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[2026] ZAKZDHC 59
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Redink Rentals (RF) Limited and Others v Educor Holdings (Pty) Ltd and Others (D11077/2023) [2026] ZAKZDHC 59 (17 September 2026)
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IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU NATAL
LOCAL DIVISION, DURBAN
CASE
NO.: D11077/2023
In the matter between:
REDINK
RENTALS (RF) LIMITED
First Applicant
TOWER
INVESTMENTS(PTY) LTD
Second Applicant
REDINK
RENTALS SECURITY (SPV) RF (PTY) LTD
Third Applicant
and
EDUCOR
HOLDINGS (PTY) LTD
First Respondent
A1
CAPITAL (PTY) LTD
Second Respondent
DAMELIN
(PTY) LTD
Third Respondent
INTEC
COLLEGE (PTY) LTD
Fourth Respondent
LYCEUM
COLLEGE (PTY) LTD
Fifth Respondent
JUDGMENT
Olsen J:
[1]
In 2021 Redink Rentals (RF) Limited and Tower
Investments (PTY) Ltd (the first and second applicants) launched
proceedings for the
winding-up of Educor Holdings (PTY) Ltd (the
first respondent) and A1 Capital (Pty) Ltd (the second respondent).
In each of those
cases the applicant claimed
locus
standi
as creditor, and the claim was
challenged. The applications were argued on 14
th
April 2023. Judgment was reserved. Prior to its
delivery, and on 2
nd
May
2023, a written settlement agreement was concluded which resulted in
the winding up proceedings being withdrawn. In the present
proceedings the applicants seek to enforce the provisions of the
settlement agreement. The issue is whether it should be permitted
to
do so in the face of opposition from the respondents.
[2]
The applicants in the proceedings for the
winding up of Educor Holdings (Pty) Ltd joined A1 Capital (Pty) Ltd,
Damelin (Pty) Ltd,
Intec College (Pty) Ltd and Lyceum College (Pty)
Ltd as interested parties (the latter three being the third, fourth
and fifth
respondents in the present proceedings). In the result all
five of the present respondents were parties to the settlement
agreement.
[3]
The settlement agreement itself records that
a company known as Redink Rentals Security (SPV) RF (PTY) Ltd should
as a matter of
caution also be party to the settlement agreement. It
has by reason of that fact been cited as the third applicant in the
present
proceedings.
[4]
In terms of the settlement agreement the
respondents (called the “debtors” in the written
agreement) acknowledged that
they were indebted to the first and
second applicants (called the “creditors” in the
agreement) in the amount of R76
million. The debtors undertook,
jointly and severally, to pay that debt ‘in full and final
settlement of any and all claims,
costs and interest that the
creditors may have against the debtors, including but not limited to
the two winding-up applications’.
The debt would be paid off in
instalments, the first of which was R4,6 million which had to reach
the account of the first applicant
by no later than 3
rd
May 2023. Against payment of that instalment
the creditors’ attorney had to advise the judge that the
proceedings were
settled, and withdraw the winding-up applications.
The instalment was paid and the two applications were withdrawn.
[5]
The agreement made provision for the payment of 11
further monthly instalments of varying amounts, the final one being
payment of
R36,9 million due on 31
st
March 2024.
[6]
The agreement provided that should the debtors
default on any payment undertaking the balance of the debt would
immediately become
due and payable. However written notice of ten
business days to rectify such a breach of the payment terms would
have to be furnished.
Clause 8.2 was to this effect. It is not
disputed that the respondents did default. The requisite notices were
given. On occasions
extensions of time were allowed. Requisite
notices having been given, the respondents remained in default on 4
th
October 2023 when the applicants launched the
present proceedings in which they seek judgment for payment of the
balance of the
capital due, R63 508 000, together with
interest and costs.
[7]
There is no dispute about the facts set out above.
Enforcement of the settlement agreement is resisted on the grounds
that
(a)
the apparent and intended consensus of the parties
was afflicted by a common error which rendered the agreement void;
and
(b)
if the agreement was not void, the applicants
employed the wrong form of proceeding or process in order to enforce
the agreement.
[8]
Both of these grounds of opposition are
constructed around the same two, or perhaps three errors. It is
convenient to furnish an
account of them before proceeding to deal
separately with each of the grounds of opposition.
[9]
Clause 3 of the settlement agreement provided for
the provision by each of the debtors of a written consent to judgment
for the
debt. This was said to be as “further security for the
debt”.
[10]
Clause 4.3 read as follows.
“
Subject
to the creditors complying with clause 8.2 of this agreement, should
there be any default in the payment undertaking, the
creditors shall
be entitled in terms of the provisions of Rule 41(4) of the Uniform
Rules of Court to, on 5 (five) days’
notice to the debtors,
lodge the consents to judgment with the registrar for judgment on the
balance then due.”
[11]
What might be called the primary error in
these provisions is that a confession to judgment of the type which
is the subject of
Rule 31(1) is a document in which a defendant
confesses “in whole or in part to the claim contained in the
summons.”
No summons was involved here. The settlement arose
out of the motion proceedings in which the winding-up of two of the
five respondents
was sought. It is with respect to confessions of the
type referred to in Rule 31 that the procedure of submitting the
confession
to the Registrar (or to a Judge) is provided by Rule
31(1)(c).
[12]
The second error flows from the first.
Clause 4.3 speaks to a right to lodge consents to judgment with the
registrar in terms of
the provisions of Rule 41(4). Rule 41(4) has to
do with the enforcement of settlement agreements, and it allows an
application
for judgment on a settlement agreement to be made under
that rule in order to enforce it. There is no provision in Rule 41(4)
for
the submission of a confession to judgment to the Registrar (or
to a Judge). That second error is repeated in clause 8.3 which reads
as follows.
“
If
the debtors fail to rectify a breach of this agreement by them, the
creditors shall, subject to the creditors complying with
clause 8.2,
be entitled to lodge the written consent to judgment with the
registrar as provided by Rule 41(4) of the Uniform Rules
of Court.”
[13]
The third error, which hinges more around the
scope of operation of Rule 41(4), is that the subrule may only be
employed to enforce
a settlement agreement (by applying “for
judgment in terms thereof on at least five days’ notice to all
interested
parties”), if the proceedings which were settled had
not been withdrawn. As already mentioned, in terms of the settlement
agreement, once the respondents had paid the first instalment (as
they did), the applicants were obliged to withdraw the winding
up
proceedings, which they did. By reason of that withdrawal Rule 41(4)
ceased to apply.
The Procedural
Objection
[14]
The applicants launched their application in
October 2023 utilising the long form of notice of motion, allowing
the respondents
the full periods set out in Rule 6 to deliver any
notice to oppose the application, and thereafter to deliver answering
affidavits.
The notice of motion recorded that an order for payment
of a sum of R63 508 000, together with interest thereon,
was
sought. The notice of motion recorded nothing concerning either
of Rules 41 or 31. The notice of motion reflected an ordinary
application
in terms of Rule 6(1).
[15]
The respondents assert that the errors I have
described above were common errors. If that is the case, one assumes
that the advice
given by the attorneys to their clients concerning
the provisions of the settlement agreement was on each side to the
effect that
the confessions to judgment which were signed by the
respondents had the utility ascribed to them in the contract (i.e.
they could
be used in the case of any default whatsoever); and that
there was some relationship between the procedure for securing
judgment
on confession and Rule 41(4) of the Rules. It is plain from
the history of the applicants’ attempts to enforce the
agreement
prior to launching this application that the applicants’
attorney remained of that view for at least some time.
[16]
The founding affidavit delivered by the applicants
set out the provisions of the settlement agreement in the usual form.
It recorded
the respondents’ unconditional acknowledgement of
debt and undertaking to pay, and the instalments the respondents were
to
pay in discharge of their obligations. It recorded that 10 days’
written notice to cure a breach had to be delivered in terms
of the
settlement agreement if the respondents defaulted, and that the
winding up proceedings had been withdrawn following payment
of the
first instalment . The affidavit recorded the acceleration clause and
that the applicants “shall be entitled to lodge
the written
confessions to judgment with the registrar, as provided for by Rule
41(4) of the Uniform Rules of Court”. Copies
of the settlement
agreement and the confessions to judgment were annexed to the
founding affidavit.
[17]
The founding affidavit then dealt with the
respondents’ breaches of the agreement, requests for
indulgences and the furnishing
of notices with regard to the breaches
in terms of clause 8.2 of the settlement agreement (i.e. ten business
days’ written
notice). In the course of the exchanges directed
at getting the respondents to meet their obligations, a number of
notices were
delivered by the applicants’ attorney, addressed
to the respondents attorneys and to the registrar of this court. The
notices
were entitled “Notice in terms of Rule 41(4)”.
The material paragraph of each notice reads as follows.
“
Kindly
take notice that the first and second applicants hereby give five
days’ notice to the debtors to make payment in the
sum of …
failing which the first and second applicants shall lodge the
debtors’ signed confessions to judgment with
the registrar for
judgment on the balance due.”
[18]
I am quite unfamiliar with such notices. The full
text of Rule 41(4) is as follows.
“
Unless
such proceedings have been withdrawn, any party to a settlement which
has been reduced to writing and signed by the parties
or their legal
representatives but which has not been carried out, may apply for
judgment in terms thereof on at least five days’
notice to all
interested parties.”
As I
understand the position, when an application must be made on notice
to a party, what is required by the Rule is that the application
should be delivered to the party. Whilst Rule 6 would obviously apply
, all the respondent would be entitled to is 5 days’
notice of
the date of set down. (That construction reflects the policy of
encouraging settlement followed by our courts. See
Eke
v Parsons
2016 (3) SA 37
(CC) at
paragraphs 21 to 23.) The applicants’ attorneys obviously
thought otherwise. Counsel who appeared for the respondent
said he
was in respectful agreement with the approach adopted by the
applicants’ attorneys. I have not researched this issue
any
further. As the proper construction of Rule 41(4) is a
side-issue in the determination of the present proceedings, I
make no
decision on it. The threatened course of action under the so-called
notices in terms of Rule 41(4) was not carried out.
The confessions
to judgment were not submitted to the Registrar. Instead, as I have
said, the applicants launched an application
using the long form of
notice of motion in terms of Rule 6, furnishing the respondents
the standard periods set out in Rules
6(5)(b)(iii) an (d)(ii).
[19]
Paragraph 2 of the founding affidavit in the
application read as follows.
“
I
am duly authorised by the applicants to depose to this affidavit in
support of the relief sought in this application for default
judgment
pursuant to a settlement agreement, as provided for in Rule 31(1)(c)
and read with Rule 41(4).”
I can think of no
explanation for the fact that these references to Rules 31(1)(c) and
41(4) were made, except inadvertence, error
and/or inattention on the
part of the lawyer who drafted the founding affidavit. Quite clearly,
and despite the fact that the plaintiffs’
attorney may still
have been unaware of the errors in the contract referred to above,
the notice of motion recorded in the clearest
terms that those
provisions were not actually sought to be employed.
[20]
Nevertheless the respondents delivered a notice of
intention to oppose the application and a notice which purported to
be in terms
of Rule 30(2)(b). The notice drew attention to paragraph
2 of the founding affidavit , contending that the application
constituted
an irregular step because the relief under the rules
referred to in paragraph 2 of the founding affidavit was in law not
available.
The notice ignored altogether the fact that the notice of
motion made no reference to any claim for relief under those rules,
and
the fact that there had been no submission of confessions to
judgment either to the Registrar or to a Judge. The notice was a
purely
technical device.
[21]
The applicants offered no response to the notice
in terms of Rule 30(2)(b). By notice of motion issued in December
2023 the respondents
launched an application to have the
applicants’ application declared an irregular step, and set
aside. I will refer
to the present application as the “main
application”, and to the respondents’ application as the
“counter-application”,
as it came to be known.
[22]
Further papers were delivered in the
counter-application, and both it and the main application were
enrolled for hearing on 28
th
February 2025. At the commencement of that hearing
the learned judge was advised that the first and fourth respondents
had been
deregistered. Affidavits were provided explaining that the
applications for re-registration of those respondents had been made,
but that they remained in deregistration. Counsel for the applicants
and respondents agreed that in those circumstances the main
application should be adjourned. Counsel for the respondents argued
that the counter-application should also be adjourned, while
counsel
for the applicant argued that it should be heard.
[23]
The judge decided that there was no need to
adjourn the counter- application. It was based on the founding
affidavit attested to
by the respondents’ attorney who could
supplement or amend the application in need. He could do so
“
regardless
of whether the first and fourth respondents were before court or not,
save that a costs order may not be given against
the two non-existing
respondents. Furthermore, the applicants are not seeking a
substantive order for the performance of any action
by the first and
fourth respondents, but an order that the application on a procedural
issue be dismissed.”
(See paragraph 6 of the
judgment.)
The learned Judge heard
the argument and found that there was no merit in the complaint upon
which the counter-application was founded.
It was ordered that “the
respondents’ application is dismissed.”
[24]
The respondents applied for leave to appeal
against that order. It was refused on 4
th
July 2025. The main application was set down for
hearing on 5
th
August
2025, but removed from the roll as the respondents had applied to the
Supreme Court of Appeal for leave to appeal against
the order made in
the counter-application. The application for leave to appeal was
dismissed by the Supreme Court of Appeal on
2
nd
October 2025.
[25]
The main application was set down for hearing on
17
th
of
February 2026, but was adjourned as, on that day, the respondents
delivered their answering affidavit accompanied by an application
to
condone its late delivery.
[26]
A few days before the main application was to be
heard before me (22
nd
July, 2026), the first and fourth respondents
served an application to rescind the original order granted, they say
against them,
in the counter-application. (I believe that these
papers were not yet filed at court. The applicants’ attorneys
delivered
a copy to my registrar in case they should feature in the
respondents’ argument.) Those papers reflected no date
for
hearing and were thus incomplete. Counsel for the respondents
advised me that he felt obliged to disclose that the set of papers
just served had been prepared by counsel shortly after the order of
the Supreme Court of Appeal had been handed down (ie October
2025),
but that he was unable to explain why they had not been signed and
issued at that time. He nevertheless said that, whilst
he was not
asking for the main application to be adjourned, he was suggesting
that it was appropriate that the main application
be adjourned
so that the application for rescission could be heard once all its
papers were delivered; whereafter, if rescission
were granted, the
counter-application of the first and fourth respondents would have to
be argued and ruled upon. These submissions
were made without any
notable embarrassment on counsel’s part, over the fact that the
very same application had been ruled
upon at least with respect to
the other three respondents, and that the Supreme Court of Appeal had
refused leave to appeal against
that ruling.
[27]
I find it necessary to express the view that
counsel’s proposal as to the “appropriate”
procedural course merely
serves to reinforce the complaint made by
the applicants repeatedly, that the respondents have sought to delay
the final adjudication
of the main application by whatever means
possible. In doing so they have followed procedures or processes
which, to put it at
its lowest, must be the product of advice
received from their lawyers. Rule 30 unfortunately provides such a
device. If a defendant
or respondent seeking to delay proceedings can
identify an irregular step, or something which might be passed off as
one, such
a party may afford written notice to its opponent, when 10
days has elapsed after becoming aware of this step, to cure the cause
of complaint within another period of 10 days. As a device for delay
the Rule is efficient. Up to 20 days delay may be achieved
if the
opponent elects to cure the alleged deficiency or irregularity upon
which the defendant or respondent relies. If the opponent
chooses not
to cure the defect, presumably because it is not conceded that there
is any irregularity involved, the employment of
Rule 30 becomes a
ruthlessly efficient device for achieving delay. A further 15 days
may elapse before the application in terms
of Rule 30(1) to set aside
the irregular step is launched. There must then be time for answering
affidavits and replying affidavits,
before the case joins the roll of
opposed applications. The efficiency of this delay mechanism arises
because in terms of Rule
30(2)(a) the party employing the mechanism
is not permitted to take any further steps to advance the proceedings
“with knowledge
of the irregularity”. A defendant need
not deliver a plea, and a respondent need not to deliver an answering
affidavit. In
this particular case the delay achieved thus far is
three years.
[28]
It is in the light of the aforegoing, and for the
further reasons which are set out hereunder, that I conveyed to
counsel for the
respondents that I did not agree with the proposition
that the main application should be adjourned in order to allow the
two respondents
who were deregistered at the time when the Rule 30
application was argued, but which had now become reregistered, to
follow the
same course which had been employed by the three
respondents who were registered at the material time, in order
further to delay
a decision in the main application.
[29]
No application in terms of Rule 30(1) serves
before me. However to accede to counsels request that the main
application be delayed
I would have to conclude that some merit might
be found in proposed proceedings in terms of Rule 30. I see none.
There was no “irregular
step”, in the sense in which that
term is used in Rule 30(1). There is no complaint that the notice of
motion had not been
signed; or that it incorporated truncated time
limits without the support of a certificate of urgency; or that the
founding affidavit
had not been attested to. In reality the so-called
procedural complaint raised by the respondents amounts to this.
Because the
deponent to the founding affidavit had stated that the
applicants were seeking judgment “pursuant to a settlement
agreement,
as provided for in Rule 31(1)(c) and read with Rule
41(4)”, everything else in the affidavit which supported the
claim set
out in the notice of motion should be disregarded; and that
in consequence of that the affidavit did not support the relief
sought
in the notice of motion which made no mention of Rule 31 or
Rule 41. That is a complaint that the content of the affidavit does
not support the relief sought in the notice of motion. Delivering
such an affidavit is not an irregular step. If the founding affidavit
does not support the relief sought in the notice of motion, that may
constitute a recipe for the failure of the application. The
question
as to whether the application should succeed or fail, because the
founding affidavit does or does not support the relief
sought, is to
be decided upon adjudication of the main or substantive application.
[30]
I revert to what might be called the ‘recission
application’ contemplated by the first and fourth respondents.
It rests
upon the proposition that when this court made the order
dismissing that application at a time when those two respondents were
deregistered, the judgment was intended to close the door on the
first and fourth respondents as well as the other three. I am not
convinced that it was. As it turns out, and as is apparent from what
I said earlier, the answering affidavit delivered extremely
late by
the respondents again raises the procedural issue at which the
application in terms of Rule 30 was directed. Indeed, counsel
for the
respondents has argued that the applicants conceded in the
proceedings in which leave to appeal the order in the Rule 30
application was sought, that the judgment of this court on the issue
was not appealable because it could be revisited in the main
application. On that basis it could be, and was, argued before me
again.
[31]
In my view there is no merit whatsoever in the
so-called “procedural complaint”. The proceedings
launched in the main
application were ordinary motion proceedings for
the enforcement of an undisputed debt. The fact that the deponent to
the founding
affidavit thought that the relief the applicant sought
was “provided for in Rule 31(1)(c) and read with Rule 41(4)”
is neither here nor there. An error like that cannot vitiate the
entire procedure when all allegations necessary in order to sustain
the claim set out in the notice of motion (which defines what the
case is about) are contained in the founding affidavit. There
is in
any event a signifier in the founding affidavit that, despite his
misunderstanding of the impact of Rules 47 and 31 on these
proceedings, the deponent to the founding affidavit realised that the
application actually launched was not dependant on any such
provisions which he believed to be applicable. He states:
“
A
copy of this application will be served on the respondents, although
not strictly required in terms of the settlement agreement
or in
law.”
[32]
Furthermore, the settlement agreement itself
sanctions the proceedings reflected in the notice of motion in the
main application.
Clause 8 deals with the subject of default. Clause
8.1 is the acceleration clause. Clause 8.2 requires 10 business days’
written notice to rectify a breach. Clause 8.3 is the one which
erroneously provides for the lodgement of consents to judgment with
the registrar. Clause 8.4 then provides as follows.
“
This
agreement does not prevent any of the parties from utilising its
remedies, which are available in law.”
[33]
On the subject of the procedural issue raised by
the respondents, the judgment in
Massey-Ferguson
(SA) Ltd v Ermelo Motors Ltd
1973 (4)
SA 206
(T) is instructive. That case also concerned the enforcement
of a settlement agreement in terms of which the defendant
acknowledged
its liability for payment of a sum, and undertook to
make payment in instalments; and defaulted in payment of those
instalments.
The defendant argued that the plaintiff had followed a
wrong procedure relying, as it did, on Rules 6(11) and 41(4). Then,
as now,
Rule 6(11) dealt with “interlocutory and other
applications incidental to pending proceedings”, and provided
that they
may be brought on notice, supported by the required
affidavits, and set down at a time assigned by the registrar or
directed by
a Judge. The plaintiff’s notice of motion read as
follows.
“
Take
notice that application in terms of Rule 6(11) read with Rule 41(4)
of the Uniform Rules of Court will be made…”
The defendant argued that
the application was not an interlocutory application nor one
incidental to pending proceedings; and that
the court should not
condone “a wrong procedure”. In my respectful view the
manner in which learned Judge dealt with
that argument was entirely
correct, and should be followed.
“
Mr
Preiss
may
be right in that the present application is not incidental to pending
proceedings in the sense contemplated in Rule 6(11) because
it is not
subordinate or accessory to while at the same time being distinct
from the main proceedings, but a reference in the notice
of motion to
a wrong sub-rule does not vitiate the entire proceedings, if the
correct procedure has substantially been followed.
The applicant
could simply have brought this application under subrule 1 which
provides:
‘
Save
where proceedings by way of petition are prescribed by law, every
application shall be brought on notice of motion supported
by an
affidavit as to the facts upon which the applicant relies for
relief.’
The reference to Rule
41(4) is not, in my view, wrong. The written settlement has not being
carried out. More than four days’
notice has been given to the
respondents and the applicant is entitled to apply for judgment.”
Rule 6(1) currently reads
to the same effect as it did in 1973. Applications are “brought
by notice of motion”. A founding
affidavit is a document which
“supports” the notice of motion. If an erroneous
reference to a Rule in a notice of motion
can be overlooked because
it does not vitiate proceedings which are otherwise in order, then it
is all the more clear that a similarly
erroneous reference to
procedural rules in an affidavit cannot be regarded as vitiating the
proceedings.
[34]
Finally,
Eke v
Parsons
lays down the general approach
to the type of objection raised by the respondents in the present
matter. That case concerned a settlement
concluded between the
parties after the plaintiff had applied for summary judgment on a
money claim against the defendant. The
parties agreed that if the
defendant should default the plaintiff would be entitled to set down
his summary judgment application
again, and indeed supplement his
papers in that application by delivery of a further affidavit. The
settlement was made an order
of court. The defendant defaulted. The
plaintiff supplemented his papers and brought the application for
summary judgment before
the court. It was upheld. One of the defences
or objections raised by the defendant was that what was placed before
the court was
properly identified or characterised as a second
application for summary judgment, something which Rule 32 did not
sanction. The
issue as to the viability of a “second summary
judgment application” was dealt with in paragraphs 39 to 42 the
judgment
of Madlanga J. The last two of these paragraphs read as
follows.
“
[41]
Where the parties themselves, through a settlement agreement reached
with legal representatives present on each
side, prefer to dispense
with the strictures of a rule and request that the court recognise
this preference by means of a consent
order, for one party suddenly
to perform a volte-face and demand strict adherence with that
selfsame rule borders on the ludicrous.
Justice between the two
litigants demands that their settlement agreement, which was made an
order of court, must be given effect.
After all, a court’s duty
is to do justice between litigants. In this instance justice demands
that Mr Eke be held to his
bargain.
[42]
In the circumstances of this case, it matters not that Rule 32 does
not provide for the enrolment of
a second summary judgment
application. Mr Eke’s contentions in this regard cannot
succeed. Substance must be put ahead of
form.”
( See
also
Trans-African Insurance Co Ltd v
Maluleka
1956 (2) SA 273
(A) at 278.)
[35]
Of course the facts in
Eke
v Parsons
are not replicated in this
case. Nevertheless the case involved the enforcement of a settlement
agreement, and an objection to such
enforcement based on technical
grounds related to the provisions of the Uniform Rules of Court. Even
if I saw any merit in the
respondents’ contention that the
erroneous reference by the deponent in the founding affidavit to
inapplicable Rules undermines
the efficacy of the notice of motion
and the applicants’ claim (which I do not), this would be an
instance where justice
demands that the respondents be held to their
bargain by enforcement of the settlement agreement.
The Defence on the
Merits
[36]
As already stated the respondents’
contention is that the settlement agreement was void from the outset
by reason of common
error. The defence is pleaded as follows in the
respondents’ answering affidavit.
“
[42]
It was essential from the applicants’ perspective that in the
event of a breach they would have the right
to rely on Uniform Rules
31(1)(c), and 41(4).
[43]
Without the problematic clauses and the said reliance upon Uniform
Rules 31(1)(c), and 41(4), there would
have been no settlement
agreement.
[44]
It follows on this version that the common error of the parties went
to the root of the settlement agreement,
rendering it impossible of
factual and lawful performance in the event of a breach, and
completely vitiated the apparent consent
of the parties.
[45]
The result was that the settlement agreement was and is void
ab
initio.
[46]
In this regard, if a contract is entered into on the basis of a
common assumption as to a past, present or
future state of affairs,
and that assumption turns out to be unfounded, the contract will be
void. What is required in order to
render a contract void is a common
assumption which turns out to be unfounded.
[47]
These requirements are satisfied on the common cause facts.”
[37]
This defence flounders both on the facts and the
law. Dealing with the factual evidence first, the respondents’
case is set
out in paragraphs 42 and 43 of the answering affidavit.
The deponent to that affidavit furnishes no evidence which might
explain
how he might have acquired the knowledge which justifies him
making the bold statement that the applicants would not have
concluded
the contract if they knew that the remedy of submitting
consents to judgment to the registrar was unavailable. The applicants
were
entitled to deal with that in reply. The deponent to the
replying affidavit points out that the deponent to the answering
affidavit
did not sign the settlement agreement on behalf of the
first respondent, of which he was a director. Speaking on the
applicants’
part, the deponent to the replying affidavit
complained that the assertions in the answering affidavit are
unsubstantiated, and
said this regarding the intention of the
applicants.
“
As
the representative of the applicant who was involved in instructing
their legal representatives in the drafting of the settlement
agreement, I can categorically state that the only material terms
with which the applicants were concerned was how the respondents
were
going to repay the applicants the amount owed.”
[38]
The respondents did not seek leave to file a
fourth set of affidavits in order to deal with this aspect of the
replying affidavit,
which, as I see it, was the only admissible
direct evidence on the question as to whether as a matter of fact the
applicants would
have seen the non-availability of the remedy of
submitting consents to judgment to the registrar as a right or
privilege without
which they would not have concluded the settlement
agreement. However, given the test applicable in law to this enquiry,
such evidence
given after the event concerning the intention of a
party is relevant, but is not necessarily decisive.
[39]
Strangely enough the answering affidavit
incorporates footnotes, and with regard to the allegations in
paragraph 46 (i.e. the statements
of law contained therein), the
affidavit refers to two judgments. The one is
Williams
v Evans
1978 (1) SA 1170
(C) at 1174
and 1175. The case concerned agreements which anticipated that a bank
would grant one of the parties an overdraft facility.
The bank
declined the request. The respondent alleged that the contracts were
void because the common assumption failed, and because
the contract
would not have been concluded but for the assumption. The applicant
sought an order declaring the contracts enforceable,
and denied that
the grant of the overdraft facility was a necessary condition for the
enforceability of the contracts. The court
referred the matter to
trial to because of the factual dispute concerning the status of the
common but unrealised assumption concerning
the grant of the
overdraft facility. The second judgment referred to is
Dickinson
Motors (Pty) Ltd v Oberholzer
1952 (1)
SA 443
(A) at 450. Scheiner JA said the following at page 450.
“
In
Huddersfield
Banking Company Ltd v Henry Lister & Son Ltd
,
1895 (2) Ch. 273
, Lindley, L.J., states the proposition,
‘
That
an agreement founded upon a common mistake, which mistake is
impliedly treated as a condition which must exist in order to
bring
the agreement into operation, can be set aside, formally if
necessary, or treated as set aside and as invalid without any
process
or proceedings to do so.’
This seems to me to
express in clear language a principle which is inherent in all
developed systems of law.”
The proposition endorsed
by Scheiner JA is in effect that, if the correctness of what turns
out to have been a common mistake was
treated by the parties
(expressly or tacitly) as a state of affairs which must exist in
order to render the agreement enforceable,
only then does the mistake
render the contract invalid or unenforceable. Both judgments
contradict the proposition advanced in
paragraph 46 of the answering
affidavit – in particular the last sentence of it.
[40]
In
Wilson Bayly
Holmes (Pty) Ltd, v Maeyane and others
1995
(4) SA 340
(T) at 344B, Nugent J put the test for the consequences of
a common mistaken belief that a certain state of affairs exists as
follows.
“
What
determines whether the contract is invalid is whether the parties
have agreed, expressly or tacitly, that this should be the
consequence if the state of affairs does not exist.”
The learned Judge went on
to make the observation that in some cases “the belief that the
state of affairs exists will be
merely incidental to the parties’
intention to create a binding relationship.”
[41]
In
Van Reenen Steel
(Pty) Ltd v Smith N.O. and Another
2002
(4) SA 264
(SCA) the court considered the questions discussed above,
and concluded by endorsing as correct, and in conformity with
authority
and principle, the passage from
Wilson
Bayly Holmes
quoted above.
[42]
In argument before me counsel for the respondents
accepted that it is not simply a question as to whether a common
error existed.
With reference to
Van
Reenen Steel
, counsel argued (and I
quote from his heads of argument) “that the enquiry is one of
construction: whether the parties intended
the agreement to operate
only upon the existence of the assumed state of affairs.”
[43]
In support of an outcome favouring the respondents
I was referred by counsel to the judgment of the Labour Appeal Court
in
Volkswagen (SA) (Pty) Ltd v Koorts
and others
[2011] ZALC 5.
It was argued
that it was held in that case that a contractual provision “founded
upon an unavailable legal mechanism”
was sufficiently
fundamental and prominent, and that the parties would not have
contracted in the same form had they known of the
true legal
position. The only paragraph in the judgment of the Labour Appeal
Court to which I was referred is paragraph 17. In
that paragraph
Landman AJA furnished a summary of the arguments put forward by the
appellant. Those arguments were rejected. With
reference to
Wilson
Bayly Holmes
and
Van
Reenen Steel,
the court found
that the true test is what I have set out above. With regard to the
position of the parties, the provisions of the
contract, and applying
the test just referred to, the court examined the question as to
whether the parties would still have contracted
as they did, if they
had realised prior to concluding the contract that their belief as to
the availability of a certain legal
remedy was erroneous. The
conclusion was that they would have contracted as they did –
i.e. the existence of the preferred
legal remedy was not a condition
which had to subsist for the contract to be enforceable.
[44]
I do not know the source from which counsel
for the respondents acquired his belief that the decision in
Volkswagen
was
the opposite of what it in fact was. There is no room at all for
mistake if one reads the judgment. I must conclude that counsel
had
not read the judgment. Objectively speaking, the argument constituted
an attempt to mislead the court. I do not for a moment
suggest that
counsel actually intended to do so. But the lesson is nevertheless
clear.
[45]
There is a material difference between the common
error in
Volkswagen
,
and the one here. V
olkswagen
concerned an agreement to submit issues to
arbitration. The common mistake made by the parties was their
understanding that they
could by agreement clothe a court which might
be called upon to review the arbitrator’s decision with the
power to do so
on wider grounds than the law permits. There was a
genuine mistake as to the availability of a remedy. Here there is no
mistake
about the remedy: it is a judgment of the court rendering the
claim executable. The mistake in this case concerned only the
procedure
by which that remedy may be acquired.
[46]
The parties in the present case were embroiled in
litigation over the question as to whether winding up orders should
be granted.
Judgment had been reserved. They then decided that
settlement was preferable. From the respondents’ perspective
the risk
that winding up would eventuate was avoided. In exchange
they had in effect to abandon their argument or contention that the
applicants
in the winding up proceedings had no
locus
standi
because nothing was owing to
them. On the side of the applicants, they would avoid the risk of
failure in the winding up proceedings,
and gain the advantage of an
unconditional acknowledgment of liability coupled with a payment
regime with which they could live.
That is what they elected to do.
[47]
It was not argued and could not be argued that the
respondents would have been advantaged in any way if indeed the
remedy of submitting
their confessions to judgment to the registrar
was available. From their perspective the availability of that remedy
was, if anything,
disadvantageous.
[48]
The applicants made a measured decision to abandon
winding up proceedings in exchange for an unconditional
acknowledgement of debt
and enforceable undertakings to pay. A lot of
money was involved – over R70 million. In my view the notion
that the applicants
would not have made that choice if they had known
that they would have to launch ordinary motion proceedings to enforce
the settlement
agreement in the event of default, as opposed to
submitting the confessions to judgment to the registrar, verges on
the ludicrous.
That conclusion is furthermore consistent with:
(a)
the existence of clause 8.3 of the settlement
agreement which in effect reserved the right of both parties to
pursue remedies not
immediately contemplated in the settlement
agreement;
(b)
the factual evidence presented by the
deponent to the replying affidavit; and
(c)
the fact that, even though the applicants’
attorneys seem to have believed that the confessions to judgment were
viable at
the time when the present main application was launched, an
election was made to pursue enforcement by launching an ordinary
application
in terms of Rule 6.
Conclusion.
[49]
I conclude that the relief sought by the
applicants must be granted.
[48]
It appears that no order has yet been made on the respondents’
application for condonation of the very much delayed delivery of its
answering affidavit. In its replying affidavit the applicants’
deponent stated that the applicants do not oppose the application for
condonation because that would only assist the respondents
“in
their continual attempt to frustrate the applicants in having the
main application determined”. As dissatisfied
as I may be
concerning the quality of the application for condonation, I believe
that it should be granted if for no other reason
than the one
identified by the applicants.
[50]
Although the settlement agreement provides that
payments are to be made into the bank account of the first applicant,
the acknowledgment
of debt made by each of the respondents is in
favour of the first and second applicants who are defined as the
“creditors”.
It seems that where the agreement makes
provision for payment to be made to the first applicant, that is
intended merely to be
a payment mechanism, and not to define the
beneficiaries of the obligations undertaken by the respondents which
are expressly stated
to be in favour of the “creditors”.
[51]
I accordingly make the following order.
1.
The respondents’ application for condonation
of the late delivery of their answering affidavit is granted, and the
costs of
the application for such condonation shall be paid by the
respondents, their liability being joint and several.
2.
The respondents are ordered to pay the first and
second applicants the sum of R63 508 000, together with
interest thereon
at the rate of 11.75 percent per annum from 4
th
October 2023 to date of payment, their liability
being joint and several.
3.
The costs of the application, including the costs
of two counsel where incurred, shall be paid by the respondents,
their liability
being joint and several. Such costs shall include any
that may have been reserved earlier. Counsels’ fees may be
taxed on
Scale C in respect of Senior Counsel, and otherwise on Scale
B.
Olsen J
Case Information:
Date of
Hearing:
22 July 2026
Date of
Judgment:
17 September 2026
Counsel for the
Applicants:
A Troskie SC, with D Eades
Instructed by:
Larson Falconer Hassan Parsee Incorporated
2
nd
Floor.
93 Richefond Circle
Ridgeside
Office Park
Umhlanga
Rocks
Tel:
031 534 1600
Ref: N
Kinsley/JD/02/T307/002Durban
Email:
[email protected]
[email protected]
Counsel for the
Respondent:
G N Harpur SC
Instructed by:
Mooney Ford Attorneys
3
rd
Floor,
The Boulevard
19
Park Lane
Parkside,
Umhlanga
Tel:
031 304 9881
Ref:
ABN/E1526/50
Email:
[email protected]
[email protected]