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[2018] ZAWCHC 35
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Calligeris N.O. and Another v Parker N.O. and Another (7937/2017) [2018] ZAWCHC 35 (22 March 2018)
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OFFICE
OF THE CHIEF JUSTICE
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH
COURT OF SOUTH AFRICA
[WESTERN
CAPE HIGH COURT, CAPE TOWN]
Case No.:
7937/2017
In the matter
between:
MR THEODORE
CALLIGERIS N.O.
First Applicant
MRS HELEN
CALLIGERIS N.O.
Second Applicant
(
Nomine
Officii
in their capacities as the Trustees
for the time
being of the HELLAS TRUST No 3514/2010)
and
MR ASHRAF
PARKER
N.O.
First
Respondent
(
Nomine
Officio
in his capacity as Arbitrator appointed
by the Registrar
of Deeds pursuant to the provisions of
Regulation 71
of
the
Sectional Titles Act 95 of 1986
)
TIDES UNIT D
(PTY)
LTD
Second Respondent
JUDGMENT
delivered
22 MARCH
2018
MEER J.
[1] The
Applicants apply for an arbitration award, delivered on 27 March
2017, by the First Respondent, as arbitrator in proceedings
between
the Applicant and the Second Respondent, to be set aside. They
do so in terms of Section 33 (1) of the Arbitration
Act 42 of 1965
(“the
Arbitration Act&rdquo
;), on the grounds of misconduct and
gross irregularity on the part of the arbitrator, and furthermore on
the grounds of inordinate
delay under
Section 23
(a) of the
Arbitration Act and
Management
Rule 71
of the
Sectional Titles Act 95
of 1986
. Alternatively they challenge the award under Section
34 of the Constitution of the Republic of South Africa 108 of 1996,
read with the provisions of the
Promotion of Administrative Justice
Act 3 of 2000
, on the basis that they did not receive a fair and
impartial hearing.
[2] The
Second Respondent opposes the application and in turn applies for the
award to be made an order of Court. The First
Respondent abides
the decision of the Court.
[3] The
arbitration award was granted by the First Respondent in a dispute
between the Second Respondent, as the Claimant in the
arbitration,
and the Applicants, who are the trustees of the Hellas Trust, as
Respondents therein. For ease of reference
I shall refer in
this judgment to the Applicants as “the Trustees”, the
First Respondent as “the Arbitrator”
and the Second
Respondent as “the Claimant”, as it was in the
arbitration.
Background
Facts
[4] During
2011 and 2012 various disputes arose between the Trustees, the
Claimant and the Body Corporate of a sectional title scheme
known as
‘The Tides’, situated at [...] T. Road, Camps Bay, Cape
Town. The sectional title scheme consists of
two units, Unit
No. […] and Unit No. […], owned by the Trustees and the
Claimant respectively. The Trustees’
property was
contiguous to, and situated immediately above, the Claimant’s
property.
[5] The
disputes which arose may be summarised as follows:
5.1
The Claimant alleged that it had suffered damage as a result of water
flowing from the Trustee’s
property into the Claimants
property, and claimed compensation for the damage.
5.2
The Trustees alleged that they had suffered damage as a result of
water ingress from the Claimant’s
property into their property
and claimed compensation for such damage.
5.3
The Body Corporate alleged that the Claimant was indebted to it for
certain arrear levies and sought
payment of such levies.
[6] The
Registrar of Deeds appointed the Arbitrator pursuant to Management
Rule 71
of the Sectional titles Act 95 of 1986. He is a duly
admitted and practising attorney. The disputes, by agreement,
were consolidated and heard together and determined in one
arbitration.
[7] The
Claimant led the evidence of six witnesses, whilst the Trustees
called sixteen witnesses in total. The matter was
argued on 7
April 2016, with both parties providing heads of argument. The
Arbitrator’s award was handed down on 27
March 2017, some
eleven and a half months later.
[8] The
award, as pointed out by the Trustees, is a word for word recitation
of the Claimant’s heads of argument, and contains
no
independent consideration or assessment of the Trustees’
arguments and defences which were presented to the Arbitrator
both in
writing and orally.
[9] A
cross-referencing exercise by Mr MacWilliam, for the Trustees,
between the arbitration award and the Claimant’s heads
of
argument that were submitted to the Arbitrator, does indeed indicate
that the award is by and large a reproduction of the Claimant’s
heads of argument. The cross-referencing shows that there is
nothing in the award which departs from the Claimant’s
heads of
argument, save for superficial changes, and, contends Mr MacWilliam,
“the very occasional, largely irrelevant typographical
modification designed to make the Award look like the work of the
arbitrator”. As was pointed out also by Mr MacWilliam,
there is not one reference in the award to anything that was argued,
and the award contains only one reference to the Trustees’
heads of argument, being an addition to footnote 20 of the award.
There is thus no mention in the award of any argument or
defence of the Trustees.
The
Stance of the Trustees
[10] The
Trustees contend that the award stands to be set aside in terms of
Section 33
(1) (a) of the
Arbitration Act, on
the grounds that the
Arbitrator misconducted himself in relation to his duties as
Arbitrator, and in terms of
Section 33
(1) (b) thereof, on the
grounds that, in rendering the award which he did, the Arbitrator
committed a gross irregularity in the
conduct of the arbitration
proceedings. The Arbitrator, they submit, has simply held out
the contents of the Claimant’s
heads of argument as being his
own by making superficial amendments thereto, and there was a
wholesale failure by the Arbitrator
to apply his own mind to the
matter, let alone to the Trustees’ arguments and defences.
[11] In
illustration of this, the Trustees point out that no mention is made
of one of their important defences, arising from the
fact that on the
Claimant’s own case, the leaks of which the Claimant
complained, came through the concrete deck which did
not form part of
the Trust’s section and for which it was not responsible.
The concrete deck, they point out, formed
part of the common
property. Whilst the surface of the concrete deck may have
formed part of an exclusive area which the
Trust was entitled to use,
and also formed part of the roof of the Claimant’s section, it
was common property. The
Sectional Title Act provides that it
is the obligation of the Body Corporate of the sectional title
scheme, against which the Claimant
has made no claim, to maintain or
repair that common property. It was not the obligation of the
Trust to do so. The
Arbitrator, contend the Trustees, simply
failed to address this or any other related issue. The
Arbitrator, so the argument
continues, abrogated his duty to
determine the matter fairly and the award must accordingly be
set-aside.
[12] The
Trustees further argue that the award stands to be set aside due to
the excessive delay in delivering the award. Management
Rule 71
(6), which they contend applied, prescribes in pre-emptory terms that
the Arbitrator “shall make his or her award
within 7 days from
the date of the completion of the arbitration”. If
Section 23
(a) of the
Arbitration Act were
found to be applicable,
the Arbitrator was obliged to render his award within 4 months of the
date on which he entered on the reference.
Good cause, they
argue, was not shown for the time period of 4 months to be. Contrary
to the aforementioned Rule and
Section, the arbitration, they point
out, was concluded on 7 April 2016 and the award was made almost a
year later on 27 March
2017.
The
Stance of the Arbitrator
[13] The
Arbitrator abides the decision of the Court. He has filed an
affidavit in which he attributes the delay for his award
to the sheer
volume of the evidence, the technical and complex nature thereof and
the piece-meal fashion in which it was led.
Given the
circumstances, he disagrees that the delay in delivering his award
can be regarded as inordinate or unreasonably long.
He states
that he formed the impression, from his interaction with the parties
in December 2016, that they understood the
reasons for the delay,
adding that they did not put him under pressure to deliver the award.
He denies that he failed to
properly apply his mind to the
matter, and in particular to the Trustees’ case.
[14] He says
that while it is indeed so that his award largely reflects the
Claimant’s arguments as presented in its heads
of argument,
this is due quite simply to the fact that the Claimant presented a
significantly more compelling case. He states
further that
there is nothing untoward in a presiding officer predominantly
relying on one party’s heads of argument in preference
to
another’s. This, he contends, is the very purpose of
heads of argument, which is to assist a presiding officer in
coming
to the correct decision.
The
Stance of the Claimant
[15] The
Claimant’s founding affidavit in this application supports the
reasons proffered by the Arbitrator for the delay
in granting the
award, and the Arbitrator’s denial that he failed to consider
the evidence and arguments presented by the
Trustees. The
Claimant contends that by their conduct, the Trustees consented to
the Arbitrator taking what time he needed
to consider the matter and
deliver his award, and had waived any right to complain about the
delay. It is only because the
award was not granted in their
favour that they now cynically complain about the delay.
[16] Mr
Newdigate, for the Claimant, characterised the Trustees’
contention that the Arbitrator substantially reproduced or
regurgitated the Claimant’s heads of argument, as a gross
exaggeration. He submitted that there was nothing untoward
in a
presiding officer relying on one party’s heads of argument in
preference to those of another, or in accepting the Claimant’s
submissions and adopting certain of the language used.
[17] Mr
Newdigate submitted that the Arbitrator did in fact take into
consideration the Trustees’ argument regarding the origin
of
the ingress of water. In this regard he referred to what is
stated at paragraphs 6, 7, 19, 19.4, 19.5, 22, 23, 25 and
31 of the
Arbitrator’s award.
Discussion
Should
the Award be set aside under
Section 33
of the
Arbitration Act?
[18
] The
answer to the above question requires me to consider whether the
conduct of the Arbitrator constituted misconduct and/or a
gross
irregularity under
Sections 33
(1) (a) and (b) of the
Arbitration Act
respectively
Section 33
(1) of the
Arbitration Act, provides
as follows:
“
33.
Setting aside of award.
-(1) Where –
(a)
any member of an arbitration tribunal has misconducted himself in
relation to his duties as arbitrator or umpire; or
(b)
an arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration proceedings or has exceeded its
powers; or
(c)
an award has been improperly obtained,
the
court may, on the application of any party to the reference after due
notice to the other party or parties, make an order setting
the award
aside.”
Section
33
(1) (a) misconduct
[19]
Precisely how the Arbitrator used the Claimant’s heads of
argument, and to what effect, is important in assessing if
there was
misconduct under
Section 33
(1) (a) of the
Arbitration Act.
[20
] It is
not a gross exaggeration to say that the Arbitrator substantially
reproduced the Claimant’s heads of argument, for
that is
precisely what he did. The fact is that he reproduced these
heads of argument
verbatim
in his award, and in so doing, did not even credit or acknowledge the
author of the heads. There was no evidence of the independent
exercise of the Arbitrator’s mind in the mere reproduction of
the heads.
[21] With
regard to the Arbitrator’s contention that the Claimant
presented the more compelling case, and that for this reason
the
award reflects the Claimant’s heads of argument solely, as is
aptly stated by the Trustees, the Arbitrator’s role
was not
simply to pick an argument and reproduce it, as he did. He had
to make a reasoned finding, which considered the submissions
and
evidence of each side, and explain his conclusions by engaging
therewith. The Arbitrator failed dismally in this task.
His
denial that he failed to apply his mind to the Trustees’
arguments and defences, is merely a bare denial that is
not at all
evidenced in the award.
[22] The
contents of the paragraphs referred to by Mr Newdigate as showing
that the Arbitrator considered the Trustees’ argument,
are no
more than a replication, word for word, of the contents of the
Claimant’s heads of argument. They do not show
that the
Arbitrator applied his mind to the Trustees’ argument regarding
the origin of the ingress of water or the Trustees’
liability
therefor.
[23] The
Constitutional Court, in
Stuttafords Stores (Pty) Ltd & others
v Salt of the Earth Creations (Pty) Ltd
[2010] JOL 25995
(CC),
had occasion to comment on a judgment, which, apart from 32 lines of
the judge’s original writing, replicated the Respondent’s
counsel’s heads of argument. There too, there was no
independent reference to the Applicant’s heads of argument,
except for references carried over from the Respondent’s heads
of argument. The Court, at paragraph 11, said:
“[11]
While some reliance on and invocation of counsel’s heads of
argument may not be improper, it
would have been better if the
judgment had been in the judge’s own words:
‘The
true test of a correct decision is when one is able to formulate
convincing reasons (and reasons which convince oneself)
justifying
it. And there is no better discipline for a judge than writing
(or giving orally) such reasons. It is only
when one does so
that it becomes clear whether all the necessary links in a chain of
reasoning are present; whether inferences
drawn . . . are properly
drawn; whether the relevant principles of law are what you thought
them to be; whether or not counsel’s
argument is as well
founded as it appeared to be at the hearing (or the converse); and so
on.
…
The
very act of having to summarize in one's own words what a witness has
said, or what is stated in an affidavit or what a document
says or
provides, is in itself a very good discipline and is conducive to a
better and more accurate understanding of the case.’
[12]
These remarks were made by a former Chief Justice, Corbett CJ, in an
address at the first orientation
course for new judges under the new
constitutional dispensation. We have deliberately refrained
from dealing with case law
on the issue whether the extensive use of
counsel’s heads could lead to a perception of bias, because it
is not a question
we need to decide here. Suffice to state,
however, that if these wise words are heeded by judges the necessity
of deciding
the issue in the future should not arise.”
(Footnotes omitted)
[24] The
question whether the extensive use of counsel’s heads of
argument could lead to a perception of, and was in fact
an act of
bias, however looms large in this case, given the perception of the
Trustees and their challenges to the conduct of the
Arbitrator in
terms of
Section 33
of the
Arbitration Act and
the right to a fair
hearing under Section 34 of the Constitution. It is moreover a
question that cannot but be answered with
a resounding yes, in the
light of the Arbitrator’s conduct in replicating the Claimant’s
heads of argument, and not
even mentioning those of the Trustees, in
his award. As is stated by Butler in LAWSA (3
rd
Edition, Volume 2) at paragraph141:
“An
arbitrator must dispense justice equally and impartially between the
parties, and failure to do so may result in the award
being set aside
on the basis of misconduct.”
I am of the
view that this is precisely so with regard to the award of the
Arbitrator. It did not illustrate an equal and
impartial
dispensing of justice by the Arbitrator. It was partial to the
Claimant and, in my view, showed “wrongful
or improper conduct”
on the part of the Arbitrator, a requirement for misconduct as stated
by Solomon JA, in the leading
case on review of arbitrations,
Dickenson & Brown v Fisher’s Executors
1915 AD 166
at 175-176:
“Now
I do not propose to attempt to give any definition of the word
“misconduct”, for it is a word which explains
itself.
And, if it is used, in its ordinary sense, I fail to see how
there can be any misconduct unless there has been some
wrongful or
improper conduct on the part of the person whose behaviour is in
question.”
The award
thus falls within the purview of Section 33 (1) (a) of the Act, on
the basis of misconduct on the part of the arbitrator.
It
stands to be set aside for this reason alone.
Section 33
(1) (b) gross irregularity
[25] In
Telcordia Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA) the Court had occasion, at paragraph 72, to consider the
concept of gross irregularity. It quoted from
Ellis v
Morgan; Ellis v Dessai
1909 TS 576
at 581, where Mason J
laid down the basic principle in the following terms:
“But
an irregularity in proceedings does not mean an incorrect judgment;
it refers not to the result, but to the methods of
the trial, such
as, for example, some high-handed or mistaken action which has
prevented the aggrieved party from having his case
fully and fairly
determined.”
At paragraph
73 of
Telcordia,
Harms JA (as he then was) went on to quote
from
Goldfield Investment and Another v City Council of
Johannesburg
1938 TPD 551
, at pages 560 – 561, as follows:
“The
law, as stated in
Ellis v Morgan supra
has been accepted in
subsequent cases, and the passage which has been quoted from that
case shows that it is not merely high-handed
or arbitrary conduct
which is described as a gross irregularity; behaviour which is
perfectly well-intentioned and
bona fide
, though mistaken, may
come under that description. The crucial question is whether it
prevented a fair trial of the issues.
If it did prevent a fair
trial of the issues then it will amount to a gross irregularity.
Many patent irregularities have
this effect. And if from the
magistrate’s reasons it appears that his mind was not in a
state to enable him to try
the case fairly this will amount to a
latent gross irregularity. If, on the other hand, he merely
comes to a wrong decision
owing to his having made a mistake on a
point of law in relation to the merits, this does not amount to gross
irregularity.
In matters relating to the merits the magistrate
may err by taking a wrong one of several possible views, or he may
err by mistaking
or misunderstanding the point in issue. In the
latter case it may be said that he is in a sense failing to address
his mind
to the true point to be decided and therefore failing to
afford the parties a fair trial. But that is not necessarily
the
case. Where the point relates only to the merits of the
case, it would be straining the language to describe it as a gross
irregularity or a denial of a fair trial. One would say that
the magistrate has decided the case fairly but has gone wrong
on the
law. But if the mistake leads to the Court’s not merely
missing or misunderstanding a point of law on the merits,
but to its
misconceiving the whole nature of the inquiry, or of its duties in
connection therewith, then it is in accordance with
the ordinary use
of language to say that the losing party has not had a fair trial.
I agree that in the present case the
facts fall within this latter
class of case, and that the magistrate, owing to the erroneous view
which he held as to his functions,
really never dealt with the matter
before him in the manner which was contemplated by the section.
That being so, there was
a gross irregularity, and the proceedings
should be set aside.”
[26] In
Total
Support Management (Pty) Ltd and another v Diversified Health Systems
(SA) (Pty) Ltd and another
[2002] ZASCA 14
;
2002 (4) SA 661
(SCA), at para 41,
Smalberger ADP had these apposite words to say about the conduct of
an arbitrator:
“[41]
When selecting an arbitrator the parties to the arbitration agree to
someone in whom, by dint of his
(or her) experience and ability, they
can repose the necessary confidence and trust to determine their
dispute. What they
seek is a judgment from the person chosen.
An arbitrator is not entitled to delegate this function. He
alone must perform
the duties he has undertaken and with which he has
been entrusted, unless the parties agree otherwise. Because of
the essentially
personal nature of his appointment he should be
circumspect about utilising the services of an assistant.
Making use of an
assistant is not
per se
objectionable.
Where the parties agree to an arbitrator doing so, care should be
taken to reach consensus on what precise
functions the assistant may
perform, to obviate any later dispute in this regard. Failing
agreement, an assistant should
not be allowed to perform tasks that
may encroach on what would be regarded as the normal functions of an
arbitrator. In
no circumstances may the assistant be allowed to
usurp the decision-making function of the arbitrator or act in a
manner subversive
of his independence. Ultimately the question
to be asked, and answered, is whether the arbitrator exercised his
own judgment
in deciding the issues. This will depend upon the
facts of each particular case.”
[27] I am
inclined to agree with Mr MacWilliam that in the present case the
crucial question posed in
Goldfield,
namely
whether the behaviour of the arbitrator prevented a fair trial, has
to be answered in the affirmative. I agree that
the manner in
which the arbitrator abrogated his duty to write his own award, and
his failure to address the Trustees’ arguments
and defences,
prevented a fair trial of the issues. In replicating the heads
of argument as his award, the Arbitrator did
not exercise his own
judgment in deciding the issues. The Arbitrator’s actions
clearly prevented the Trustees from
having its case fully and fairly
determined and thus falls under the purview of gross irregularity as
enunciated in
Goldfield
at paragraph 73
supra
.
His actions also permitted his decision-making function to be
usurped by the Claimant’s heads of argument in a manner
subversive of his independence, and prevented the exercise of his own
judgment in deciding the issues. This is the very conduct
to be
avoided by arbitrators, referred to in
Total
Support supra
. The award qualifies to
be set aside for gross irregularity in terms of Section 33 (1) (b)
also.
Section
34 of the Constitution
[28] The
Arbitrator’s conduct was also in violation of the right to a
fair public hearing before an impartial tribunal or
forum, enshrined
at Section 34 of the Bill of Rights. In
Lufuno
Mphaphuli & Associates (Pty) Ltd v Andrews and another
2009
(4) SA 529
(CC), at paragraph 176, Kroon AJ in considering the
fairness of an arbitration in the context of Section 34 of the Bill
of Rights,
endorsed what Schreiner J had to say in
Goldfield
supra
, namely that the crucial question was
whether the behaviour of the arbitrator prevented a fair trial. I
have already answered
that question in the affirmative.
[29] For all
of the above reasons I am of the view
that the
arbitration award stands to be set aside in terms of
Section 33
(1)
(a) and (b) of the
Arbitration Act and
in terms of Section 34 of the
Constitution
The
delay in delivering the award
[30] The
Trustees’ contention that the Arbitration was governed by
Management Rule 71 and that the time frame of 7 days as
prescribed in
Management Rule 71 (6) applied, was disputed by Mr Newdigate. He
submitted the Rule did not apply because the
Claimant and Trustee had
agreed to the Arbitrator’s appointment in respect of their
dispute after the Arbitrator’s
initial appointment under the
Management Rule. The factual background, however, shows that
the arbitration was governed by
the Management Rule. A Notice
in terms of Management Rule 71 (2) was sent by the Claimant to the
Trustees declaring a dispute.
The fact that the parties also
agreed to the Arbitrator who had initially been appointed by the
Registrar of Deeds pursuant
to Management Rule 71, does not detract
from his appointment under that Rule. The arbitration award
itself refers to it being
an award under Management Rule 71. I
agree with Mr MacWilliam that the effect of the proviso in
Section 40
of the
Arbitration Act was
that the time frame at Management
Rule 71
(6) was applicable and the award had to be made 7 days after the
conclusion of the Arbitration. Given that most of the award
would have emanated from the cutting and pasting of the Claimant’s
heads of argument this could easily have been achieved.
It was
not, and the award stands to be set aside for this reason also.
[31] I note,
however, that even if the time limit specified at
Section 23
(a) of
the
Arbitration Act had
applied, good cause for the delay, as is
provided for at
Section 38
of the
Arbitration Act, has
not been
shown. I am not satisfied that the reasons for the delay, as
provided by the Arbitrator, justified the delay of
almost a year from
the date when argument concluded on 7 April 2016 until the award was
granted on 27 March 2017.
[32] The
volume of the evidence and the technical and complex nature thereof,
alluded to by the Arbitrator, does not explain away
or justify the
long delay in delivering the award. Judicial notice can be
taken of the fact that judicial officers and arbitrators
with heavy
work-loads routinely deal with similar cases and volumes of evidence,
and frequently deliver reasoned judgments which
engage with the
arguments, within prescribed time periods. In any event, the
content of the award, in reproducing the Claimant’s
heads,
neither engages with nor assesses the volume of the evidence or the
technical and complex nature of the issues, the very
aspects relied
upon by the Arbitrator for the delay. Here too, given, as
aforementioned, that most of the award would have
emanated from the
cutting and pasting of the Claimant’s heads of argument, the
award could have been ready within a few days
of the completion of
the arbitration.
[33] Nor does
the piece-meal fashion in which the evidence was led explain the
excessive delay. This may, as contended by
the Trustees, well
explain the delay until the completion of the argument, but not the
delay in the award being produced.
Finally, the fact that the
parties may have conveyed the impression to the Arbitrator, in
December 2016, that they understood the
delay and accordingly did not
put him under pressure, does not in any way excuse his inordinate
delay.
[34] In view
of the above, I do not accept that the Arbitrator has displayed good
cause for the inordinate delay of eleven and a
half months in
producing the award, a delay which was in violation of both
Management
Rule 71
(6) and
Section 23
(a) of the
Arbitration Act.
[35
] For all
of the above reasons, the application must succeed with costs.
I grant the following order:
1.
The Arbitration Award is set aside.
2.
The application for the Arbitration Award to be
made an order of Court is refused.
3.
The Second Respondent shall bear the costs of the
application.
_____________________
Y
S MEER
Judge
of the High Court