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[2016] ZAGPJHC 143
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ACL/Intara Joint Venture v Baran Engineerging (17127/2015) [2016] ZAGPJHC 143 (12 February 2016)
IN THE HIGH COURT
OF SOUTH AFRICA
(GAUTENG
DIVISION, JOHANNESBURG)
CASE
NO
: 17127/2015
DATE
:
12 FEBRUARY 2016
In
the matter between
ACL/INTARA
JOINT
VENTURE
....................................................................................
APPLICANT
And
BARAN
ENGINEERGING
...........................................................................................
RESPONDENT
JUDGMENT
RUBENS
A.J.
:
On
11 May 2015 ACL Group Limited (“ACL”) and Intara CC
(“Intara”) (collectively the applicants) launched
an
application in which the following relief was claimed:
“
1.1:
That the arbitration award of the Third Respondent (received on 2
April 2015) be remitted back to him in terms of
Section 32(2)
of the
Arbitration Act 42 of 1965
in order to reconsider/making (sic) a
fresh award, regarding the following:
1.1.1:
The final amount;
1.1.2:
Reasons for his finding in the computation of the abovementioned
amount.
1.2:
That the Respondents, jointly and severally be ordered and directed
to pay the costs of this application.”
[2]
I shall refer to this application as the main application, to the
first and second respondents as Baran and to the third respondent
as
the Arbitrator.
[3]
Baran delivered a notice of counter application on 18 June 2015 which
was accompanied by an affidavit which served both as the
answering
affidavit in the main application and as a founding affidavit in the
counter application.
[4]
The following relief is sought in the counter application:
“
1:
That the arbitration award of the third respondent, annexure ‘B’
to the applicant’s founding affidavit,
be made an Order of
Court.
2:
That the applicant be ordered to pay the costs of this application.”
[5]
The main application is not opposed by the arbitrator.
[6]
Neither a replying affidavit in the main application nor an answering
affidavit in the counter application was delivered by
the applicant.
[7]
On 13 October 2015, Barren caused the matter to be set down for
hearing on 8 February 2016. To that end, Baran’s
counsel
filed Heads of Argument on 7 September 2015 and a Practice Note on 26
November 2015. No Heads of Argument or Practice
Note was filed
on behalf of the applicant.
[8]
When the matter was called before me on Monday 8 February 2016, Mr
Van Der Vyver who appeared for the applicant, handed up an
application for a postponement of the matter
sine
die
, in which the applicant tendered to
pay the costs occasioned by the postponement. The application
for a postponement was
served on Baran’s attorneys on Sunday, 7
February 2016. On 8 February 2016 Barren delivered its
Answering Affidavit
in the postponement application.
[9]
The grounds upon which a postponement of the matter was sought are
set out in an affidavit deposed to by one Mr Mellet, who
also deposed
to the founding affidavit in the main application. These are
the following:
[9.1]
The applicant was represented by an attorney, Mr Du Plooy, from the
inception of the dispute until the termination of
the latter’s
mandate by the applicant on 29 January 2016. Mr Du Plooy cause
a notice of his withdrawal as the applicant’s
attorney of
record to be served on the same day.
[9.2]
Mr Du Plooy was, according to Mr Mellet “...always intricately
involved in the matter to the degree, where he enjoyed
autonomy on
dealing with the matter on a general mandate...”
[9.3]
Mr Mellett also pauses to mention that “...as a result of the
Applicant’s operations, relating to a vast number
of projects,
including a number of projects in different African countries, I, as
the only representative of the Applicant having
intricate knowledge
of the matter, entrusted the matter entirely to Du Plooy. My
trust in him was also solidified by my past
long standing
relationship with him.”
[9.4]
Mr Mellett then goes on to allege that:
“
3.11:
After the delivery of the application for remittal, Du Plooy did
nothing to bring the matter to finality, despite him
(sic) having
been mandated to pursue the matter.
3.12:
I only discovered that the matter had not been attended to at all by
Du Plooy on 26 January 2016, when I met with Du
Plooy to discuss the
matter, as well as other matters that he is currently assisting the
applicant with.
3.13:
During this discussion, he intimated to me that an affidavit is
required to be filed in respect of the counter-application.
3.14:
He intimated to me that the Applicant has not yet delivered its
replying affidavit to the remittal application, as well
as an
answering affidavit to the counter application. He made mention
that an application for condonation might be required.
3.15:
During this meeting, I was supplied with certain documentation
including a notice of set down...
3.16:
Upon perusal of the Notice of set down, I cannot glean which
application has been set down. I similarly have not seen
any
heads of argument by the First and Second Respondents or a practice
note indicating their intention for the motion week of
8 February
2016. I can only gather the (sic) application and counter
application was (sic) enrolled as a single application.
3.17:
As a result of Du Plooy’s failure to execute his mandate
herein, an impasse occurred between the Applicant and Du Plooy,
insofar Du Plooy (sic) did not follow and prosecute the application.
Herein he failed to alert me that an affidavit, as well
as heads of
argument must be drafted. The fact that I only became aware on
26 January 2016 that the matter was not pursued,
was the last straw
and I consequently terminated his mandate shortly thereafter as I had
lost all trust in him.”
[9.5]
Mr Mellett also explains that he:
“
4.7:
...must pause and highlight that I, as a result of other business
ventures, of the Applicant I maintain an extremely
busy schedule.
Herein the Applicant has mining operations in Maun Botswana,
telephonic services in Ivory Coast, operations
in Namibia that relate
to civil works and 4 sites in South Africa that require my constant
intervention. Copies of two pages
of my passport is (sic)
attached...
4.8:
I was also hospitalised for a period of 2 months last year since
September 2015 in Bloemfontein as a result of a viral
infection.
I attach hereto proof of the October 2015 hospital account...
4.9:
I raised the aspects in paragraph (sic) 4.7 and 4.8 to highlight to
the above Honourable Court that the past couple of
months, I was in
any event unable to constructively pursue this matter, even if I was
fully briefed by Du Plooy of the status of
the matter. I
however confirm that the Applicant is committed to the process and
has an intense desire to prosecute the application
for remittal
herein.”
(The
October 2015 hospital account annexed to Mr Mellet’s affidavit
in the postponement application indicates that Mr Mellet
was
hospitalised for the month in question. No document is attached
which evidences Mr Mellet’s hospitalisation in
September 2015
as alleged by him and no explanation is provided for the omission.)
[9.6]
Barnard Incorporated was appointed as the applicant’s attorney
on 29 January 2016. Mr Viljoen of the latter firm
addressed a
letter to Baran’s attorneys on the same day which records,
inter alia, the following:
“
3:
We have now received some of the pleadings and is (sic) still in the
process of obtaining instructions.
4:
We are therefore instructed to kindly request that the matter be
postponed on the 8
th
of February 2016 in order to gather
information and consult with counsel on the way forward.
5:
As this coming Monday will be 7 days prior to the set down date, we
trust that reservation fees will be avoided.”
[9.7]
Baran’s attorneys rejected the request for postponement in a
letter addressed to Barnard Incorporated on 1 February
2016 which
records, inter alia, the following:
“
3.3:
On 30 June 2015 (the date on which your client ought to have
delivered a replying affidavit), the writer enquired from
Mr du Plooy
as to whether your client intends to deliver a replying affidavit.
Mr du Plooy advised that it was indeed your
client’s intention
to do so by 7 July 2015.
3.4:
Three further extensions of time were afforded to your client to
deliver its replying affidavit, the last date being
no later than 22
July 2015. In this regard, we attach a copy of the letter
addressed to Mr du Plooy on 21 July 2015 for ease
of reference.
3.5:
Your client failed to deliver a replying affidavit (or an affidavit
opposing the counter application) by 22 July 2015
or to date.
3.6:
A number of subsequent telephone calls were made to Mr du Plooy, in
particularly (sic), on 1 September 2015, 2 September
2015, 21
September 2015 and 14 October 2015 to enquire as to whether your
client has abandoned its application. No written
response was
ever received.
3.7:
Given your client’s apparent attempt to delay payment of our
clients’ claim, our clients delivered their heads
of argument
and updated index and proceeded to enrol the matter (albeit
incorrectly) for hearing on 19 October 2015.
3.8:
On 14 October 2015, Mr du Plooy informed us that the correct date for
the hearing of this matter, i.e. Monday,
8 February 2016.
A copy of Mr du Plooy’s letter is also attached for ease of
reference.
4:
In view of the above, it is apparent that your client
has had ample opportunity to consider its position, take legal
advice
and to consult with counsel in regard to this matter.
Consequently, your client’s request for a postponement
is
denied.
5:
We record that the disputes which had arisen between our respective
clients were referred to arbitration by agreement on 25 April
2015.
We also record that the purpose of consensual arbitration proceedings
is to reach finality in regard to dispute.
6:
We are instructed to advise that our clients (sic) view your client’s
request for a postponement as mala fide and
yet another attempt to
delay payment of our client’s claim. Please be advised
that any application which your client
intends to bring in this
regard shall be opposed. Moreover, your client will be required
to apply to Court for condonation,
should it wish to deliver a
replying affidavit before the hearing of this matter.
[10]
Although Mr Mellett does not say so specifically, it is implicit in
his allegation that Mr Du Plooy failed to alert him to
the fact
that: “...an affidavit, as well as heads must be
drafted...” that his version is that Mr Du Plooy did
not advise
him of the numerous extensions of time afforded to the applicant as
recorded in Baran’s Attorneys’ letter
of 1 February 2016.
[11]
What is significant is that despite Mr Mellet’s accusations of
gross neglect on the part of Mr Du Plooy he nowhere alleges
that a
meeting which he had with Mr Du Plooy on 26 January 2016:
“...to discuss the matter, as well as other matters,
that he
[was]...assisting the applicant with...” was to bring Mr Du
Plooy to book. In fact, Mr Mellet offers no explanation
whatever for his own inaction and failure from 11 May 2015 until 26
January 2016, to make any enquiry concerning the matter, more
particularly, in the light of Mr Du Plooy’s alleged failure to
report to him for a period in excess of some eight months
since the
launch of the main application. Mr Mellet’s allegedly
busy schedule and hospitalisation (the duration of
which he falsely
exaggerated) are not a satisfactory excuse when all it would have
taken for him to address an enquiry to Mr Du
Plooy was an email or a
telephone call.
[12]
I also find it strange that Mr Mellet refers to the fact that, as he
alleges, he only found out on 26 January 2016 that Mr
Du Plooy had
not pursued the matter as "…the last straw…”
On Mr Mellet's version, this was the only
conversation that he had
with Mr Du Plooy since the launch of the main application. For
that to have been "…the
last straw…"
something must have occurred in the intervening period but Mr Mellet
is careful to avoid explaining what
this was.
[13]
Copies of various letters which passed between Baran's attorneys and
Mr Du Plooy are annexed to Baran's answering affidavit
in the
postponement application. These reveal that on 7 July 2015
Mr Du Plooy intimated that what could only have
been a
reference to the applicant's
replying
affidavit in the main application and answering affidavit in the
counter application would be finalised by the applicant's
senior and
junior counsel on 8 July 2015. On 17 July 2015 Mr Du Plooy
advised that the applicant's senior counsel
was only available to
settle the applicant's replying affidavit in the main application
from 20 July 2015, that Mr Mellet's
brother had passed away
on 11 July 2015 as a result of which Mr Mellet had not been
available in the week of 17 July 2015
for consultation and
final instructions and that it was his (Mr Du Plooy's)
opinion that "…the affidavit…"
would be filed
in the course of the following week and that condonation would be
sought. On 14 October 2015 Mr
Du Plooy confirmed that
the matter would be heard on 8 February 2016.
[14]
If Mr Mellet's allegations regarding Mr Du Plooy's unexplained
and
inexcusable inaction are true, it is surprising that he did not
request
Mr Du Plooy
to provide a confirmatory affidavit. I must assume that he did
not do so because nothing is said by
him in this regard.
[15]
In addition to the fact that Mr Mellet, in the founding affidavit in
the postponement application, makes no mention of the
applicant's
prospects of success in the main application, on the applicant's own
version, even if the main application were to
succeed, the applicant
would be liable for payment of an amount of R775 564.46 plus
interest. The arbitration award
was issued on 30 March 2015.
No payment has been forthcoming nor is any explanation provided by Mr
Mellet for that failure.
[16]
In the context of private arbitration the principle of finality is an
important factor.
[1]
The
application for a postponement has all the hallmarks of an attempt to
delay the counter application in order to delay
payment of what is
due by the applicant to Baran for as long as possible.
[17]
Mr Theron SC who, together with Mr Booysen, appeared for Baron, urged
me, with considerable force, not to grant the postponement.
However,
and in order to give the applicant a final opportunity to present its
case, I ordered the applicant to file its answering
affidavit and
replying affidavit by no later than 11 February 2016 and I stood the
matter down for argument on 12 February 2016.
[18]
On 12 February 2016 Mr Theron SC advised me that the applicant's
latest attorneys had filed a notice of withdrawal as attorneys
of
record and had addressed a letter to Baron's Attorneys on
10 February 2016, the relevant portion of which reads:
"We
have been unable to obtain instructions from our client's
representative as a result of his unavailability."
[19]
Turning now to the merits of the main application, the applicant
seeks a remittal of the award to the arbitrator in terms of
section
32(2)
of the Arbitration Act 42 of 1965 as amended ("the Act")
which provides that:
"The
court may on the application of any party to the reference after due
notice to the other party or parties made within
six weeks after the
publication of the award to the parties, on good cause shown, remit
any matter which was referred to arbitration,
to the arbitration
tribunal for reconsideration and for making of a further award or a
fresh award or for such other purpose the
court may direct."
[20]
The phrase "…on good cause shown…" which is
of wide import requires the court to consider each case
on its merits
in order to achieve a just and equitable result in the particular
circumstances.
[2]
As I
have already mentioned, in private arbitrations the principle of
finality will count heavily but other relevant factors
such as the
relative prejudice that will be caused if the matter is not remitted
must also be considered.
[3]
[21]
The pertinent facts appear from the award. These are the following:
[21.1]
In about February 2012 Baran was appointed as subcontractor to ZTE
Corporation of South Africa (Pty) Ltd for the construction,
supply,
delivery, installation and testing of ducting and fibre optic cable
along a predesignated route.
[21.2]
Baran in turn appointed the applicant as its sub-subcontractor to
execute and complete the civil works.
[21.3]
The applicant sued Baron for various relief arising out of the
execution and termination of the contract between them and
Baran
instituted a counter claim against the applicant.
[21.4]
The applicant commenced with the execution of the works. Two of
its invoices remained unpaid, namely one dated 19 November 2012
for R1 169 556.38 and the other dated 22 January 2013
for R786 249.45.
[21.5]
The applicant insisted on payment of the invoiced amounts on a basis
which was at variance with the terms of the contract,
and on
4 December 2012, suspended the execution of the works.
[21.6]
By letter dated 30 January 2013 Baran alleged that the
applicant had repudiated the contract and terminated it.
Its
acceptance of the applicant's repudiation was justified.
[21.7]
Although the amounts of the applicant's last two invoices to which I
have referred may not have been due at the time, it
is common cause
that the work reflected therein was all eventually approved and that
the work had been completed before the contract
was terminated.
[21.8]
The applicant effectively claimed a quantum
meruit
in respect of the work done by it, an
equitable remedy available to a contracting party which has not
performed fully in terms of
the contract.
[21.9]
The applicant failed to prove the quantum of its incomplete
performance.
[21.10]
Baran employed another contractor to complete the work which had not
been completed by the applicant. Its entitlement
to do so was
established by the contract which provided that if the applicant
failed to complete the works by a specified date,
Baran would be
entitled to complete the works itself or by third party contractors
and that the applicant would be liable for all
costs incurred in this
regard. This accordingly amounted to a claim for specific
performance rather than damages.
[21.11]
The cost of completion amounted to R2 771 370.32 being the
amount which Baran was therefore entitled to be paid.
[22]
The conclusion arrived at by the arbitrator is articulated in the
award as follows:
"The
question now needs to be asked whether the amounts of [the
applicant's] invoices dated 19 November 2012 and
22 January 2013, or any other amounts such as retention,
must be deducted from this amount.
The
calculation of the amount to which Baran is entitled shows that it
assumes that the applicant's last two invoices and other
amounts such
as retention had not been paid.
If
those [the applicant's] invoices, or any other unpaid amounts, are
brought into account, they would be added to the amount due
to Baran
only to be deducted again.
The
amount due to Baran is accordingly net of any amounts due to [the
applicant], and [the applicant] is not entitled to any other
deduction.
I
mention in passing that this would also have applied to any quantum
meruit
proved by [the applicant]."
[23]
The grounds on which the remittal of the award to the arbitrator
is sought are set out in the applicant's founding affidavit
in the
main application as follows:
"8.1
I submit that the findings of the [arbitrator], as set out in
paragraph (sic) 33 and 46 of his award be referred
back to him for
reconsideration and for making a further and/or fresh award.
8.2
As shown ... above, the [arbitrator] found at paragraph 33 of his
award that the amount of the last two invoices
of the applicant,
being the one dated 19 November 2012 in the amount of
R1 169 556.39 and the other dated 22 January 2013
in the amount of R786 249.45 is due and payable to the
applicant.
8.3
The applicant claimed payment of the two invoices and interest
thereon as well as a retention amount pertaining
to these invoices
and other invoices previously paid to Baran ... as set out above.
8.4
I submit that the arbitrator omitted to give judgment in favour of
the two invoices in line with his proportionate-decision
in
applicant's favour. His omission to deal with this finding and
or payment of the amounts should be remitted for consideration.
8.5
As far as the arbitrator's reasoning as set out in paragraph 46 of
the award is concerned, I submit that it
does not make sense that the
above mentioned two invoices, including the retention amount,
pertaining thereto, should be added
to the amount due to Baran.
Baran submitted as exhibit "K1-K7" the breakdown and
calculation of their quantum.
Exhibit "K1-K7" is
attached hereto as annexure "K". The [arbitrator]
however found in paragraph 45 of
the award that the amount of
R2 771 370.32 (the counterclaim) is due to Baran. I
submit that that amount, as well
as the retention amount should be
deducted from the amount of the counterclaim, if the two invoices (as
mentioned above) is payable
(and judgment has been granted for that
amount).
8.6
I therefore submit that the arbitrator made an error in computation
of the amount and that the matter be remitted
to him for
reconsideration."
[24]
In my view, the arbitrator's conclusion is correct. The
applicant failed to prove the quantum of its incomplete performance
and the arbitrator was unable to award it any amount in that regard.
The applicant's contention that the arbitrator should
have deducted
the aggregate of the amounts reflected in its two invoices from the
proved cost of completing the works awarded to
Baran is unsound.
The contract was terminated as a result of the applicant's unlawful
repudiation. The applicant's
attempt to seek to enforce payment
of the invoiced amounts is a claim for specific performance of a
contract no longer in existence.
Whether or not the
arbitrator's remark that if the invoiced amounts or other unpaid
amounts are brought to account, they would
be added to the amount due
to Baran only to be deducted again and that the same reasoning would
apply to any quantum
meruit
proved by the applicant are
correct (a matter about which I express no opinion) does not, in my
view, undermine the correctness
of the arbitrator's conclusion.
[25]
Even if I am wrong and the reasoning of the arbitrator and his
conclusion are not correct, that does not, in my view, take
the
matter any further.
[26]
An arbitrator is entitled to make a mistake. As stated by
Harms JA (as he then was) in
Telcordia
Technologies Inc v Telkom SA Limited
[4]
:
"[85]
The fact that the arbitrator may have either misinterpreted the
agreement, failed to apply South African law correctly,
or had regard
to inadmissible evidence does not mean that he misconceived the
nature of the enquiry or his duty in connection therewith.
It
only means that he erred in the performance in his duties. An
arbitrator "has the right to be wrong" on the
merits of the
case and it is a perversion of language and logic to label mistakes
of this kind as a misconception of the nature
of the enquiry –
they may be a misconception of the meaning of law or the
admissibility of evidence, but that is a far cry
from saying that
they constitute a misconception of the nature of the enquiry.
[86]
The power given to the arbitrator was to interpret the agreement,
rightly or wrongly, to determine the applicable
law, rightly or
wrongly, and to determine what evidence was admissible rightly or
wrongly…"
[27]
In
Kolber
and Another v Sourcecom Solutions (Pty) Ltd and Others; Sourcecom
Technology Solutions (Pty) Limited v Kolber and Another
[5]
the
position was described as follows:
"[58]
It is true, as pointed out by Mr Duminy, that the expression "good
cause" suggests a wide discretion.
The expression must,
however, be interpreted within the context of the other provisions of
the Act, such as the provisions of section
28."
This
section reads as follows:
"[28]
Award to be binding.
Unless
the arbitration agreement provides otherwise, an award shall, subject
to the provisions of this Act, be final and not subject
to appeal and
each party to the reference shall abide by and comply with the award
in accordance with its terms."
"[59]
It is clear that the agreement
in casu
does not "provide
otherwise". On the contrary, clause 17 – which is
the arbitration clause – states
that:
"17.6
Each of the parties hereby irrevocably agrees that the decision of
the arbitrator (…) in the arbitration proceedings:
17.6.1
shall be final and binding on each of them; and
17.6.2
will be carried into effect; and
17.6.3
can be made an order of any court to whose jurisdiction the parties
are subject."
"[60]
The only inference to be drawn from all this is therefore that the
Legislature and both the parties in this matter all
subscribed to the
philosophy which transpires from the following dictum by Gardiner J
in
Clark v African Guarantee and Indemnity Co Ltd
1915 (CPD)
68 at 77:
"The
Court will always be most reluctant to interfere with the award of an
arbitrator. The parties have chosen to go
to arbitration
instead of resorting to the Courts of the land, they have specially
selected the personnel of the tribunal, and
they have agreed that the
award of that tribunal shall be final and binding. As Halsbury
LC said in
Holmes Oil Co v Pumpherston Oil Co Court of Sess
R18
at 53:
‘
One
of the advantages that people are supposed to get by reference to
arbitration is the finality of the proceedings when the arbitrator
has once stated his determination. They sacrifice something for
that advantage – They sacrifice the power of appeal.
If,
in their judgment, the particular judge whom they have selected has
gone wrong in point of law or in point of fact, they have
no longer
the same wide power to appeal which an ordinary citizen prosecuting
his remedy in the courts of law possess, but they
sacrifice that
advantage in order to obtain a final decision between the parties.
It is well-settled law, therefore, that
when they have agreed to
refer their difficulties to arbitration as they have here, you cannot
set aside the award simply because
you think it is wrong.""
[28]
In addition section 32(2) does not contemplate a remittal for
explanation and elucidation,
[6]
which is in effect what is sought in paragraph 1.1.2 of the notice of
motion in the main application. In the circumstances
I make an
order in terms of the draft, which I mark as X in terms of which:
[a]
the main application is dismissed with costs and the award of the
arbitrator, annexure “B” to the founding affidavit
in the
main application is made an order of court.
[b]
the applicant is to pay the costs of the counter application.
[c]
the costs in the main application and in the counter application are
to include the costs consequent upon the employment of
two counsel.
A
P RUBENS
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
COUNSEL
FOR APPLICANT:
NO
APPEARANCE FOR THE APPLICANT
INSTRUCTED
BY:
NO
APPEARNCE FOR THE APPLICANT
COUNSEL
FOR RESPONDENT:
E
THERON SC
INSTRUCTED
BY:
HOGAN
LOVELLS (SOUTH AFRICA) INC.
DATE
OF HEARING: 12/02/2016
DATE
OF JUDGMENT: 19/02/2016
[1]
Leadtrain
Assessments (Pty) Ltd v Leadtrain (Pty) Ltd
2013
(5) SA 84 (SCA) 88A
[2]
SA
Forestry Co Ltd v York Timbers Ltd
2003
(1) SA 331
(SCA) at 338I-J;
Leadtrain
Assessments (Pty) Ltd v Leadtrain (Pty) Ltd
supra
at paragraph 14.
[3]
SA
Forestry Co Ltd v York Timbers supra at 339 B-C
[4]
[2006] ZASCA 112
;
2007
(3) SA 266
(SCA)
[5]
2001
(2) SA 1097
(C)
[6]
Silpert
v Seymour
1932 TPD 329