Lomon Marè and Others v Trudie Marè

The first appellant (Lomon Marè) and the respondent (Trudie Marè) were married out of community of property with accrual for 20 years (1997-2017). They had two minor children. During divorce proceedings, a settlement agreement was concluded on 18 January 2017, which became an order of court on 28 February 2017. The settlement agreement required the appellants to pay R5.5 million to the respondent in full and final settlement of all claims. Clause 2 provided for a specific method of payment: the respondent would select game (sable antelope and buffalo) to the value of R5.5 million from a farm at Gravalotte, and Mr Killie Williams (a third party) would pay the amount within a reasonable period after the game was removed. However, Mr Williams and the appellants could not agree on prices for the game (Williams considered the prices unrealistic and not market-related), and he refused to purchase the game. The respondent received no payment and, having lost her maintenance income after the divorce, found herself in financial difficulty. She applied to the High Court to enforce payment of the R5.5 million.

• Whether clause 2 of the settlement agreement created an unconditional obligation to pay R5.5 million, or whether payment was conditional upon the specific method outlined in sub-clauses 2.1 and 2.2 being fulfilled
• Whether the failure of the envisaged source and method of payment (through sale of game to Mr Williams) affected the existence of the obligation to pay
• Whether the provision for payment from proceeds of sale of game was a suspensive condition for the coming into existence of the obligation to pay
• What the effect was of the impossibility of the agreed source, manner and time of payment
• Whether the contract should be interpreted equitably where ambiguity exists

The appeal was dismissed with costs, including costs of two counsel. The High Court order requiring the appellants to jointly pay R5.5 million to the respondent was upheld.

Where a settlement agreement provides for payment of a specified amount "in full and final settlement" but describes a particular source and method of payment, the provision regarding source and method is not a suspensive condition for the coming into existence of the obligation unless clear language indicates such intention. Such provisions merely relate to the manner, form and time of payment. When interpreting contractual provisions, regard must be had to the context, including the purpose of the agreement and the parties' underlying legal rights (here, family law rights to financial awards following dissolution of marriage). Where the envisaged source or method of payment fails or becomes impossible, the obligation to pay remains in force and payment becomes due within a reasonable time after the failure becomes evident. The principle of equitable construction applies where contractual language is ambiguous - courts will not adopt an interpretation that gives one party an unfair or unreasonable advantage over the other, particularly where it would result in a manifestly inequitable outcome.

The court noted (based on information from the bar) that the joinder of the second and third appellants during trial was based on the respondent's assertion that assets nominally held by them should be regarded as assets of the first appellant for purposes of claims regarding financial consequences of dissolution of marriage. The court also observed that the respondent could hardly be blamed for not pleading a tacit term, given the clarity of the common law position. The court did not need to determine when the reasonable period for payment commenced, as this was not implicated by the limited issue on appeal. The court confirmed that the issues of impossibility of performance and resultant voidness of the settlement agreement fell away as a result of the limitation of the leave to appeal granted by the Supreme Court of Appeal.

This case is significant for South African contract law principles regarding the interpretation of payment obligations and the distinction between substantive conditions and procedural provisions regarding manner and form of payment. It reinforces the principle established in Van den Berg v Tenner that provisions specifying a source or method of payment do not necessarily create suspensive conditions - they may merely postpone the time of payment. The case demonstrates the application of contextual interpretation principles and the equitable construction rule where contractual provisions are ambiguous. It is particularly important in the matrimonial law context, confirming that courts will not readily interpret settlement agreements in a manner that would defeat substantive family law rights to financial awards following dissolution of marriage. The judgment illustrates that where a party undertakes an unconditional obligation but specifies a particular method of performance that later fails, the obligation remains enforceable and performance becomes due within a reasonable time by alternative means.