The Supreme Court of Appeal (SCA) on Tuesday overturned a Pretoria high court order which had set aside a R2.5m settlement agreement between the Road Accident Fund (RAF) and a claimant.
The SCA said the Constitutional Court had recently given guidance that contractual agreements concluded freely and voluntarily by the parties ought to be respected and enforced.
On September 15 2017, Matedewuja Ubisi issued summons against the RAF in the high court for a claim of R9.5m after sustaining injuries as a result of a motor vehicle accident.
While RAF initially filed a plea disputing liability and the amount of the claim, the issue of liability was settled between the parties on June 5 2019.
The matter was set down for hearing in respect of the amount of damages on November 25 2021. On the day of the hearing, the RAF sent an offer of settlement in respect of quantum to Ubisi's law firm.
The offer of R2.5m was made in respect of general damages, loss of earnings and an undertaking in respect of future medical expenses and costs. The RAF had offered R2m for loss of earnings and R500,000 for general damages.
Ubisi's law firm accepted the offer and prepared a draft order containing the settlement agreement. On May 6 2022, the RAF consented to the draft order being made an order of court.
The matter was placed on the settlement roll and heard by the high court on June 5 2022.
However, the high court indicated it was not a rubber stamp of settlement agreements and said it had to interrogate such offers.
In its judgment, the high court refused to award the agreed quantum of damages in respect of loss of earnings on the basis that the RAF tender was not justified. It found that the report made by Ubisi’s industrial psychologist had improperly qualified him for past and future loss of earnings.
The court also refused to award the R500,000 tendered for general damages on the basis that Ubisi’s general practitioner confirmed in his report that Ubisi's whole person impairment was 12% and below the 30% threshold, which was a clear indication that he did not qualify for general damages.
The court further ordered Ubisi’s attorneys, Nel van der Merwe & Smalman Inc to pay the costs of the action, including costs of Ubisi’s experts, out of their own pockets.
Ubisi applied for leave to appeal, which the high court refused. Leave to appeal was granted by the SCA.
In its judgment, the SCA said the legal position on how a court should deal with a settlement agreement brought by the parties to be made an order of court, was recently settled by the Constitutional Court.
The court said agreements concluded freely and voluntarily by the parties ought to be respected.
“This is in accordance with the established principle pacta sunt servanda (agreements must be honoured).”
The SCA said in that judgment, the court further held that a judge should not interfere with the terms of the settlement agreement.
“The Constitutional Court emphasised that a judge is not entitled to demand the parties to address his or her concerns. Once he or she has informed the parties of the concerns, it is upon the parties to elect whether to address the concerns or indicate to the judge that they regard the matter as settled between them,” the SCA said.
The SCA said there was no live dispute between the parties in this matter.
“They had settled their litigious dispute thereby terminating the court’s jurisdiction to pronounce on it."
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