Botha v Road Accident Fund

The appellant and his wife were injured in a motorcycle accident and instituted separate claims against the Road Accident Fund (RAF). On 3 March 2014, both cases came to trial. The RAF conceded liability in the appellant's claim. The parties settled the appellant's claim for general damages at R1 million and past hospital and medical expenses at R236,922.70 (despite the claim initially being for R150,000). The settlement was based on vouchers and documentation presented by the appellant's attorney. The RAF also undertook to pay future medical expenses under section 17(4)(a) of the Road Accident Fund Act 56 of 1996. The claim for loss of future earnings was postponed. This agreement was made an order of court by consent. After payment, the appellant's attorneys discovered that the actual past medical expenses totalled R784,278.78. Source documents for some expenses had mistakenly been placed in his wife's file and not presented during settlement negotiations. The appellant's attorney advised the RAF of this 'mutual error' and requested rescission of the court order to reflect the correct amount. The RAF refused, arguing the matter was res judicata.

• Whether a settlement agreement made an order of court could be rescinded under Uniform Rule 42(1)(c) on the basis of a common mistake
• Whether the mistake was a common mistake or a unilateral mistake
• Whether a party can rely on their own mistake to avoid a contract where the mistake was due to their own fault
• Whether the court has discretion to set aside a judgment recording a valid settlement agreement under Rule 42(1)

The appeal was dismissed with costs, including the costs of two counsel.

A settlement agreement made an order of court cannot be rescinded under Uniform Rule 42(1)(c) where the mistake relied upon is a unilateral mistake by one party (not a common mistake shared by both parties), particularly where that mistake was caused by the mistaken party's own fault or negligence. Under the reliance theory, where one party makes a material mistake but the other party reasonably relies on the impression that there was consensus, the contract remains valid and binding. A party cannot rely on their own mistake to avoid a contract where the mistake was due to their own carelessness, such as failing to conduct necessary investigations or properly organize relevant documentation before concluding the agreement. Where a court order records the terms of a valid settlement agreement, there is no judicial discretion to set aside that order under Rule 42(1), even if a mistake has occurred.

The court described the mistake as a 'retrospective mistake by means of fresh evidence', noting that the source documents relating to the unclaimed portion of expenses constituted evidence that came to light only after the court had considered the vouchers and given judgment. The court emphasized that attempting to characterize a unilateral mistake as a mutual mistaken assumption is merely an attempt to 'clothe a unilateral mistake in another garb' and cannot succeed. The judgment reinforced general principles regarding when parties can escape contracts due to fault in their own mistakes, citing Christie's extensive examples including: not carrying out reasonably necessary investigations, not reading the contract before signing, carelessly misreading terms, not having the contract explained in an understandable language, misinterpreting clear and unambiguous terms, and any circumstances where the mistake is due to carelessness or inattention.

This case is significant in South African contract law and civil procedure for clarifying the distinction between common mistakes and unilateral mistakes in the context of settlement agreements made orders of court. It reinforces the principle that parties cannot escape binding settlement agreements made orders of court based on their own unilateral mistakes, particularly where those mistakes are due to their own fault or carelessness. The judgment emphasizes the application of the reliance theory in South African contract law: where one party reasonably relies on representations made (even if mistaken), the contract remains binding. The case also clarifies the limited scope of Uniform Rule 42(1)(c) rescission applications where valid settlement agreements have been concluded, confirming there is no judicial discretion to set aside such orders even where a mistake has occurred. This promotes certainty in settlement agreements and discourages parties from attempting to resile from settlements based on subsequently discovered errors that were due to their own negligence.