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[2014] ZASCA 126
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Wright v Wright and Another (494/13) [2014] ZASCA 126; 2015 (1) SA 262 (SCA) (22 September 2014)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 494/13
Reportable
In
the matter between
ALEC
PETER
WRIGHT
..................................................................................................
APPELLANT
and
WILLIAM
ROBERT
WRIGHT
.......................................................................
FIRST
RESPONDENT
WRIGHT
METALS
CC
...............................................................................
SECOND
RESPONDENT
Neutral
citation:
Wright v Wright
(494/13)
[2014] ZASCA 126
(22 September 2014)
Coram
:
Maya, Shongwe, Majiedt and Saldulker JJA, Gorven AJA
Heard:
29 AUGUST 2014
Delivered:
22 SEPTEMBER 2014
Summary:
Challenge to factual findings of a referee appointed in terms of
section 19bis of the Supreme Court Act 59 of 1959 –
party
challenging referee’s factual findings has to persuade a court
through admissible evidence that there are genuine disputes
of fact
on material aspects.
ORDER
On
appeal from:
South Gauteng High Court,
Johannesburg (Kathree – Setiloane J, sitting as court of first
instance):
The
appeal is dismissed with costs.
JUDGMENT
Majiedt
JA (Maya, Shongwe and Saldulker JJA and Gorven AJA concurring):
[1]
Section 19bis of the Supreme Court Act, 59 of 1959 (the section)
[1]
provides for the appointment of a referee to enquire and report upon,
inter alia, a matter which relates wholly or in part to accounts.
The
present dispute concerns the debatement of a partnership account. By
consent between the parties, the Wright brothers, a chartered
accountant, Mr Desmond Snyman, was appointed as a referee to
investigate the matter and to report to the high court. At issue in
this appeal is how a challenge to a referee’s factual findings
in his or her report is to be approached.
[2]
The Wright brothers owned a metal business, Wright Metals CC, the
second respondent. The appellant, Mr Alec Peter Wright, ran
the
business and his wife kept the business’ books of account and
performed other administrative duties. A dispute arose
between the
appellant and the first respondent, Mr William Robert Wright,
concerning the profits from the business. The sibling
enmity
culminated in litigation. The first respondent obtained a court order
in the South Gauteng High Court, Johannesburg, before
Satchwell J,
declaring that the brothers had conducted business in partnership, a
part whereof comprised the metal business, the
second respondent.
Satchwell J’s order dissolved the partnership, ordered the
appellant to provide an accounting of the partnership
business,
debatement of the account and payment of any amount found to be due
to the first respondent. The accounting had to be
made in respect of
the period from March 1989 to date of dissolution of the partnership.
[3]
Attempts to resolve the accounting and debatement between the parties
came to nought. The parties consented to referral of their
dispute to
a referee in terms of the section. Thereafter the first respondent
brought an application for payment of the sum of
R1 085 000
and interest, being the amount the referee found to be due to the
first respondent pursuant to his report.
The appellant opposed the
application, raised a number of disputes with the referee’s
report and sought dismissal of the
application. He also
counter-applied for a referral of the disputes for trial,
alternatively for the hearing of oral evidence and,
in the further
alternative, for remittal to the referee.
[2]
The high court dismissed the counter-application and adopted the
referee’s report without modification,
[3]
thus having the effect of a finding by the court in the
proceedings.
[4]
The appeal
before us is with leave of the high court.
[4]
The appellant challenged the referee’s report on a number of
aspects:
(a) Whether the
referee was correct in adding an amount of R12 969 to the
profits of the business. The appellant averred that
this is telephone
expenditure, all of which save for an amount of R150 was business
related.
(b) A dispute arose
about the 2001 capital account adjustment made by the referee on the
basis that the source of the funds was
not properly proved by the
appellant, who insisted that the source documents had in fact been
provided to the referee.
(c) The amount of
sales for the 2005 financial year was allegedly incorrectly
calculated and reflected by the referee.
(d)
The referee allegedly incorrectly excluded certain expenses from his
calculations on the basis that they were not business related.
The
appellant takes issue with this as they are weighbridge expenses,
which the appellant avers are business related by their very
nature.
[5]
The appellant contended that these are genuine disputes of facts,
raised in good faith, which required adjudication at a trial
or
through the hearing of oral evidence. In this regard the appellant
placed reliance on the well-known principles set out in
Room
Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd.
[5]
Before dealing with these contentions, it is necessary to consider
the functions of a referee under the section and how a challenge
to
his or her report should be approached by a court.
[6]
There is a dearth of reported cases on the section. This may suggest
a lack of use in practice or the uncontentious interpretation
and
application of the section whenever it was used. The section provides
a useful tool for a court to resolve factual disputes
expeditiously
where the court would otherwise be delayed, inconvenienced or
disadvantaged.
[6]
[7]
The section reads in relevant part:
‘
(1)
In any civil proceedings any court of a provincial or local division
may, with the consent of the parties, refer –
(a)
any matter which requires extensive
examination of documents or scientific, technical or local
investigation which in the opinion
of the court cannot be
conveniently conducted by it; or
(b)
any matter which relates wholly or in part
to accounts; or
(c)
any other matter arising in such
proceedings,
for
enquiry and report to a referee, and the court may adopt the report
of any such referee, either wholly or in part, and either
with or
without modifications, or may remit such report for further enquiry
or report or consideration by such referee, or make
such other order
in regard thereto as may be necessary or desirable.
(2)
Any such report or any part thereof which is adopted by the court,
whether with or without modifications, shall have effect
as if it
were a finding by the court in the civil proceedings in question.
(3)
Any such referee shall for the purposes of such enquiry have such
powers and shall conduct the enquiry in such manner as may
be
prescribed by a special order of court or by rules of court. . .’
[8]
The high court undertook an extensive analysis of the origins of the
section.
[7]
I do not deem it
necessary to regurgitate this helpful analysis. The high court also
made reference to
Young’s
Estate v Estate Young,
[8]
the (Natal) Arbitration Act of 1898, 24 of 1898 (the Natal
Arbitration Act) and the Transvaal Arbitration Ordinance of 1904. I
agree with the learned judge’s finding that
Estate
Young
is authority for the proposition that ‘a court is bound by the
findings of a referee contemplated in s 19bis, unless it can
be found
that the conclusions arrived at by the referee were unreasonable,
irregular or wrong’
[9]
And
the section is indeed, as the learned judge observed, ‘an
almost verbatim promulgation of the Natal and Transvaal statutory
provisions, save for s 25 of the Natal Arbitration Act of 1898. . .
.’
[10]
[9]
Section 25 of the Natal Arbitration Act provided that: ‘the
report or award of any officer of the court, official or special
referee, or arbitrator, on any such references shall unless set aside
by the Court, be equivalent to the verdict of the jury’.
In
Estate
Young
the Full Bench interpreted the provision to mean that a referee’s
report shall be equivalent to the verdict of a jury (ie
factual
finding). It referred
[11]
with
approval to the following dictum of Innes CJ in
Union
Government (Minister of Railways and Harbours) v Wilkinson and
Carroll
:
[12]
‘
The
principles which should guide the Court in dealing with the verdict
of a jury in a civil case are well recognised. It cannot
retry the
suit. The decision upon all matters of fact – and the existence
of the negligence in such matter – is for
the jury. And their
conclusion cannot be set aside merely because the Court may not upon
a perusal of the record agree with it,
but only if it is such as
reasonable men could not properly have arrived at . . . And we should
only be so justified if the conclusions
arrived at were wholly
unreasonable.’
[10]
The position of a referee under s 19bis is, as the high court
correctly found, similar to that of an expert valuator who only
makes
factual findings but dissimilar to that of an arbitrator who fulfils
a quasi-judicial function within the parameters of the
Arbitration
Act 42 of 1965
.
[13]
In this
regard, the dictum of Boruchowitz J in
Perdikis
v Jamieson
[14]
is apposite:
‘
It
was held in
Bekker v RSA Factors
1983
(4) SA 568
(T) that a valuation can be rectified on equitable grounds
where the valuer does not exercise the judgment of a reasonable man,
that is, his judgment is exercised unreasonably, irregularly or
wrongly so as to lead to a patently inequitable result.’
This
is also the position in respect of the referee’s report –
it can only be impugned on these narrow grounds.
[11]
As outlined above, the primary thrust of the attack on the referee’s
report concerned disputes on calculations, exclusions
and
misinterpretations of validly incurred expenses. The appellant’s
case was that genuine disputes of fact have been raised
which
warranted referral to trial or for the hearing of oral evidence or
remittal to the referee. But there is an insurmountable
difficulty in
these contentions, namely the absence of first hand, primary evidence
from the appellant to underpin these factual
disputes.
[12]
The referee executed his assignment by evaluating the files,
documents and reports of the parties’ expert witnesses.
The
appellant had engaged the services of a chartered accountant, Mr
Jacques Pieter Theron (Mr Theron), while the first respondent
had
also appointed a chartered accountant, Mr Mark O’Hara (Mr
O’Hara). The referee had conveyed his proposed methodology
to
the accountants as well as the parties’ attorneys at a
preliminary meeting. Based on his evaluation of the experts’
submissions and supporting documentation, the referee concluded that
the appellant owes the sum of R1 085 000 and interest
to
the first respondent as his share of the partnership’s profits.
On behalf of the appellant Mr Theron challenged the referee’s
findings in the respects enumerated above and concluded that the
total profit due is only R156 106. Mr Theron filed an affidavit
in support of the appellant’s opposition to the application. A
confirmatory affidavit of Ms Thereza Carmen Schmidt (Ms Schmidt),
an
auditor in Mr Theron’s firm’s employ, accompanied Mr
Theron’s affidavit.
[13]
The appellant’s challenge to the referee’s factual
findings was based entirely upon Mr Theron’s report, as
confirmed by Ms Schmidt. But the appellant’s misconceived
approach to the matter permeates this challenge. The factual findings
could only be impugned on the narrow grounds outlined above. It was
for the appellant to persuade the high court that the report
should
not be adopted or that it should be adopted with modifications.
Unless and until it was properly impugned on the narrow
grounds, it
stood as the court’s factual findings upon adoption without
modification. It was not for the first respondent
to persuade the
high court that the referee’s report and factual findings were
correct. That would subvert the purpose of
the section. The referee
had been appointed, by consent between the parties, to facilitate the
high court’s task of resolving
the factual issues arising from
the accounting and debatement, as the high court was called upon to
do.
[15]
The appellant had the
duty of impugning the factual findings or to raise genuine disputes
of fact. It is legally untenable to approach
the matter like the
appellant did, namely to treat the referee’s report as if it
was the first respondent’s factual
‘version’ which
had to be tested against the appellant’s factual version. That
is not the manner in which the
section is meant to operate. Put
differently, a court is not required to adjudicate a challenge to the
referee’s factual
findings under the section in the way that it
would decide factual disputes in motion proceedings. I discuss next
the challenge
itself against the backdrop of this misconceived
approach.
[14]
Mr Theron (assisted by Ms Schmidt) prepared his report and reached
his conclusions solely on the basis of the books of account
and other
source documentation provided by his client, the appellant. A glaring
omission from the appellant’s papers is a
confirmatory
affidavit from his spouse who, as stated, wrote up the books of
account of the business. The absence of such an affidavit
confirming
the correctness of the information furnished to Mr Theron to enable
him to prepare his report is fatal. Without that
affidavit Mr
Theron’s report constitutes inadmissible hearsay.
[15]
It is well established that in application proceedings the affidavits
take the place of both the pleadings and the essential
evidence to be
led at trial.
[16]
The deponent
to an affidavit is required to set out the source of his or her
information. Hearsay evidence is inadmissible, save
in urgent
applications and where a court in its discretion permits such
evidence in terms of
s 3
of the
Law of Evidence Amendment Act 45 of
1988
. Where a respondent in motion proceedings seeks to raise genuine
disputes of fact it must do so through admissible evidence. A court
will not permit factual disputes to be raised through inadmissible
evidence where admissible evidence is readily available.
[17]
Litigants are required to seriously engage with the factual
allegations they seek to challenge and to furnish not only an answer
but also countervailing evidence, particularly where the facts are
within their personal knowledge.
[18]
[16]
The appellant’s challenge to the referee’s factual
findings must fail on this ground alone. But there is another
compelling reason why the factual findings must stand. This is on the
basis referred to by the high court, namely that no substantiation
for the cross-referenced challenges is provided by Mr Theron.
[19]
None of the challenges contain any motivation in support of each
challenge. It is not necessary to list them as the high court
has
already done so in full.
[20]
On the authorities outlined in footnotes 17 and 18, a genuine dispute
of fact on material aspects can only be raised through a
fully
motivated answer and/or countervailing evidence where the facts are
peculiarly within a party’s knowledge. Mr Theron’s
challenge on behalf of the appellant did not meet this standard and
was correctly rejected by the high court.
[17]
For these reasons the high court was correct in adopting the
referee’s report without modification. The appeal must fail.
[18]
The following order is issued:
The appeal is
dismissed with costs.
______________________
S
A MAJIEDT
JUDGE
OF APPEAL
APPEARANCES
For Appellant: N
Alli
Instructed
by: Stan Fanaroff & Associates, Johannesburg
Phatshoane
Henny, Bloemfontein
For Respondents: A
Bester
Instructed
by: Halse, Havemann & Lloyd, Pinetown
Webbers,
Bloemfontein
[1]
The
section has been replaced, with minor changes, by
section 38
of the
Superior Courts Act, 10 of 2013
.
[2]
In
terms of
s 19bis
(1).
[3]
Wright
v Wright
&
another
2013 (3) SA 360 (GSJ).
[4]
Section
19bis
(2).
[5]
Room
Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949
(3) SA 1155
(T) at 1163.
[6]
PM
Nienaber ‘Building and Engineering Contracts’ in Joubert
(ed)
LAWSA
2
ed vol 2(1) (2003) para 479.
[7]
Paragraphs
9 and 10.
[8]
Young’s
Estate v Estate Young
1917
NPD 244.
[9]
Paragraph
9.
[10]
Ibid.
Similar procedures existed in sections 21 to 23 of the Cape
Arbitrations Act 29 of 1898 and in the South West Africa
Proclamation
3 of 1926.
[11]
At
253.
[12]
Union
Government (Minister of Railways and Harbours) v Wilkinson and
Carroll
1916
AD 123
at 127. See further:
Chaffer
and Tassie v Richards
1905 NLR 207
at 216 – 217.
[13]
Paragraphs
14 and 15 of the high court’s judgment. An arbitral award may
be set aside only on the limited statutory grounds
set out in
s 33
of the
Arbitration Act, namely
the arbitrator’s misconduct in
relation to his or her duties qua arbitrator; or where the
arbitrator has committed a gross
irregularity in the conduct of
proceedings or has exceeded his or her powers; or where the arbitral
award has been improperly
obtained. See generally:
Lufuno
Mphaphuli & Associates (Pty) Ltd v Andrews & another
2009 (4) SA 529
(CC);
Cool
Ideas 1186 CC v Hubbard & another
[2014] ZACC 16
, 2014(4) SA 474 (CC). There are consequently
significant differences between the powers and functions of
arbitrators and referees
and between the bases on which an
arbitrator’s award and a referee’s report can be
impugned.
[14]
Perdikis
v Jamieson
2002
(6) SA 356
(W) para 7.
[15]
Compare
Doyle
& another v Fleet Motors PE (Pty) Limited
1971
(3) SA 760(A)
at 763 C-D.
[16]
Foize
Africa (Pty) Ltd v Foize Beheer BV & others
2013
(3) SA 91
(SCA) para 30.
[17]
Minister
of Land Affairs and Agriculture & others v D&F Wevell Trust
2008
(2) SA 184
(SCA) para 56.
[18]
Wightman
t/a JW Construction v Headfour (Pty) Ltd & another
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA) para 13.
[19]
Paragraph
28 of the high court’s judgment.
[20]
See
paras 29–35.