MEC for Economic Affairs, Environment and Tourism, Eastern Cape v Kruizenga and Another

• Jurisdiction: South Africa
• Judge: Harms DP, Nugent JA, Cachalia JA, Leach JA and Seriti AJA
• Judgment Date: 01 April 2010
• Citation: 2010 (4) SA 122 (SCA)
• Docket Number: 169/09
• Hearing Date: 09 March 2010
• Counsel: RG Buchanan SC for the appellant. HJ van der Linde SC (with PE Jooste) for the respondents.
• Court: Supreme Court of Appeal

Cachalia JA: G

[1] This appeal deals with the question of an attorney's ostensible (apparent) authority to reach agreement at a pre-trial conference convened in terms of rule 37 of the Uniform Rules of Court, even if the effect of the agreement is to settle an opposing party's claim. The Eastern H Cape High Court, Bhisho (Van Zyl J) [1] held that by instructing the State attorney to defend the action and to brief counsel to conduct his defence, the appellant represented to the outside world that his legal representatives had 'the usual authority that applies to their office'. And by not informing the respondents that their authority was limited, he 'must reasonably have expected that persons who dealt with his agents would I believe that they had the authority to compromise the claims'. So, the court concluded, he was estopped (prohibited) from denying the

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authority of his legal representatives to agree to the settlement. [2] The A learned judge thus held that the appellant was not entitled to escape the consequences of the agreement which his legal representatives had made. He also refused the appellant leave to appeal, but this court granted the necessary leave.

[2] The dispute forms part of the litigation in a trial action in which the B two respondents claim damages from the appellant in his representative capacity arising from an alleged negligent failure of the provincial government's employees to take preventative measures to contain a fire. The fire started on provincial government property under the appellant's control and spread to the respondents' adjoining properties, causing C extensive damage to their vegetation and infrastructure.

[3] The factual background and chronology of the present dispute are set out in the High Court's reported judgment and need not be repeated in detail. [3] In essence the dispute concerns whether the agreements, which the State attorney reached with the respondents at two rule 37 pre-trial D conferences without the appellant's authority, are binding. The minute of the first conference, which was signed by the parties' attorneys some six months later, records that the appellant had conceded 'the merits of the plaintiff's case and the only aspect that remains in dispute between the parties and which remains to be resolved is that of quantum'. The E second conference was held, almost 18 months later, after the trial judge, on the morning before the trial commenced, enquired from the parties' legal representatives whether any attempt had been made to settle the dispute over quantum. The matter then stood down for the parties to consider settlement proposals. They met the following day. The minute of this meeting, which was signed by attorneys and counsel for the F parties, records the appellant to have admitted liability for some heads of the damages claimed, whilst the dispute over the remaining heads would proceed to trial. This minute, which incorporated the earlier agreement, was placed before the judge. The appellant then sought a postponement of the whole case, which the judge refused in the light of the admissions G made. He accordingly made an order based on the admitted liability and postponed the hearing concerning the outstanding issues.

[4] Thereafter, with a view to reopening the provincial government's case on the merits, the appellant launched an application to rescind and set aside the court order and to withdraw the admissions his legal H representatives had made as recorded in the pre-trial minutes. He grounded his application on an allegation of the existence of a general practice or instruction - but unbeknown to the respondents or their legal representatives - to the effect that the State attorney needed his or the head of department's express authority to settle or compromise a claim, I and concomitantly the State attorney's failure to obtain his specific authority to concede the merits of the action or to settle certain heads of

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A damage. (There is no suggestion that counsel, who was instructed to appear for the State, was aware that the State attorney lacked authority, and for present purposes only the latter's authority is in issue.) Although there was a factual dispute concerning the existence of the general practice, the High Court approached the matter on the basis that there B was such a practice. And I will likewise do so.

[5] The appellant's application for rescission was brought under the common law and not in terms of Uniform Rule 31 or 42. Mr Buchanan, who appears for the appellant, contends that the appointment of C attorney and counsel, in itself, does not give rise to a representation that they have full authority, not only to conduct the litigation, but also to compromise a claim or to consent to judgment against the client. The law, he submits, requires express - not merely apparent - authority for this purpose. And so he contends, because the State attorney agreed to compromise the claim in conflict with general practice - and that D judgment was granted pursuant thereto - this entitles the appellant to the relief claimed.

[6] It is important to reiterate what was said at the outset - the issue in this matter is whether the appellant may resile from agreements made by E his attorney, without his knowledge, at a rule 37 conference. The judgment does not deal with agreements reached outside of the context of conducting a trial in the normal course of events. The rule was introduced to shorten the length of trials, to facilitate settlements between the parties, narrow the issues and to curb costs. [4] One of the F methods the parties use to achieve these objectives is to make admissions concerning the number of issues which the pleadings raise. [5] Admissions of fact made at a rule 37 conference, constitute sufficient proof of those facts. [6] The minutes of a pre-trial conference may be signed either by a party or his or her representative. [7] Rule 37 is thus of critical importance G in the litigation process. This is why this court has held that in the absence of any special circumstances a party is not entitled to resile from an agreement deliberately reached at a rule 37 conference. [8] And when, as in this case, the agreements are confirmed by counsel in open court, and are then made a judgment or order of a court, the principle applies H with even more force.

[7] It is settled law that a client's instruction to an attorney to sue or to defend a claim does not generally include the authority to settle or

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compromise a claim or defence without the client's approval. [9] The rule A has been applied to a judgment consented to by an attorney without his client's authority [10] and also when the attorney did so in the mistaken belief that his client had authorised him to do so. [11] This principle accords with the rule in the law of agency that where an agent exceeds the express or implied authority in transacting, the principal is not bound by the transaction. [12] B

[8] But there appears to be some uncertainty in the way this principle has been applied. Midgley observes that our courts, under the influence of English law, have distinguished between settlements made outside of and those made during the course of litigation - and appear to have C accepted that the power to settle a claim is one of the usual and customary powers afforded a legal representative in the latter instance. [13] So, in Mfaswe v Miller, [14] an attorney's clerk compromised a claim on the day of the trial before the client had arrived at court. He did so fearing that if the client did not arrive in good time, default judgment may be D given against him. Thereafter the client sued his attorney for the full amount of the original claim. The court said that the clerk had accepted the compromise 'in the exercise of the discretion vested in an attorney'. [15] And because he had acted in good faith, and was not negligent, the court held that the attorney was not liable to...