Big Five Duty Free (Pty) Limited v Airports Company South Africa Limited

On 26 August 2009, ACSA awarded a tender to Big Five Duty Free (Pty) Ltd to operate duty-free shops in three international airports for ten years. Flemingo, an unsuccessful bidder, applied for an urgent interdict and review of the award. Phatudi J upheld the review and set aside the award on grounds that it was unlawful as ACSA had taken into account an irrelevant consideration and the process was not transparent or fair. Big Five appealed to the full court. ACSA abided the decision and did not participate. Before judgment was handed down, Big Five and Flemingo settled their dispute. Flemingo abandoned the Phatudi J judgment and Big Five withdrew the review application. At the parties' request, the full court made their settlement agreement an order of court on 20 June 2014. Subsequently, ACSA took the view that it was not bound by the settlement agreement as it was not a signatory, and that Phatudi J's order declaring the award unlawful still stood. ACSA decided to restart the tender process. Big Five sought an order from the Gauteng Division compelling ACSA to honor the 2009 award. Hughes J refused the application, holding that the Phatudi J order was a 'public remedy' that could not be set aside by private parties.

• Whether a settlement agreement between private parties can effectively set aside a public law judgment declaring administrative action unlawful
• Whether ACSA, which abided the outcome of the appeal, was bound by the settlement agreement made an order of the full court
• Whether a judgment in a review application is a judgment in rem that cannot be abandoned by agreement between parties
• The proper interpretation of the settlement agreement and whether it had the effect of setting aside the Phatudi J judgment
• Whether a court making a settlement agreement an order of court exercises a judicial function or merely records the agreement between parties

The appeal was upheld with costs, including costs of two counsel. The order of the Gauteng Division was set aside and replaced with: (a) a declaration that ACSA is bound by its decision of 26 August 2009 to award Big Five the right to operate duty-free stores at the three international airports; (b) an order directing ACSA to sign and implement the written lease agreement with Big Five within 30 days; (c) ACSA to pay Big Five's costs, including costs of two counsel.

When parties to litigation settle their dispute and the settlement agreement is made an order of court, all parties to the litigation are bound by that order, including parties who chose to abide the outcome of the appeal. A party which abides the decision of an appeal court is bound by the outcome, including a settlement agreement made an order of court. A settlement agreement must be interpreted in its factual context, and where the clear purpose and effect of the agreement is to abandon a prior court order and withdraw review proceedings 'as if never instituted', the necessary implication is that the parties intended the prior order not to stand. The principle that judgments in rem cannot be abandoned by private parties does not apply where all parties to the litigation are bound by a settlement agreement made an order of court disposing of the entire dispute.

The court observed that it was not necessary to determine whether Hughes J was entitled to decide that the full court had erred in making the settlement agreement an order of court, but indicated that in its view it was not open to her to do so as she was bound by the doctrine of res judicata and her finding regarding the doctrine of precedent was misplaced. The court also noted the strong public policy interest in enforcing settlement agreements, particularly where parties have seriously and willingly embraced undertakings to settle disputes in full and final settlement.

This case establishes important principles regarding the binding effect of settlement agreements made orders of court in public law disputes. It clarifies that parties to litigation who abide the outcome of an appeal are bound by settlement agreements made orders of court, even in matters involving review of administrative action. The judgment demonstrates that while courts do not exercise a full judicial function when making settlement agreements orders of court, such orders can effectively resolve disputes regarding the lawfulness of administrative action where all affected parties to the litigation consent or abide the outcome. The case also affirms the importance of contextual interpretation of settlement agreements and the strong public policy favoring enforcement of settlements that resolve existing disputes.