On 31 May 2024 the Constitutional Court delivered a judgment confirming that an agreement purporting to settle litigation must, at a minimum, resolve the dispute between the parties in a lawful manner and have some advantage to the parties and the court, otherwise the agreement ought not to be made an order of court.

The matter arose from the unlawful occupation of certain residential properties and related eviction orders that were granted by the High Court. The occupiers brought an urgent court application to stay the enforcement of the eviction orders on the basis that no alternative accommodation had been provided to them by the City of Ekurhuleni or the MEC for Human Settlements. In turn, the owners of the properties brought a conditional counter-application against the City and the MEC for constitutional damages and a declarator that their property rights had been violated by the City’s and the MEC’s failure to provide alternative accommodation to the occupiers.

On the day of the hearing of the stay application, the attorneys for the parties reached a settlement agreement which was made an order of court by consent. The consent order required the City to buy the owners’ properties, with the purchase price to be determined according to the Expropriation Act, and to reverse and write off the rates and taxes that were incurred by the owners from the time that the unlawful occupation began. The consent order also provided for a loss of income claim by the owners against the City, to be decided by the High Court.

The City subsequently brought an application to have the consent order rescinded on the basis, amongst other things, that it did not meet the requirements for a settlement agreement to be made an order of court.

The Constitutional Court stated that the courts favour a settlement because it reduces the demands on the judiciary and allows their limited resources to be reallocated to other cases. However, before making a settlement agreement an order of court, the court must be satisfied that the agreement:

• relates to and resolves the issues in dispute between the parties;
• is consistent with the law, the Constitution and public policy; and
• holds some practical or legitimate advantage for the parties and the court.

In applying these requirements, the Court found that the terms of the consent order:

• did not relate to the issues in dispute as it left the High Court’s eviction orders unenforced and the occupiers’ stay application unresolved;
• were unlawful because the City had not complied with its statutory obligations for purchasing property and writing off rates and taxes; and
• potentially gave birth to further litigation between the parties by providing for unquantified claims to be determined by the High Court.

Accordingly, the consent order did not resolve the disputes between the parties, nor did it attempt to do so in a lawful and advantageous manner, and the High Court should never have granted it.

The Court therefore granted the rescission of the consent order and remitted the matter back to the High Court so that the stay application could be adjudicated.

The case is City of Ekurhuleni Metropolitan Municipality In re: Unlawful Occupiers 1 Argyl Street and Others v Rohlandt Holdings CC and Others (CCT 228/22) [2024] ZACC 10 (31 May 2024).