Multiple pension funds (the appellants) suffered losses totalling approximately R946 million from wrongful removal of surplus assets through a scheme known as the Ghavalas Option, leading to curatorship or winding-up of the funds. The funds instituted delictual claims against Alexander Forbes Financial Services (Pty) Ltd as one of several wrongdoers. Alexander Forbes gave notice to various other alleged joint wrongdoers in terms of s 2(2)(b) of the Apportionment of Damages Act 34 of 1956. None of the notified parties intervened. The funds settled with Alexander Forbes for R325 million (less than the full R936 million claimed) without admission of liability. The settlement agreement provided that Alexander Forbes would pay R325 million and cede to the funds its rights to claim contributions from all third parties to whom notice had been given under s 2(2)(b) of the Act. Clause 6 of the settlement agreement expressly stated the payment "does not reflect the full loss sustained by the Funds" and "serves to discharge only that portion of the loss for which the Funds regard the company liable." Clause 7 described the payment as operating "in full and final settlement of the company's share of the amounts claimed in the action." The funds then sued the other alleged joint wrongdoers based on the ceded right to claim contributions under s 2(12) of the Act. The respondents excepted, arguing that because the settlement was not "in full settlement of the plaintiff's claim" as required by s 2(12), no right of contribution arose and therefore no such right could be ceded.
The appeal was dismissed with costs, including costs of two counsel. The exception was upheld. In SGHC case number 16215/2011, Nedbank Limited was ordered to pay the costs, including costs of two counsel, of Mitchell Cotts Pension Fund (in liquidation) and Lucas South Africa Pension Fund (in liquidation) in respect of Nedbank's withdrawn cross-appeal.
For the purposes of s 2(12) of the Apportionment of Damages Act 34 of 1956, a 'full settlement of the plaintiff's claim' means a complete settlement that extinguishes the plaintiff's claim entirely against the settling joint wrongdoer, not merely a settlement of that joint wrongdoer's proportionate share of the total liability. Where a settlement agreement expressly provides that it settles only one joint wrongdoer's 'share' of the amounts claimed and does not reflect the full loss sustained by the plaintiff, the jurisdictional requirement for a right of recourse under s 2(12) is not satisfied. Consequently, the settling joint wrongdoer does not acquire a statutory right to claim contributions from other joint wrongdoers and has no such right to cede to the plaintiff. The scheme of the Apportionment of Damages Act contemplates adjustment of liability among joint wrongdoers only after the total claim has been settled or determined by judgment, not after partial settlement of one wrongdoer's share.
Ponnan JA in the minority observed that the Apportionment of Damages Act should be interpreted to facilitate recovery by victims and adjustment of liability among wrongdoers, and that nothing prevents a victim from taking cession of a wrongdoer's right of recourse. He suggested that if the majority view prevails, it would mean victims cannot settle with a prudent or financially responsible wrongdoer for an amount representing that wrongdoer's proportionate liability and then proceed against other wrongdoers through ceded contribution rights - a result that may discourage settlements. The minority also noted that s 2(6)(c) protects alleged joint wrongdoers by allowing them to raise any defense the settling wrongdoer could have raised against the plaintiff, including that they were not wrongdoers at all. Plasket AJA in the majority noted that while some respondents argued 'full settlement' meant settlement for the full amount claimed (not a compromised amount), this interpretation was unsound as it would discourage settlements. The majority accepted that s 2(12), like s 2(6), contemplates settlements for less than the amount claimed. The majority also observed that from a practical perspective, very few settlements in delictual claims involve complete and unconditional surrender by a defendant. The judgments collectively note the complexity of the Act's provisions, with the minority particularly emphasizing that 'many a problem lies hidden in the folds of its tortuous syntax' and that Chapter 2 is 'complex and textually involved.'
This judgment is significant for establishing the interpretation of 'full settlement' in s 2(12) of the Apportionment of Damages Act 34 of 1956. The majority decision clarifies that for a joint wrongdoer to acquire a statutory right to claim contributions from other joint wrongdoers under s 2(12), the settlement must extinguish the plaintiff's entire claim, not merely settle one wrongdoer's proportionate share of liability. This has important implications for settlement strategies in cases involving multiple joint wrongdoers. The case demonstrates that victims cannot settle with one wrongdoer for only that wrongdoer's share, obtain cession of contribution rights under s 2(12), and then pursue other joint wrongdoers through those ceded rights. Such a strategy is incompatible with the scheme of the Act, which contemplates adjustment of total liability among joint wrongdoers after full settlement or judgment. The case also provides guidance on when courts will interpret contracts on exception, particularly where the entire contract is before the court and parties are ad idem on its meaning. The split decision (3-2) reflects the complexity of the Act's provisions and the difficulty in balancing the competing interests of victims seeking full recovery and joint wrongdoers seeking to avoid multiple liability exposures.