Case CCT 156/22
[2024] ZACC 04
Hearing Date: 18 August 2023
Judgement Date:25 April 2024
Post Judgment Media Summary
The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.
On Thur sday, 2 5 April 2024 at 10h00, the Constitutional Court handed down judgment in an application for leave to appeal against a judgment and order of the High Court, Free State Division, Bloemfonte in.
On 31 January 2016, t he applicant Mr Tumelo Mafisa was a passenger in a motor vehicle when the driver of the vehicle collided with a tree. Mr Mafisa suffered damages in the form of medical expenses, loss of earnings and general damages.
The appli cant is sued summons in the High Court agai nst the respondent, the Road Accident Fund ( RAF and claimed damages for medical expenses, loss o f earnings and general damages. The RAF disputed liabilit y and the quantum of the claim. The matter was subsequently enrol led for hearing on 11 and 12 May 2021 . On the first day of the hearing, the parties requested that the matter stand do wn for settlement negotiations. The next day, the parties approached the Judge and requested her to make the settleme nt agreement an order of court. The Judge , without elaborating, indicated that she was not entirely satisfied wit h the terms of the draft order. She reserved judgment to consider the proposed settlement.
On 15 June 2021, the High Court handed down a wri tten judgment in which it held that the applicant had failed to prove that he sustained damages with respect to pa st and future loss of earnings. As a result, t he High Court refused to award the applicant the agreed quantum of damages for loss of earnings on the basis that the tender by the RAF was not justified. The High Court unilaterally amended the draft order by striking out the amount for loss of earnings and awarded the applicant the agreed a mount for general damages only. The applicant applied fo r leave to appeal to the Full Cou rt and Supreme Court of Appeal. These applications, as well as the application for reconsideration to the President of the Supreme Court of Appeal, were dismissed.
Subsequently, the applicant applied for leave to appeal in this Court. The RAF filed a notice to abide. The Personal Injury Plaintiff Lawyers Association (PIPLA) was admitted as amic us curiae in these proceedings. The General Council of the Bar of South Africa was approached by this Court to appoint Counsel t o make submissio ns on the issue of a High Court’ s power to investigate the merits of a settlement. Adv Snellenberg was appointed.
The parties submitted that the case involved a significant l egal question: whether the High Court could unilaterally amend a settlement agreement without allowing the parties involved a chance to respond, effectively binding them to an agreement they did not intend to make. They argued that this essentially made the court a party to the agreement, impacting numerous litigants involved in similar cases. Additionally, the parties raised constitutional concerns, asserting that altering the agreement without due process violated their right to a fair hearing and breached the separation of powers doctrine by blurring the Court’ s im partial role with that of the Executive in managing public funds.
In a unanimous judgment penned by Mhlantla J (with Zondo CJ, Kollapen J, Mathopo J, Rogers J, Schippers AJ, Theron J, Tshiqi J and Van Zyl AJ concurring), the Court held that the application implicated the right to a fair public hearing insofar as the High Court failed to apprise the parties of its concerns and proceeded to unilaterally amend the settlement agreement. Therefore, the Court’s jurisdiction wa s engaged Given the pre valence of similar cases and the differences in how so me of the Divisions of the High Court have dealt with settlement agreements, the Court held that it wa s imperative for the issues raised to be decided. Therefore, leave to appeal was granted.
On the merits of the application, the Court focused on two issues. First, whether a court is empowered to amend a settlement agre ement concluded by the parties. Second, what procedures a court should follow if it is of the view that it should not make a settleme n t agreement an order of court.
On the first issue, the Court held that a court is not empowered to unilaterally amend a settlement agreement. A compromise, whether embodied in a court order or not, generally brings an end to t he dispute between the parti es. However, the Court explained that this is not authority for the position that a court has no jurisdiction to raise conce rns over settlement agreements. When asked to make a s ettlement agreement an order of court, this Court’s decision in Eke v Parsons [2015] ZACC 30 demands that courts ensure that the agreement is competent and proper before it can be g iven the seal of a court order. A settlement agreement will only be competent and proper if it relates directly or indirectly to the dispute between the parties; accords with the Constitution and the law and is not contrary to public policy; and holds some practical and legitimate advantage.
On the second issue, the Court affirmed that, as a general rule, a Judge should not interfere with the t erms of a settlement agreement. A J udge is, however, entitled to raise con cerns in certain circumstances. The concerns contemplated by Eke are concerns arising from the terms of the set tlement agreement itself. Thus, J udges do not have free reign and must exer cise restraint to ensure that there is no undue imp osition on contractual freedom. Where a J udge raises concerns, the grounds thereof should be clear and may not be based on information retrieved from inadmissible evidence.
The Constitutional Court said that once a J udge raises their concerns with the parties, two possibilities arise. First, the Judge may refuse to make the settlement agreement, an order of court. Second, the J udge may noti fy the parties of her concerns. It must be emphasis ed that the Judge is not entitled to demand the parties to address these concerns. Once the Judge has informed parties of her concerns, the parties may elect not to address the concerns and indicate to the Judge that they regard the matter as settled betw een them. In such a case, the Judge will note on the court file that the matter has been settled between the parties and that the settlement agreement will not be an order of court. If the parties elect to address the issues raised and the Judge is satis fied, the settlement agreement will be made an order of court. If the Judge is not satisfied, she will refuse to do so. However, the fact that the Judge refused to make the settlement agreement an order of court does not mean that the settlement agreemen t is invalid. Whether the settlement agreement is valid depends on its terms and the law.
In the present matter, the High Court was presented with a settlement agreement to be made an order of court. It did not do so and reserved judgment to consider th e agreement. Without raising its conc erns with the parties, the High Court unilaterally am ended the settlement agreement. In its reasoning, the High Court had regard to information obtained from the expert reports in the court file which were neve r place d as evidence before it. T h is Court held that the unilateral alteration of the settlement agreement and consideration of evidence not before the High Court was improper as there was no li ve dispute between the parties. As the validity and terms of the co mpromise were not in dispute, it was not open to the High C ourt to pronounce on it either.
The Constitutional Court further held that the Hig h Court did not have the power to unilaterally amend the settlement agreement therefore, it exceeded its jurisdiction Furthermore, the High Court’s failure to raise its concerns with the parties and the failure to allow them an opportunity to address these concerns is contrary to the obligation to hear the parties before making an order that is adverse to them.
In the result, the Constitutional Court upheld the appeal and set aside the order of the High Court. As there was no evidence of impropriety in relation to the settlement agreement, th is Court held that there was no basis to remit the matter. Therefore, t he order of the High Court was replac ed with the original settlement agreement agreed to by the parties an order of court. As to costs, the Court held that the RAF was not responsible for the High Court’s impermissible alteration to the draft order. The RAF also did not oppose the applicatio n for leave to appeal. As such, the Court made no order as to costs beyond those already provided for in the draft order.
The Full judgment here
