In the recent case, the High Court of South Africa dealt with an application for the rescission of two court orders. These orders were related to a settlement agreement following defaults on loan repayments by the Applicants.
The applicants had entered into a settlement agreement with the respondents (Bank) after defaulting on their loan repayments. The settlement agreement and an addendum were made orders of the court on 6 June 2022 and 20 December 2022, respectively.
The applicants sought the rescission of these court orders on several grounds. They argued that the orders were invalid and unenforceable, that the orders were not capable of enforcement until the banks obtained final judgment in the action. They sought the variation of the orders to ensure that execution steps could only be taken upon the upon the banks obtaining final judgment.
The court had to determine whether the applicants’ right to seek rescission of the court orders was perempted due to acquiescence and whether the rescission application had merit.
A peremption, which is the principle that a party who has acquiesced in a judgment cannot later seek to rescind it. The court found that the applicants had indeed acquiesced to the orders by entering into the settlement agreement and its addendum voluntarily and with legal representation. They had not challenged the orders for two years and had accepted the benefits of the orders, such as receiving additional finance. Furthermore, the applicants had engaged in further negotiations after breaching the first order without challenging its validity. The court concluded that the applicants’ conduct pointed unequivocally to acquiescence, thereby establishing peremption.
Even if peremption had not been established, the court found that the rescission application would not succeed on its merits. The court held that the orders constituted final judgments in respect of the applicants’ liability for the consolidated debt. The orders were clear and unambiguous, and the quantum of liability was objectively ascertainable. The orders did not create any significant ambiguity or uncertainty.
The court dismissed the application for rescission and ordered the applicants to pay the bank’s costs. This case underscores the importance of understanding the implications of settlement agreements made orders of court and the principle of peremption in South African law.