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[2019] ZAGPJHC 20
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Genesis on Fairmount Joint Venture v KNS Construction (Pty) Ltd (15440/2018) [2019] ZAGPJHC 20 (1 February 2019)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 15440/2018
In
the matter between:
GENESIS
ON FAIRMOUNT JOINT
VENTURE APPLICANT
And
KNS
CONSTRUCTION (PTY) LTD (In
liquidation) RESPONDENT
JUDGMENT
TSOKA
J
[1]
This is an application in terms of s31 of the Arbitration Act 42 of
1965 (the Act) to make an arbitral award an order of court.
[2]
Briefly, the facts giving rise to this application are the following.
During November 2006, the applicant, Genesis on Fairmount
Joint
Venture, (Genesis) employed the respondents, KNS Construction (Pty)
Ltd (In liquidation) (KNS) to construct a building for
it. KNS
proceeded with its mandate which was, however, during September 2008
cancelled by Genesis on the basis of malperformance
by KNS. The
latter viewed Genesis’ cancellation of the contract as
repudiation of the contract. It accepted the said repudiation
and it
also cancelled the contract on the basis of repudiation. On the
version of each of the parties, it is evident that the contract
came
to an end.
[3]
Pursuant to the cancellation of the contract, the principal agent
appointed by the parties in terms of the contract prepared
a final
account for payment by KNS. The latter disputed the account and
Genesis’ allegations that the contract was indeed
cancelled
entitling Genesis to payment.
[4]
In terms of the contract the dispute between the parties was referred
to arbitration. On 26 October 2011 a pre-arbitration meeting
was held
between the parties. Retired Justice JH Conradie of the Supreme Court
of Appeal was appointed as the arbitrator. Certain
procedural issues
regarding the arbitration, which are not relevant in the present
matter, were agreed upon.
[5]
On 17 November 2014, Justice Conradie issued a Directive in terms of
which the issue to be determined was the correctness of
the final
account issued by the principal agent. It being agreed that Justice
Conradie was only to determine the issue of liability
while the issue
of quantification of the final account was to be held over for later
determination.
[6]
Justice Conradie became unavailable with the result that the matter
proceeded before PJ Pretorius SC. On 27 January 2016 Pretorius
SC
handed down his award. In terms of the award, KNS’ relief,
which was for a declarator, was rejected and Genesis’
cancellation of the contract upheld. Notwithstanding Genesis’
success in the arbitration, the arbitrator only awarded Genesis
50%
of the costs of the arbitration hearing.
[7] As at the
pre-arbitration meeting, the parties agreed on an appeal procedure.
KNS delivered a notice of appeal while Genesis
noted a cross-appeal
in particular with regard to the awarding of only 50% of the costs of
the arbitration hearing. In due course,
KNS withdrew its appeal.
Genesis did not withdraw its cross-appeal.
[8]
Later, KNS approached this court (Van Oosten J) to make the
arbitrator’s award an order of court. The approach to this
court was made notwithstanding Genesis’ pending cross-appeal.
KNS’ application was dismissed by Van Oosten J as the
cross-appeal was still pending and had not yet been disposed of.
[9]
On 10 March 2017, Genesis’ cross-appeal served before JF
Myburgh SC, PA Solomon SC and AE Franklin SC who upheld the
cross-appeal by inter-alia directing KNS to pay Genesis’ 100%
costs of the arbitration. The Appeal Tribunal ordered KNS to
pay the
costs of the appeal as well.
[10]
The award of the appeal tribunal is the subject matter of the present
application which Genesis seeks to make an order of court.
The
application is opposed by KNS who in the main contends that Genesis
lacks the legal capacity to make the appeal tribunal award
an order
an order of court. It being contended that as Genesis is a
partnership and the said partnership was dissolved, it has
no legal
capacity to enforce the award. Genesis on the other hand insists that
the partnership still exists and that it has the
legal capacity to
enforce the appeal tribunal’s award.
[11] Before dealing with
the issue of Genesis’ legal capacity, I must first deal with
KNS’s application for leave to
file a further supplementary
affidavit.
[12]
The supplementary affidavit, although served and filed, its admission
into record is strongly resisted by Genesis.
[13]
In the main, the purpose of the supplementary affidavit is directed
at challenging the authority of Genesis to make the appeal
tribunal’s
award an order of court.
[14]
The conduct of KNS is telling as to whether the supplementary
affidavit sought to be admitted, is bona fide or not.
[15] At no stage during
the arbitration, the appeal and when the matter served before Van
Oosten J, was Genesis’ lack of legal
capacity ever raised. The
issue was only raised for the first time late in December 2018.
Although KNS sought the admission of
the same supplementary affidavit
before Vally J in October 2018, the application was dismissed on 31
October 2018 by the learned
Judge. Before me KNS still seeks the same
order for admission of the supplementary affidavit. This is in spite
of Vally J’s
order and the remarks he made that the Master of
the High Court must investigate the conduct of the liquidator. The
learned Judge
was probably concerned about the conduct of the
liquidator representing KNS as to whether the said liquidator acts in
the interests
of the general body of creditors of KNS. I share the
same concern. It would be interesting to know whether the Master of
the High
Court followed up the concern raised and what the outcome
is.
[16]
Genesis insists that the partnership consisting of three parties
still exists and has not been dissolved. Although there is
no
objective and conclusive proof that the partnership has been
dissolved, KNS is adamant that the partnership has been dissolved.
In
spite of the fact that there is no discernable prejudice to be
suffered by the latter if the appeal tribunal award is made an
order
of court, KNS persists in its opposition to the application being
made an order of court. That the opposition is mala fide,
frivolous
and vexatious, is beyond question.
[17]
On 16 December 2018, pursuant to KNS’ notice in terms of Rule
14, Genesis filed a reply in terms of Rule 14(5). In terms
of that
reply, Genesis pointed out that the existing parties are Itumeleng
Trust; Vestacor (Pty) Ltd and Wild Break 1323 (Pty)
Ltd (formerly
Wild Break 1323 CC). Still KNS is of a different view. It persists
that the partnership is no more and that it lacks
the legal capacity
to approach this court in terms of s31 of the Act.
[18]
Alan Bernard Witt (Witt), the deponent to Genesis’ founding
affidavit, in support of this application signed on 17 April
2018,
clearly states that ‘I am duly authorized to depose to this
affidavit on behalf of the applicant.’ In spite of
Witt’s
authority to act on behalf of Genesis, again KNS insists that Genesis
has no legal capacity to seek an order making
the appeal tribunal
award an order of court.
[19]
During September 2016, Van Oosten J heard an application by KNS to
make Pretorius SC’s award an order of court. In that
hearing,
although the partnership had already been dissolved, according to
KNS, no word is said about the dissolution of the partnership.
In
fact KNS sought an application to make the award of Pretorius SC, an
order of court against the very dissolved partnership.
[20]
The conclusion reached is that KNS’ attempt to file the
supplementary affidavit is nothing but a ruse to disentitle Genesis
to what it is rightfully entitled. The application is frivolous and
mala fide. It serves no purpose other than to frustrate the
interest
of justice and to deny Genesis its entrenched right to access to
court. Accordingly the application to file the supplementary
affidavit is dismissed with costs. Genesis is in terms of the Act,
entitled to an order making the appeal tribunal award an order
of
court.
[21]
A lot has been said about Genesis’ lack of legal capacity in
excluding the admission of the supplementary affidavit.
Nothing
further need be said with regard to the contended lack of authority.
[22] In opposing Genesis’
application, KNS contends further that the former is not entitled to
an order for costs as clause
10 of Justice Conradie’s Directive
reads –
‘
10.
Until the conclusion of the arbitration, each party is to bear its
own costs and one half of the costs of the arbitrator.’
[23]
Clause 10 of the Directive must be read in context. It was issued
after the issue of liability was separated from the issue
of
quantification of the final account rendered by the principal agent.
[24]
The sensible and businesslike meaning to be attributed to the clause
is the following. Prior to the finalization of the issue
of liability
by the arbitrator, each party was to bear its own costs. The costs of
the arbitrator were however to be shared equally
between the parties.
To read the clause as KNS wishes this court to do, will not only be
unbusinesslike but will also bind the
arbitrator before whom the
issue of liability would serve. That this could not have been the
intention of the arbitrator, is clear
and obvious. In any event
Pretorius SC, and KNS itself understood the Directive as understood
by Genesis. That at the conclusion
of the determination of liability,
the issue of costs would follow the result.
[25]
In any event, if KNS understood the clause differently why did it
prepare a bill of costs which was taxed and allowed in the
amount of
R299 888.19? The drafting and taxation of KNS’ bill of costs
reveals that KNS understood the clause clearly. It
seems to me that
KNS would stop at nothing to prevent Genesis from getting the remedy
it is factually and legally entitled to.
[26] Having regard to the
aforesaid, the following order is granted –
26.1 The arbitration
award handed down on 10 March 2017 by the arbitration tribunal
consisting of JF Myburgh SC, PA Solomon SC and
AE Franklin SC is made
an order of court;
26.2 In terms of s35(4)
of the Act, the costs referred to in the arbitration tribunal’s
award are to taxed by the Taxing Master
of the High Court of South
Africa, Gauteng Local Division, Johannesburg on the High Court scale
on a party and party scale.
26.3 KNS is ordered to
pay the costs of this application.
___________________
M TSOKA
JUDGE OF THE HIGH
COURT
GAUTNEG LOCAL
DIVISION, JOHANNESBURG
Appearances
For
the applicant: Adv A O Cook, SC
Instructed
by: Norton Rose Fulbright
For
the respondent: Adv M v R Potgieter, SC
Instructed
by: Senekal Simmonds Inc
Heard:
30 January 2019
Judgment
handed down: 1 February 2019