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[2022] ZAGPJHC 268
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Kruinkloof Bushveld Estate NPC v The Chairperson of the Panel of Appeal Arbitrators and Others (20/18332) [2022] ZAGPJHC 268; 2022 (6) SA 236 (GJ) (29 March 2022)

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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
No: 20/18332
REPORTABLE:
YES
OF
INTEREST TO OTHER JUDGES: YES
REVISED.
29/03/2022
In
the matter between:
KRUINKLOOF
BUSHVELD ESTATE NPC
Applicant
and
THE
CHAIRPERSON OF THE PANEL OF
APPEAL
ARBITRATORS
First Respondent
THE
PANEL OF APPEAL ARBITRATORS
Second Respondent
ALOUISE
ADLAM
Third Respondent
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email. The date and time
for
hand-down is deemed to be
10h00
on 29 March 2022
JUDGMENT
INGRID
OPPERMAN J
Introduction
[1]
A dispute arose between the applicant
(‘
Kruinkloof’
),
a homeowners association, and the third respondent (‘
Ms
Adlam
’
), a member of Kruinkloof.
Kruinkloof claimed R1,4 million from Ms Adlam. This amount comprised
of three components: monthly levies,
penalty levies and interest. The
dispute was referred to arbitration where Kruinkloof secured an award
in its favour. Ms Adlam
appealed the arbitration award and was
successful in her appeal. The Appeal Panel found Ms Adlam to be
indebted to Kruinkloof in
the sum of R72,000 and not R1.4 million.
Such indebtedness is for monthly levies only. In other words, the
Appeal Panel rejected
the claim for penalties and interest. As will
be seen, there were two grounds (relevant to this hearing) upon which
the Appeal
Panel rejected the claim for penalties. The first ground
is set out in paragraphs [72] and [73] of the award, the second in
paragraphs
[74] and [75] of the award of the Appeal Panel. In this
judgment I find that the former ground (that contained in paragraphs
[72]
and [73] of the Appeal Panel’s award) constituted an
exceeding of their powers, but that the latter ground (that contained

in paragraphs [74] and [75] of the Appeal Panel’s award) was
within the scope of the issues which the parties had referred
to
arbitration, was hence
not
an
exceeding of their powers and that the one ground was distinct from
the other with the effect that the one could survive whilst
the other
was rejected.
[2]
Kruinkloof seeks a review of the award of the
Appeal Panel.
Background
facts
[3]
The matter has its origin in two agreements
concluded between Ms Adlam and the developer, Kopane Financial
Services (Pty) Ltd (‘
Kopane
’
)
of a private residential estate in Boskruin, Randburg. The one
agreement was a sale agreement in respect of Erf [....] Boskruin
Ext
59 Township (‘
Erf [....]
’
)
and the other a building agreement. In terms of the sale agreement,
Ms Adlam was contractually obliged to become a member of Kruinkloof

upon transfer of Erf [....] into her name. This occurred on 20
November 2014. She remains the registered owner of Erf [....].
[4]
Certain disputes arose between Ms Adlam and
Kopane. Ms Adlam initiated arbitration proceedings against Kopane
wherein she claimed
to have cancelled both the sale agreement and the
building agreement and claimed repayment of the moneys paid to
Kopane, both as
seller and as builder. Retired Judge Van der Merwe
was appointed as arbitrator and made two awards in an arbitration
between Ms
Adlam and Kopane. No costs order was made in either award
by Retired Judge Van der Merwe. The costs were reserved.
[5]
The cancellation of the two agreements was
confirmed (by consent of Kopane) and Kopane was directed to pay Ms
Adlam R1,648,000 and
R1,4 million against transfer of Erf [....] to
Kopane.
[6]
Kopane and Ms Adlam were unable to come to terms
as to the transfer of Erf [....]. Ms Adlam then issued an application
which resulted
in an order made by Kairinos AJ.
[7]
The
order made by Kairinos AJ resulted in arbitration proceedings which
ultimately ended in the appeal before the Appeal Panel which
forms
the subject matter of this review. The appointed arbitrator was Adv
Gregory Amm (‘
Mr
Amm
’
).
The pleadings which served before Mr Amm formed part of the founding
affidavit. Mr Amm found for Kruinkloof (‘
the
Amm award
’
).
[1]
[8]
An appeal was lodged against the Amm award.
[9]
The
Appeal Panel (the first and second respondents) delivered its award
[2]
and
it is against such award by the Appeal Panel that Kruinkloof applies
for the relief set out in the notice of motion.
Relief
sought in the notice of motion
[10]
The relief sought by Kruinkloof in the
notice of motion is the reviewing and setting aside of the award of
the Appeal Panel dated
9 June 2020 (‘
the
award’
) in terms of section
33(1)(b) of the Arbitration Act, 42 of 1965 (‘
the
Arbitration Act
’
).
The
basis for the review
[11]
Kruinkloof contends that the Appeal Panel exceeded
its powers and handed down an award which falls to be set aside for
gross irregularity
and/or having exceeded its powers as the Appeal
Panel ignored the grounds of appeal and proceeded to determine the
appeal on the
basis introduced by themselves, which formed no part of
the
lis
between
the parties and which was disavowed by Ms Adlam during argument
before the Appeal Panel. The Appeal Panel found the following:
Firstly, they made an award that Kruinkloof must
pay the costs of the awards of Retired Judge Van der Merwe (in an
arbitration to
which Kruinkloof was not a party); (“
the
first ground of review”
); and
Secondly, they decided the appeal on a novel basis (concerning the
effect of the cancellation of the sale and building agreements
(not
raised as a ground of appeal) (“
the
second ground of review”
).
Issues
[12]
Ms Adlam concedes that the Appeal Panel
exceeded its powers in ordering Kruinkloof to pay the costs of the
arbitration proceedings
unrelated to the dispute before the Appeal
Panel. The sole question which falls for determination in respect of
the first ground
of review is the effect of the Appeal Panel having
exceeded its powers concerning the award of costs on the remainder of
their
award. Ms Adlam contends that her counterclaim is a sensible
manner of correcting the costs of the award. The relief sought in the

counter application is that an order be granted in terms of
section
31(2)
of the
Arbitration Act, correcting
the alleged patent error in
the costs order contained in the award and that paragraph 82.4 of the
appeal award dated 9 June 2020
be corrected to read:
‘
4.
The respondent [Kruinkloof] is ordered to pay the costs of this
arbitration, which costs are to
include the costs occasioned by the
employment of two counsel where applicable.’
[13]
Ms Adlam then finally requests that an order be
granted in terms of
section 31(1)
of the
Arbitration Act, making
the
award of the Appeal Panel dated 9 June 2020 as amended an order of
court.
[14]
The second issue is whether or not the second
ground of review should be sustained and the Appeal Panel’s
award be set aside.
The
primary sections in the
Arbitration Act relied
upon
[15]
Kruinkloof relies on
Section 33(1)(b)
of the
Arbitration Act which
reads:
“
(1) Where- (b) an
arbitration tribunal has committed any
gross irregularity
in
the conduct of the arbitration proceedings or has
exceeded its
powers
the court may, on the application of any party to the
reference after due notice to the other party or parties, make an
order
setting the award aside
.” (emphasis provided)
[16]
Ms Adlam in her counterclaim relies on
section 31
(2) of the
Arbitration Act which
reads:
‘
31(2) The court to
which application is so made, may, before making the award an order
of court, correct in the award any clerical
mistake or any patent
error arising from any
accidental slip
or omission.”
(emphasis provided)
First
Ground of Review
[17]
It was common cause between the parties before
this court t
hat the Appeal Panel had exceeded its powers in
ordering Kruinkloof to pay the costs of the arbitration proceedings
before retired
Judge Van der Merwe (which had been reserved by him)
which proceedings were unrelated to the dispute before the Appeal
Panel.
[18]
Ms Adlam’s case was that this constituted an ‘accidental
slip’ as contemplated
in
section 31(2)
of the
Arbitration Act.
[19
]
In
Food
Corporation
of
India
v
Marastro
CIA
Naviera
S.A.
[3]
,
in explaining what was meant by ‘accidental slip’ in
relation to the provisions of
section 17
of the
Arbitration Act
(older
act in England but similar to our
Arbitration Act) it
was held
that
-
‘
In one sense, of
course all errors are accidental. You do not make a mistake on
purpose. But here the words take their colour from
their context. I
do not suggest that (the section) is limited to clerical mistakes.
But, in general, the error must, in the words
of Rawlatt J in
Sutherland and Co v Hannerig Brothers Ltd
, [1921] 1K.B. 336 at
344 be an error affecting the expression of the tribunal's thought,
not an error in the thought process itself....
The fact that the
error was an elementary error is not sufficient to make it
accidental.’
[20]
In the case digest for
Bristol-
Meyers
[4]
the essence of the slip rule was formulated as follows:
‘…
..while it
was not possible to use the slip rule…..to permit the court to
revise a judgment after having second thoughts,
it was possible to
utilise the rule in order to give effect to the original intention of
the court…’
[21]
Russell on Arbitration 24
th
edition explains the use of the slip rule as follows
[5]
:
‘
Thus,
if the tribunal assesses the evidence wrongly or misconstrues or
fails to appreciate the law, it cannot correct the resulting
errors
in its award under the slip rule. Nor can it use the slip rule to
reconsider a decision once made. Where, however, the tribunal
has
transposed the parties, or has incorrectly calculated the amount
payable under the award as a result of accepting the evidence
of a
particular witness but attributing that witness to the wrong party,
it may correct the award under the slip rule. If the correction
under
the slip rule reveals other errors, for example in relation to costs,
they may also be considered as ‘arising from’
the slip
and therefore within the tribunal’s power to correct the
award.’ (footnotes omitted)
[22]
By parity of reasoning, Mr Badenhorst SC, representing Kruinkloof,
argued that the Appeal
Panel had deliberately (although
bona
fide
) applied themselves to the question of costs, which had
not been placed before them and had decided to make a finding on such
issue.
This error, so the argument ran, is one, which evidences an
error in the thought process of the Appeal Panel itself and although

it may be labelled elementary, does not qualify to be corrected under
‘the slip rule’.
[23]
Mr Van Vuuren SC, representing Ms Adlam, argued that the court should
have regard to the
Appeal Panel’s subsequent pronouncement on
the issue ie their communication to the parties that this was a
‘slip’
and that it could be corrected. Mr Van Vuuren,
however, also conceded readily that this labelling by the Appeal
Panel has limited
value. In the case digest for
Mutual
Shipping
Corp
of
New
York
[6]
the following caution appears:
‘
Although admission
by the arbitrator of the error is not a necessary prerequisite, the
court should be slow to intervene unless
there is such an admission’
[24]
In an email from one of the members of the Appeal Panel the following
is stated:
‘
Dis met spyt dat
ons verneem van die fout met die kostebevel in ons Toekenning. In 'n
arbitrasie is dit wel moontlik om 'n klaarblyklike
fout reg te stel.
As al die partye toestem tot die wysiging, kan ons dit informeel
wysig op een van die volgende maniere:
1
Ons reik net 'n gewysigde toekenning uit; of
2
Die Respondent gee net kennis van afstanddoening van daardie deel van

die toekenning; of
3
As almaI toestem is geen verdere stappe nodig nie, tensy iemand dit

'n bevel van die Hof wil maak.
Ons hoor graag van julle.
Groete
……
..’
[25]
I am not persuaded that it is admissible as a tool of interpretation
to have regard to
the
ipse
dixit
of a member/or the members of the Appeal Panel nor that a court
should be slow to intervene unless there is such an admission as
was
suggested in the
Mutual
Shipping
matter
[7]
but I do not pronounce
on the correctness of either of these propositions as I do not
consider it necessary by virtue of the route
that I have chosen to
follow to reach my finding on this issue.
[26]
Mr Van Vuuren suggested that I should have regard to the entire award
and assess how this
obvious, and perhaps even elementary, error came
about ie to investigate the reasons and to establish whether the
correction would
give effect to the original intention of the Appeal
Panel or whether it would amount to a revision (a disguised appeal)
of the
award. In my view, this would be the correct approach. In
doing so, I am mindful of the comments in
Bristol-Myers
at
paras 24 and 25:
‘
24. Robert Goff LJ
went on: “I do not think it would be right for me to attempt in
this judgment to define what is meant by
“accidental slip or
omission”:
the animal is I suspect, usually recognizable
when it appears on the scene.”
25.“Those cases
establish that the slip rule cannot enable a court to have second or
additional thoughts. Once the order
is drawn up any mistakes must be
corrected by an appellate court. However it is possible under the
slip rule to amend an order
to give effect
to the
intention
of
the
Court
. If the last two cases referred to
above had been cited in Molnlycke, I believe the obiter statement
made by the judge would have
been expressed differently.”’
(emphasis provided)
[27]
The costs of the application and the considerations in respect
thereof are dealt with in
paragraphs [79] to [81] of the award. The
Appeal Panel in paragraph [81] concluded:
‘
The
respondent must therefore be held liable for the costs incurred
in
this appeal
’.
[28]
It is clear from this finding that the Appeal Panel intended that
Kruinkloof be liable
for the costs of the appeal (and thus the
hearing under consideration). Mr Badenhorst argued that the slip rule
applies where,
by way of example, the reasons in the award justifies
an award of R 50 000 but the order reads R100 000. In my
view this
case is no different to his example because the costs order
is not supported by the reasoning in respect of the costs in
paragraph
[81] of the award. The award ought to have reflected costs
against Kruinkloof for the appeal only (analogous position is the
R50 000)
but the award reflected costs against Kruinkloof for
both the appeal and the reserved costs of the arbitration before
retired Judge
Van der Merwe (analogous position is the R100 000).
In my view, this was clearly a slip and was not intended. The Appeal
Panel
intended to limit the costs to those incurred in respect of the
appeal only and I find it to be so: the animal
[8]
appeared on the scene and is clearly recognizable to me.
[29]
If I am wrong in my conclusion on this point
[9]
,
I would be driven to conclude that that portion of the award should
be disregarded as it is a nullity
[10]
.
[30]
The Appeal Panel had no jurisdiction to make an order in respect of
the costs of an arbitration
where they were not presiding and where
one of the litigants, Kruinkloof, was not even a party.
[31]
Relying on the judgment of
Palabora
Copper (Pty) Ltd v Motlokwa Transport & Construction (Pty)
Ltd
[11]
Mr Van Vuuren argued that the costs award is completely separate and
severable from the Appeal Panel’s award on the merits
of the
dispute, that it does not taint the remainder of the award and that
Ms Adlam’s counter application would be a sensible
manner of
correcting the costs award.
[32]
Mr Badenhorst argued that Ms Adlam could not succeed in her
contention that the award was
bad in part and good for the rest
because the
Palabora
principles had not been established.
[33]
The prerequisites for the Palabora principle are (a) whether the
objectionable provisions
in the award are separable from the rest, or
not so clearly separable that it can be seen that the part of the
award attempted
to be supported is not at all affected by the faulty
portion; and (b) it can be demonstrated that the award is “
good
for the rest
”.
[34]
Mr Badenhorst submitted that the irregular costs order was far more
serious and had a far
reaching effect. It was so egregious, so the
argument ran, that it cast a pall of irregularity and evidenced a
failure by the Appeal
Panel to apply its mind to the proceeding as a
whole. He submitted that this was the kind of mistake that led to the
Appeal Panel
not merely missing or misunderstanding a point of law on
the merits but resulted in its misconceiving the entire nature of the
enquiry as was the case in
Goldfields
Investment Ltd v City Council of Johannesburg
[12]
:
‘
The law, as stated
in
Ellis
v
Morgan
(supra) has been accepted in
subsequent cases, and the passage which has been quoted from that
case shows that it is not merely
high-handed or arbitrary conduct
which is described as a gross irregularity; behaviour which is
perfectly well- intentioned and
bona
fide
, though
mistaken, may come under that description. The crucial question is
whether it prevented a fair trial of the issues. If
it did prevent a
fair trial of the issues then it will amount to a gross irregularity.
Many patent irregularities have this effect.
And if from the
magistrate's reasons it appears that his mind was not in a state to
enable him to try the case fairly this will
amount to a latent gross
irregularity. If, on the other hand, he merely comes to a wrong
decision owing to his having made a mistake
on a point of law in
relation to the merits, this does not amount to gross irregularity.
In matters relating to the merits the
magistrate may err by taking a
wrong one of several possible views, or he may err by mistaking or
misunderstanding the point in
issue. In the latter case it may be
said that he is in a sense failing to address his mind to the true
point to be decided and
therefore failing to afford the parties a
fair trial. But that is not necessarily the case. Where the point
relates only to the
merits of the case, it would be straining the
language to describe it as a gross irregularity or a denial of a fair
trial. One
would say that the magistrate has decided the case fairly
but has gone wrong on the law. But if the mistake leads to the
Court's
not merely missing or misunderstanding a point of law on the
merits, but to its misconceiving the whole nature of the inquiry, or

of its duties in connection therewith, then it is in accordance with
the ordinary use of language to say that the losing party
has not had
a fair trial. I agree that in the present case the facts fall within
this latter class of case, and that the magistrate,
owing to the
erroneous view which he held as to his functions, really never dealt
with the matter before him in the manner which
was contemplated by
the section. That being so, there was a gross irregularity, and the
proceedings should be set aside.’
[35]
In
Telcordia
,
Harms JA, set the scene for the aforegoing as follows:
‘
[72]
It is useful to begin with the oft quoted statement from
Ellis
v Morgan
where Mason J laid down
the basic principle in these terms:
‘
But
an irregularity in proceedings does not mean an incorrect judgment;
it refers not to the result, but to the methods of a trial,
such as,
for example, some high-handed or mistaken action which has prevented
the aggrieved party from having his case fully and
fairly
determined.’
[73]
The
Goldfields Investment
qualification to this
general principle dealt with two situations. The one is where the
decision-making body misconceives
its mandate, whether statutory or
consensual. By misconceiving the nature of the inquiry a hearing
cannot in principle be fair
because the body fails to perform its
mandate.
Goldfields Investment
provides a good
example. According to the applicable Rating Ordinance any aggrieved
person was entitled to appeal to the magistrates
court against the
value put on property for rating purposes by the local authority. The
appeal was not an ordinary appeal but involved,
in terms of the
Ordinance, a rehearing with evidence. The magistrate refused to
conduct a rehearing and limited the inquiry to
a determination of the
question whether the valuation had been manifestly untenable. This
meant that the appellant did not have
an appeal hearing (to which it
was entitled) at all because the magistrate had failed to consider
the issue prescribed by statute.
The magistrate had asked himself the
wrong question, that is, a question other than that which the Act
directed him to ask. In
this sense the hearing was unfair. ‘
[36]
The Appeal Panel made an order on something not argued and not placed
before it. It did
not prevent Kruinkloof from having its case fully
and fairly determined. Nothing during the appeal hearing in regard to
this feature
infringed on the rights of Kruinkloof. The award was
incorrect insofar as it ordered Kruinkloof to pay costs of an
arbitration
to which it was not a party (the Appeal Panel exceeded
its powers) but that does not equate to an irregular proceeding and
applying
the
Palabora
principle, I conclude that subject to
what is said hereinafter about the findings in paragraphs [72] and
[73] of the award, that
the award is good for the rest which entitles
this court to excise the offending portion of paragraph 82.4 and to
endorse the balance.
Second
Ground of Review
[37]
The
parties were in agreement that the correct approach to the matter is
to be found in the leading case of
Hos+Med
Medical Scheme
[13]
where
Lewis JA summarised the source of an arbitrator’s powers as
follows:
‘
In my view it is
clear that the only source of an arbitrator's power is the
arbitration agreement between the parties and an arbitrator
cannot
stray beyond their submission where the parties have expressly
defined and limited the issues, as the parties have done
in this case
to the matters pleaded.
Thus the arbitrator, and therefore also
the appeal tribunal, had no jurisdiction to decide a matter not
pleaded.
… It is of course possible for parties in an
arbitration to amend the terms of the reference by agreement, even
possibly
by one concluded tacitly, or by conduct, but no such
agreement that the pleadings were not the only basis of the
submission can
be found in the record in this case, and Thebe
strenuously denied any agreement to depart from the pleadings.’
(emphasis
provided)
[38]
Hos+Med
makes clear the relationship between (a) the arbitration agreement;
(b) the issues in the arbitration, and (c) the powers of the

arbitrators.
Telcordia
makes
clear that the arbitration clause in an arbitration agreement may
have independent existence from the ‘host’ arbitration

agreement and that the ‘reference’ to arbitration is what
defines the set of issues that the parties have agreed they
want the
arbitrator to decide by referring those issues to her for decision.
Whether a particular issue falls within the reference
to arbitration
is often referred to as being a question of jurisdiction of the
arbitrator. It can also be understood as a question
of whether the
parties agreed (often a matter of interpretation) that a particular
issue should or should not be decided by the
arbitrator. An
arbitrator who has decided an issue that was not part of what the
parties agreed the arbitrator should decide is
said to have exceeded
her powers or to have lacked jurisdiction to decide that issue. In
Hos+Med
the parties to that arbitration agreement had agreed that the issues
to be decided by the arbitrator were the issues defined by
the
pleadings filed in the arbitration
[14]
.
In
Hos+Med
unlike in
Telcordia
,
the arbitrator was confined to the issues on the pleadings. That was
what the parties had agreed the arbitrator should decide,
the issues
on the pleadings. The Appeal Panel in
Hos+Med
decided the appeal on an issue that had not been pleaded and thus
they were found by the SCA to have exceeded their powers and
the
Appeal Panel’s award in that matter was set aside. In
Telcordia
[15]
the arbitration agreement gave the arbitrator wider powers than did
the arbitration agreement in
Hos+Med
to determine what set of issues was to be decided. As the comparison
between
Hos+Med
and
Telcordia
[16]
demonstrates, the term ‘jurisdiction’ in relation to
arbitrations is in many ways (but not in every way) synonymous
with
the terms of the arbitration agreement,
[17]
If the issues decided by the arbitrator fall within the terms of the
agreement that the parties agreed the arbitrator should decide
then,
matters of substantive law aside, the arbitrator is said to have
jurisdiction. Decisions made by an arbitrator on issues
falling
within her jurisdiction are within her powers, decisions made on
issues falling outside her jurisdiction are instances
of ‘an
arbitrator exceeding her powers’. Of course there are other
ways in which an arbitrator can exceed her powers
[18]
but those do not arise in this matter.
[39]
Mr Badenhorst argued that the issues which the Appeal Panel was
empowered to decide were
circumscribed by the grounds of appeal of
which notice was given in the notice of appeal. The agreement on the
appeal procedure,
was contained in the following documents: (a)
paragraph 5 of the consent order made by Kairinos AJ which read
“
Should the parties not agree to the amount owing by the
applicant to the second respondent within two weeks from the date
upon which
the invoices, statements and supporting documentation
referred to in paragraph 4 is provide to the applicant, any one of
the applicant
or the second respondent may refer the dispute to AFSA
for determination in terms of the AFSA’s expedited rules
”.
(b) the minutes of the pre-arbitration agreement held on 14 August
2019 (‘
the pre-arbitration agreement
’) and (c) the
AFSA expedited rules. Paragraph 2.4 of the pre-arbitration agreement
records agreement on a right to appeal
and refers to annexure X which
sets out that which is relevant to such an appeal. Mr Badenhorst
emphasised paragraph 2 of Annexure
X which provides that the notice
of appeal shall set out concisely and succinctly the grounds of
appeal.
[40]
Mr Badenhorst therefore argued that the jurisdiction of the Appeal
Panel was circumscribed
by the issues defined in the notice of
appeal.
[41]
Mr Van Vuuren argued that the Appeal Panel had the same Jurisdiction
as Mr Amm (the arbitrator)
and that annexure X did no more than
circumscribe the procedure on appeal.
[42]
The Appeal Panel made the following findings:
In paragraph [72]: -
‘
The moment the
owner lawfully cancels the deed of sale the obligation to erect a
dwelling falls away. It can never have been the
intention of the
parties to hold an owner liable for the completion of a building
after the agreement to purchase a stand has been
cancelled and such
cancellation has been accepted. A fortiori must such obligation cease
the moment the building contract is validly
cancelled as well by the
owner because of the builder's inability to finalize the building.
The respondent's rule aimed at forcing
the owner/member to complete a
building can only apply to an owner who is still contractually bound
to remain in the estate and
who is able to compel the builder to
complete his task. Any other interpretation is wholly unbusinesslike
and could not have been
contemplated by the parties.”; and
In paragraph [73]: -
‘
The obligation to
complete the building fell away once both the deed of sale and the
building contract had been cancelled. The appellant
was therefore not
liable for any penalties sought to be imposed thereafter.’
[43]
When the Appeal Panel raised the propositions underpinning the
aforegoing, Ms Adlam’s
counsel explicitly renounced same.
[44]
A transcript of the relevant portion of the argument reveals that the
Appeal Panel put
a question to both counsel for Kruinkloof and Ms
Adlam as to the effect of the cancellation of the sale and building
agreements
as follows: -
‘
Een groot vraag
wat julle nie aangespreek het erens nie: Die effek van die
kansellasie van die kontrakte op al die goed’
and
‘
Toe het albei
kontrakte ontbind by ooreenkoms. Daarna wil ek weet wat julle betoog
is oor die effek op hierdie kansellasie of ontbinding
dan op al die
goed, want dit speel 'n rol en al wat ek kon sien in die kontrak - en
dis in die koopkontrak - is dat daar solank
daar 'n dispuut is oor
die kansellasie, sal heffings en sulke goed aanloop maar dis al. Daar
is nie 'n ding dat enige ander goed
gaan voortloop ten spyte van
kansellasie nie, so dit het 'n effek op heffings, dit het 'n effek op
n bouery, dit het 'n effek op
al die goed wat gedoen is daarna, so ek
wil antwoorde daarop he’
and
‘
Kan ek hierby
aansluit? Dit essensieel 'n uitleg van die kontrakte. Die oomblik toe
die boukontrak gekanselleer word, kan daar nog
sprake daarna wees
daarvan dat die appellant versuim het om die bouwerk te voltooi? Die
boukontrak is gekanselleer en tesame met
die kansellasie van die
boukontrak is die lidmaatskap, of is die koopkontrak van die eiendom
gekanselleer. Lidmaatskap van die
huiseienaarsvereniging is 'n
funksie van die koopkontrak van die eiendom. Die oomblik wat daai
kontrak gekanselleer word, kan daar
dan nog sprake daarvan wees dat
die appellant onderworpe is aan die reels van die
huiseienaarsvereniging, laat staan nou die feit
dat oordrag nie gegee
kan word voordat die heffings nie bepaal is nie. Post die kansellasie
van die koopkontrak van die eiendom.
(a) kan daar nog sprake daarvan
wees dat die huiseienaarskap nog bevoegdheid oor die appellant het om
enige heffings of enige boete
te verhaal en (b) na die kansellasie
van die koopkontrak, kan daar nog sprake daarvan wees dat die
appellant enigsins onderhewig
gestel kan word aan die boetes dat die
boukontrak nie voltooi is nie nadat die boukontrak nie meer bestaan
nie en dat eienaarskap
van die huiseienaarsvereniging beeindig sou
word indien dit nie was vir die feit dat die eiendom nog nie oorgedra
is nie. maar
dis juis die probleem - as sy ophou om 'n lid te wees
van die huiseienaarsvereniging, is sy dan nog onderhewig aan boetes?”
[45]
Ms Adlam’s counsel then responded as follows to the Appeal
Panel’s questions:
‘
Ek het die vraag
oorweeg en meen dis tweeledig – daar is niks gepleit van die
aard in die arbitrasie nie en ek was onseker
hoe ver so ’n punt
gevoer kon word op appèl as dit nooit geopper is nie. Die
tweede punt is dat die huiseienaarsvereniging
nie direk ‘n
party tot enige van hierdie kontrakte was nie. Dit het regte gekry
ten behoewe van ‘n derde waar die voordele
aanvaar is en dit is
nie vir my seker dat as daardie koopkontrak gekanselleer is, dat die
beding ten behoewe van ‘n derde
daarmee saam gekanselleer word
nie. Wat vir my die deurslag gegee het, is die feit van registrasie
en dit wil vir my voorkom of
die feit van registrasi.e in die naam
van die appellant beteken dat sy ‘n lid van die
huiseienaarsvereniging bly in terme
van die bepalings van die
titelakte. Dit is weereens ‘n geval waar ek graag sou wou
saamstem en sê die appellant is
nie meer onderhewig nie, maar
dit lyk vir my ... nie veel aandag daaraan gegee nie. Dit lyk vir my
of daar probleme is met ‘n
argument dat die appellant die
gevolge van die registrasie kan oorkom op hierdie manier.“
[46]
It is clear from the above extract, that the Appeal Panel was
expressly advised (by Ms
Adlam’s counsel) that it was not open
to Ms Adlam to rely on the consequences of a finding that the sale
agreement and the
building agreement had been lawfully cancelled.
[47]
It is common cause that this issue had not been pleaded and was not
dealt with in the hearing
or in the award of Mr Amm. Thus, assuming
without finding that Ms Adlam is correct on this issue ie that the
Appeal Panel’s
jurisdiction is that of Mr Amm’s, it
follows that Mr Amm had no jurisdiction to decide the issue canvassed
in paragraphs
[72] and [73] and accordingly also not the Appeal
Panel.
[48]
There is no real dispute that the Appeal Panel had the jurisdiction
to decide the penalty
levies issue. They found in paragraphs [74] and
[75] of the award that Kruinkloof’s rule 13.2, provided for the
exercise
of a discretion when deciding to impose penalties or not.
The Appeal Panel found that the wording of the rule is incompatible
with
an automatic imposition of any penalties and the absence of any
demand prior to the litigation almost three years later lead to
the
ineluctable conclusion that penalties would not be imposed. Mr
Badenhorst contended that this might have been a good argument
and
might have passed the
Palabora
test had the last sentence of
paragraph [75] not linked the reasoning of that which was not within
the Appeal Panel’s jurisdiction,
to paragraphs [74] and [75],
such sentence being: ‘
Given the cancellation of both the
deed of sale and the building contract the probabilities are
overwhelming that Mr Wasserfall
snr did not seek to impose penalties
that he must have known or suspected to be unenforceable.
’(‘
the
linking sentence’
).
[49]
In my view, the linking sentence does not scupper the
Palabora
test. The linking sentence was no more than a ‘belts and
braces’ finding. The finding that Mr Wasserfall had exercised
a
discretion against imposing penalties had already been made in
paragraph [74] of the award. The linking sentence was a further

string in the bow of the reasoning. The linking sentence was
unnecessary in making such finding and I conclude that the linking

sentence is separable from the remainder of the findings in
paragraphs [74] and [75] of the award.
[50]
Mr Badenhorst argued further, on this point, that the heading in the
award which preceded
the discussion in paragraphs [71] and further,
is a clear indication that this section was one composite thought
process and not
capable of being severed. Such heading reads: ‘
The
Obligation to Complete the Building Operations’
.
[51]
In my view, the introductory portion of paragraph [74] is clearly
indicative that what
follows, is separable, it reads: ‘
There
is further, and in the alternative, no evidence whatsoever…..
’.
What then follows is an evaluation of the evidence. What was
considered and discussed in paragraphs [72] and [73], were
the legal
and factual consequences of the cancellation of both the deed of sale
and the building contract thus not an analysis
of the evidence
per
se
. The linking sentence relates to an evaluation of the evidence
and the probabilities in respect thereof. The two sections:
paragraphs
[72] and [73] on the one hand and paragraphs [74] and [75]
on the other, are conceptually distinct and thus separable.
[52]
Mr Van Vuuren argued that the facts relied upon in paragraphs [74]
and [75] were recorded
in paragraph 7.2.10 of the notice of appeal.
Mr Badenhorst pointed out that paragraph 7.2.10 was a sub-paragraph
of paragraph 7
of the notice of appeal which dealt with the
Conventional Penalties Act and that it is impermissible to stretch
the application
of paragraph 7.2.10 to cover the finding made in
paragraphs [74] and [75]. This appears to be correct.
[53]
Paragraph 4 of the notice of appeal, however, dealt squarely
with this issue being
the mechanism to be followed to impose
penalties and this was addressed by the Appeal Panel, which they were
perfectly entitled
to deal with. Moreover, this review focussed
exclusively on the findings in paragraphs [72] and [73] and
Kruinkloof had no quarrel
with the findings in paragraphs [74] and
[75] in their founding affidavit or heads of argument.
[54]
The crux of Mr Badenhorst’s argument was that the position was
clearly that none
of paragraphs [71] to [74] are covered by the
Appeal Panel’s powers as defined in terms of the Notice of
Appeal and thus
that there is no scope for separating good from bad
in terms of
Palabora
.
[55]
Mr Van Vuuren argued that the source of the Appeal Panel’s
jurisdiction is not to
be found in the grounds of the Notice of
Appeal. Their jurisdiction is the same as that of Mr Amm which
jurisdiction encompassed
the disputes, issues and questions set out
and/or those arising from the pleadings
[19]
.
For this proposition he relied on the decision of
Sentrale
Kunsmis Korporasie
[20]
[56]
Annexure ‘X’ does not in its terms provide that the
Appeal Panel’s jurisdiction
is limited to the grounds of
appeal. It sets out a procedure. As pointed out by Mr Van Vuuren,
what would the position be if at
the hearing of the appeal another
more valid reason was to arise for finding that the ‘award’
were sustainable? Relying
on
Sentrale Kunsmis
he argued that
never can it be that a notice of appeal can circumscribe
jurisdiction. In my view, it would indeed lead to an absurdity
if
that were the general rule although, the parties could conceivably,
by agreement, limit the Appeal Panel’s jurisdiction
in this way
but I find that it did not occur here.
[57]
In summary on the second ground of review:
57.1. The issue whether
penalties were payable served before Mr Amm and the Appeal Panel thus
had the jurisdiction to decide the
issue
[21]
.
57.2. The Appeal Panel
could decide that penalties were not payable for another reason not
canvassed in the hearing before Mr Amm
nor traversed in his reasons
for his award provided the parties were afforded an opportunity to
deal with the point before the
Appeal Panel and it constituted a
purely legal argument.
[22]
57.3. If the jurisdiction
of the Appeal Panel is determined with reference to the notice of
appeal (which I have found not to be
the case in this matter), the
issue of penalties is dealt with in paragraph 4 thereof.
57.4. If the Appeal Panel
had no jurisdiction to decide the penalties issue for the reasons set
out in paragraphs [72] and [73],
I find that the issue of penalties
served before Mr Amm and that the Appeal Panel could determine such
issue on the basis reflected
in paragraphs [74] and [75] which
paragraphs did not form the basis of the review. Kruinkloof only took
issue with paragraphs [72]
and [73].
Conclusion
[58]
The relief sought by Kruinkloof in its notice of motion is that the
award of the Panel
of Appeal Arbitrators dated 9 June 2020, save for
paragraphs [68] to [70] and paragraph [82.2] be set aside
[23]
.
Implicit in this request is an interpretation that the reasons are
part of the award.
[59]
Much was made of this at the hearing and in the additional heads of
argument filed. In
my view, this question is to be answered with
reference to the four corners of the
Arbitration Act and
the caution
expressed by the Constitutional Court in
Lufuno
Mphaphuli
[24]
that
Section 33(1)
of the
Arbitration Act should
not be interpreted
in a manner that will enhance the powers of a court to set aside
arbitration awards. If
Section 33(1)
were to be interpreted as
suggested by Mr Badenhorst, it would mean that every time an
application to make an award an order of
court is placed before a
court, such court would be obliged to scrutinise and consider the
reasoning process that led to the executory
part of the award being
granted. Such an approach would fly in the face of what the litigants
expressly agreed, being that the
legal issues should be left for the
decision of the arbitrator (and in this case the Appeal Panel too).
The complaints which can
be raised before a court are very limited in
scope and must be directed at the method utilised to reach the
conclusion and not
at the result itself. One should not confuse the
reasoning with the conduct of the proceedings.
[25]
The reasons are not considered by a Court when enforcing an award.
The reasons are accordingly not sanctioned or endorsed by making
the
award an order of court. The executory part of the award (the order)
is. The purpose of an order is to make the processes of
the high
court in regard to the execution of judgments available to the
successful party in the arbitration.
[26]
[60]
Section 31
of the
Arbitration Act authorises
a court to make an award
an order of court which should be read in context:
Section 28
provides for the parties to comply with the award. This is clearly a
reference to the “
order”
, which is the
Arbitrator’s award. The ordinary meaning of the word “award”
is: “
to
give
or
order
the
giving
of
(something)
as
an
official payment compensation or prize
” (Oxford
Dictionary); and “
money or a prize following an official
decision”
by example “
the jury awarded liable
damages of
£100 000.
” (Cambridge Dictionary);
and “
To declare to be entitled, as by a decision of court of
law or an arbitrator
” (Chambers Dictionary).
[61]
In my view, the reasons in an arbitral award can and should be used
to assist in the enquiries
relating to jurisdiction, whether there
were irregularities in the process and the like. Very much as such
reasons were used in
this matter. However, when it comes to what is
to be made an order of court, a court only endorses the executory
part of the arbitral
award.
[62]
There was some mudslinging during the course of the additional heads
of argument which
were filed. Accusations were made that the court
was being mislead and other impropriety was alleged. I have found
none. In my
view, counsel argued what the papers allowed.
Order
[63]
I accordingly make the following order:
63.1. The review
application is dismissed with costs including the costs of two
counsel one of which is a senior counsel, where
so employed.
63.2. The following
accidental slip in paragraph 82.4 of the award of the Panel of Appeal
Arbitrators dated 9 June 2020 is corrected
in terms of
Section 31(2)
of the
Arbitration Act 42 of 1965
, as amended so that paragraph 82.4
reads: ‘The respondent is to pay the costs of this arbitration
which costs are to include
the costs occasioned by the employment of
two counsel where applicable;’
63.3. Paragraph 82 of the
award of the Panel of Appeal Arbitrators dated 9 June 2020 as amended
in paragraph 63.2 hereof, is made
an order of court.
63.4. The applicant is to
pay the costs of the counter-application including the costs of two
counsel one of which is a senior counsel,
where so employed.
OPPERMAN
Judge
of the High Court
Gauteng
Local Division, Johannesburg
Counsel
for the applicant: Adv CHJ Badenhorst SC and Adv JW Steyn
Instructed
by: Rossouws, Lesie Inc
Counsel
for the third respondent: Adv PHJ Van Vuuren SC and Adv HM Viljoen
Instructed
by: Ramsay Webber Inc
Counsel
for the first and second respondents: None
Date
of hearing: 18 August 2021
Date
of additional heads of argument: 23 August 2021 (3
rd
respondent), 30 August 2021 (applicant), and 6 September 2021 (3
rd
respondent)
Date
of judgment: 29 March 2022
[1]
The Amm award reads:
“
1. The
defendant’s special defence of prescription is dismissed with
costs on the same basis as that listed in paragraph
6 below.
2. The defendant
is to make payment to the claimant of the costs pertaining to the
defendant’s withdrawal and abandoned
counterclaim.
3. The defendant
is liable to make payment to the claimant in each of the following:
(a)
each of the relevant monthly levy payments from the period April
2016 as required in terms
of
rule 11.1
of annexure SOC3 of the
claimant’s statement of claim;
(b)
each monthly levy penalty (being 3 x the
rule 11.1
monthly levy) as
provided for and to be calculated in terms of
rule 11.5.1
of
annexure SOC3 of the claimant’s statement of claim; and
(c)
the
rule 2.4.2
monthly penalty levies from 1 September 2016 (being 8
x the
rule 11.1
monthly levy and as provided for in and to be
calculated in terms of annexure SOC3 of the claimant’s
statement of claim).
4. Interest on each of
the aforesaid amounts
a tempore morae
to date of payment.
5. To the extent
necessary and/or required, in the event of either of the parties
failing to reach an agreement and/or consensus
on the calculation of
any of the amounts due, owing and payable by the defendant to the
claimant in respect of paragraphs 3(a)
to (c) above, any of the
parties may approach the arbitrator, on reasonable and appropriate
written notice to the other party,
for appropriate direction and/or
hearing and subsequent award on the specific issues.
6. The defendant is
liable to make payment to the claimant of the claimant’s costs
of the arbitration to date, the costs
of the arbitrator to date, and
the transcription services to date.”
[2]
The award which was made reads as follows:
“
1. The appellant
is ordered to pay the costs occasioned by the withdrawn
counterclaim;
2. The appellant’s
prescription defence is upheld in respect of the arrear levies due
for April 2016 and May 2016;
3. The appellant is
ordered to pay the sum of R72 000,00 plus
mora
interest
at the rate of 10.5% per annum from date of
mora
to date of
payment;
4. The respondent is to
pay the costs of this arbitration as well as the costs reserved in
Award No. 1 and Award No. 2 by the
Honourable retired Judge Van der
Merwe, which costs are to include the costs occasioned by the
employment of two counsel where
applicable;
5. The remaining orders
issued by the arbitrator are set aside.”
[3]
[1986] 2 Lloyd's Rep. 209 Lloyd L.J. See too the leading case on
rule 42(1)(b):
Firestone
South Africa (Pty)Ltd v Gentiruco AG
,
1977 (4) SA 298
(A) at 306F- H where the principle was distilled to
encompass only the correction of an error in expressing the judgment
or order
not the substance thereof.
[4]
B
ristol-Myers
Squibb
C
o
v
Baker
Norton
Pharmaceuticals
Inc
(Costs)
Court
of
Appeal
(Civil
Division)
[2001] EWCA Civ 414
28 Mar 2001
[5]
Paragraph
6 - 169
[6]
Mutual
Shipping
Corp
of
New
York
v
Bayshore
Shipping
Co
of
Monrovia
(The
Montan)
[1985] 1 W.L.R. 625
, [1984] 12 WLUK 262
[7]
Quoted in paragraph [24] hereof.
[8]
To
borrow from the colourful description in
Bristol-Meyers.
[9]
or
more appropriately phrased: If I mistook the animal on this scene.
[10]
Vidavsky
v Body Corporate of Sunhill Villas
,
2005 (5) SA 200
(SCA) at para [17]
[11]
2018 (5) SA 462
(SCA) at [48]
[12]
1938
TPD 55
and followed in
Telcordia
Technologies Inc v Telkom SA Ltd
,
2007 (3) SA 266 (SCA)
[13]
Hos+Med
Medical Aid Scheme v Thebe Ya Bophelo Healthcare Marketing &
Consulting (Pty) Ltd and Others
[2007] ZASCA 163
;
2008 (2) SA 608
(SCA) at
[30]
[14]
In a typical South African arbitration the pleadings are the
statement of claim, the statement of defence, the statement of
counterclaim and the statement of defence to the counterclaim. In
Hos+Med
the parties had filed additional pleadings using the titles of
pleadings conventionally used in the High Court rules but that
is of
no moment.
[15]
The
arbitration clause in
Telcordia
referred
to by Harms JA in par [7] of that judgement provided that all
disputes between the parties that may arise had to be determined
by
an arbitrator. This included disputes related to interpretation of
the agreement as well as disputes of a legal nature. See
par [36], &
[52] of
Telcordia
and
par [56] where the point is made that ‘to exceed one’s
powers does not go to merit but jurisdiction’.
[16]
Which
was concerned with the issue of irregularity in the proceedings
before the arbitrator and with an exceeding of powers, as
appears
from par. [52] and [80] – [86] of
Telcordia
,
see also par. [95] & [99]
[17]
It
could also be synonymous with ‘the terms of the agreement
referring a particular set of issues to an arbitrator (the

reference)’ or to ‘the terms of the arbitration clause’
and of course to the substantive law of jurisdiction,
but such
considerations do not arise for consideration in this case.
[18]
An
example is given at par. [69] of
Telcordia
that:
‘[A]n error of law may lead an arbitrator to exceed his
powers…’ Contra par. [86] ‘[I]t is a fallacy
to
label a wrong interpretation of a contract, by the arbitrator as a
transgression of the limits of his power….[I]f he
errs in his
understanding or application of local law the parties have to live
with it.’
[19]
This case is thus to be distinguished from
Hos-Med
in
which case the issues were limited to the pleadings.
[20]
Sentrale
Kunsmis Korporasie (Edms) Bpk v NKP Kunsmisverspreiders (Edms) Bpk
,
1970 (3) SA 367
(A) at 395F
[21]
Thus,
the notice of appeal did not circumscribe jurisdiction.
[22]
Sentrale
Kunsmis
(supra)
at p395F
[23]
It
is not insignificant that Kruinkloof seeks the enforcement of the
Appeal Panel’s award in respect of the finding of prescription

of the levies for April and May 2016. This request evidences the
fact that Kruinkloof concedes that the award is good at least

insofar as it supports such relief and thus, to that extent,
separable from the rest.
[24]
Lufuno
Mphaphuli & Associates (Pty) Ltd v Andrews and Another
,
2009 (4) SA 529
(CC) at para [235]. See too
Palabora
(supra) at paragraph [8]
[25]
Telcordia
(supra)
paragraphs [75] and [76]
[26]
Palabora
paragraph
[51]