Offers to settle in litigation: Beware, they can bite!

In the Johannesburg High Court matter of Wimpey v HPS Africa Consulting Engineers (Pty) Ltd (5268/19) [2019] ZAGPJHC 266 (16 August 2019), the plaintiff sued the defendant for payment of an amount. The defendant had made an unconditional tender to settle the claim which the plaintiff accepted. But after doing the deal the defendant claimed that there were additional terms that should have been in the settlement involving the delivery of drawings. Wriggling on its own hook, it initially refused to honour the tender, then claimed that the tender was conditional and eventually said that the tender was withdrawn completely. To the extent that there were additional terms that ought to have been in the settlement, those ought clearly to have been part of the offer to settle.

Justice Vally was asked to hold the defendant to the settlement that had been proposed and accepted. In the course of his judgment he considered the proper interpretation and purpose behind Rule 34(1) of the Uniform Rules of Court. The Rule says that: “In any action in which a sum of money is claimed, either alone or with any other relief, the defendant may at any time unconditionally or without prejudice make a written offer to settle the plaintiff’s claim.” He correctly observed several problems for the defendant. First, the tender was unconditional. Second, the tender was accepted. Third, the defendant initially regarded itself bound but when payment was due, it said the tender was no longer unconditional and it refused to pay. Finally, it tried to withdraw the tender.

The court said that the defendant was trapped in a web of its own making and that its approach was irrational and disingenuous. It noted that once a tender in terms of rule 34(1) is made and accepted, the door to further litigation on the underlying dispute is permanently shut for both the defendant and the plaintiff.

Unhappily for the defendant, its lack of diligence in the settlement saw judgment being granted against it on the terms of the original settlement offer. Its unsuccessful attempts to wriggle out of the deal it had done saw it slapped with a costs order on a punitive scale.