In a February 2025 judgment, the high court addressed the issues of making a settlement agreement an order of court and the power of the court to rescind an order wrongly granted. The case involved a dispute between the appellants, who alleged that the respondent owed them money advanced for a farm purchase, and the respondent, who had claimed the funds were a gift but settled the claim. The court had to determine whether the settlement agreement had correctly been made an order of court and, if not, whether the order granted could be rescinded due to alleged jurisdictional errors.

The dispute arose when the respondent sought repayment of money advanced to the appellants for the purchase of a farm. Initially, the appellants denied that the money was a loan, claiming it was a gift. However, under the threat of litigation, the appellants signed a settlement agreement  in May 2019, agreeing to repay the respondent. The agreement was made an order of court in September 2019. The appellants later sought to rescind the order, arguing that the court lacked jurisdiction as there was no preceding litigation, and that the claim had prescribed.

The court emphasised that for a settlement agreement to be made an order of court, it must relate directly or indirectly to an issue under litigation between the parties, be consistent with the Constitution, the law, and public policy, be capable of being practically implemented, and hold some practical and legitimate advantage to at least one of the parties. The court found that the settlement agreement in this case did not meet these criteria, as there was no preceding litigation on the settled issues.

The appellants argued that the order should be rescinded because it was wrongly granted and the court lacked jurisdiction to make it. The court held that a court order is binding until set aside, even if it is grossly wrong. The court emphasised that the ordinary requirements for rescission must be met, including explaining any delay in bringing the application, demonstrating good faith, and showing a defence to the claim with some prospect of success.

The court found that the appellants had not met the ordinary requirements for rescission. The appellants’ delay in bringing the rescission application was not adequately explained, and their defence to the claim was weak. The court concluded that the absence of preceding litigation was not enough to justify rescission on its own, and the ordinary requirements for rescinding the order had not been satisfied. The application to rescind the order making the settlement agreement an order of court was dismissed.

Van Dyk v Rhodes (A2024/076119) [2025] ZAGPJHC 133 (24 February 2025)