KET Civils CC v The Member of the Executive Committee: Police, Roads & Transport, Free State and Others

KET Civils CC was appointed by the Free State Department of Police, Roads & Transport to a panel of contractors for road upgrading and maintenance for 36 months. In November 2020, the Department informed KET that the Auditor General had discovered the panel was irregularly constituted, did not comply with section 217 of the Constitution, and would need to be disbanded. KET consented to termination and suspended work, but the Department later alleged this was a breach of contract. KET brought an application for declaratory relief. The Department filed a counter-application for self-review seeking to declare the panel unlawful. On 29 April 2021, both applications were struck from the roll for lack of urgency as far as KET was concerned, but the Department settled with the other contractors (third to fifth respondents) and this settlement was made an order of court without KET's consent. Two different merit orders were issued on the same date (29 April 2021), causing confusion. The second merits order purported to bind KET despite it not being party to the settlement. KET's application for leave to appeal was dismissed as out of time. KET then applied for reconsideration under section 17(2)(f) of the Superior Courts Act.

• Whether exceptional circumstances existed to warrant reconsideration of the dismissal of leave to appeal under section 17(2)(f) of the Superior Courts Act 10 of 2013
• Whether it was competent for the high court to make a settlement agreement an order of court without hearing an interested party affected by that order
• Whether an order in rem can be granted affecting a party's rights without that party's consent
• The proper approach courts should adopt when asked to make settlement agreements orders of court
• Whether the high court erred in issuing two different merit orders on the same date affecting parties differently

1. Leave to appeal granted. 2. The high court's order dismissing the application for leave to appeal was set aside and substituted with: (a) Leave to appeal granted; (b) Paragraphs 1 to 5 of the second merits order set aside and replaced with orders: (i) reviewing and setting aside the decision to appoint the panel; (ii) declaring the conduct inconsistent with section 217 of the Constitution and invalid; (iii) suspending the declaration of invalidity until contracts are completed; (iv) preserving KET's rights to pursue payment claims and dispute resolution mechanisms. 3. The orders made effective from 29 April 2021. 4. First respondent (MEC) to pay costs of appeal including costs of third to fifth respondents until 23 June 2023. 5. Each party to pay own costs after 23 June 2023.

A court may not competently make a settlement agreement an order of court when that order affects the rights of a party who was not party to the settlement and did not consent to it. When presented with a settlement agreement sought to be made an order of court, a court must satisfy itself that all parties purported to have concluded the agreement had in fact agreed to settle, and must carefully scrutinize the settlement on the merits before granting such an order. No order in rem should be granted without hearing all the parties involved whose rights may be affected. Once a settlement agreement is made an order of court, it changes the status of parties' rights and obligations and brings finality to the lis; therefore, courts must exercise particular care before sanctioning such orders. Exceptional circumstances warranting reconsideration under section 17(2)(f) of the Superior Courts Act exist where fundamental procedural irregularities have occurred that, had they been known to the judges considering a petition, would likely have yielded a different outcome.

The court noted that the confusion in this matter was contributed to by all parties to some extent, including KET, which informed its decision regarding costs incurred after the Department filed its notice to abide. The court observed that the record filed by KET was haphazard, though this was remedied by a supplementary record filed by the contractors. The court also indicated that the general rule that the successful party is entitled to costs should yield to equity in circumstances where confusion has been contributed to by multiple parties. The judgment implicitly suggests that better case management and clearer communication between the court and parties could have avoided much of the confusion that characterized these proceedings.

This case is significant in South African civil procedure for clarifying the requirements when courts are asked to make settlement agreements orders of court, particularly where those orders affect non-consenting parties. It reinforces the Constitutional Court's guidance in ACSA v Big Five Duty Free and Buffalo City v Asla Construction that courts must carefully scrutinize settlement agreements before sanctioning them as orders of court. The judgment emphasizes that orders in rem cannot be granted affecting a party's rights without hearing that party and obtaining their consent. It also demonstrates the application of section 17(2)(f) of the Superior Courts Act and confirms that exceptional circumstances exist where fundamental procedural irregularities have occurred that would likely result in grave injustice if not corrected. The case is important for administrative law principles in the context of public procurement, confirming the court's role in reviewing irregular tender processes while balancing practical considerations through remedies like suspended declarations of invalidity.