About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2011
>>
[2011] ZAGPPHC 190
|
|
Cash Paymaster Services (North West) (Pty) Ltd v South African Social Security Agency (6406/2011) [2011] ZAGPPHC 190 (13 September 2011)
REPORTABLE
IN THE NORTH GAUTENG HIGH
COURT, PRETORIA (REPUBLIC OF SOUTH AFRICA)
DATE
13/09/2011
CASE
NO: 6406/2011
In
the matter between:
CASH
PAYMASTER SERVICES
(NORTH
WEST) (PTY)
LTD
....................................................................................
APPLICANT
And
THE
SOUTH AFRICAN SOCIAL SECURITY
AGENCY
.....................................
RESPONDENT
JUDGMENT
KOLLAPEN.
J
[1]
The applicant seeks an order in the following terms:
1.
Declaring that the respondent has no right to appeal the ruling of
the arbitrator, Advocate E S J Van Graan SC, dated 11 November
2010,
in terms of which ruling the arbitrator dismissed the respondent's
exception to the applicant's statement of claim filed
in the
arbitration between the parties.
2.
Setting aside the respondent's notice of appeal dated 24 November
2010 in terms of which the respondent noted an appeal against
the
ruling of the arbitrator to dismiss the respondent's exception.
Background
[2]
The applicant and the respondent entered into a service level
agreement (SLA) on 4 June 2001 at Mafikeng in terms of which the
applicant undertook to provide certain services with regard to the
social grant cash payment system of the respondent.
[3]
The SLA contains an arbitration clause and a dispute arose in terms
of the SLA which was then referred to arbitration.
[4]
Two preliminary meetings were held on 21 October 2009 and thereafter
on 7 June 2010 and were presided over by Advocate Fabricius
SC the
initial arbitrator, and then Advocate Van Graan SC his successor.
[5]
The minutes of those meetings were reduced to writing and in broad
terms dealt with the procedure to be followed in the arbitration,
the
timeframes for the arbitration and the conditions of appointment of
the arbitrator. In addition and at the meeting of 21 October
2009,
the parties agreed to a right of appeal notwithstanding anything
contrary contained in the SLA.
[6] The applicant then
filed its statement of claim to which the respondent filed an
exception which was dismissed by the arbitrator
with costs on 11
November 2010.
The
respondent on 24 November 2010 filed a notice of appeal against the
decision of the arbitrator of 11 November 2010.
The
Dispute
(i)
The extent of the right of appeal
[7]
The applicant's stance is that the pre-arbitration agreement that
provides for an appeal does not provide the respondent with
the right
of appeal against the interlocutory decision of the arbitrator to
dismiss the exception.
The respondent in turn
contends that the wording of the pre-arbitration agreement is
sufficiently wide to confer a right of appeal
against any decision of
the arbitrator.
(ii)
Jurisdiction
[8]
The respondent contends that the High Court has no jurisdiction to
entertain the application as the pre-arbitration agreement
provides
for a right of appeal to be heard by an appeal tribunal consisting of
three senior counsel and that the dispute with regard
to the
appealability of the arbitrator's decision should be determined by
the appeal tribunal including the question of whether
an appeal could
lie against the dismissal of the exception.
[9] (iii) At the hearing
of the matter the court raised a further issue for consideration by
the parties, namely whether the SLA
which provides in clause 25.6.1
that any dispute between the parties unless resolved amongst the
parties will be referred to and
be determined by arbitration could
mean that the dispute involving the interpretation of the right to
appeal in the pre-arbitration
agreement should then have been
referred to arbitration for its resolution.
The
parties were afforded the opportunity to make written submissions on
this further aspect and both parties provided useful heads
of
argument in this regard.
[10] Having regard to the
above the issues in dispute and for determination are the following:
(a)
The interpretation of clause 25.6.1 of the SLA and in particular
whether arbitration was mandatory in respect of the dispute
around
the meaning of the right of appeal.
(b)
The scope and extent of the right of appeal and whether it could be
interpreted to cover interlocutory rulings.
(c)
The jurisdiction of the High Court.
Clause
25.6 of the SLA
[11]
The SLA provides as follows:
"Settlement of
Dispute:
25.6.1 Should any dispute
arise between the parties in connection with the interpretation or
application of the provisions of this
Agreement or its breach or
termination or the validity of any documents furnished by the parties
pursuant to the provisions of
this Agreement, that dispute will
unless resolved amongst the parties, be referred to any be determined
by arbitration in terms
of this clause.
25.6.2 Any party to this
Agreement may demand that a dispute be determined in terms of this
clause by written notice given to the
other party. The party
commencing legal action shall decide whether the dispute will be
resolved by way of arbitration or litigation
and in the even of the
former, this clause shall be taken to constitute the submission of
the parties to arbitration; and"
[12]
The pre-arbitration agreement amends the SLA and is not an
independent agreement. It amends clause 25.6.8 of the SLA which
provides that "the decision of the arbitrator will be final and
binding on the parties to the dispute" by expressly providing
for a right of appeal. Accordingly it must follow that any dispute
around the pre-arbitration agreement must be dealt with in terms
of
clause 25.6 which governs the procedure to be followed in the
settlement of disputes.
It
is common cause that a dispute has risen between the parties as
contemplated in the SLA (as amended) and the question that follows
is
what are the procedures that are required to be followed in resolving
such a dispute. While clause 25.6.1 provides clearly in
relation to
such a dispute that it will "unless resolved among the parties
be referred to and determine by arbitration"
suggesting that
arbitration is the preferred choice of the parties it is also
instructive that clause 25.6.2 then provides the
mechanism for this
to happen and in particular provides that "any party to this
agreement may demand that a dispute be determined
in terms of this
clause by written notice given to the other party.
[13]
It is common cause that the respondent at no stage gave written
notice to the applicant that the new dispute be determined
in terms
of clause 25 of the SLA and accordingly if regard be had to the
remaining provisions of clause 25.6.2 then the applicant
had an
election whether to proceed by way of arbitration or by way of
litigation. As none of the parties invoked clause 25.6.2
by giving
the requisite written notice it cannot be accordingly contended that
arbitration was peremptory or that the provisions
of clause 25 (read
in their entirety) ousts the right of ether party to approach court.
At best it gives the parties the option
of arbitration and if either
of them elects such an option they are obliged to give written notice
to this effect. This did not
happen and accordingly it could not be
contended that the new dispute around the interpretation of the right
to appeal provisions
in the pre-arbitration agreement could only be
resolved through arbitration.
The
Scope and Extent of the Right of Appeal
[14]
The relevant provisions of the pre-arbitration agreement of 21
October 2009 provide as follows: -
"
12. APPEAL
12.1
The arbitrator will endeavour to make an award and give reasons for
his award, within 15 (fifteen) days of conclusion of the hearing.
12.2
The parties shall have the right to appeal, notwithstanding anything
to the contrary contained in the SLA.
12.3
Any party dissatisfied with the award shall, within 10(Ten) days
after the award, give notice to the other of his intention
to appeal
the award.
12.4
The notice of appeal shall state whether the whole or only a part of
the award is appealed against and if only part of such
award, it
shall state which part and shall further specify the finding of fact
and or ruling of law appealed against and the grounds
upon which the
appeal is founded."
[15]
The applicant contends that clauses 12.1 and 12.2 of the
pre-arbitration agreement do not provide the respondent with the
right of appeal against the interlocutory decision to dismiss the
exception whilst the respondent contends that the wording of clause
12.2 is wide enough to confer a right of appeal against any decision
of the arbitrator.
In
interpreting clause 12.2 one should not interpret it in isolation but
in context with the other clauses in the agreement and
in this
instance with clause 12 in its entirety. See Swart v Cape Fabrix
(Pty) Ltd 1979 1 p202A at 202C.
[16]
The language of clause 12 refers consistently to an "award"
of the arbitrator which could be the subject of an appeal.
Notwithstanding that clause 12.2 provides that the parties "shall
have the right to appeal" it must be clear from the
clause as a
whole that such an appeal would only lie in respect of "an
award".
The
meaning of the term award must then be considered and in the
Arbitration Act it simply defines award as including interim awards
which does not take the matter much further.
To
ascribe the wide and unrestricted meaning the respondent contends for
in interpreting the term award would mean that every decision
or
ruling of the arbitrator would be appealable as opposed to a decision
that disposes (in full or in part) of the dispute. It
would then
render rulings around postponements, the admissibility of documents
and the admissibility of evidence and all such interlocutory
rulings
appealable resulting in an arbitration process that could potentially
be long drawn out and without any end in sight. If
indeed the parties
intended such an eventuality they would have used in conjunction with
the term award the words ruling or decision
or both. Award is in my
view different and distinguishable from a ruling. The former would
definitively dispose of a dispute while
the latter would not.
[17]
In this regard the arbitrator characterises the decision to dismiss
the exception as a ruling and not an award which is a factor
to be
considered in determining whether the parties agreed to a right of
appeal as wide as the respondent contends for. Surely
if the
arbitrator who was tasked with resolving the dispute and was privy to
the pre-arbitration agreement of 21 October 2009 regarded
his ruling
as an award he would have stated this to be the case.
[18]
I am not convinced that the pre-arbitration agreement provides for
such a wide right of appeal and that accordingly the common
law
relating to appealability of purely interlocutory decisions would
apply, namely that such decisions are not appealable. In
my view the
kind of appeals envisaged are appeals against an award. The ruling by
the arbitrator on 11 November 2010 dismissing
the defendant's
exception to the plaintiff's statement of claim is ruling as it
professes to be and not an award and therefore
in my view no appeal
would lie against such a ruling.
The
Jurisdiction of the High Court
[19]
The respondent contends that the pre-arbitration agreement provides
for an appeal tribunal consisting of three senior counsel
to consider
appeals against an arbitrator's award and that accordingly the appeal
tribunal should have had the opportunity to decide
the issue or
whether it has jurisdiction to adjudicate upon the matter. To that
extent its submission is that while the jurisdiction
of this court is
not ousted, the application is premature in that it should have
served before the appeal tribunal first.
In
Gutsche Family Investments (Pty) Ltd v Mettal Equity Group
2007 5 SA
491
at 496 (A-B) the court held as follows:
"Where
the parties themselves disagree as to the powers conferred on an
appeal arbitrator, the appeal arbitrator cannot extend
the area of
jurisdiction over the very matter which he is required to resolve.
And if he does, he will act beyond his mandate.
The contention
advanced by the appellants is that the appeal agreement empowered the
appeal arbitrator finally to determine his
own jurisdiction. It is a
far reaching contention implying that the agreement constituted an
ouster of the court's jurisdiction.
Such an agreement must be
provided for specifically, and in the clearest terms."
It
is common cause that the parties are not in agreement with the scope
and extent of the right of appeal provided for in the pre-arbitration
agreement. Accordingly it must follow that the parties are also in
disagreement as to the powers conferred on the appeal tribunal
(that
is whether it can consider an appeal against an interlocutory ruling)
and as such and having regard to the dicta in Gutsche
(supra) it
would be impermissible to have the appeal tribunal determine its own
jurisdiction.
[20]
The respondent's stance is in my view not sustainable and my finding
is that this court does have the necessary jurisdiction
to determine
the issue. If there is to be merit in the submission that the court's
jurisdiction is ousted this should be provided
for in the clearest
terms. This is not the case and the disagreement between the parties
that effectively precludes the appeal
tribunal from determining its
own jurisdiction must lead to the inescapable conclusion that this
court indeed has jurisdiction
to determine the dispute between the
parties.
For
these reasons the application must fail and in the circumstances I
make the following order:
1.
It is declared that the respondent has no right to appeal the ruling
of the arbitrator, advocate E S J Van Graan SC dated 11
November
2010, in terms of which ruling the arbitrator dismissed the
respondent's exception to the applicant's statement of claim
filed in
the arbitration between the parties.
2.
The respondent's notice of appeal dated 24 November 2010 in terms of
which the respondent noted an appeal against the ruling
of the
arbitrator to dismiss the respondent's application is hereby set
aside.
3.
The respondent is ordered to pay the cost of the application.
N
J KOLLAPEN
JUDGE
OF THE NORTH GAUTENG HIGH COURT
Heard
on
:
...................
28 July 2011
For
the Applicant
:
.......
Adv R Strydom
SC
Instructed
by
:
............
Smit Sewgoolam
Incorporated, Johannesburg
For
the Respondent
: Adv V S Notshe SC
Instructed
by
:
.........
State Attorney,
Pretoria
Date
of Judgment
: 13 September 2011