PART 1 Section D - Civil Procedure made easy PDF

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Civil Procedure made easy...

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PART 1 SECTION D: ADDITIONAL INFORMATION 1. INTRODUCTION  A dispute in a civil matter may be settled at any time prior to the institution of legal proceedings, and after this at any time before judgment has been made  A settlement is an important means of averting the risk of losing a case and then incurring legal costs  It is governed by the rules of court and is aimed at encouraging defendants to make an offer and terminate further litigation

2. COMMON LAW OFFERS It is very important to note the distinction between an unconditional offer and an offer of compromise, as different consequences are attached to each of these offers

Unconditional offer

Offer to compromise

Admission of liability to a whole or part of the claim Intention: Amino Solvendi(admit liability) Effect is that there is an acknowledgement of debt which creates a new cause of action. Can be revealed at court

Denial of liability Intention: Amino Contrahendi( enter into an agreement of compromise) Accepting the offer extinguishes the whole of the original claim which creates a new cause of action. Cannot be revealed at court

2.1 Unconditional Offer  Admission of liability in whole or part of the offeree's claim  By making such an offer, the offeror is acknowledging debt in respect of the claim  If the unconditional offer relates to part of the offeree's claim only, the offeree is entitled to accept the unconditional offer in respect of that part of the claim only, and commence legal proceedings to claim the balance  An unconditional offer must be made animo solvendi (Clear that offeror's intention was to admit liability for whole or part of the offeree's claim

2.2 Offer of Compromise  An offer made under the denial of liability  The offeror denies that he is liable for part or the whole of the offeree's claim, but he is prepared to make an offer to settle the matter for less than the original claim  This is done when he wants to avoid the cost of litigation  The offer is made animo contrahendi (with the intention to enter into an agreement)  If the offeree accepts the offer the entire original claim is extinguished and he may no longer sue for the outstanding balance

 A novation occurs and the original cause of action is replaced with a new cause of action, which is the agreement to settle the matter in terms of the compromise offer  If the offeror does not perform in terms of the agreement, the offeree may sue for the whole amount of the original claim

3. POSSIBLE SHORTFALLS OF DRAFTING OFFER TO COMPROMSE  The wording and context must be unambiguous  The contra proferentum rule applies, which means that ambiguities will be interpreted in the reader's favour  Strong indicators that this is an offer of compromise and not an unconditional offer:  “Without Prejudice”, lesser amount offered “in full and final settlement”  In “settlement of your claim”

4. PITFALLS OF ACCEPTING OFFER TO COMPROMISE  As the offeree is giving up his original cause of action, he is restricted to the compromise offer (even if debtor defaults)  Acceptance of any payment can be construed as an acceptance of an offer to compromise  It is wise to accept offer on the condition that default revives original cause of action, and that an acceleration clause be inserted in the document containing the offer  Such a clause permits the offeree to sue for the full balance outstanding if any single instalment is not made in full on the due date

5. PROVNG AN OFFER OF COMPROMISE  Offeror made an offer to compromise, which was accepted, but now he is being sued for the balance of the original claim  The offeror will need to prove the following to satisfy the court:  Offer of compromise made with the necessary intent and the offeree accepted payment  He made good on the offer  His offer related to whole of plaintiff’s claim and costs

6. THE CONTENTS OF ‘WITHOUT PREJUDCE OFFER’  Used when the plaintiff rejected a reasonable offer of compromise  Defendant makes payment to court for a portion of the claim in settlement of whole claim and costs  The plaintiff is then informed in writing that:

He has 10 days to accept the offer and if it is accepted, the court pays out the money  If it is not accepted he proceeds to trial (concealed from court)  If judgment is given for less than the payment into court the defendant only pays lesser judgment, judgment entered for the defendant and the plaintiff must pay the defendant’s costs (from payment date onwards) 

7. METHODS OF RECORDING AGREEMENT TO SETTLE 7.1 Acknowledgement of Debt or General Settlement Agreements  Usually used before the start of a trial  Acknowledgement of debt may be in the form of a: 1. Unilateral undertaking in writing by 1 party to repay his opponent 2. Settlement agreement (bilateral contract entered into between the parties and signed by both sides)  Settlement agreements contain provisions requesting the court to make the agreement an order of court  The agreement must contain the following:  That ordinary rules of contract apply  The agreement be made an order of the court  Full amount payable  Instalments which were agreed upon  Acceleration clause  Payment details  Signatures

7.2 Consent to Judgment in the Magistrate's Court  This method of recording a settlement allows for immediate enforcement through a warrant or S 65 proceeding  Only available to parties in pending action proceedings (not motion or application proceedings)

Section 57 and 58 Proceedings for Liquid Amounts:  S 57 provides for a written admission of liability by the defendant, combined with an undertaking to pay in a single sum or instalments, and further combines with the undertaking that, should he breach the agreement, the plaintiff may obtain judgment against him  S 58 provides for the defendant to consent immediately in writing to judgment in favour of the plaintiff, after which the matter is directly referred to the clerk of the court for obtaining judgment against the defendant  Both sections can be used in response to both a letter of demand and a summons

 Once received summons or letter of demand the defendant can:  Admit liability  Offer to pay or pay in instalments (plus recovery costs)

 Agree that if he fails to pay, the plaintiff can apply for judgment without further notice  If debtor fails to pay once his offer is accepted:  Plaintiff shows the summons or letter of demand  He shows the defendant's written acknowledgment of debt  He shows his written acceptance of the offer  He attaches an affidavit by his attorney showing the non-compliance by the defendant

7.3 Note Settlement without Entering Judgment  Governed by Rule 27  An application is made to court to record the terms of the settlement in an action, without entering judgment in the matter  Applicant lodges a statement of the settlement  If there is no objection, the court notes that the action is settled on the terms as set out, and stays further proceedings  If compliance is not forthcoming, the party can apply to court to have judgment entered into within 12 months...