Noteworthy Judgements

  1. We confirm that Caroline de Villiers Attorneys represented Avnet South Africa (Pty) Ltd (“Avnet”) in this case.
  1. The question raised in the present application was whether a settlement agreement may be made an order of court when the agreement was reached without litigation having commenced between the parties.
  1. In terms of an agreement between the parties, Avnet supplied Lesira Manufacturing (Pty) Ltd (“Lesira”) for goods to the value of R23.59 million. On 12 October 2018, the parties entered into a settlement agreement recording Lesira’s indebtedness to Avnet and providing that the debt would be settled in a series of monthly installments from October 2018 to January 2020. The parties also agreed to have the settlement agreement made an order of court and Lesira and Edwin Sibiya undertook not to oppose that. Avnet this brought the present unopposed application to have the agreement made an order of court.
  Court decision  
  1. The primary function of the courts is to determine disputes between parties. The basis upon which a court makes a settlement agreement an order of court is therefore that there is a dispute between the parties which is already before the court and that, absent the settlement agreement, the court would have to adjudicate that dispute.
  1. Analysing divergent judicial pronouncements on the issue, the court concluded that it was precluded from making a settlement agreement an order of court, where that agreement was not preceded by litigation.
This case is a reported judgement. Our Team are here to advise on your Commercial Litigation requirements. Contact the CDV Commercial Litigation team
  1. We confirm that Caroline de Villiers Attorneys represented Smeg South Africa (Pty) Ltd (“Smeg”) in this case.
  1. This case is a reported judgement.
  1. Origo sought an order declaring Smeg’s purported cancellation invalid and that Smeg be ordered to comply with the agreement, in particular to prove Origo with stock as requested/ordered on 2 August 2017. Smeg counter-applied for interdictory relief, pending finalisation of the action, in effect to restraint Origo from disposing of or alienating any of the items lists in an annexure to the answering affidavit.
  1. The key question that arose in this case pertains to the validity and legal effect, in a contractual setting, of a tender to pay in lieu of actual payment.
  1. Pursuant to an agreement entered into between the parties on 8 July 2014, by a letter dated 14 August 2017, Smeg demanded payment from Origo International (Pty) Ltd (“Origo”), within 7 days, of the sum of R419 310.65 (the claim amount), in respect of goods sold by Origo on consignment, during December 2016, which in terms of the agreement, had become due and owing by 16 January 2017. The claim amount arose from four invoices, rendered by Smeg in December 2016, in respect of which two subsequent credits were passed. The demand further states that failing payment the agreement would be cancelled.
  1. On 18 August 2017, Origo prepared a detailed reconciliation of the account which showed that a lesser amount of R78 053.29 was due to Smeg which was forwarded to Smeg’s attorneys on 21 August 2017.
  1. Origo tendered the aforesaid amount to Smeg.
  1. Smeg subsequently cancelled the agreement on 22 August 2017, which was subsequently confirmed on 8 October 2017 and again on 9 October 2017.
Court decision  
  1. The relief sought by Origo was not granted.
  1. On the basis that Origo had undertaken to properly account to Smeg and to keep all fund properly determined to be owing to Smeg in regard to Smeg products sold ( and which items were in Origo’s possession) , in a suspense account, no interdictory relief was granted.
  1. It was held that the validity of Smeg’s cancellation of the agreement is wholly dependent upon proof of the amount claimed and that failing such proof, Smeg’s purported cancellation ought to be declared invalid in accordance with the relief sought by Origo in this application. A referral for trial or for the hearing of oral evidence generally would have followed but has become superfluous in view of the pending action and it will be for the parties which practically all information having been disclosed to either come to a sensible agreement concerning the quantification of the disputed amount or to effect such amendments to the pleadings as they may consider necessary, in order to give effect to this judgment.
Our Team are here to advise on your Commercial Litigation requirements. Contact the CDV Commercial Litigation team
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