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The consequences of your attorney binding you without your mandate

What are the implications of your legal representatives binding you to agreements you did not consent to? It is a common cause in the legal fraternity that most clients do not have the requisite legal knowledge to represent themselves in a legal setting or court of law. So, when we employ the services of legal experts, we expect that they will act in our best interests. However, the question arises, what recourse do clients have in the event that their chosen legal representative goes rogue?

In Minister of Police v Van der Watt and Another, the Supreme Court of Appeal (“SCA”) had to determine whether the Gauteng High Court had erred in dismissing the rescission application instituted by the Minister of Police.

The issue before the SCA related to an attorney’s authority to conclude settlement agreements on behalf of the minister. What led to the settlement agreements was a marital dispute in Mr Van der Watt’s house where the police were called by Mrs Van der Watt. While the police officers were assisting Mrs Van der Watt to gather her clothing so she could leave, Mr Van der Watt proceeded to assault the police officers. This resulted in Mr Van der Watt being handcuffed.

In the process of being escorted down the stairs, Mr Van der Watt wrestled with the police officers, which resulted in him falling down the stairs and sustaining injuries. Charges were laid against Mr Van der Watt for assault and resisting arrest. The charges against him were later dropped due to the low prospects of conviction.

When Mr Van der Watt was released, he instituted an action for damages against the minister for unlawful arrest, detention, and assault. The minister was represented by the state attorneys’ office. On the day of the trial, the attorney from the state attorneys’ office dealing with the matter telephoned Colonel Mahube, who was responsible for overseeing litigation in the South African Police Service, for a mandate to settle the issue of liability. Colonel Mahube refused to give the mandate and instructed the attorney to continue to defend the action.

Despite Colonel Mahube’s failure to give the mandate to settle liability, the attorney from the state attorney’s office and the counsel he briefed proceeded to conclude a settlement agreement, in terms of which the minister would be liable for 50% of Mr Van der Watt’s proven damages. The settlement agreement was then made an order of the court on 25 October 2015.

The issue of the damages to be awarded to Mr Van der Watt was enrolled for trial before Justice Louw. This issue was settled and Justice Louw made the settlement agreement an order of the court. Prior to the damages being settled, Mr Van der Watt amended his particulars of the claim by increasing the amount that he was claiming.

On 10 May 2017, an application for rescission of the orders granted by the court was launched by the state attorney on behalf of the minister.

The minister argued that the two orders were erroneously sought and granted as a result of a reasonable error. The High Court dismissed the application for rescission with costs. The minister, after a failed application for leave to appeal before the High Court, was eventually granted special leave to appeal by the SCA.

The appeal was based on the minister’s contention that the attorney and the counsel he briefed lacked the authority to conclude the two settlement agreements that had been made orders of the court. Consequently, the minister contended that the settlement agreements were void and unenforceable and could be rescinded in terms of rule 42(1)(a) of the Uniform Rules because they were erroneously sought.

Rule 42(1) in the relevant part reads as follows:

“(1) The court may, in addition to any other powers it may have, mero motu or upon the application of any party affected, rescind or vary:

(a) An order or judgment erroneously sought or erroneously granted in the absence of any party affected thereby”

The SCA, after considering the rule, above concluded that the protection provided by rule 42(1) was not available to the minister because he was legally represented in the matter. Therefore it could not be said that the orders were granted in his absence. The question that was left for the SCA to determine was whether the attorney and counsel had the authority to conclude the settlement agreements. The SCA remarked that it was common cause that the attorney’s and his counsel’s actions were contrary to the instructions of the minister.

Considering the concept of apparent authority which refers to an instance where the principal creates an impression that its agent has authority to act on its behalf, the SCA found that the minister created the impression that the attorney and counsel had authority to act on behalf of the minister. In particular, the SCA pointed out that at no point did the minister allege that either Mr Van der Watt or his counsel was aware that his attorney or counsel were acting without authority, nor did the minister allege that there was any improper conduct on the part of his attorney and counsel.

As a result, the SCA found that in the interest of justice, the minister should be held liable in terms of the settlement agreements. The SCA further remarked that once a settlement agreement was made an order of court, the matter became final and no dispute existed between the parties. Therefore, the SCA concluded that the High Court could not be faulted in dismissing the recission application.

The minister’s second argument was that the settlement agreements were concluded in the absence of authority and therefore the court orders subsequent to those settlement agreements were invalid and ought to be set aside. The SCA stated that the minister’s contention is ill-founded as the principal of reasonable mistake found application only where “the legal consequences of valid settlement agreements are to be avoided but not where a party, such as the Minister, contends that, in the absence of actual authority, there were no settlement agreements”.

The SCA also rejected the minister’s argument that the two court orders were against the rule of legality due to the fact that Mr Van der Watt amended his cause of action. In this regard, the SCA pointed out that the case relied on by the minister in support of his argument was different in that, a new cause of action was introduced in that case whilst in the present matter, Mr Van der Watt merely increased the amount claimed for damages. The SCA dismissed the minister’s appeal with costs.

The SCA noted with concern that the attorney and counsel acted against the minister’s instructions and therefore directed that its judgment be brought to the attention of the Minister of Justice and Correctional Services and the Legal Practice Council for a thorough investigation into their actions.

Clients need to be able to trust that their legal representatives will not bind them to agreements they do not wish to be bound by. It is always advisable for a representative from the client to be present when a matter is due to be heard to ensure that the chosen representatives act in accordance with the mandate received from the client.

 

Aslam Moosajee

Executive | Dispute Resolution

amoosajee@ENSafrica.com

 

Inathi Mpapa

Candidate Legal Practitioner | Dispute Resolution

impapa@ENSafrica.com