If a settlement agreement is made an order of court it is not enough to try to set aside the agreement without rescinding the court order.
The order of court is not void and must be rescinded but this can only be done on the limited grounds of fraud and justifiable error (justus error) or on the grounds that a party to the order did not give authority for the order to be made, such as when an attorney settles without authority.
In Moraitis Investments (Pty) Ltd v Montic Dairy (Pty) Ltd a company and a trust settled a dispute with a third party. The trustee (one of three) of the trust and director of the company claimed ‘without a trace of embarrassment or an explanation of the basis upon which he had originally warranted his authority’ that he had no authority to settle the dispute at the time.
Although there were three trustees, the single trustee had acted throughout the proceedings and in other proceedings warranting his authority to act on behalf of the trust. A single trustee can act alone if authorised to do so by the other trustees. On the facts the court found that there was no evidence that the trustee’s warranty of authority was not valid and the court refused to set aside the order of court.
There are very limited grounds for setting aside a settlement because it is in the public interest that disputes once settled stay settled and that settled disputes are not easily reopened by a party who has second thoughts.
