Hlobo v Multilateral Motor Vehicle Accidents Fund

The appellant’s minor daughter was seriously injured in a motor vehicle collision in 1994. A claim for compensation was instituted against the Multilateral Motor Vehicle Accidents Fund. Liability was not in dispute; only the quantum. Shortly before trial in August 1997, the parties’ attorneys settled the matter. The settlement included payment of a capitalised cash amount of R2 148 807.60 for future medical expenses (after contingencies) and the furnishing of an undertaking under Article 43 for certain other future expenses. The Fund later applied to set aside the settlement, contending that its claims handler, Mr Short, had mistakenly authorised the settlement and intended that future medical expenses be covered only by an Article 43 undertaking, not by a cash payment.

The appeal was upheld. The order setting aside the settlement was replaced with an order dismissing the Fund’s application with costs, including the costs of two counsel. The respondent was also ordered to pay the costs of the appeal.

The case reaffirms the binding nature of settlement agreements (compromises) in South African law and clarifies that litigants are bound by the acts of their attorneys acting within ostensible authority. It underscores the narrow scope for rescission based on unilateral mistake and confirms that statutory bodies such as accident funds cannot avoid settlements simply because they later regret the financial consequences.