- within International Law, Environment and Antitrust/Competition Law topic(s)
In FirstRand Bank Limited ("FNB") v Lourina Wilson NO and Another, the South African Supreme Court of Appeal ("SCA") clarified the requirements for when a valid offer of compromise is made and accepted. Additionally, the SCA outlined when exceptional circumstances exist where a litigant seeks to supplement its founding papers.
Background
FNB concluded a written loan agreement with Mr Baseley ("the deceased") for ZAR 2.8 million on 16 March 2017, repayable over 180 months and secured by two mortgage bonds over his immovable property. He died on 30 October 2017 and Ms Wilson ("the executrix") was appointed as the executrix of his estate on 13 December 2017. FNB lodged a claim for ZAR 3,508,477.53 against the estate on 14 December 2017, which the executrix admitted. Thereafter, ZAR 1 336 044.35, originating from the attorneys acting in the sale of a property owned personally by the executrix, was paid into the deceased's mortgage loan account at FNB.
On 11 October 2021, the executrix notified FNB that this payment was made in error and demanded repayment. She followed up on 18 and 23 November 2021 and FNB replied on 23 November 2021, stating that it was investigating the matter. On 30 November 2021, the executrix stated that due to FNB's failure to refund the erroneous payment, she offered the erroneously paid amount as a "full and final payment" of the outstanding loan and considered the matter finalised. FNB expressly rejected any such settlement on the same day but retained and allocated the funds to reduce the estate's debt. FNB later claimed that during an 8 December 2021 telephone call, the executrix agreed that the funds could remain in the account. The executrix denied this.
On 19 January 2022, the executrix asked FNB to propose a reasonable settlement, noting she could not raise a bond for the full outstanding amount owing. FNB then issued a section 129 notice under the National Credit Act, 2005, reflecting a reduced indebtedness of ZAR 2 003 415.97.
Proceedings in the High Court
FNB instituted proceedings in the Western Cape High Court, Cape Town, for repayment of the reduced debt, interest and an order declaring the mortgaged immovable property specially executable in terms of section 30 of the Administration of Estates Act, 1965 ("the Act"). It also brought an interlocutory application to supplement its founding affidavit to show compliance with sections 29 and 30 of the Act, which deals with publication of a notice and expiry of the claims period, because its founding papers lacked proof of compliance with these provisions.
The court dismissed FNB's application with costs, finding that the debt was compromised on 30 November 2021. It held that the executrix's email that day was an offer of compromise and that FNB's retention and appropriation of the funds, despite its written rejection, objectively amounted to acceptance.
Given the finding of compromise, the court found it unnecessary to determine the issues about FNB's initial failure to plead and prove compliance with sections 29 and 30 and its interlocutory bid to supplement its papers.
In the SCA
The SCA held that a compromise is a contract requiring offer and acceptance, with the onus of proof resting on the party asserting the compromise, in this case the executrix. Although the 30 November 2021 email was an offer "in full and final" settlement FNB expressly and immediately rejected it on the same day. There was no compromise.
FNB's retention of the funds could not override its unequivocal rejection of the offer. The executrix's 19 January 2022 request for a "reasonable settlement" was inconsistent with a concluded "full and final" settlement, further undermining the executrix's defence that there was a compromise. FNB's later tender to refund the erroneous payment and its explanation about the 8 December call supported the conclusion that its retention of the funds did not signify acceptance of the offer of compromise.
On the procedural issues, the SCA accepted that applicants must ordinarily make their case in the founding affidavit and that compliance with sections 29 and 30 of the Administration of Estates Act is a necessary averment to be made in the founding papers, when seeking execution against estate property. FNB's interlocutory application properly attached the missing proof and made the required averments. In the circumstances, permitting supplementation was in the interests of justice. The evidence was formal and uncontested, the claim was secured and admitted and the estate's administration had already been delayed since 2017. Refusing supplementation would elevate form over substance, result in wasted costs and delay resolution, especially as FNB could simply re‑launch on corrected papers.
Conclusion
FNB's appeal was upheld. FNB was granted leave to supplement its founding affidavit and judgment was entered against the deceased estate for ZAR 2 003 415.97, plus interest at 10.25% per annum, calculated daily and compounded monthly from 5 April 2022 until final payment. The court declared the specified immovable property specially executable under section 30 of the Act. The executrix was ordered to pay the costs of the application in the High Court, including the costs associated with the interlocutory application, on an attorney‑client scale, as well as the costs of the appeal.
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