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[2010] ZAECPEHC 49
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Mzingisi Development Trust and Others v Nelson Mandela Bay Metropolitan Municipality (939/10) [2010] ZAECPEHC 49 (17 August 2010)
IN
THE HIGH COURT OF SOUTH AFRICA NOT REPORTABLE
EASTERN
CAPE, PORT ELIZABETH
Case
No.: 939/10
Date
heard: 5 August 2010
Date
delivered: 17 August 2010
In
the matter between:
MZINGISI
DEVELOPMENT TRUST
First
Applicant
DIETER
HEINZ WERNER ROHRICH N O
Second
Applicant
SINDISWA
GLADYS JAWUKA N O
Third
Applicant
SILAS
NTUTUZELO NKANUNU N O
Fourth
Applicant
MZIMKHULU
GORDON DILIMA N O
Fifth
Applicant
MCE
DISI
ORSMOND XUNDU N O
Sixth
Applicant
NYANISILE
MOSES BOYCE N O
Seventh
Applicant
and
NELSON
MANDELA METROPOLITIAN MUNICIPALITY
Respondent
JUDGMENT
EKSTEEN
J:
[1] The first applicant is a Trust,
established during 1992, as a community based Trust which has for its
principle purpose community
led development and large scale housing
and other development projects in and around Port Elizabeth. The
second to seventh applicants
are the trustees of the first applicant.
[2] The applicants launched this
application against the respondent for a variety of relief all of
which has its foundation in a
Land Availability and Services
Agreement concluded between the applicants and the respondent during
on or about December 1997.
The respondent did not attempt to raise
any substantive defense to the relief claimed and conceded all the
relief which the applicant
sought. The only remaining issue relates
to the costs occasioned by the application.
[3] The applicants rely on a written
Agreement being the Land Availability and Services Agreement to which
I have referred above.
On 25 February 2010 the applicants were
advised that the respondent council had decided to “disengage”
from the development
projects being undertaken by the applicants
pursuant to the Land Availability and Services Agreement. On the
same day the respondent
took a resolution in terms of which it
purported to rescind all agreements concluded with the first
applicant. This resolution
resulted in the respondent declining to
give effect thereafter to any of its obligations in terms of the
Agreement and in particular
it declined to advertise or to further
consider the application for the rezoning and subdivision of the
remainder of Erf 590 Bethelsdorp,
and the remainder of Erf 921
KwaDwesi, which had been submitted by the first applicant as a
necessary prerequisite for the effective
execution of its development
project undertaken under the Land Availability and Services
Agreement. These events gave rise to
the launching of the
application.
[4] The relief, as I have stated
above, was conceded, however, the respondent disavows any liability
for the costs occasioned by
the application. It relied on two
grounds for this contention, firstly that the first applicant was
obliged to refer the dispute
between the parties to arbitration and,
secondly, that the first applicant was not entitled to make
application for rezoning and
subdivision of the property by reason of
the fact that it was not the owner of the property. By virtue of the
conclusion to which
I have come below it is not necessary to consider
the second ground raised.
[5] The applicant relies on the
written agreement as the foundation for the application. Paragraph 8
of the written Agreement is
headed “BREACH AND ARBITRATION”.
Paragraph 8.4 provides as follows:
“
8.4 In the event of any dispute
between the parties as to any one of the following:-
the amounts to be paid as
compensation in the event of the termination of this Agreement by
reason of a default by any party,
as per 8.3 above; and
8.4.2 any of the obligations of the
parties in terms of or contemplated in or in relation to this
Agreement or any agreement reached
or to be reached between the
parties as contemplated in this Agreement, or the interpretation of
any of the provisions of this
Agreement or of any agreement reached
between the parties as contemplated in this Agreement
such dispute shall be referred to
arbitration in terms of 8.5.1 and 8.5.2 below, and subject to the
provisions thereof.”
[6]
Paragraph
8.5 stipulates as follows:
“
8.5 If a dispute arises between
the parties in regard to any matters contemplated in this Agreement,
or the rights or obligations
of either party in terms hereof or
arising herefrom, either party shall be entitled and obliged to
require, on written notice to
the other, that such dispute be
submitted to arbitration and then such dispute shall be settled by
arbitration … “
[7] This obligation to submit to
arbitration is reinforced in clause 8.13 of the Agreement which
provides as follows:
“
8.13 The provisions of this
entire clause dealing with arbitration shall constitute the
irrevocable consent by the parties to arbitration
in terms hereof and
neither party shall be entitled to withdraw from or claim at any such
proceedings that he is not bound by these
provisions or by any ruling
or any procedure laid down in terms of such provision.”
[8] On consideration of the content of
the arbitration clause set out in the Agreement it cannot be gainsaid
that the parties had
firmly bound themselves to arbitration.
Section
3(1)
of the
Arbitration Act, 42 of 1965
provides that an arbitration
agreement can be terminated only by consent by all the parties unless
the arbitration agreement itself
provides otherwise. The effect
thereof is that the cancellation of the contract pursuant to a breach
thereof does not terminate
the operation of the arbitration clause.
See
Gardens Hotel (Pty)
Ltd and Others v Somadel Investments (Pty) Limited
1981 (3) SA 911
(W). Indeed, in the present matter, clause 8.15
provides specifically that where either party purports to cancel the
agreement
the provisions of the agreement shall continue to be in
force as far as any dispute regarding any matter contemplated in the
agreement
or any other agreement between the parties contemplated or
referred to in the main agreement is concerned for purposes of
resolving
such dispute by arbitration.
[9] It is plain from the relief sought
in the Notice of Motion that a dispute had arisen in respect of the
cancellation of the Land
Availability and Services Agreement hence
the applicants’ sought a declarator that the resolution adopted
by the council
in terms of which it purported to rescind the
agreement was unlawful and of no force or effect. This, it appears
to me, is a matter
covered by the arbitration agreement. Whilst it
is so, as provided for in
section 3(2)
of the
Arbitration Act, that
a
arbitration agreement does not deprive the court of its jurisdiction
of the dispute, the courts are nevertheless loathed to intervene
with
the agreement entered into between the parties unless there are
special circumstances justifying such an intervention. This
approach, generally to respect the agreement between parties to bind
themselves to private arbitration, has recently been endorsed
in the
Constitutional Court in the matter of
Lufuno
Mphaphuli & Associates v Andrews
2009
(4) SA 529
(CC) at 585 and following.
[10] In all the circumstances I am
satisfied that the applicants had firmly and irrevocably bound
themselves to have disputes of
this nature decided on arbitration.
No special circumstances emerge from the present case which would
justify deviation there
from. In the circumstances I consider that
it was inappropriate for the applicants to have brought this matter
to court with all
the cost implications associated therewith. The
respondent, however, did not seek to defend its conduct and, upon a
consideration
of the application filed, saw the error of its ways and
has conceded that it was wrong.
[11] In these circumstances it would
be appropriate to make no order as to costs thus leaving each party
to pay its own costs.
________________________
J W EKSTEEN
JUDGE OF THE HIGH COURT
Appearances:
For the Applicants:
Adv
G Goosen, S C instructed by Silas Nkanunu & Van Loggerenberg
Attorneys, Port Elizabeth
For
the Respondents:
Adv R
Buchanan S C and Adv T Booi instructed by Le
Roux
Incorporated, Port Elizabeth