In January 2025, the High Court addressed an application to enforce a settlement agreement made before litigation. The case revolved around a claim by the applicant seeking to enforce a settlement agreement against the respondent, the developer of a retirement village. The central issue was whether a settlement agreement concluded prior to any litigation between the parties could be made an order of the court.
The applicant, a pensioner residing in the United Kingdom, had previously lived in South Africa and purchased a unit in a retirement village from the respondent in 2014. The agreement granted the applicant the exclusive right of lifelong occupation of the unit in return for lending an amount of R1,450,000.00 to the respondent. In January 2019, the applicant terminated the life rights agreement and sold her life rights in the unit to a new owner. The respondent undertook to pay the applicant R1,341,250.00 within six weeks from the date the new occupant took possession of the unit.
The respondent failed to make the payment, leading to negotiations between the parties. On 3 March 2020, they concluded a settlement agreement in which the respondent agreed to make monthly payments to the applicant from May 2020 until August 2020. The agreement also stipulated that, in the event of a breach, the applicant could enforce the settlement agreement and the respondent consented to judgment and the settlement agreement being made an order of the court.
The respondent failed to adhere to the terms of the settlement agreement, prompting the applicant to seek an order from the court to enforce the settlement agreement.
The primary legal issue was whether a settlement agreement concluded prior to any litigation between the parties could be made an order of the court. The court had to determine if it had the power to grant such an order and whether the settlement agreement related to pending litigation issue between the parties.
The court examined the legal principles surrounding the enforcement of settlement agreements. It referenced a Constitutional Court’s decision which established that, for a settlement agreement to be made an order of the court, it must relate directly or indirectly to litigation between the parties. The court emphasised that it does not sit to merely rubber-stamp private agreements unrelated to litigation.
The court found that when the settlement agreement was concluded, there was no pending litigation between the parties. The agreement was not related to any existing legal dispute but was a private arrangement to settle a financial obligation. Therefore, the court did not have the power to make the settlement agreement an order of the court.
The court dismissed the application.
A settlement agreement such as this one is a contract like any other. The applicant’s correct remedy was to sue to enforce the contract.
Alana v Monoline Investments 8 Trust (2020/37977) [2025] ZAGPJHC 47 (23 January 2025)