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IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case Number: 8491/2022
In the matter between:
LIONS HILL DEVELOPMENT COMPANY (PTY) LIMITED First Applicant
(Reg. no. 2004/001232/07)
THE TRUSTEES FOR THE TIME BEING OF Second Applicant
THE KSK TRUST
(Reg. no. IT1947/2007)
STONEHILL PROPERTY GROUP (PTY) LTD Third Applicant
(Reg. no. 1987/001807/07)
SHAUN LOUIS RAI Fourth Applicant
and
INVESTEC BAK LIMITED Respondent
(Reg. no. 1969/004763/06)
JUDGMENT
JANISCH AJ:
Introduction
1. The Applicants, as recipients of loans from the Respondent and security
providers, fell into default in respect of their repayment obligations. Following
the Respondent’s issue of summons against the Applicants (“the Action”), the
parties entered into a settlement agreement and later an addendum. By
agreement, both were made orders of court.
2. The Applicants now seek, as their primary relief, the rescission of these
orders which were granted on 6 June 2022 (“the First Order ”) and 20
December 2022 (“the Second Order”) (together “the Orders”).
3. In the first alternative, if rescission is refused, the Applicants ask for
declaratory relief to the effect that the Orders are not capable of enforcemen t
for purposes of executing against the movable and immovable assets of the
Applicants “ until the Respondent has obtained final judgment in the action
under case no. 8491/2022 and has successfully taken steps in terms of rules
45, 46 and/or 46A of the Uniform Rules”.
4. In the second alternative, the Applicants seek the variation of the Orders in
the following respects, namely: (i) that the Orders should no longer provid e
that, upon breach thereof, the settlement agreement (now the Order) operates
as a judgment against the Applicants, but should record that, upon breach
thereof, the Respondent is entitled to persist with the Action in order to obtain
judgment against the Applicants, and (ii) that the paragraphs in the Order that
authorize the pursuit of execution steps in the event of breach should apply
only upon the Respondent obtaining final judgment.
5. The second alternative relief is sought on two bases, namely: (i) th e court’s
inherent power to amend interlocutory orders, and (ii) the court’s power to
vary orders in terms of Uniform Rule 42(1)(b).
6. If the Respondents are successful in any of the above respects, they ask to
be granted 20 days from the date of the order to file their plea in the Action.
7. The Respondent opposes all the relief sought. As an overarching point, it
contends that any right to seek rescission of the Orders is perempted. If that
does not dispose of the matter, it contends that the relief is not ava ilable on
the merits.
The factual matrix
8. It is necessary to set out the factual background in some detail.
9. The First to Third Applicants are all entities associated with the Fourth
Applicant whom the Respondent describes, unchal lenged, as “ the moving
spirit behind the other applicants.”
The loan agreements and related arrangements
10. The commercial relationship between the Applicants and the Respondent (a
bank) commenced in 2018. In the ensuing period the Respondent advanced
considerable sums to the Appl icants, primarily to enable property investments
or developments. The Applicants have also in various ways provided personal
and real security for the indebtedness to the Respondent.
11. It is not necessary to describe the various loans and associated securit y
arrangements in great depth. Suffice it to say the following:
11.1. The largest of the loans was advanced to the First Applicant for
purposes of a property development in Cape Town. The original loan
was concluded in August 2018, with additional advances being made in
2020 and 2021. As at 26 October 2021 it was agreed that the
indebtedness was R216,653,454.97. The Second and Fourth
Applicants provided guarantees and indemnities for debts under the
loan, limited to R180 million. The First, Second and Fourth Appl icants
also registered mortgage bonds over immovable properties as security
for the indebtedness.
11.2. The Respondent advanced three separate loans to the Second
Applicant. The sums advanced were respectively R23,580,365,
R10,983,100 and R54,811,000. The repaym ent period for two of these
loans was extended by agreement. The Fourth Applicant provided
guarantees and indemnities in favour of the Respondent for the debts
of the Second Applicant.
11.3. The Respondent advanced a loan to the Third Applicant in the sum of
R3,400,000. The Third Applicant registered a mortgage bond over an
immovable property as security for the indebtedness. The Fourth
Applicant provided a guarantee and indemnity in favour of the
Respondent for the debts of the Third Applicant.
11.4. The Respondent gr anted the Fourth Applicant a credit facility
associated with his private bank account.
11.5. Finally, the Respondent entered into an instalment sale agreement with
the Fourth Applicant in respect of the purchase of a motor vehicle (“ the
ISA”). The Respondent took security over the vehicle.
The Action
12. By March 2022, the Applicants were in default in respect of the finance
arrangements set out in paragraphs 11.1 to 11.4 above. Although there were
discussions regarding further extensions of repayment terms, on 1 April 2022
the Respondent issued summons against the Applicants (the Action).
13. In its particulars of claim, the Respondent set out the terms of the various loan
agreements with the Applicants, as well as the associated security
arrangements.
14. The Respondent plead ed that the Applicants were in default of their
obligations in various respects, and that they were liable for the full amounts
outstanding under those agreements. Certificates of balance certifying the
amount owed by the Applicants at the time were annexed.
15. The Respondent claimed payment of the certificated amounts, interest at the
prime rate, and a declaration that certain immovable propert ies owned by the
different Applicants was specially executable.
The settlement agreement
16. On 4 April 2022, s hortly after summons was served in the Action, the parties
entered into the settlement agreement.
17. There is no dispute that the settlement agreement was entered into seriously,
freely and voluntarily, with all parties having received legal advice.
18. The settlement agreemen t is a detailed document. It has 16 pages of
substantive terms incorporated in 42 paragraphs. Given the nature of the
relief sought in this application, it is necessary to address its contents in some
detail.
19. The preamble commences with recordals that:
19.1. the Applicants are in breach of their obligations to the Respondent in
respect of the various causes of action pleaded in the summons; and
19.2. the Fourth Applicant is also liable to the Respondent in respect of the
ISA for an amount of R828,763.87 (“the ISA Debt”).
20. It is recorded that the parties had agreed to settle all and any claims which the
Respondent may have against the Applicants as set out in the summons and
in respect of the ISA, which settlement they wished to record in writing and
make an order of Court.
21. Paragraphs 1 to 4 of the settlement agreem ent fall under the heading
“Acknowledgement“. In these paragraphs:
21.1. The Applicants acknowledge that as at the d ate of the settlement
agreement they are indebted to the Respondent “as set out in terms of
prayers (a) to (x) of the summons ” (these being all the prayers) , and
are also jointly and severally indebted to the Respondent for a
contribution towards its legal costs in the amount of R200,000.00
(together “the Summons Debt”).
21.2. The Applicants acknowledge that the various immovable properties
reflected in the summons and mortgaged to the Respondent serve as
security for inter alia the Summons Debt and the ISA Debt , and the
Respondent is entitled to realise such properties in the event that the
Applicants are in breach of their obligations as set out in the settlement
agreement.
21.3. The Applicants acknowledge that the Summons Debt is currently due,
owing and payable to the Respondent and that in order to discharge
inter alia that debt, certain properties owned by the Applicants must be
sold.
22. It is then recorded that the parties wish to enter into the settlement agreement
“to regulate the sale of such properties and the disc harge of inter alia the
Summons Debt to the [Respondent]“.
23. Clauses 5 to 7 deal with the ISA. It is recorded that the re would be an early
termination of this agreement on or before 30 June 2023, whereupon the
settlement value would be pa id by the Fourth Applicant to the Respondent.
Until that date, the Fourth Applicant would continue to comply with the terms
of the ISA, failing which there would be a breach of the ISA and the settlement
agreement, triggering the default provisions of paragraph 33 (which I reflect
below).
24. Clauses 8 to 10 provide for the Respondent to advance certain additional
funding amounting to R19,330,000 to the First and Second Applicants.
25. Clauses 11 to 13 record that the First Applicant owes the R espondent a
finance fee of R13,600,000.00 under its loan agreements, and that the
Applicants undertake jointly and severally to pay this fee on demand. In the
absence of demand, the amount will be payable when the full outstanding
loan balance is paid on or before 30 June 2023 , as contemplated in a later
clause.
26. Clauses 14 to 16 make provision for a “penalty fee ” in the event of the
Applicants being in breach of the ir obligations to the Respondent under the
settlement agreement or the loan agreements . The penalty is calculated on a
sliding scale from R4 million to R0 depending on the balance of the debt
owing by the First and Second Applicants at the time it becomes payable. The
First, Second and Fourth Applicants are jointly and severally liable for th e
penalty fee which is payable on demand in the event of a breach.
27. Clause 17, which plays a prominent role in the Applicants’ case, provides as
follows:
“On condition that the [Applicants] (or any one of them as the case may
be) comply timeously and in full with each and every one of their
obligations to the [Respondent] in terms of the Settlement Agreement, the
[Respondent] will hold over on any further ste ps in terms of the
Summons“.
28. Clauses 18 to 20 provide a revised payment schedule for the settlement of all
the amounts owed, being the S ummons Debt, the ISA Debt, the additional
funding provided and the finance fees (together the “Consolidated Debt”). The
schedule provides payment milestones, culminating in the payment of the full
outstanding balance by 30 June 2023. Amounts arising from the earlier sale of
certain properties will be immediately applied to reduce the indebtedness.
29. Clauses 21 to 24 make provision for the Respondent to agree to a further
restructuring of the outstanding balance of the consolidated debt if the
Applicants are up to date with their repayment obligations as at 30 November
2022.
30. Clauses 25 to 31 regulate special powers of attorney (“SPOAs”) authorising
the Respondent to dispose of certain properties held by the First and Second
Applicants. Some of those SPOAs already existed and would remain in place.
Another SPOA would be executed by the First Applicant in respect of its
properties, although this would not be exercised if the Applicants were not in
breach of the settlement agreement or the loan agreements.
31. Clause 32 varies the interest rate in respect of the Second Applicant’s loan
agreements.
32. Clause 33, which together wit h clause 34 falls under the heading “ Breach”, is
central to the present dispute.
33. Clause 33 provides that should any one of the Applicants breach any of the
terms of the settlement agreement or the terms of the SPOAs or attempt to
withdraw an SPOA, or breach any of the terms of the loan agreements which
are currently in existence between them, including the ISA, then the following
would occur:
33.1. “[t]he full outstanding balance of the Consolidated Debt shall be
immediately due, owing and payable by the [Applicants], jointly and
severally where applicable, and subject to the limitations set out in the
Summons as may be applicable, without further notice ” (clause 33.1.
The “limitations” pertain to restrictions on the a mount of indebtedness
under the guarantees and indemnities provided by the Second and
Fourth Applicants as reflected in paragraph 11.1 above);
33.2. the First, Second and Fourth Applicants wo uld be liable to pay the
penalty fee on demand (clause 33.2);
33.3. the Respondent would be entitled to recover any legal costs over and
above the agreed contribution of R200,000 from the Applicants jointly
and severally (clause 33.3);
33.4. “[t]he settlement agreement, having been made an order of Court, shall
operate as a judgment against the [Applicants]“ (clause 33.4);
33.5. “[t]he [Respondent] shall be entitled, at its election, to proceed with
recovery procedures and/or execution steps against the [Applicants] (or
any one of them) in respect of the full outstanding balance of the
Consolidated Debt, the Penalty Fee and further costs ” (clause 33.5);
and
33.6. “[t]he [Respondent] shall be entitled, at its election and without
prejudice to any of its other rights, to exercise any rights and any
remedies to which it is entitled under law against the [Applicants] (or
any one of them) including but not limited to exercising its rights under
the SPOAs, the issue of a writ of attachment and the sale of the
properties mortgaged to the [Respondent] and/or the issue of
applications for the liquidation/ sequestration of one of the [Applicants],
as may be applicable” (clause 33.6).
34. In cl ause 34, it is provided that on condition that the Applicants are not in
breach of any of the terms of the loan agreements “for the duration of the
implementation of the settlement agreement, full compliance by the
[Applicants] with the terms of the Settlement Agreement (including repayment
of the Consolidated Debt), wil l constitute full and final settlement of the
[Applicants’] obligations to the [Respondent] in terms of the Summons, the
ISA and the Additional Funding”.
35. The final provisions of the settlement agreement, under the heading
“General“, include the following:
35.1. An arrangement that “ for any purpose in connection with the
Settlement Agreement, a certificate of balance signed by any one of
the [Respondent’s] managers or assistant managers as to the
outstanding balance of the Consolidated Debt (or any part thereof) and
the Penalty Fee shall be prima facie proof of the [Applicants’]
indebtedness to the [Respondent]” (clause 35).
35.2. An agreement that “ [t]he Settlement Agreement does not constitute a
novation of the [Respondent’s] causes of action and security as set out
in the Summons or the ISA” (clause 36). I note that the clause contains
what both parties accept was a typographical error by referring to the
Applicants’ causes of action, whereas it should refer to the
Respondent’s causes of action . My recordal of the ter m above reflects
what was intended.
35.3. Any illegal or unenforceable provision in the settlement agreement is
excisable and will not affect the validity or enforceability of the
remainder thereof (clause 38).
35.4. “The Settlement Agreement shall be made an order o f Court” (clause
40).
36. In accordance with the parties’ agreement, the settlement agreement was
made an order of Court on 20 June 2022 (i.e. the First Order).
Breach and the first addendum
37. The Applicants were unable to meet the revised payment schedule contained
in the First Order. Instead of proceeding with enforcement mechanisms under
the First Order, the Respondent entered into further negotiations with the
Applicants. These culminated in the first addendum to the settlement
agreement, which was concluded on 14 November 2022.
38. The addendum makes no significant changes to the core elements of the
settlement agreement (i.e. the First Order) which the Applicants impugn in this
application. The following aspects however bear highlighting.
39. The preamble records that certain payments have been made pursuant to the
settlement agreement, but that the Applicants are nonetheless in breach
thereof. The Respondent is accordingly entitled to proceed in terms of clause
33 of the First Order . However, the Responden t is prepared inter alia to
extend certain payment due dates in clause 18 of the First Order on the terms
contained in the first addendum.
40. The first addendum records an agreed increase in the Applicants’ contribution
to the Respondent’s legal costs, the pr ovision of yet further additional funding
by the Respondent to the First and Second A pplicants (i.e. a further sum of
R14,375,000), an additional finance fee, amendments to the penalty fee
provisions and adjustments to the payment schedule (including the e xtension
of the date for final payment to 30 November 2023). Certain agreements were
reached regarding the marketing and sale of seven properties owned by the
Second Applicant.
41. Finally, i t was recorded that save as provided for in the addendum, the
provisions of the settlement agreement would continue to apply and be
binding on the parties, and that the addendum was to be made an order of
court.
42. In accordance with the parties’ agreement, the first addendum was made an
order of court on 20 December 2022 (i.e. the Second Order).
43. The First and Second Orders are accordingly to be read together as a single
order.
Further breach and negotiations
44. Despite the further respite provided by the Second Order, t he Applicants were
unable to meet the revised payment schedule , and once again fell into
breach.
45. Even then, the Respondent did not simply turn to enforcement measures. It
engaged the Applicants in further negotiations for the conclusion of a second
addendum. These negotiations failed. The papers detail the Applicants’
difficulties with what the Respondent required to be included in a further
settlement. These included restrictions on how the proceeds of the sale of a
particular property were to be applied to different items of indebted ness, and
the proposed revised payment schedule (which the Fourth Applicant says was
not achievable). A significant bone of contention seems to have been the
arrangements for the sale of the Fourth Applicant’s own properties. Although
the draft agreement a pparently provided that in the event of a breach the
Respondent would not exercise its rights over those properties until certain
other properties held by the First and Second Applicants had been sold, the
Fourth Applicant wanted an absolute suspension of the marketing and sale of
those properties for one year. The Respondent was not prepared to agree to
this.
46. On 4 April 2024 the Respondent put the Applicants to terms to sign the
second addendum, reiterating that if that were done, there would be no sale of
the Fourth Applicant’s properties until the other properties had been sold. If
the agreement was not signed, the Respondent would however proceed in
terms of the default clauses in the settlement agreement.
47. The second addendum was not signed.
48. The Applicants then sought further legal advice. Pursuant to that, on 31 May
2024 they launched the present application. The Respondent had apparently
not yet taken any execution steps pursuant to the Applicants’ breach.
The application
49. The fundamental averment on which the application is based is that the
Orders are invalid and unenforceable. The bases for this, as described in the
Applicants’ heads of argument, are that the Orders do not:
49.1. in all instances “ relate directly or indirectly to an issue or l is between
the parties”;
49.2. amount to a final judgment capable of giving the Respondent the right
to enforce it by seeking immediate or direct execution. In this regard,
they also do not amount to a final judgment capable of allowing the
Respondent, at this t ime, to follow the execution processes set out in
rules 45, 46 or 46A;
49.3. constitute orders which are clear and unambiguous;
49.4. provide a formulation in a way that compliance therewith is not left to
the discretion of the parties or the Sheriff; and
49.5. give final effect to the judgment which brings the dispute to closure, i.e.
it ought to render the issues between the parties res judicata.
50. On that basis, the Applicants ask for the rescission of the Orders in their
entirety. Such an order would place the Respondent i n a position where it
would need to press on with the Action (or launch a new action based on the
settlement agreement) and take a new judgment against the Applicants.
51. In the alternative, if the Orders are not rescinded, the Applicants seek relief
(as des cribed in paragraphs 3 to 5 above) that would nonetheless preclude
the Respondent from enforcing the Orders before it (the Respondent) had
taken final judgment under the Action.
52. What the Applicants envisage is that, if the relief sought is granted, they would
be entitled to contest the Action on any grounds available to them, in respect
of which they seek leave to file a plea within 20 days. They intimate that there
are various defences that they would seek to raise. These include “ the validity
of the loan agreements, [the Applicants’] liability and the so -called guarantees
under the summons” – in other words, defences to the merits of the claim.
53. The Respondent opposes the application and argues that none of the grounds
relied upon to impugn the Orders have substance.
54. As a preliminary ground of opposition, the Respondent however contends that
any attempt to have the order rescinded at this stage is perempted. It states
that this disposes of all the relief sought by the Applicants. It is therefore
appropriate for me to address this aspect first.
Peremption
55. The common law principle of peremption arises most commonly in the context
of appeals. It is underpinned by the notion of finality of legal proceedings.
Stated in its simplest terms, the principle is that a person who has acquiesced
in a judgment cannot appeal against it.
56. Peremption is however not limited to appeals, but applies also to attempts to
rescind a judgment or order. In Zuma v Commission of Inquiry into
Allegations of State Capture, Corruption and Fraud in the Public Sector
2021 (11) BCLR 1263 ( CC), Khampepe J said the following (in paragraph
[101]):
“It is trite that the doctrine of peremption finds application across our legal
landscape. The doctrine tells us that ‘[p]eremption is a waiver of one’s
constitutional right to appeal in a way that leads no shred of reasonable
doubt about the losing party’s self -resignation to the unfavourable order
that could otherwise be appealed against’. The principle that underlies this
doctrine is that ‘no person can be allowed to take up two positions
inconsistent with one another, or as is commonly expressed, to blow hot
and cold, to approbate and reprobate’. Notwithstanding this, our law does
allow for some flexibility where policy considerations exist that militate
against the enforcement of peremption. Although the doctrine has its origin
in appeals, the doctrine and its principles do apply equally in the case of
rescission.” (underlining added)
57. Peremption, being a form of waiver of a right, is not necessarily easily
established. The person relying on it bears the onus to establish it. As stated
in South African Revenue Service v Commission for Conciliation,
Mediation and Arbitration 2017 (1) SA 549 (CC) in paragraph [26]:
“The onus to establish peremption would be discharged only when the
conduct or communication relied on does ‘point indubitably and necessarily
to the conclusion’ that there has been an abandonment of the right to
appeal and a resignation to the unfavourable judgment or order.”
58. Peremption is therefore based on an evaluation of the aggrieved party’s
conduct. A range of evidence may be admissible for this purpose.
Acquiescence can be inferred from any unequivocal conduct inconsistent with
the intention to appeal (Gentiruco AG v Firestone SA (Pty) Limited 1972 (1)
SA 589 (A) at 600A-B).
59. The question which arises is whether the conduct of the Applicants indeed
points “indubitably and necessarily” to the conclusion that they acquiesced in
the Orders and abandoned any right they may otherwise have had to rescind
the order. If so, peremption will have been established.
60. In my view, the evidence points very strongly to unequivocal acquiescence
with the Orders; in other words, to the Applican ts having conducted
themselves over a considerable period of time in a manner inconsistent with
any intention to challenge the validity of the Orders. The primary indications
are as follows.
61. First, at the risk of stating the obvious, the Orders are the res ult not of
imposition by a court against the Applicants’ will, but of the voluntary entering
into of the settlement agreement and the addendum. They are born out of
agreement and a willingness on the part of the Applicants to be bound by
them from the outs et as orders of C ourt. The Applicants were legally
represented in so agreeing. There is no dispute that they entered into the
agreements seriously. The Orders were advantageous to them, given the fact
that they were indisputably in breach and received more time to pay.
62. Second, there is the passage of time. The first settlement agreement was
concluded in April 2022 and became the First Order in June 2022. The first
addendum was concluded in November 2022 and became the Second Order
in December 2022. The aspe cts of the Orders on which the Applicants now
seek to impugn them were all contained in the First Order. At no stage until
the issue of the present application – a period of two full years from the date
of the settlement agreement – was there any hint that the Applicants did not
regard themselves as bound by the Orders. This is strongly indicative of
acquiescence.
63. Third, I assume (in the absence of evidence to the contrary, which the
Applicants would clearly have provided had there been any) that the
Applicants received the additional finance to which the Respondent committed
itself in the Orders. They thereby accepted the benefits of the Orders. This is
inconsistent with a contention that they did not acquiesce in the Orders.
64. Fourth, when the Applicants fell into breach under the First Order, they did not
seek to challenge the validity of that Order but engaged in negotiations to
amend the settlement agreement through the first addendum. T he first
addendum contained a specific acknowledgement that the Applicants were in
breach of the First Order and that the Respondent would be entitled to
proceed in terms of clause 33 thereof (i.e. the breach clause, which is a
primary target of the present application) . They also agreed that the first
settlement agreement, as amended, would continue to apply and be binding
on them, and that the first addendum would be made an order of court (as it
duly was) . The very content of the first addendum therefore unequivocally
conveys their acquiescence with the First Order and what are now challenged
as being invalid terms thereof.
65. In this respect the judgment in Jiyana v Absa Bank Limited [2020] ZASCA
12 is on point. The appellants had sought to set aside a default judgment
granted against them following default on a home loan agreement. There was
a settlement agreement made an order of court for the payment of the
arrears. The appellants defaulted again and another default judgment was
granted. Unsuccessful attempts were made to invalidate that default judgment
through applications for rescission of the orders. The property was attached.
Another settlement agreement was entered into, which was agai n breached.
Applications to interdict the sale in execution failed and the property was sold.
66. The primary question on which the appeal turned was peremption, i.e.
whether it was permissible for the appellants to impugn the default judgment
given the settle ment agreement entered into. Relying on South African
Revenue Service v CCMA (supra) and the authorities referred to above, the
court had regard to the terms of the settlement agreement as evidencing the
conduct of the appellants. It stated as follows:
“By confirming to (sic) the validity of the default judgment and accepting
their liability towards Absa pursuant to that judgment, it was no longer open
to the appellants thereafter, to impugn it. As explained by the Constitutional
Court in Eke v Parsons 2016 (3) SA 37 (CC) para 31, the result of a
settlement agreement made an order of court is that a party is precluded
from relying on a course of action or defence that could have been
advanced or raised but for the settlement order … in my view, there could
be no clearer conduct pointing to the abandonment of their right to attack
the default judgment than clause 1 of the settlement agreement. The
appellants clearly resigned themselves to the consequences of the
judgment against them, and committed themselves to fulfilling its terms.”
67. Fifth, once it became clear that the Second Order would also not be complied
with, the Applicants, in an attorneys’ letter of 21 September 2023, assured the
Respondent of their “ earnest intentions to adhere to the settlement
agreement”. Once again, instead of casting doubt upon the validity of the
agreements and Orders, the Applicants entered into settlement negotiations
for revised repayment terms.
68. In my view, the conduct of the Applicants reflected above points indubitably
and necessarily to the conclusion that they resigned themselves to the Orders
and abandoned any right to challenge their legitimacy. The fact that the
Applicants applied to rescind the Orders at the last minute, when the
negotiations had reached an impasse, cann ot reverse a peremption that had
already occurred as a matter of fact.
69. The Applicants now contend that they only became aware of the
Respondent’s intention to execute on the Orders, and in particular to sell the
Fourth Applicant’s personal properties, on 2 0 March 2024, and that this was
what resulted in the application being launched some three weeks thereafter
(on 12 April 2024). The argument is that, between those two dates, the
Applicants did not acquiesce in the conduct of the Respondent and its
intention to sell properties in terms of the Orders. In the replying affidavit it is
stated that the Applicants acted expeditiously “ as soon as the difference in
interpreting the Court orders became clear between the parties.”
70. This is not the test in relation to peremption. The question is whether the
Applicants acquiesced in the Orders. As shown above, the Applicants had at
all times accepted (and even benefited from) the applicability of the Orders,
and were aware of the provisions of clause 33 involving a final judgment in the
event of breach, and the powers of enforcement or execution flowing from it.
This pertained to all the properties referred to in the Action. Even if it is true
that the Applicants had a different interpretation of the Orders, a dispute about
their interpretation cannot alter the fact that they submitted to them as binding
orders.
71. I therefore agree with the Respondent that the Applicants perempted any right
to claim rescission of the Orders.
72. This, however, is not the end of the peremption enquiry. In Booi v Amathole
District Municipality 2022 (3) BCLR 265 (CC) in para [29], it was held that
while peremption serves the important purpose of legal certainty , a court may
decline to enforce a peremption if doing so would not advance the broader
interests of justice . In other words, peremption may not be enforced where
overriding policy considerations militate against this.
73. In South African Revenue Service v CCMA (supra in paragraph [28]), the
Constitutional Court explained that:
“[t]he broader policy considerations that would establish peremption
are that those litigants who have unreservedly jettisoned their right of
appeal must for the sake of finality be held to their choice in the
interests of the parties and of justice. But, where the enforcement of
that choice would not advance the interests of justice, then that
overriding constitutional standard for appealability would have to be
accorded its force by purposefully departing from the abundantly clear
decision not to appeal.”
74. One of these circumstances is where the court would be bound, as a result of
a mistake of law by a party in deciding not to challenge an order , to what is
legally untenable (Government of the Republic of South Africa v Von Abo
2011 (5) SA 262 (SCA) at 270 D-H).
75. In my view, this cannot mean that peremption will always be overcome if the
order is wrong as a matter of law. If that were so, peremption would largely be
a dead letter. The primary good which peremption seeks to protect is finality
and legal certainty as between parties. The question will be whether, in the
interests of justice, the case is one in which enabling a party to challenge a
perempted order outweighs the resultant loss of finality and certainty.
76. In my view, the present is not such a case. The parties, both legally
represented, reached settlements in circumstances where the Applicants
were already in breach in respect of significant amounts of money and wh ere
the Respondent had every right to pursue its legal remedies. They concluded
detailed settlement terms on two successive occasions. These agreements,
contrary to what the Applicants now contend, amounted to a compromise. The
Respondent was prepared not to pursue the full and immediate enforcement
of the indebtedness and to execute on the associated security, on condition
that the Applicants met revised payment targets; but it obtained the protection
of an acceleration clause with the effect of a final ju dgment in respect of the
outstanding indebtedness if the Applicants breached. The Applicants
benefited from receiving additional funding and more time to repay their debt,
but had to agree to incorporate within the settlement aspects such as the ISA
debt and the penalty fee, and the enforcement terms of clause 33.
77. The rescission application only arose when the Applicants realized,
colloquially speaking, that they had “ run out of road ” in seeking to keep the
settlement afloat for a further period. They resor ted then to attacking the
Orders on grounds which do not cast doubt on their fundamental
indebtedness to the Respondent. This bears the hallmarks of last -ditch
manoeuvring to avoid the adverse consequences of the Orders. The timing of
the attacks is opport unistic. Their purpose seems to be solely to delay the
Respondent’s ability to recover the funds advanced. This is egregious given
the history of the Respondents being prepared to accommodate the
Applicants to enable them to comply with their obligations.
78. The fact that the Orders flowed from settlement agreements, rather than being
imposed on the Applicants against their will or without their co -operation, is
also an important factor in the enquiry into the interests of justice. The
common law has always su pported the resolution of disputes by agreement.
As stated in PY v YL 2013 (6) SA 28 (ECG) in paragraph [22] and cited with
approval by the Constitutional Court in Eke v Parsons 2018 (3) SA 37 (CC) in
paragraph [22], “ [a] compromise once lawfully struck is very powerfully
supported by the law, since nothing is more salutary than the settlement of
lawsuits.” In such circumstances, there would in my view have to be
particularly compelling reasons to permit a litigant that had consciously and
seriously agreed to a settlement order, and had implemented and acquiesced
in it, to seek to extricate itself from that order. I do not believe that such
reasons are present here.
79. Accordingly, even if there were a legal basis to challenge the content of the
Orders, a matte r that I address below, in the exercise of my discretion I
cannot conclude that this is a case in which the court should override the
effect of perception in the interests of justice.
80. In any event, I do not think that the rescission application would succ eed on
its merits. I turn to address that issue.
The merits – recission
81. There is authority that an order made by agreement pursuant to a settlement
may be rescinded where the contractual arrangement on which the order is
based is unlawful (Valor IT v Premier, North West Province 2021 (1) SA 42
(SCA) in paragraph [55]). This however does not mean that a court must
necessarily rescind any order made by agreement merely because it finds
that the discretion to make the agreement an order of court was not p roperly
exercised. The minority judgment of the Constitutional Court in Eke v
Parsons (supra in paragraph [75]) concluded that the improper exercise of
the discretion does not free parties on whom the order applies from complying
with it, to the extent tha t they may ascertain what it requires them to do.
Rescission of an order is therefore a remedy that may be applied if the
interests of justice so demand, and each case will turn on its own facts.
82. On the assumption that a rescission power rests with this c ourt even outside
Rule 42, I turn to consider the bases upon which the Applicants rely in their
challenge to the Orders. The five main grounds raised in this regard are listed
in paragraph 49 above. There is some overlap between them. I will address
them in the same order as set out by the Applicants.
83. Before doing so, reference must be made to Eke v Parsons (supra), which
provides valuable guidance in relation to v arious issues raised by the
Applicants.
Eke v Parsons
84. In Eke v Parsons, the respondent had applied for summary judgment against
the appellant in relation to payment owing under a sale. The application did
not proceed because the parties concluded a settlem ent agreement which
was made an order of Court. The appellant breached the terms of the order,
whereupon the respondent, as permitted in terms of the order, re -enrolled the
summary judgment application. The appellant raised defences which were
dismissed, and summary judgment was granted. The appellant sought leave
to appeal, which the Constitutional Court ultimately granted on three issues.
The first of these was the effect of making a settlement agreement an order of
Court.
85. The appellant argued that the se ttlement agreement was invalid for various
reasons. One of these was that the settlement agreement did not constitute a
final judgment or order because it provided for the continuation of litigation in
the form of a re-enrolled summary judgment application.
86. There were two judgments: the majority judgment of Madlanga J, and the
minority judgment of Jafta J.
87. The majority confirmed (in paragraph [8]) that the practice of making
settlement agreements orders of Court is well-established in our legal system.
It e ndorsed the statement (already cited above) that the law supports
compromises once lawfully struck “ since nothing is more salutary than the
settlement of lawsuits” (paragraph [22]). There are numerous reasons for this,
including the benefit to litigants of avoiding a costly and acrimonious trial, as
well as the benefit to the administration of justice by reducing overcrowded
court rolls and decreasing the burden on the judicial system.
88. Having endorsed the principle that a court has a discretion whether or n ot to
make a settlement agreement an order of court, and that an important factor
is the need to make orders that are readily enforceable, the majority stated
that “[w]hilst ordinarily the purpose served by a settlement order is that, in the
event of non-compliance, the party in whose favour it operates should be in a
position to enforce it through execution or contempt proceedings, the efficacy
of settlement orders cannot be limited to that. A court may choose to be
innovative in ensuring adherence to the order. Depending on the nature of the
order, it may – for example – first issue a mandamus for compliance. Failing
compliance, it may then consider committal for contempt. Both the mandamus
and order for committal may be sought by merely supplementing the papers
already before court. On the Thutha approach [a reference to Thutha v
Thutha 2008 (3) SA 494 (TkH)] , the terms of the settlement agreement not
incorporated by the court in a settlement order can only be enforced by
means of a full blown fresh s uit. The disadvantages of this need no
elaboration”.
89. The majority went on to confirm (in paragraph [25]) that not everything agreed
to by the parties should be made an order of court. “ The order can only be
one that is competent and proper. … For an order to be competent and proper
it must, in the first place, ‘relate directly or indirectly to a 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.”
90. In relation to this point, earlier in the judgment (in paragraph [19]) it was stated
as follows:
“The Thutha approach is formalistic and takes a narrow view of the efficacy
and value of court orders granted as a result of settlement agreements. In
certain instances, agreement – or lack of it – on certain terms may mean
the difference between an end to litigation and a protracted trial.
Negotiations with a view to settlement may be so wide -ranging as to deal
with issues that, although not strictly at issue in the suit, are related to it –
whether directly or indirectly – and are of importance to the litigants and
require resolution. Short of mere formalism, it does not seem to serve any
practical purpose to suggest that such issues sho uld be excised from an
agreement that a court sanctions as an order of court.”
91. Secondly, the agreement must not be objectionable, i.e. “ 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. They must not be at odds with public policy.”
92. Finally, the agreement must “hold some practical and legitimate advantage”.
93. The majority stated further (in paragraphs [31] and [32]) that the eff ect of a
settlement order is to change the status of the rights and obligations between
the parties:
“Save for litigation that may be consequent upon the nature of the particular
order, the order brings finality to the lis between the parties; the lis beco mes
res judicata (literally, “a matter judged”). It changes the terms of the
settlement agreement to an enforceable court order. The type of
enforcement may be execution or contempt proceedings. Or it may take any
other form permitted by the nature of the order. That form may possibly be
some litigation the nature of which will be one step removed from seeking
committal for contempt; an example being a mandamus.
Litigation antecedent to enforcement is not necessarily objectionable. That is
so because ordinarily a settlement agreement and the resultant settlement
order will have disposed of the underlying dispute. Generally, litigation
preceding enforcement will relate to non -compliance with the settlement
order, and not the merits of the origin al underlying dispute. That means the
court will have been spared the need to determine that dispute, which –
depending on the nature of the litigation – might have entailed many days of
contested hearing.”
94. Further at paragraphs [35] and [36] the following was stated:
“A settlement order that makes provision for payment of a judgment debt by
instalments does not become unacceptable only because payment is to be
made in instalments. With an order of this nature, proceeding straight to
execution may not be practical because what remains owing may have to be
quantified. That is what necessitates another approach to court. Is that
objectionable? I think not.
In sum, what all this means is that, even with the possibility of an additional
approach to court, sett lements of this nature do comport with the efficient
use of judicial resources. First, the original underlying dispute is settled and
becomes res judicata. Second, what litigation there may be after the
settlement order will relate to non -compliance with t his order, and not the
original underlying dispute. Third, matters that culminate in litigation th at
precedes enforcement are fewer than those that don’t.”
95. Based on this analysis, the majority held that the order was final in its terms
and that the respond ent was entitled to approach a court for enforcement of
the order in accordance with the procedure set out in it.
96. The minority was critical of the order, finding that because it envisaged the re -
enrolment of the matter for another order, it was not final. However, as
already mentioned, the mere fact that the court a quo had in the view of the
minority failed to exercise its discretion properly in making the order did not
make a difference:
“But the improper exercise of the discretion does not free parties o n
whom the order applies from complying with it, to the extent that they
may ascertain what it requires them to do.” (paragraph [75]).
The first ground: the inclusion of the ISA in the Orders
97. The Applicants seek to have the Orders set aside and rescinded in their
entirety because they do not in all instances “relate directly or indirectly to an
issue or lis between the parties”.
98. The contents of the Orders on which the Applicants rely, as identified in oral
argument, are the ISA, the additional funding, th e finance fee and the penalty
fee.
99. I have referred to the discission of the general principle in Eke v Parsons. It is
correct that a court will decline simply to adopt and make an order an
agreement entered into outside the context of litigation. But the C onstitutional
Court recognised that where there is litigation which the parties have agreed
to settle, courts should not adopt a formalistic approach towards what is
included in the order. The contents of the order may relate only indirectly to an
issue or lis between the parties. That includes aspects “ not strictly at issue in
the suit” but related to it, which are of importance to the parties and require
resolution.
100. The additional funding was advanced as an integral part of the overall
settlement, plainly to assist the First and Second Applicants by allowing them
to continue operating with a view to realizing investments and so repaying the
main indebtedness. It is therefore a feature that relates directly to the main
issue between the parties.
101. Likewise, the penalty fee is a feature of the settlement of the main dispute,
acting as an inducement to the Applicants to meet their revised repayment
obligations timeously. That, too, relates directly to the main issue in the
Action.
102. The finance fee, as is apparent from the settlement agreement, is payable
under the main loan to the First Applicant. It is therefore at least indirectly
related to the Action (even if not strictly at issue in the suit), and the parties
clearly considered this also to require resolution in the context of a settlement
of the outstanding loan. The addendum made provision for a second finance
fee pertaining to the advance of the additional funding in the First Order. It is
also therefore closely associated with the issues in the Action.
103. The ISA potentially stands on a different footing, not being one of the loans
that was the subject of the Action. It however shares with the Action the
characteristics of an advance of money by the Respondent to one of the
Applicants (the Fourth Applicant in this case) which remained outstanding at
the time of the settlement agreement.
104. In each of these cases, including the ISA, the parties regarded the aspects
referred to as being sufficiently important to be included in the omnibus
settlement of the Action. The negotiations were wide -ranging and the parties
decided to accommodate all these aspects in one agreement, even though
they were not all aspects in respect of which relief was sought in the Action.
105. Moreover, the identified ite ms make up a relatively minor component of the
issues that were resolved. By far the bulk of the settlement pertained to the
Applicants’ indebtedness arising from the loan agreements on which the
Action was based. In particular, the ISA indebtedness of bel ow R1 million is
relatively insignificant in the scheme of things.
106. In these circumstances, where the parties contracted within the context of
litigation, I see nothing objectionable about their incorporating in the
commercial settlement the related or additional aspects referred to above, and
asking for them to be included in the Orders. It would be an exercise in
pointless formalism, inconsistent with the obvious benefits of settlement, to
require the excision of these aspects from the Orders. Even less so is it
appropriate or desirable effectively to set aside the whole of the Orders (as
the Applicants seek) merely because of the presence of terms relating to a
peripheral or subsidiary matter that was not part of the lis. In keeping with the
approach of t he minority in Eke v Parsons , even if this aspect should not
have been included in the Orders, the Orders exist and the parties can still
ascertain what they require them to do in fulfilment of that part of the
settlement. There is no reason to invalidate the Orders in their entirety
through a rescission.
The second ground: not a final judgment allowing for immediate and direct
enforcement
107. The Applicants contend that the Orders are not “ competent and proper ”
because they do not amount to a final judgment ca pable of giving the
Respondent the right to enforce it by seeking immediate and direct execution.
108. It is correct that an order should have the character of finality and
enforceability. However, finality and enforceability do not necessarily
presuppose that no further legal steps are required to give practical effect to
such an order.
109. In Eke v Parsons , the settlement order did not itself give rise to an
immediately enforceable judgment in an amount of money. It regulated the
process that would lead to a fina l judgment in the event of breach: the
respondent could re-enrol the summary judgment application, supported by a
supplementary affidavit to prove the outstanding balance; and the appellant
undertook not to oppose the application.
110. The Orders go substantial ly further than in Eke v Parsons . Clause 33.1
provides that the full balance of the Consolidated Debt (i.e. the Summons
Debt, the ISA Debt, the Additional Funding and the Finance Fees) becomes
immediately due, owing and payable by the Applicants, jointly a nd severally
where applicable. Clause 33.2 makes the penalty fee payable on demand.
Clause 33.3 entitles the Respondent to recover legal costs jointly and
severally. Clause 33.4 then provides that the settlement agreement, having
been made an order of Cour t, “ shall operate as a judgment against the
Appellants”.
111. On a proper construction of the Orders, they give rise, in the event of breach,
to final judgments against the Applicants in respect of the Consolidated Debt
at the time of breach, and for costs. The First, Second and Fourth Applicants’
indebtedness for the penalty fee is also established, subject to the
Respondent making demand for payment.
112. By agreeing to these Orders, the Applicants abandoned any right to raise
substantive defences to the Respondent ’s claims (such as those that they
now intimate they would want to plead) in the event of breach. Liability would
be finally established in the event of breach. In that respect at least, the
Orders bring finality to the dispute and “ hold a practical and le gitimate
advantage”.
113. The above is dispositive of the second ground raised by the Applicants.
114. The Applicants nonetheless argue that the Orders lack the quality of finality
that would allow them to be immediately executed upon through the issue of a
writ of execution. This is because the Orders do not reflect any actual
amounts of indebtedness. Relying inter alia on Muniamma v Ramalingam
1932 NPD 29 at 37, they contend that it is only where the judgment liability is
specifically set out and described in an order that a writ can issue, and that
the amount for which execution issues cannot be debated before, and
judicially determined, by the registrar of the court.
115. The mere fact that a judgment does not include reference to a specific amount
of indebtedness does not necessarily mean that a writ cannot be issued on
the basis thereof, particularly where the amount is easily ascertainable . It has
for example been recognized that a judgment creditor can issue a writ in
respect of a category of costs reflected in a maintenance order for which the
debtor is responsible by filing an affidavit with the registrar demonstrating the
costs so incurred (Butchart v Butchart 1997 (4) SA 108 (W) at 115E-I).
116. It has also been held that a writ can be issued in support of a conditional
judgment. In other words, where liability under the order is subject to the
occurrence of a particular event, it is not necessa ry to obtain a further order
confirming that the event has occurred before issuing a writ. On ordinary
principles, a person issuing a writ does so at their own risk if it is later
determined that the condition was not fulfilled and the writ is set aside as a
result (McNutt v Mostert 1949 (3) SA 253 (T) at 25-256).
117. On the other hand, a writ cannot be sustained where the amount payable
under the judgment “ can only be ascertained after a further problem of law
has been decided ” (De Crespigny v De Cr espigny 1959 (1) SA 149 (N) at
150G). In that case the amount payable was £150 per year “ free of English
income tax” and it was therefore necessary for there to be a determination of
the English tax position before it could be known what the amount owing was.
118. The Applicants argue that the Orders fall within the principle in De Crespigny
in that the determination of the Respondent’s quantum is an unresolved
“problem of law”. On that basis they contend that a writ could not be issued on
the Orders without more.
119. The part ies’ intention was clearly to introduce a mechanism whereby final
liability for the then outstanding amount of the Consolidated Debt and the
penalty fee would arise immediately on breach. The quantum of that liability at
the time is objectively ascertainab le. If there are inherent difficulties in doing
so, I am certain that these would have been raised. I do not see that the mere
establishment of the amount owing at the time of breach is a “problem of law”
that would have to be decided before a writ could be issued.
120. In this context, the Applicants emphasise clause 36 of the First Order which
provides that for any purpose in connection with the settlement agreement, a
certificate of balance serves as prima facie proof o f the Applicants’
indebtedness. They argue that this necessarily means that a further judicial
determination of the quantum is required before the Orders can be executed
upon.
121. I do not agree. As stated above, it is competent for a judgment creditor, at its
own risk, to cause a writ to be issued in relation to an easily and objectively
ascertainable amount in respect of which an order has been made, and may
provide an affidavit to the registrar to this effect. The Applicants may of course
seek to set aside the w rit on the basis that the quantum is unjustified. In such
a case (which would clearly fall within the ambit of “ [f[or any purpose in
connection with the Settlement Agreement ”), the Respondent may put up a
certificate of balance which in terms of clause 36 will stand as prima facie
proof of the amount of the indebtedness. The Applicants may or may not
show the true quantum to be otherwise. Clause 36 thus does not necessarily
point to the need for a further judicial step in quantifying the amount of the
judgment.
122. It may nonetheless be prudent for the Respondent, so as to avoid such
disputes arising at a later stage and to mitigate its risks in issuing a writ in a
particular amount, to make an application to this Court for a declarator
confirming the amount of the established liability of each of the Applicants. If it
chooses to do so, once again it can support its application with a certificate of
balance, which certificate will have the status of prima facie proof under
clause 36. The Applicants can oppose th e application if they believe they can
show that the certificate is wrong.
123. Even if I am wrong in the above conclusion, and if the Applicants are correct
that execution cannot proceed until there is a final quantified judicial
expression of liability, this does not make the Orders defective on the basis of
a lack of finality. The majority in Eke v Parsons recognized that even where
an order based on a settlement agreement envisages the need for further
litigation, which may include a further approach to court to quantify what
remains owing, this does not invalidate the order on the grounds that it lacks
finality.
124. The debate about the power to issue a writ immediately on the judgment as it
appears from the Orders is therefore not determinative of the validity of the
Orders per se . For the reasons given above, whether or not a further
application t establish the quantum is required, the Orders cannot be
impugned on the basis of a lack of finality.
Third ground: the Orders do not constitute orders which are clear and
unambiguous
125. The nub of the Applicants’ third ground is that the Orders are ambiguous or
confusing because they do not adequately clarify the relationship between the
Action and the Orders; and therefore that they are not competent and proper.
126. In interpreting the Orders, the ordinary principles to attribute meaning to a
written document apply (Eke v Parsons (supra) in paragraph [29],
Engelbrecht v Senwes Limited 2007 (3) SA 29 (SCA) in paragraph [6]) .
Although the Order s started out as settlement agreements, they have now,
with the imprimatur of the Court, been clothed with a higher status and the
settlement agreement has been novated . For purposes of interpretation they
must be approached from the direction of the order and not the direction of
the agreements they replaced (Moraitis Investments (Pty) Limited v Montic
Dairy (Pty) Limited 2017 (5) SA 508 (SCA) in paragraph [16]).
127. There is a further principle of interpretation which in my view has resonance
when interpreting orders. This is the maxim ut res magis valeat quam pereat –
namely that the interpretation of a document that allows it to have some
operation is preferred over one that gives it no operation (see e.g. Du Plessis
v Nel 1952 (1) SA 513 (A) at 523).
128. In Interciti Property Referrals CC v Sage Computing (Pty) Ltd 1995 (3) SA
723 (W) at 727I to 728F, it was held that an interpretation of an arbitration
award which gives it some meaning and scope of operation is to be preferred
to one which renders the award meaningless. In discussing this principle,
Zulman J (as he then was) endorsed the approach in Wood v Griffith (36 ER
291) in regard to interpreting an arbitrator’s award, as follows:
“It is extremely clear that every award must be certain and final; but it
has, particularly in more modern time, been considered the duty of the
Court, in construing an award, to find that it is certain and final; and
instead of leaning to a construction, which in effect would destroy nine
tenths of the awards made, if possible to put one consistent sense on
all the terms. In considering the meaning of this award relative to the
sale of the estate, it must be recollected that the business of the
arbitrator was to settle the differences between Griffith and Wood; … in
the construction of an award the court is bound, so far as the terms will
admit, to give it such a meaning as shall render it conclusive; and not
by the construction of one part to defeat another.”
129. In regard to this maxim, Bradfield Christie’s The Law of Contract in South
Africa (8th Edition) at page 273 states as follows:
“It seems eminently possible to regard this as a contextual
consideration, namely that the parties’ purpos e in entering into the
contract was to create an effective, workable agreement, militating in
favour of an interpretation that upholds the contract.”
130. To my mind it remains significant that the Orders constitute a judicial
confirmation of the parties’ bona fide and intentional resolution of the dispute
between them, which they wished to have given judicial support. The Orders
must preferably be interpreted in a way that upholds or realizes, rather than
destroys, the parties’ common purpose.
131. The core of the Applicants’ argument is that the Orders are ambiguous or
uncertain in relation to how they resolve the underlying dispute. The
contention is that it is uncertain whether the Orders effectively override the
Action or are merely an interlocutory arrangement within the context of the
Action.
132. As I understand the argument, the ambiguity of which the Applicants complain
arises from a reading of clauses 17, 33 and 36 of the First Order. C lause 17
provides that the Respondent will “[hold] over on any further steps in terms of
the summons “ on condition that the Applicants compl y timeously with their
obligations under the agreement. Clause 33.4 provides that the settlement
agreement operates as a judgment against the Applicants in the event of
breach, while clauses 33.5 and 33.6 allow the Respondent to take recovery
procedures or execution steps . Clause 36 then provides that the settlement
agreement (i.e. the First Order) does not constitute a novation of the causes
of action and security set out in the summons and the ISA. The Applicants, in
a nutshell, say that the Orders seek both to preserve and override the Action.
133. In my view, these provisions can comfortably be read together and do not give
rise to any significant ambiguity or uncertainty as to their scope of operation.
134. Clause 17 recognises that the Respondent has issued summons against the
Applicants (i.e. that the Action exists) . It gives the assurance that, for as long
as the Applicants are not in breach of the settlement a greement, the
Respondent will do nothing further in relation to the Action. Thus the
Applicants could be sure that no steps to take judgment under the Action
would be taken while there was no default. By definition, while that position
existed, there was n o judgment pursuant to the Orders (because that only
arose on breach). Clause 17 has value for the Applicants during this period as
it precludes the Respondent from taking other steps towards judgment in the
meantime.
135. Clause 17 does not, in my view, mean t hat if there is a breach, the
Respondent is required to continue with the Action. On the contrary, when
that happens, clause 33 comes into operation, giving rise to a final and
binding judgment that the Applicants are liable for the outstanding amount of
their respective indebtedness. There is no need to resume litigation under the
Action as liability has been established by operation of the Orders.
136. Clause 36 provides that the settlement agreement does not constitute a
novation of the causes of action on wh ich the Action was based. What this
means is that t he Orders do not preclude the Respondent from electing to
resume the Action on the underlying cause of action, should it have reason to
do so.
137. In this regard, it has been held that a settlement agreement typically has the
same effect as res judicata, and therefore that an action on the original cause
of action is excluded. However, there is an exception where the agreement
expressly or by necessary implication provides that in the event of non -
compliance, a party may fall back on its original cause of action (Van Zyl v
Niemann 1964 (4) SA 661 (A) at 669H -670A). Where there is such a
provision, the party has an option either to enforce the compromise or to
proceed with the original cause of action ( Trust Bank van Afrika Bpk v
Eksteen 1969 (1) SA 276 (A) at 284C).
138. Clause 36 aims to keep the Respondent’s options open. The fact that there is
such a provision does not mean that the Respondent must necessarily
abandon the Orders and revert to the Action in the event of breach.
139. In the circumstances, I do not see that the identified provisions create
uncertainty or confusion in the interpretation or application of the Orders, let
alone such substantial uncertainty as to invalidate them.
Fourth ground: compliance is left to the discretion of the parties or the Sheriff
140. The Applicants’ argument in this regard is that the way the Orders are
worded, particularly clauses 33.5 and 33.6, they do not specify how any
judgment will be enforced, and hence that it is up to the Respondent (and the
sheriff) to decide what the Applicants are required to do under the Orders.
141. I do not agree with this argument. I have already demonstrated that the
Orders settle the issue of the Applicants’ liability. The Orders do not leave it in
the discretion of the Respondent or the sheriff to decide what constitutes
compliance with the Orders. Any dispute about quantum can be resolved
either by the Applicants challenging the validity of a writ or pre -emptively by
the Respondents seeking a declarator in this regard . The fact that the
Respondent has various options as to how to enforce the Orders (e.g.
attaching and realizing movable or immovable property) is nothing unusual in
the context of a money judgment.
Fifth basis: bringing the dispute to closure / rendering the issues res judicata.
142. The final argument is that the Orders do not finally settle the dispute between
the parties and do not render the issues res judicata.
143. This is a repackaging of grounds dealt with above. I have already concluded
that the Orders do settle any dispute as to the Ap plicants’ liability for the
Consolidated Debt, which becomes res judicata.
Conclusion on rescission
144. For the above reasons, the Applicants have not established grounds to have
the Orders rescinded. Even if the application for rescission had not been
perempted, I would therefore not have been inclined to grant that relief.
The alternative relief
145. The alternative relief sought is premised on the Orders not being rescinded.
As mentioned above, the first alternative (paragraph 2) is for a declaratory
order, while the second and third alternatives (paragraphs 3 and 4) are for the
variation of the Orders.
146. The Respondent argues that the dismissal of the rescission relief on the
grounds of peremption would also dispose of the entire alternative relief. That
is probably true of the second and third alternatives. These seek the variation
of aspects of the Orders two years after they were made, in circumstances
where the Applicants clearly acquiesced in them in their current form. If a right
to rescind an Order ca n be perempted, it would follow that a right to vary an
Order can be perempted too.
147. I do not think that the same conclusion necessarily holds for the first
alternative, which is cast in the form of a declaratory order relating to the
enforceability of the Orders. A dispute about the interpretation of an order is
not a challenge to the validity or content of the order itself.
148. It is however unnecessary to reach a final conclusion on this issue, as I would
in any event not be inclined to grant the orders sought on their merits.
The first alternative – declaratory relief (paragraph 2 of the notice of motion)
149. The relief sought in this alternative reads as follows:
“alternatively, it be declared that the Court Orders are not capable of
enforcement for purposes of executing against the movable and immovable
assets of the Applicants until the Respondent has obtained final judgment in
the action under case no. 8491/2022 … and has successfully taken steps in
terms of the rules 45, 46 and/or 46A in the Uniform Rules of Court.”
150. This must be read with paragraph 5 of the notice of motion, which is a prayer
for an order, upon the Applicants succeeding in terms inter alia of paragraph
2, granting them 20 days to file their plea in response to the particulars of
claim.
151. Reading these paragraphs together, it is apparent that the Applicants’ case is
that, on a proper interpretation of the Orders, they have no final effect in the
event of a breach, and that the Respondent must revert to the Action and take
judgment on the merits (after allowing the Applicants to raise whatever
defences they wish to by way of a plea).
152. I have already held that the Orders do constitute final judgments in relation to
the Applicants’ liability in respect of the Consolidated Debt, costs and the
penalty fee (subject to demand). The Respondent may proceed to enforcing
these Orders, subject to the comments made above regarding the issue of a
writ. If the Applic ants’ interpretation is correct, the provisions of clause 33
would essentially be ineffectual. I do not consider that to be a proper
construction of the Orders.
153. There is also the further difficulty that, as discussed above, the Orders
encompass aspects that are not part of the Action (e.g. the additional finance
and the penalty fee). If the Applicants’ interpretation were correct, the Orders
could not be used as a basis to enforce those debts, and the Respondent
would have to commence a new action for judg ment in those amounts –
which is not a sensible or businesslike construction of Orders that are aimed
at bringing litigation to an end.
154. It follows that the fundamental premise of the declarator sought cannot be
granted. The second part of that order, whi ch pertains to the practicalities of
execution on the final judgment still to be sought in the Action, falls with it.
155. I might in this context however say that as I read the Orders, they already
encompass a declaration of the immovable properties listed in the summons
as specially executable. Clause 2 of the First Order provides that in the event
that the Applicants are in breach of their obligations under the settlement
agreement (i.e. the Orders), the Respondent is entitled to realise “ such
properties”. T he reference to “ such properties ” is to “ the various immovable
properties registered in [the Applicants’] names and mortgaged in favour of
the [Respondent] as set out in the Summons ”. Clause 2, as part of the
settlement agreement, is treated as a judgment in terms of clause 33.4.
156. The immovable properties which are pleaded in the summons to be
mortgaged to the Respondent (which include the Fourth Applicant’s two
properties (Erf 3 […] Camps Bay and Erf 2 […] Knysna)) are therefore, under
the Orders, effectively declared by the Court to be specially executable.
157. There may be a dispute about whether that order suffices for purposes of
compliance with Rule 46A to the extent that the Fourth Applicant contends
that one of the properties is his primary residence. This is not an aspect which
I need to decide at this stage . If the Respondent seeks to execute against
such a property based on the Orders , it may be that the Fourth Applicant
challenges the Respondent’s right to do so on, because the Rule 46A process
was not followed before the Orders were made. Questions of waiver or public
policy regarding the enforcement of the Orders may then arise. Alternatively,
the Respondent may decide pre -emptively to remove any such question by
making a special Rule 46A application, thus rendering any such dispute moot.
In these circumstances, where there is no concrete dispute yet in existence, I
do not consider it appropriate to make declaratory orders on this issue.
The second alternative – variation of interlocutory orders (paragraph 3 of the
notice of motion)
158. The Applicants’ second alternative claim is for a variation of the Orders in a
fundamental respect: the deletion of clause 33.4 and its replacement with the
words “The Plaintiff shall be entitled to persist with its action instituted under
8491/2022 in order to obtain judgment against the Defendants .” Clauses 33.5
and 33.6 would then also be amended to allo w for those powers only to be
exercised upon that judgment being taken.
159. Given the views already expressed above about the construction of the
Orders, it is apparent that any such variation would strike at the heart of the
Orders by depriving them of their effect in giving rise to a final judgment
against the Applicants.
160. The Applicants seek to justify the variation on the basis that clauses 33.4 to
33.6 are merely interlocutory orders, which a court may in the exercise of its
discretion vary. They rely for this proposition on South Cape Corporation
(Pty) Limited v Engineering Management Services (Pty) Limited 1977 (3)
SA 534 (A) at 550H.
161. The full dictum in South Cape reads as follows (at 550H-551A):
“At common law a purely interlocutory order may be correct ed, altered or set
aside by the Judge who granted it at any time before final judgment;
whereas an order which has final and definitive effect, even though it may be
interlocutory in the wide sense, is res judicata.”
162. I do not view the Orders (and clause 33.4 in particular) as purely interlocutory.
They have substantive effect, and finally resolve the issue of the Applicants’
liability in relation to the different items of indebtedness. Those aspects are
res judicata . The amendment would effectively nullif y an existing and
substantive judgment under the guise of varying an interlocutory order.
163. It follows that the second alternative lacks merit.
The third alternative: variation under Rule 42(1)(b)
164. Little more need be said about the Applicants’ reliance on Rule 42(1)(b).
165. The Rule reads as follows:
“The court may, in addition to any other powers it may have, mero motu
rescind or vary an order in which there is an ambiguity, or a patent error or
omission, but only to the extent of such ambiguity, error or omission.”
166. For reasons already give above, I do not consider there to be any ambiguity in
the Orders. The Applicants also made no case for the presence of an error or
omission.
167. I am therefore of the view that Rule 42(1)(b) has no application.
Costs
168. The Respondent has been successful in its opposition to the application, and
should therefore have its costs.
169. The matter raised a number of complex issues and both parties sensibly
retained senior counsel. In the circumstances I am satisfied that the costs of
counsel should be taxed on Scale C as envisaged in Uniform Rule 69(7).
ORDER
170. In the premises, I make the following order:
170.1. The application is dismissed.
170.2. The Applicants are liabl e for the Respondent’s costs, jointly and
severally, on a scale as between party and party, including the costs of
counsel on Scale C.
-----------------------------
M W JANISCH
Acting Judge of the High Court
Western Cape Division
APPEARANCES:
For the Applicant/s: F Sievers SC
F W Landman
Instructed by: Marlon Shevelew & Associates Inc
For the Respondent: I J Muller SC
Instructed by: Edward Nathan Sonnenbergs Inc
Date of hearing: 13 November 2024
Date of judgment: 26 November 2024 (electronically)