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[2010] ZAGPJHC 73
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Bain Vaal (Pty) Limited v Duprojekte (Pty) Limited and Another In re: Bain Vaal (Pty) Ltd v Duprojekte (Pty) Ltd (2009/19132) [2010] ZAGPJHC 73 (9 September 2010)
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
Not Reportable
CASE NO: 2009/19132
DATE: 09/09/2010
In the matter between:
BAIN VAAL (PTY) LIMITED
Applicant
and
DUPROJEKTE (PTY) LIMITED
First Respondent
HARDING, R LEE
Second Respondent
In re:
BAIN VAAL (PTY) LTD
Claimant
and
DUPROJEKTE (PTY) LTD
Defendant
J U D G M E N T
LAMONT, J
:
[1] This is an application to
review a decision of an arbitrator, the second respondent. The
applicant and first respondent (to
whom I shall refer as the
respondent) concluded a building contract. That contract provided
for payment for work as certificated
from time to time. The parties
suspended the operation of that particular term of the contract as
the applicant was unable to
meet its financial obligations to the
respondent from time to time. In the course of that suspension the
services of the certificating
person, the principal agent, were
dispensed with. At a point in time during March 2006 the respondent
wished to continue with the
terms of the contract as had originally
been agreed. The respondent wished no longer to be bound by the
contract suspending the
operation of those terms relating to the
principal agent certification and payment.
[2] In consequence the
respondent sent a letter to the applicant requiring the applicant to
remedy a breach of the contract. This
letter dated 23 March 2006 gave
the applicant notice in terms of sections 38.1.1, 38.1.4, 38.1.5,
38.1.6 and 38.1.7 of the contract
and advised that if the default was
not rectified it was the intention of the respondent to cancel the
contract in terms of section
38.0. The notice was delivered on 25
March 2006. The applicant’s response to the notice is to be
found in a letter dated
4 April 2006 written by the applicant’s
attorneys. In that letter the following is stated:
“
Ons verwys na bostaande en bevestig hiermee dat ons aanstel
met onmiddellike effek, Mnr Kevin Jackson van Vanderbijlpark …
as hoofagent of ‘principal agent’.
Let daarop dat u in terme van die bestaande kontrak, vyf (5) dae
het om enige redelike beswaar wat u mag hê teen die aanstelling
van bogemelde persoon as ‘principal agent’ aan ons oor te
dra.
”
That letter was preceded by a letter dated 3 April 2006 from the
applicant to the respondent in which the following is stated:
“
I confirm receipt of your letter dated 23 March 2006 and
wish to inform you that in terms of the JBCC contract clause 5.4 that
a
principal agent will be appointed shortly of which appointment you
will be notified in writing, please note that you have 5 working
days
within which to lodge a reasonable objection against such appointment
should you have any.
”
On 10 April 2006 the respondent wrote to the applicant as follows:
“
In both the abovementioned
[letters]
certain of the
issues upon which we rely for cancellation of the building agreement
inter alia, the forthcoming appointment of
the principal agent and
issue of a payment certificate. We would like to record the payment
of outstanding amounts due for building
work done up to date is not
explicitly mentioned. As you well know failure to effect payment of
the contract is a material breach
of the contract. We believe that a
proper evaluation of your client’s efforts to rectify his
default should be done:
…
We maintain therefore that your appointment of Kevin
Jackson cannot be construed as the employer’s compliance with
clause
5.3 and therefore the breach of contract still exists.
”
The respondent also contended in the letter that the appointment of
Mr Jackson had been made by the attorneys and not by the applicant
and that for that reason Mr Jackson was in the employment of the
attorneys and not of the applicant. The respondent stated accordingly
that although it objected to the appointment in terms of clause 5 it
believed that the person appointed did not have the relevant
building
experience. However, as no appointment had been appointed no
appointment had been made it could not object. This peculiar
paragraph reads as follows:
“
Although we hereby object to his appointment in terms of
clause 5 of the JBCC principal building agreement, as we do not
believe
that he has the proper experience of the JBCC principal
building agreement, which is a complex building contract and which
requires
strict compliance, we are of the opinion that there actually
is no agent as yet to which we could object. However, should you
disagree we herewith place on record our formal objections.
”
[3] The letter further states that no certificate had been issued
and no payment tendered and that accordingly the applicant’s
breach of contract remained. The respondent then cancelled the
contract.
[4] The applicant alleged in its statement of claim that:
Building work had been done.
On 10 April 2006 the respondent purported to cancel the contract;
that at the time the purported cancellation took place the
applicant was not in breach and that accordingly the cancellation
was in conflict with the terms of the building contract.
That the respondent’s purported cancellation instituted a
repudiation which was accepted on 20 April 2006.
[5] The respondent in its plea admitted the contract had been
concluded denied that the cancellation was a purported cancellation
and for that reason denied that the repudiation had come into being
for the applicant to accept. The respondent instituted a counterclaim
claiming
inter alia
that the absence of a principal agent
entered in the respondent writing the letter placing the applicant on
terms to remedy the
following breaches:
Failing to appoint a principal agent.
Failing to issue payment certificates.
Failing to issue statements.
Failing to certify amounts as required.
The respondent further alleged that the applicant did not remedy the
breaches and had only directed a letter to the respondent
informing
the respondent that the applicant did not regard itself in breach
and claiming that the respondent was in breach in
terms of clause
15.1.2 and 15.3 of the building contract which allegation it denied.
The respondent further alleged that it had
cancelled the contract on
10 April 2006 in terms of the letter of cancellation and was
entitled to payment of various amounts.
[6] When the matter came for hearing before the arbitrator the
parties agreed that certain issues would be separated and submitted
for determination as preliminary points. The preliminary issues
included:
Whether the respondent was in terms of the contract entitled to
issue the letter of demand dated 23 March 2006 as it did (the
first
preliminary issue).
If it was so entitled did the claimant timeously remedy the breach
which formed the subject of the demand (the second preliminary
issue).
Was the respondent entitled to cancel the contract as it purported
to do in terms of the letter dated 10 April 2006 (the third
preliminary issue).
If not was the respondent’s purported cancellation on 10 April
2006 a repudiation of the contract (the fourth preliminary
issue).
If so was the claimant entitled to accept the repudiation and cancel
the contract (the fifth preliminary issue).
[7] The arbitrator heard the matter and made rulings on the issues.
[8] There is no attack on the arbitrator’s finding that the
respondent was entitled to issue the letter of demand dated
23 March
2006.
[9] I have referred to this document as the notice letter.
[10] The arbitrator considered the second preliminary issue (whether
or not the claimant timeously remedied the breach forming
the
subject-matter of the demand) and in the course of making that
determination made findings which are under attack.
[11] If the arbitrator’s award on this point could be set
aside then the entire award falls to be set aside. It is fundamental
to the claim that the applicant did not remedy the breaches in
respect of which complaint was made and notice given. If it did
not
remedy the breaches then the conduct of the respondent was lawful. If
it did remedy the breaches the conduct of the respondent
was not
lawful.
[12] In the course of making a ruling on the second preliminary
issue the arbitrator considered the letter written by the applicant
on 4 April 2006 (in which Mr Jackson was appointed as “
principal
agent
”). The arbitrator considered clause 5.3 of the
contract (a standard JBCC contract). The clause reads as follows:
“
5.3 Should the principal agent or any agent be unable to
act or cease to be an agent, the employer shall notify the contractor
of the new principal agent or agent to be appointed. The employer
shall not appoint such principal or agent against whom the contractor
makes a reasonable objection in writing within five (5) working days
of receipt of such notice failing which the employer shall
forthwith
make such appointment and notify the contractor accordingly.
”
[13] The arbitrator construed the clause as meaning that if there
were no principal agent (as was the case) the applicant was entitled
to notify the respondent of a new principal agent to be appointed in
the future. The clause did not entitle the applicant according
to
the arbitrator, to appoint the principal agent against whom a
reasonable objection was made within 5 days of receipt of the
notice.
He construed the clause as meaning that the employer could not
appoint the agent until the time period for the contractor
to make
reasonable objection had lapsed.
[14] Having made that finding the arbitrator then found that the
purported appointment constituted non-compliance with the terms
of
the demand letter as the applicant had appointed Jackson with
immediate effect instead of tendering Jackson as a person who
could
be appointed if there was no objection. Accordingly the arbitrator
found that the applicant did not remedy its breach.
[15] It was submitted that the arbitrator in approaching the matter
in this way had acted capriciously in that this issue was
never
before him, was never raised during the hearing and formed no part of
the arbitration proceedings. The evidence before the
arbitrator was
that the applicant had “
inderdaad binne die tyd ‘n
persoon aangestel of ten minste genomineer
” (page 286). The
applicant relied upon this evidence as founding a claim that the
appointment had been lawfully made and
that the evidence accordingly
disclosed that the issue was not before the arbitrator.
[16] The submission was made that the approach of the arbitrator to
the preliminary issue was not covered by the delineation of
the
disputes between the parties and warranted the conclusion that the
applicant had been deprived of a fair hearing and also the
inference
that the arbitrator had misinterpreted the dispute he was to
determine. Reliance was placed upon the authority of
Lufuno
Mhaphuli and Associates (Pty) Ltd v Andres
2009 (4) SA 529
(CC)
at 593 (A) para [221];
Steeledale Cladding (Pty) Ltd v Parsons NO
and Another
2001 (2) SA 663
(D&CLD) .
[17] It was common cause between the parties that a
bona fide
mistake as to the relevant facts or applicable law did not found any
misconduct unless the mistake was so gross and manifest that
it could
not have been made without some degree of misconduct on partiality on
the part of the arbitrator. See
Johan Louw Konstruksie (Edms) Bpk
v Mitchell NO and Another
2002 (3) SA 171
(C) at 181 paras [42]
and [43]. See also
Telcordia Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA) at 302 paras [86] and following and para [122].
[18] It is not for me to decide that the arbitrator is wrong or
right. The question is whether or not the issue was raised and
was
one which the parties required him to determine. The issue is not a
legal issue raised by the pleadings. The issue is a factual
issue.
The question is whether the legal issue raised in the pleadings
encompasses the factual issue or not. Pleadings are designed
to
determine legal and not factual issues.
[19] It is apparent from the way the applicant pleaded its case that
it is dependent upon the allegation that it had remedied
the breach
in respect of which complaint was made. The submission was made that
the factual issue underpinning that allegation
was to be found by
looking at the letters which had been written. In the letter which
had been written by the respondent subsequent
to the alleged remedy
by the applicant the respondent raises on this point the right of the
attorney to appoint the principal agent.
The letter does not raise
the question of whether or not the fact that the appointment had been
made with immediate effect constituted
an improper remedy of the
breach.
[20] The applicant assumed that that factual issue was the issue with
which it was to deal. The applicant did not consider the
issue
considered by the arbitrator. This failure of the applicant to
consider the issue raised by the arbitrator in my view does
not
necessarily mean that the issue was not properly raised and in need
of a decision. The pleadings do not define the factual
issue. The
pleadings indicate that the applicant raised an issue which it was
not obliged to raise (that it had remedied a breach).
All the
applicant needed to raise was that the respondent had evidenced a
fixed and settled intention not to be bound by the
contract by
issuing the notice of cancellation. The respondent would then have
been obliged to have pleaded that it was entitled
to issue the notice
of cancellation as it had placed the applicant on terms and as the
applicant had not remedied the breach. This
in the ordinary course of
pleading would have led to the applicant asking the respondent to
identify the respects in which it alleged
the breach had not been
remedied. The respondent would have been obliged to furnish the
respects which presumably would have included
the matters raised by
the arbitrator.
[21] It is in consequence of the manner in which the pleadings are
drawn and the applicant’s assumption that it had remedied
the
breach and that the respondent’s complaint was limited to the
complaint raised in its letter of objection and cancellation
that led
to the state of affairs.
[22] The parties simply failed in the pleadings to identify the
respects in which the applicant had or had not remedied the breach.
This does not mean however that the factual issue was not an issue to
be dealt with or which the respondent was precluded from
raising.
[23] In my view in these circumstances the arbitrator was entitled
to approach the matter as if the issue was one to be decided
before
him. Insofar as the evidence is concerned the evidence concerning
the appointment was never led in the context of dealing
with the
formulation of the problem as formulated by the arbitrator namely an
entitlement of the applicant to appoint immediately
versus an
entitlement to only appoint once a condition had been met (the lapse
of the time period and non-objection by the respondent).
[24] In these circumstances the arbitrator was entitled to give
consideration to the issues.
[25] It is common cause that whether the arbitrator was right or
wrong is a matter of no moment in the application. If the arbitration
was entitled to consider the issue then the review application must
fail.
[26] I find that the arbitrator was so entitled and accordingly that
the review application fails. I would accordingly dismiss
the
application with costs.
____________________________
C G LAMONT
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
Counsel for the Applicant : Adv. J.G. Wasserman SC
Attorneys for the Applicant : Wandrag & Marias Inc
Counsel for First Respondent : Adv. P. Ellis SC
Adv. J. Vlok
Attorneys for First Respondent : Booyse Attorneys
Date of hearing : 1 September 2010
Date of Judgment : 9 September 2010