Botha vs. Botha - (24 Jul 2024)

A settlement agreement can be set aside if it was fraudulently obtained

Civil

The Appellant and the Respondent were married, out of community of property, with the inclusion of the accrual system, on 4 November, 2000. Subsequently divorce proceedings were launched in the Regional Court. A final decree of divorce, incorporating an agreement of settlement signed by the parties, was made an order of court on 9thMarch, 2021. The basis of the application was that the accrual amount had been incorrectly calculated and that this was a mistake common to the parties. The effect of the amendment was to reduce the amount payable to the Appellant.

The appellant approached the high court seeking the setting aside of the regional court order. A full bench of the high court dismissed the appeal on the grounds that, the order of the regional court was interlocutory and therefore not appealable. The finding by the high court gave rise to an application for special leave to appeal to this Court in terms of Section 16(1)(b) of the Superior Courts Act, 2013, against the judgment and order of the high court. The central issue in present appeal was whether certain clauses in a settlement agreement were concluded as a result of a common mistake between the parties.

As a general rule, a settlement agreement was concluded as a form of compromise by parties who wanted to avoid protracted and expensive litigation. The purpose of a compromise was to prevent or put an end to litigation. A compromise had the effect of res iudicata. Here the settlement agreement signed by the parties was a final agreement between the parties, putting all disputed issues to rest. There were very limited grounds on which a party could rely on a mistake to resile from a contract.

A settlement agreement can be set aside if it was fraudulently obtained. It can also be set aside on the ground of justus error, provided that such error vitiated true consent and did not merely relate to the merits of the dispute which was the very purpose of the parties to reach a settlement. There was no misrepresentation by the appellant. There were protracted negotiations between the parties which led to a settlement agreement. In consultation with his legal representatives, the respondent signed the settlement agreement which was made an order of court. The fact that several months later he had a change of heart and believed that he had overpaid his former wife did not translate into a mistake common to the parties.

If the mistake was due to that party’s own fault, the error could not be said to be justus and the mistaken party cannot escape liability for the agreement that he signed. At best for the respondent, this was a unilateral error. It did not lay the basis for a claim for the variation of the settlement agreement on the grounds of a common mistake. The relief sought by the respondent in the regional court was final in effect. The order of High Court is set aside. Application for special leave to appeal succeeds.

Tags : SETTLEMENT AGREEMENT CLAUSES COMMON MISTAKE