South Africa: Legal Representatives Settling A Matter Without Mandate

Introduction

Are there ever circumstances where it would be considered permissible for a legal representative to settle a matter on their client's behalf without instruction to do so? And if so, when?

In the matter of Denby v Ekurhuleni Metropolitan Municipality 2021 (1) SA 190 (GJ) (hereinafter referred to as 'Denby'), Gilbert AJ of the Gauteng Local High Court considered several Supreme Court of Appeal (hereinafter the "SCA') decisions in formulating his judgment. It, therefore, provides an interesting highlight reel of the considerations of the Court when deciding on the circumstances in which a legal representative may settle a matter before the Court without a mandate to do so by their client.

Background

The matter, from a legal standpoint, contained no complex contradictions or issues. It is because the legal representatives had no significant disputes or issues to be determined that they were able to reach favourable terms for settlement.

The plaintiff was injured while riding his bike in the municipality against which the action was brought. In the early hours of the morning, the plaintiff had hit a pothole and suffered injuries severe enough to require that he be admitted to the hospital.

The plaintiff's matter was then referred to the Court wherein it was enrolled for trial and subsequently required that a pre-trial meeting take place between the legal representatives of the parties as per the uniform rules of the Court. This is done to narrow down the issues in dispute, amongst other things.

Although terms of the settlement were agreed, the defendant's attorneys noted that they could not obtain instruction from their client but had 'applied their mind to the facts, expert reports, case law and legal aspects of the case'¹.

Considerations by the Court

In a previous matter before the SCA, the superior Court stated that 'attorneys generally do not have implied authority to settle or compromise a claim without the consent of the client', but that '[h]owever, the instruction to an attorney to sue or defend a claim may include the implied authority to do so, provided the attorney acts in good faith'.²

The Court in the above-referenced matter further stated that the appointment of a legal representative would include instructions to defend a matter, draft any formal papers, and attend Rule 37 conferences. Part of attending such conferences would mean that a legal representative would be required to make certain admissions for purposes of narrowing down the issues between the parties. It would, therefore, naturally flow that it would not be 'untoward' for a legal representative to agree to the invariable outcome of the matter.³

The SCA then reasoned that 'it could hardly be asserted that the admissions fell within his usual authority, but the settlement, which amounts to a string of admissions, not.'⁴

Conclusion

The direction of the SCA guided the Court in Denby accordingly, wherein it reasoned that the purpose of Rule 37 conferences are to encourage settlements.⁵ At no point did the defendant expressly withhold authority from their legal representative to enter into a settlement agreement.

It ended its judgment by clarifying that to be a valid act on behalf of one's client, the 'legal representative must be acting bone fide in what they believe to be the interests of their client for the client to be bound by their actions', and in these circumstances, the defendant's attorneys were doing just that.

Footnotes

1. Para 10 of Denby.

2. At para 7 of MEC for Economic Affairs, Environment and Tourism, Eastern Cape v Kruizenga and another 2010 (4) SA 122 (SCA).

3. At para 18.

4. At para 19.

5. At para 21.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.