About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2021
>>
[2021] ZAGPJHC 733
|
|
ABSA Bank Limited v Cloete and Another (35640/2019) [2021] ZAGPJHC 733 (9 March 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 35640/2019
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
In
the matter between:
ABSA
BANK
LIMITED
Applicant
and
JUDGE
THOMAS D CLOETE
First Respondent
MYROOF
ASSET DISPOSALS (PTY) LTD
Second Respondent
Summary:
Review under section 33 of the Arbitration Act – gross
irregularity in proceedings and exceeding of powers for arbitrator
to
take into account submissions from the Bar not supported by any
evidence at all.
JUDGMENT
KATHREE-SETILOANE
J,
[1]
This is a
review of an arbitration award made by Judge Cloete (“the
arbitrator”) on 9 April 2019 (“April Award”),
sitting as an arbitrator in the arbitration between the
applicant,
Absa Bank Limited (“Absa”) and the second respondent,
MyRoof Asset Disposals (Pty) Ltd (“MyRoof”).
[1]
[2]
The April
Award concerned an application by Absa, brought on affidavit, to
extend certain time periods set out in a previous award
made by the
arbitrator. Absa and MyRoof are parties to a long-running arbitration
before the arbitrator. MyRoof owns and
operates a
website
www.myroof.co.za
that
lists properties for sale. One of its targets is
the
property-management division of banks. Absa agreed to list particular
categories of
properties
on the website and to pay MyRoof a commission on the purchase price
of sales on the website in terms of the Master Services
Agreement
(“MSA”) which they concluded.
[3]
MyRoof alleges, in the arbitration proceedings, that Absa breached
the
MSA. Only one of the several breaches alleged is directly
relevant to this application. It relates to properties that Absa
listed
on MyRoof’s website and sold to third parties, during
the contract period, and for which Absa did not pay MyRoof’s
commission. MyRoof sues for the commission it claims to be entitled
to on each sale and related relief. These claims are referred
to as
claim 6 and claim 7 in the arbitration.
The
February 2019 Award
[4]
The key issue in relation to the quantification of claims 6 and 7 is
calculating
how many properties Absa listed on MyRoof’s website
and sold to third parties during the contract period.
[5]
The arbitrator made an award in February 2018 apropos the accounting
and
debatement process for claims 6 and 7. Absa failed to meet the
deadlines to account as specified in the February 2018 award. This
resulted in the parties entering into a written contract which put in
place a process to determine which properties should count
for the
quantification of claims 6 and 7. The contract set out Absa’s
obligations, the deadlines it had to meet and the consequences
that
would follow should it fail to do so. On 1 February 2019, the
arbitrator made the contract an award by consent between the
parties
(“February 2019 award”).
[6]
As part of the debatement, under the February 2019 award, MyRoof was
required
to email a list of properties, to Absa, to be used to
quantify claims 6 and 7. Absa could identify points of disagreement
with
MyRoof’s list which would then be put before the
arbitrator for resolution. However, if 15 days after receiving
MyRoof’s
list of properties, Absa failed to raise any
disagreements with it, Absa would be deemed to agree with the list as
the pool of
properties for quantification of claims 6 and 7.
[7]
Two weeks after the February 2019 award was made, MyRoof emailed its
list
of 6 877 properties to Absa’s then-attorney. It claimed
that the list should be used to quantity claims 6 and 7 as the listed
properties were on Absa’s website and sold to third parties
during the contract period. Absa, however, failed to identify
points
of disagreement” with MyRoof’s list within 15 days of
receipt thereof, because an employee who was, at that
time,
overseeing the arbitration, Ms. Merle Naidoo (“Ms. Naidoo”),
overlooked MyRoof’s email. This triggered
the deeming provision
in the February 2019 award – namely, the expressly agreed
consequences that would then follow. - which
lie at the heart of this
review application.
The
extension application
[8]
In April 2019, Absa brought an application to extend the time periods
of the accounting and debatement, as specified in the February 2019
award, by a few weeks. Absa supported its extension application
with
the affidavit evidence of Ms Naidoo. She explained that she had
overlooked MyRoof’s e-mail with the list of 6877 accounts
and
the deeming provision was triggered even though “[Absa]
genuinely believed that the accounting process was still underway”.
[9]
According to Ms Naidoo, the deeming provision, in the February 2019
award,
resulted in a “fiction” as Absa was deemed liable
to MyRoof on inaccurate invoices involving millions of rands that
it
seriously disputed. She claimed that a refusal by the arbitrator to
grant Absa an extension of the periods to account would
cause it real
prejudice as, on Absa’s calculations, if claims 6 and 7 are
quantified according to MyRoof’s list, Absa
will overpay by at
least R81 million. Although MyRoof disputed this figure, in its
answering affidavit, it conceded that its list
of 6 877 accounts was
not accurate as Absa did not owe MyRoof anything for 1 399 of the
6877 accounts on the list.
[10]
MyRoof
sought an opportunity to file an answering affidavit on the question
of whether
the
extension application should be granted.
[2]
The arbitrator, however, decided to hear Absa’s extension
application without answering and replying affidavits.
[3]
In other words,
the
arbitrator proceeded to hear and decide the extension application
without MyRoof putting up any evidence, in answer, at all
to dispute
Ms Naidoo’s evidence or to demonstrate its own prejudice. Its’
counsel merely informed the arbitrator from
the bar
that “the
in duplum limit has already been reached in many if not most cases,
and that
will
prejudice [MyRoof]”.
The
April 2019 Award
[11]
The Arbitrator dismissed the extension application in the April 2019
award. In so doing,
he reasoned as follows:
‘
I have read the
application and heard argument on it. What weighs with me is the
history of the matter and the many delays by [Absa]
that have been
catalogued in detail in the correspondence, in particular in the
voluminous file of correspondence that preceded
the award made on the
1st of February 2019 and the further correspondence that followed.
There are two appendix A's that graphically
depict the timeline, and
the facts prior to the award as summarized in the letters sent by
[MyRoof’s] attorneys dated 6 November
2018.
Articles 11.1 and 11.2.5
of the AFSA Rules confer on an arbitrator the widest powers to give a
decision or ruling that he may consider
necessary or desirable for
the just, expeditious, economical and final determination of all
disputes raised in the proceedings.
Insofar as the just element is
concerned, [Absa] may pay more than it should, should the relief be
refused; but if it is allowed,
[MyRoof] has informed me that the
in
duplum
limit has already been reached in many if not most cases,
and that will prejudice [MyRoof]. In my view, [Absa’s]
application
obviously falls foul of the last three considerations
that need to be taken into account for the exercise of the discretion
vested
in an arbitrator to which I have referred. The matter has been
dragging on since mid-2016. [Absa] has had repeated opportunities
to
protect its position and advance its case. There have been egregious
shortcomings in the manner in which it has conducted itself
and the
explanation in paragraph 16 of the founding affidavit is no
exception. If it did seek legal advice before the Monday morning
when
the arbitration was due to, and did, continue, as I was informed from
the Bar, it must take the consequences.’
[12]
The arbitrator accordingly made the following order:
8.1
[Absa’s] application is dismissed.
8.2
In respect of claims 6 and 7 it is decalred:
8.2.1. [Absa]
failed to comply with its obligations with specific reference to
[its] accounting obligations in terms of [the
February 2018] award
and the [February 2019] award relating to claims 6 and 7 published on
1 February 2019;
8.2.2 the
accounting process was completed when [MyRoof] provided Absa with the
outstanding information as required
in clause 2.3 of the [February
2019 award] in [its] email to [Absa] dated 15 February 2019;
8.2.3 In
terms of clause 2.5 of the [February 2019] award the debatement of
such accounting had to take place within
30 days of such accounting
i.e., from 15 February 2019 more specifically on or before 18 March
2019;
8.2.4. In terms of
clause 2.5 [Absa] had to submit a list reflecting items of
disagreement with reasons not later than 15
calendar days before the
envisaged debatement date of 18 March 2019 i.e., at the latest on 3
March 2019;
8.2.5. [Absa’s]
failure to submit a list reflecting items of disagreement results in
the items reflected on [MyRoof’s]
list supplied on 15 February
2019 being deemed to be “in agreement” in terms of clause
2.5.2 of the further reward;
8.2.6 In
terms of clause 2.6 of the [February 2019] award [MyRoof] is
accordingly entitled to payment and to invoice
[Absa].
8.2.7 [Absa]
is no longer entitled to raise debatement issues.
Gross
Irregularity in the Proceedings
[13]
Absa
contends that the critical problem with the arbitration award is that
there was no
evidence at
all before the arbitrator to support the finding that “the
in
duplum
limit
has already been reached in many if not most cases” and so
granting Absa’s extension application would “prejudice
[MyRoof]”. Absa, accordingly, submits that the award falls
to be set
aside in terms of section 33(1)(b) of the Arbitration Act
[4]
on the basis that it involves a gross irregularity in the proceedings
or an exceeding of powers. It seeks an
order in
terms of its amended notice of motion
[5]
that the dispute between the parties be
referred
for determination to a new arbitrator in terms of section 33(4) of
the Arbitration
Act.
[6]
[14]
Absa furthermore argues that the effect of the April 2019 award is
that, for purposes of
determining its liability, Absa is deemed to be
in agreement with a list of 6877 properties produced by MyRoof which
is patently
inaccurate. This, so it contends, is because on MyRoof’s
own version, as set out in its answering affidavit, Absa does not
owe
MyRoof payment for 1399 of the 6877 accounts on the list. Moreover,
it points out that by that by that stage only 149 accounts
were
before the arbitrator of which only 69 had reached
in duplum.
Thus, of the 6877 properties only 1% of the invoices had reached
in duplum. It accordingly contends that this is not evidence capable
of sustaining the conclusion, arrived at by the arbitrator, that
many, if not all, of the invoices had reached
in duplum
.
[15]
Absa, furthermore, maintains that on its own version, MyRoof accepted
that the number of
invoices that had reached
in duplum
“was
never quantified during the argument” nor did anyone even
“suggest a figure of what the monetary value of
this [
in
duplum]
prejudice would entail. It also claims that on MyRoof’s
version, these details were “simply unknown to both parties”,
hence there was no evidence before the arbitrator in relation to
whether many, if not all, of MyRoof’s invoices had reached
in
duplum
. Absa argues that there was, likewise, no evidence before
the arbitrator of the total Rand value of the interest that MyRoof
had
lost by virtue of
in duplum
having been reached, yet the
arbitrator made, and relied on, a finding of
in duplum
prejudice
based entirely on a submission made from the Bar by MyRoof’s
counsel that “many if not all” the invoices
had reached
in duplum.
[16]
Before I deal with the question of whether the arbitrator’s
decision to dismiss Absa’s
extension application is reviewable,
I intend to dispose, upfront, with a point of law raised by MyRoof
that, the February 2019
award was a final award, and the arbitrator
could not revisit it by extending the deadlines for the accounting
and debatement exercise
as sought in Absa’s extension
application. MyRoof submits that the deadlines for compliance could
not be extended, for the
further reason that the award was based on
the underlying agreement between the parties which was made an award
by consent. It,
therefore, argues that the arbitrator was not
empowered to vary the terms of the award as that would amount to
impermissibly amending
the underlying agreement or making a new
agreement for the parties.
[17]
MyRoof
argues that, had the arbitrator granted Absa the relief sought in the
extension
application,
he would have exceeded his powers as he was bound by the agreement
between the parties. I disagree for two primary
reasons. The first is
that the arbitrator made it clear during argument, in the extension
application, that the February 2019 award
was an interim award that
may be revisited by him. This appears from the transcript of that
hearing which forms part of the review
record. The second, is that
once an agreement between parties is made an arbitration award, it is
divested of its contractual force
and is made subject to the rules
and the agreement that govern the arbitration. In this case it is the
MSA and Commercial Rules
of the Arbitration Foundation of South
Africa (“AFSA rules”). Articles 11.1 read with 11.5 of
these rules confer on
the arbitrator
the “widest
discretion and powers allowed by law to ensure the
just,
expeditious, economical, and final determination of all the disputes
raised in the proceedings including costs. Article 11.2.14
of the
AFSA rules, in turn, also confers on
the
arbitrator the power “to make rulings or give interim awards on
any matter of onus,
admissibility
of evidence, and of procedure, including awards of an interlocutory
or interim nature”.
[7]
Rule 11.2.7, in turn, empowers an arbitrator “to extend before
or after
their
expiry, or abbreviate any time limits provided for in these rules or
by his rulings or
directions”.
Although this rule makes reference to rulings or directions, this
should not be construed restrictively to preclude
an arbitrator from
extending time-limits in an interim award where a proper case for
such extension has been made out.
[18]
Thus
provided that an award is interim in nature – which the
February 2019 award is -
an
arbitration may revisit or vary the award on application by one of
the parties.
[8]
To suggest that
the arbitrator is bound by the agreement that underlies the
particular award, would negate the wide discretionary
powers that are
conferred on the arbitrator
in terms of
the AFSA rules. The deadlines in the February 2019 award were not set
in
stone.
Like any other time-limit in an arbitration award or court order, the
arbitration had
the power
to extend it.
[19]
Concerning
the question of whether the arbitrator had committed a gross
irregularity in
the
proceedings, section 33(1)(b) of the Arbitration Act empowers a court
to set aside an arbitration award where an arbitrator
has committed
any gross irregularity in the conduct of the arbitration proceedings.
A gross irregularity is a “methodological
error which prevents
a fair hearing”.
[9]
A decision
will be grossly irregular if there is a mistaken
action
which prevents the aggrieved party from having its case fully and
fairly determined.
[10]
It is
only where the mistake is of such a serious nature that it results in
the aggrieved party not having its case fully and fairly
determined,
that a review will be
justified
on the basis of a gross irregularity.
[11]
[20]
What is the gross irregularity in the April 2019 award? As alluded
to, Absa contends that
the arbitrator made a finding about MyRoof’s
in
duplum
prejudice in the absence of evidence to support that
finding. MyRoof argues, to the contrary, that the statement in the
award that
“the claimants have informed me that the in duplum
limit has already been reached in many if not most cases, and that
will
prejudice [MyRoof]”, is not a finding, in the legal sense
of the word, but is merely an observation.
[21]
It is immaterial, in my view, whether this statement is understood to
be a finding of fact
or an observation because what matters, is that
it is a factor which the arbitrator took into account in dismissing
Absa’s
extension application. In other words, the arbitrator
relied on statements made from the Bar by my MyRoof’s counsel
that
“the
in duplum
limit has already been reached in
many if not most cases and that will prejudice [MyRoof]” in the
absence of any supporting
affidavit evidence from MyRoof. This
mistaken action prevented Absa from having its extension application
fully and fairly determined.
Simply put, the arbitrator made a
methodological or procedural error that prevented a fair hearing of
the application, by denying
Absa (and MyRoof included) the
opportunity to present evidence on affidavit on the question of
whether MyRoof would suffer
in duplum
prejudice. This is a
grave methodological or procedural mistake (and not a mere
technicality) as it imperiled the arbitrator’s
duty to act
fairly in the arbitration proceedings before him.
[22]
MyRoof
contends, in relation to the duty to act fairly, that the principles
which apply to administrative law reviews have no place
in
arbitration proceedings. MyRoof’s contention is misplaced as
the Constitutional Court has held in
Lufuno
Mphaphuli
that
arbitrators have a general duty to act fairly because when parties
submit to arbitration,
they submit
to a process that they intend to be fair. Fairness implies that each
party shall be given a reasonable opportunity to
present its case and
deal with that of its opponent.
[12]
[23]
More
recently, this court in
Zamani
Marketing and Management Consultants (Pty) Ltd
and
Another v HCI Invest 15 Holdco (Pty) Ltd and Others
[13]
described a review of an arbitration award under section 33 of the
Arbitration Act as “a review proceeding by which a court
applies legislative and hence public standards to a tribunal that
adjudicates a dispute.” It held that although “an
arbitration tribunal does not exercise public powers”, it is
“nevertheless held to public standards.” And [i]t
is the
adherence to
these
standards (required by law) that a court is required to determine”
in a review under section 33 of the Arbitration Act.
[14]
A significant public standard against which a review court assesses
the conduct of an arbitration tribunal, is its adherence to
the
fairness standard in discharging its quasi-judicial functions and
duties. The duty to act
fairly is
thus the cornerstone of arbitration proceedings.
[24]
An
arbitrator has a margin of appreciation and “the right to be
wrong” on the admissibility and weighing up of evidence
and
these decisions are not reviewable under
section 33
of the Arbitration Act.
It is quite
another matter, however,
where an
arbitrator
makes a
decision without any evidence to support the decision. This is a
reviewable irregularity as it fatally undermines the fairness
of the
proceedings by denying the other
side the
opportunity to interrogate and challenge the facts concerned. Giving
judgment
against a
litigant without any evidence against him or her ignores the very
object of the
rules of
evidence”.
[15]
[25]
The April
2019 award is premised on the fact that the extension of the time
periods as
specified
in
the
February
2019
would
prejudice
MyRoof
and
that
this
prejudice,
in essence,
outweighed Absa’s overpayment prejudice. The arbitrator made
this observation not on evidence, but on what MyRoof’s
counsel
informed him from the Bar.
He then
considered it as a factor in dismissing Absa’s extension
application.
This was
patently
unfair as it is impermissible for a court to rely on evidence or
statements from
the bar as
a basis for its conclusions.
[16]
The review record reveals that during the extension application no
evidence was presented by MyRoof to establish the existence
of its
in
duplum
prejudice
as it was denied the opportunity to file an answering affidavit.
This
notwithstanding, the arbitrator relied on the existence of MyRoof’s
in
duplum
prejudice.
In doing so, he denied Absa the opportunity to present evidence to
counter the arbitrator’s reliance on MyRoof’s
in
duplum
prejudice,
thus denying it a fair hearing.
This
constitutes a gross irregularity in the conduct of the proceedings
which provides sufficient grounds for setting aside the
award.
[26]
During argument, MyRoof criticised Absa’s founding affidavit,
in the review application,
as containing a bald allegation that
“there was no evidence whatsoever of any
in duplum
prejudice”. It contends that this is demonstrably wrong and
in conflict with a substantial body of evidence before the Arbitrator
which inter alia included: (a) an express concession made by Absa’s
counsel on the first day of the hearing, in the extension
application, that
in duplum
interest was in play and that all
the cases where excessive interest is claimed (which was a clear
reference to
in duplum
having been reached) will be pointed
out in a “bundle” prepared by Absa; (c) Absa’s own
founding affidavit, as
read with the “bundle” which was
handed up and which conveyed that
in duplum
had been reached
in respect of 69 of the 149 invoices which made up the first batch of
invoices.
[27]
MyRoof accordingly contends that as a result of this evidence and the
concessions made
by Absa’s then-counsel, Absa’s entire
predicate that there was no evidence tendered about
in duplum
was
mistaken. It advances the contention that, provided there was some
evidence before the arbitrator that the accounts or invoices
had
reached in duplum, a finding by the arbitrator could not in law
constitute an irregularity, even if it was wrong. MyRoof accordingly
contends that Absa’s review is impermissible as it is directed
at the substance of the award (i.e. that it was wrong), rather
than
that there was a procedural or methodological defect in the
proceedings or that the arbitrator exceeded his powers.
[28]
MyRoof has, in my view, completely misinterpreted Absa’s
pleaded case in the review
application. A closer look at the
averments in Absa’s founding affidavit (referenced below) make
it abundantly clear that
Absa’s pleaded case is not that there
was no evidence whatsoever of any
in duplum
prejudice”:
‘
Judge Cloete
simply assumed that most of MyRoof's invoices had reached
in
duplum
, and assumed the amount of interest lost by virtue of in
duplum was close to Absa's prejudice (of R81million)… .
‘
In assessing
MyRoof's prejudice, Judge Cloete considered and relied on statements
from the Bar about the impact of the
in duplum
rule on
MyRoof's claims. Judge Cloete relied on these statements to entirely
discount the obvious overpayment prejudice caused to
Absa. But there
was no evidence before Judge Cloete to show the effect and extent of
the in duplum rule on MyRoof's claims.’
‘…
Judge
Cloete simply assumed that most of MyRoof's invoices had reached in
duplum, and assumed the amount of interest lost by virtue
of in
duplum was close to Absa's prejudice (of R81 million) … .’
‘…
Judge
Cloete assumed that in duplum applied and assumed that a rough
and-ready equivalence between MyRoof's (unspecified) in duplum
prejudice and Absa's (specified) overpayment prejudice… .”
‘
Judge Cloete
ultimately chose an irregular and procedurally unfair hybrid:
dispense with answering and replying affidavits, and
decided against
Absa based on, in substantial part, statements from the Bar with no
evidentiary support. As result of this procedure,
Absa did not have
its extension application fully and fairly determined. The adoption
of this procedure resulted in an unfair hearing
and a breach of
Absa's procedural rights… .’
[29]
What Absa’s pleaded case makes clear is that there was no
evidence before the arbitrator
that
in duplum
was reached “in
most if not all” of the invoices and that the arbitrator made
certain assumptions, based on MyRoof’s
submissions from the bar
that many if not most of MyRoof's invoices had reached
in duplum
and that the amount of interest lost by virtue of
in duplum
was close to Absa's prejudice (of R81million).
[30]
MyRoof also misconstrues the so called “concessions” made
by Absa’s counsel
at the hearing of the extension application.
As I see it, it was not a concession but rather a statement in Absa’s
interest
that only 69 of 149 invoices had reached in duplum for
purposes of Absa’s liability. Even if construed to be a
concession,
this statement does not constitute an admission that
“many, if not most” of the invoices reached
in duplum
.
[31]
Lastly, Absa’s challenge to the April 2019 award is not
directed at the substance
of the award but at the procedure. As
already alluded to, the arbitrator dispensed with answering and
replying affidavits, and
decided against Absa based on, in
substantial part, statements from the Bar with no evidentiary
support. As a result of the adoption
of this grossly irregular
procedure, Absa’s extension application was not fully and
fairly determined, thus giving rise to
an unfair hearing and a breach
of Absa's procedural rights. There is accordingly no merit to
MyRoof’s contentions to the
contrary.
[32]
In order to counter Absa’s case as properly pleaded, MyRoof
strategically changed
tack, during argument, to contend that there is
an evidentiary basis for the statement of the arbitrator that “many,
if not
most” of the 6877 invoices had reached
in duplum.
It
sought to use a three-step analysis to demonstrate this by: (a)
firstly, counting which of the 149 invoices in the Bundle had
reached
in duplum
– producing a result of 69 out of 149; (b)
secondly, subtracting the 58 “invoices of antiquity” so
that one ends
up with 69 out of 91; and (c) thirdly, extrapolating
the 69 out of 91 to the 6877 accounts and concluding that a minimum
of 3185
invoices had reached
in duplum
.
[33]
I have difficulty accepting MyRoof’s analysis for the simple
reason that the evidence
in respect of a handful of invoices is not
evidence that “many if not most” of the 6877 invoices had
reached
in
duplum
. To the extent that it seeks
to extrapolate from a small set of invoices to a larger set, it had
to at least put up an affidavit
explaining why this is justified. No
such affidavit has been deposed to. It is simply impermissible to do
this analysis from the
bar, as MyRoof has sought to do.
[34]
More critically, this analysis was not presented, on affidavit, to
the arbitrator in the
extension application – not even from the
bar. It is clear from the transcript of the proceedings in the
extension application,
that the arbitrator was not taken to a single
one of the 149 invoices by MyRoof during argument in the extension
application. The
arbitrator was also not told by MyRoof that 69 of
the 149 had reached in duplum. Indeed, on MyRoof’s own version
(in its
answering affidavit) it accepts that “the number of
cases of
in
duplum
was never quantified in
argument.”.
[35]
What is more, is that MyRoof made no reference at all, during
argument before the arbitrator,
to the 58 “invoices of
antiquity” and how they had to be deducted. Lastly, there was
no attempt at all by MyRoof to
argue before the arbitrator, that a
ratio of 69 out of 91 (or even 69 out of 149) had to be extrapolated
to the 6877 accounts.
The figure of 3185 invoices was never even
mentioned and does not appear from any document. Instead, all that
was said by counsel
for MyRoof from the Bar was that:
‘…
In respect
of claim 6 and 7 invoicing has already occurred partially. That’s
also evident from the bundle. The rest of the
invoices will simply be
finalised. Most of those invoices are already at the in duplum stage
as far as interest is concerned or
very close thereto… .’
and
“…
The
prejudice is self-evident, on almost all of the invoices in duplum
has already been reached which means no further interest
will accrue
to these invoices… .’
[36]
As persuasively contended for by Absa, it is plainly these vague
statements from the Bar,
with no reference to any evidence, that led
to the arbitrator stating that “
in duplum
limit has
already been reached in many if not most cases, and that will
prejudice [MyRoof]”. Since the three-step analysis
was not
placed before the arbitrator at all, it could not, possibly, have
been the basis for his award which was delivered 45 minutes
after the
conclusion of argument by the parties.
[37]
MyRoof’s three-step analysis was also not referred to in in
MyRoof’s answering
affidavit in the review application.
Although MyRoof’s answering affidavit refers to the “bundle”
it states merely
that “it was evident from the bundle that ….
in duplum had been reached in respect of some of the 149 invoices”.
The answering affidavit does not, however, quantify the number of
invoices where in duplum was reached as 69 out of 149. That was
done
for the first time in MyRoof’s heads of argument in the review
application.
[38]
In respect
of the second step: the MyRoof’s answering affidavit does not
make any reference to the 58 invoices “of antiquity”.
It
also does not say that
they have
to be deducted so that one ends up with 69 of 91. Similarly, in
respect of the third step, MyRoof’s answering affidavit
does
not make any reference to how in duplum over the 69 invoices can be
extrapolated to the
6877
invoices.
On the contrary, the MyRoof answering affidavit refers to the 149
invoices
as
“
an
unrepresentative
sample
”
of
the
6877
accounts.
MyRoof’s answering affidavit furthermore omits any reference to
the figure relied on, in argument, of 3185 invoices.
This is fatal to
the case advanced
by MyRoof,
during argument, as it was not properly made out in its answering
affidavit in the review application.
[17]
[39]
Accordingly, MyRoof’s new case as advanced from the Bar during
argument is completely
lacking in foundation, notably because there
has never been any answer from the arbitrator to gainsay Absa’s
avermnents that
he simply accepted MyRoof’s say-so from the Bar
regarding “many if not most” of the 6877 invoices that
had reached
in duplum
and had no evidence before him in this
regard. What is worse, is that there is not even a proper answer on
the affidavits from MyRoof
to gainsay Absa’s allegations that
the Arbitrator simply accepted MyRoof’s say-so from the Bar
that “many if
not most” of the 6877 invoices had reached
in duplum
.The most that appears is the vague reference to the
fact that “
it was evident from the bundle that …. in
duplum
had been reached in respect of some of the 149
invoices.
”
[40]
This plainly does not establish that there was evidence before the
Arbitrator that “many
if not most” of the 6877 invoices
had reached
in duplum
or evidence regarding the extent of in
duplum prejudice. This is especially so where it is common cause that
98% of the invoices
had not even been issued yet. Not surprisingly,
MyRoof’s own affidavit confirms this fact:
“
The number of
cases in duplum was never quantified during the argument nor did
anyone suggest a figure of what the monetary value
of this prejudice
would entail. It was simply unknown to both parties.”
[41]
A further
argument advanced by MyRoof is that the arbitrator, in dismissing
the
extension application, considered other factors in addition to the in
duplum prejudice such as the delays since 2016 and Absa’s
egregious shortcomings in the manner in which it conducted itself,
hence the purported
denial of a
fair hearing made no difference to the outcome of the application.
This
submission
lacks
substance
for
the
simple
reason
that
the
no
difference principle is not part of our law.
[18]
This means that when considering whether to set aside any decision, a
court does not ask whether
the denial
of a fair hearing made any difference to the outcome. A right to a
fair
hearing does not simply dissipate when it is not likely to affect the
outcome of a dispute.
[19]
Even
in open and shut cases, an affected party must
be provided
with the opportunity to meet the case advanced by an adversary. An
unfair process can never be countenanced even if
a decision-
maker might
appear to have arrived at the right result.
[42]
This
applies with considerable force to the present matter where the
arbitrator took into account certain factors regarding
in
duplum
prejudice
based
on
a
statement
from
the
bar
and
without
giving
the
parties
an
opportunity
to file answering and replying affidavits. MyRoof’s contention
lacks merit for the further reason that in law,
if a decision-maker
takes into account any reason for the decision which is bad, or
irrelevant, then the whole decision, even if
there are other good
reasons for it, is vitiated.
[20]
In the circumstances, it is simply irrelevant that the outcome of the
April 2019
award can
be justified by the fact that the arbitrator considered factors in
addition to MyRoof’s
in
duplum
prejudice.
[43]
MyRoof has filed a lengthy affidavit in this application describing
Absa’s purported
misconduct in relation to the dispute. None of
these allegations, in my view, are relevant or sustainable because
Absa, like all
parties, was entitled to a fair hearing which it was
not given, as the arbitrator took into account factors that was not
supported
by any affidavit evidence at all. Accordingly, MyRoof’s
criticism of Absa’s misconduct during the contract period and
the arbitration are irrelevant.
Exceeding
his powers
[44]
The Arbitrator also exceeded his powers. Since this was an
evidence-based arbitration,
he was bound by the requirements of
clause 15.3 of the AFSA rules which provide:
“
The arbitrator
shall apply the South African law of evidence; provided that he may
allow a party to present evidence in written
form, either as signed
statements or in affidavit form , in which event any other party may
require the deponent to attend the
proceedings for oral examination
and cross examination, and if the deponent fails to attend and submit
to be examined and cross
examined, the arbitrator may exclude such
evidence in written form altogether or may attached such weight to it
as he thinks fit.”
[45]
This prescript is peremptory. It did not entitle the arbitrator to
take into account submissions
from the Bar that was not supported by
any evidence. That the parties agreed, at a pre-arbitration meeting,
in so far as interlocutory
proceedings are concerned, “that an
informal procedure shall be adopted where possible and the applicant
shall set out the
relief sought in a letter transmitted to the
arbitrator and the other party”, does not detract from the fact
that the extension
application was an evidence-based application, as
Absa brought it on affidavit and not by way of a letter as
contemplated in the
parties’ pre-arbitration agreement.
[46]
This notwithstanding, the arbitrator made a decision based on
information from the Bar
for which no evidence had been tendered at
all by MyRoof. In doing so, he exceeded his powers.
[47]
For all these reasons, paragraphs 8.1 to 8.7 of the award falls to be
set aside in terms
of section 33(1) of the Arbitration Act.
The
Appropriate Remedy
[48]
Section
33(4) of the Arbitration Act provides that if the award is set aside,
the dispute shall at the request of either party,
be submitted to a
new arbitration tribunal. As a court sitting in review of the April
2019 award, I do
not have a
discretion to refuse Absa’s request under section 33(4) of the
Arbitration Act.
[21]
Absa is
accordingly entitled to the relief sought in its amended notice of
motion that the dispute be referred to a new arbitrator.
Costs
[49]
I see no reason why costs should not follow the result.
Order
[50]
In the result, I make the following order:
1.
Paragraphs 8.1 to 8.7 of the award granted by the first respondent on
9 April
2019 in the arbitration between the applicant and the second
respondent under the Arbitration Foundation of South Africa’s
reference number M.192 are reviewed and set aside.
2.
The dispute under Arbitration Foundation of South Africa’s
reference number
M.192 is submitted to a new arbitrator to be decided
by the parties.
3.
The second respondent is ordered to pay the costs of the application
which costs
are to include the costs of two counsel.
F
KATHREE-SETILOANE
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Counsel
for the applicant
: S. Budlender SC with J Mitchell
Instructed
by
: Webber Wentzel
Counsel
for the second respondent
: MC Maritz SC with MG Maritz
Instructed
by
: Tiaan Smuts Attorneys
Date
of hearing
5 - 6 December 2020
Date
of Judgment
: 9 March 2021
(Handed
down electronically by email to the parties’ legal
representative and by being uploaded to
CaseLines
).
[1]
The award was delivered ex tempore on 9 April 2019 and was revised
on 13 May 2019.
[2]
In response to a query from Absa’s then-counsel as to whether
MyRoof “wants to answer the application”, MyRoof’s
senior counsel responded that “we must”.
[3]
The arbitrator stated that MyRoof would answer “if necessary”.
[4]
Act 42 of 1965.
[5]
Amended notice of motion dated 7 July 2020.
[6]
Section 33(4) of the Arbitration Act provides as follows:
“
If
the award is set aside the dispute shall, at the request of either
party, be submitted to a new arbitration tribunal constituted
in the
manner directed by the court”.
[7]
Rule 11.2.14 of the AFSA rules.
[8]
Compare: Brian Belcher Projects CC v Vencor Capital (Pty) Limited
2012 (JDR) 1925 (GSJ) paras 22 to 25.
[9]
Venmop 275 (Pty) Ltd v Cleveland Projects (Pty) Ltd
2016 (1) SA 78
(GJ) at para 28.
[10]
Telcordia Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA) at
para 72 (citing Ellis v Morgan; Ellis v Dessai 1909 TS 576).
[11]
Bester v Easigas (Pty) Ltd
1993 (1) SA 30
(C) at 43B-D.
[12]
Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews
2009 (4) SA
529
(CC) at paras 221-222.
[13]
Zamani Marketing and Management Consultants (Pty) Ltd and Another v
HCI Invest 15 Holdco (Pty) Ltd and Others [2020] ZAGPJHC
5 at para
18 (“Zamani”).
[14]
Zamani at para 18.
[15]
Mpemvu v Nqasala
(1909) 26 SC 531
at 534.
[16]
Resnick v Government of the Republic of South Africa
2014 (2) SA 337
(WCC) at 342F-G; Teddy Bear Clinic for Abused Children v Minister of
Justice and Constitutional Development
2014 (2) SA 168
(CC) at para
96.
[17]
Genesis Medical Scheme v Registrar of Medical Schemes and Another
2017 (6) SA 1
(CC) at para 171.
[18]
Van der Walt v S
2020 (2) SACR 371
(CC) at paras 28-30;
Psychological Society of South Africa v Qwelane
2017 (8) BCLR 1039
(CC) at paras 32-35 (“Qwelane”).
[19]
Qwelane at para 35.
[20]
Patel v Witbank Town Council
1931 TPD 284-290
; Westinghouse Electric
Belgium SA v Eskom Holdings (SOC) Ltd 2017 (6) SA 621 (CC).
[21]
Palaborwa Copper (Pty) Ltd v Motlokwa Transport and Construction
(Pty) Ltd
2018 (5) SA 462
(SCA) at para 52.