
made an offer and the plaintiff accepted the offer, which resulted in
the formulation of the draft order.
The wording of the draft order
binds both defendants, therefore the court accepts that when Mr.
Buchner contacted Mr. van Biljon,
he was acting on behalf of both
defendants, and he had authority in respect of both parties.
Subsequently, Mr. van Biljon returned
to Bloemfontein as the merits
had become settled and Mr. Buchner confirmed that his attendance was
non-essential.
[30] Consequently,
the court finds that the first and second defendants are bound by a
settlement agreement concluded on 18
March 2019.
[31] I accordingly
make the following order:
1.
The Settlement Agreement concluded on 18 March
2019 is binding and is made an order of the Court.
2.
Costs in the cause
L F MONAKALI
ACTING JUDGE OF THE
HIGH COURT EASTERN CAPE DIVISON
APPEARANCES:
For the
Plaintiff:
Janse van Rensburg
Instructed
by:
NEVILLE BORMAN & BOTHA ATTORNEYS
22
Hill Street
MAKHANDA
For the
Defendants:
De Sander
Instructed
by:
WHITESIDES ATTORNEYS
53
African Street
MAKHANDA
Date
Heard:
15 January 2024
Date
Delivered:
02 May 2024
[1]
A.V.W
v S.V.W and Others (3118/2021) [2022] ZAWCHC 74.
[2]
Ulster
v Standard Bank of South Africa Ltd (647/2012) [2013] ZALCCT 3,
[2013] 34 ILJ 2343 (LC) ( 15 February 2013).
[3]
J.A.N
v N.C.N (2283/2021) 2022 ZAECMKGC 14 (17 May 2022).
[4]
D.K
and Others v C.F (2657/2021) [2023] ZAGPJHC 1331 (20 NOVEMBER 2023)
at para 8.
[5]
MEC
for Economic Affairs, Environment & Tourism v Kruizenga
(169/2009)
[2010] ZASCA 58
(1 April 2010) at para 11.
[6]
See
Generally JR Midgley “the Nature and Extent of a
Lawyer’s Authority “(1994 ) 111 SALJ 415
[7]
NBS
Bank Ltd v Cape Produce Co ( Pty ) Ltd
2002 (1) SA 396
(SCA) 412 C –
E , Glofinco v Absa Bank Ltd t/a United Bank
2002 (6) SA 470
(SCA)
at para 13.
[8]
Per
Botha Jin Inter Continental Finance and Leasing Corporation (Pty)Ltd
v Stands 56 and 57 Industria Ltd & another
1979 (3) SA 470
(W)
at 748D.