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[2022] ZAECQBHC 48
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Gqange Construction CC v Kay N.O and Another (3905/2021) [2022] ZAECQBHC 48 (13 December 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, GQEBERHA)
CASE NO: 3905/2021
In
the matter between:
GQANGE
CONSTRUCTION CC
Applicant
And
TREVOR
KAY NO
First Respondent
CAPE
DEPARTMENT OF HUMAN
Second Respondent
SETTLEMENT
JUDGMENT
NONCEMBU
J:
[1]
This is an application for the review and setting aside of the
arbitration award dated
30 June 2021 by the first respondent, in a
matter relating to a principal building contract between the
applicant and the second
respondent. The applicant also seeks
condonation of the late-filling of the review application, as well as
the striking out of
certain portions of the second respondent’s
answering affidavit.
[2]
Both applications are opposed by the second respondent, whilst the
first respondent
filed a notice to abide by the decision of the
court.
[3]
I will deal with both applications simultaneously because in dealing
with the condonation
application, I will inevitably have to deal with
the merits of the review, as the prospects of success thereat play a
critical
role in the determination. I will thereafter deal with the
striking out application, should it still be warranted.
[4]
The material facts of the matter are summarised quite succinctly in
the applicant’s
heads of argument. Without necessarily
regurgitating, I deem it expedient to simply rehash them as they
appear therein. They are
–
The
applicant and the second respondent entered into an agreement in
terms of which the applicant was contracted by the second respondent
to construct 32 RDP houses in Louterwater in the Kou-Kama Local
Municipality (the contract). The agreement was regulated by the
JBCC
Principal Building Agreement Series 6.1 (PBA).
[5]
Clause 30 of the PBA makes provision for the eventuality of a dispute
arising between the parties
in relation to the contract. It provides
for a resolution of such dispute by way of adjudication, and in the
event of either party
being dissatisfied with the outcome of the
adjudication process, for a referral to arbitration without the
option of an appeal.
[6]
The applicant commenced work in terms of the contract on or about 18
February 2018.
[7]
On 10 September 2019 the second respondent terminated the contract.
This gave rise
to certain disputes between the parties which related,
inter alia
,
to an amount of R1 965 220.48 which was claimed as being due to the
applicant in terms of its final account to the second respondent.
These disputes were referred to adjudication in terms of the PBA.
[8]
At adjudication the applicant was awarded an amount of R291 553.70 by
the adjudicator,
instead of the R1 965 220.48 it had claimed.
Unsurprisingly, the applicant was dissatisfied with this outcome and
referred the
matter to arbitration.
[9]
The first respondent was appointed as arbitrator in the matter. After
considering
the matter, he caused publication of his award on 30 June
2021 in which he declared,
inter alia
,
that:
9.1
the total amount of R507 260.98 Value Added Tax zero rated, was due
to the applicant and was to be paid by the second respondent
within
14 calendar days of the date of publication of the award, failing
which, interest on the outstanding amount would begin
to run from the
due date at the rate of 7% per annum until payment in full was
received by the applicant;
[1]
9.2
the second respondent was to repay the applicant the sum of R67
447.50 in costs of the arbitration previously paid by the applicant
within 14 calendar days of the date of publication of the award,
failing which, interest on the outstanding amount would begin
to run
from the due date at the rate of 7% per annum until payment in full
was received by the applicant;
[2]
and
9.3
the second respondent was to pay the costs of suite.
[10]
This is the award that the applicant now seeks to have reviewed and
set aside. The application is premised
on section 33(1) of the
Arbitration Act.
[3]
The basis of
the application is that in arriving at his decision, the first
respondent exceeded the bounds of his powers as arbitrator
or
alternatively, committed a gross irregularity by improperly ascending
into the arena.
[11]
This is predicated upon a view that at the adjudication proceedings,
a submission was made on
behalf of the applicant, which submission
was never disputed by the second respondent, to the effect that in
applying the provisions
of clause 26.11 of the PBA, the amount
claimed (R1 965 220.48) by the applicant in its final account to the
second respondent was
never disputed. According to the applicant, as
the second respondent did not dispute the amount within 45 days, it
followed that
it was deemed to have accepted the amount as being
fully due and payable to the applicant.
[12]
It appears that the adjudicator also agreed with this view, although
in his final decision he
only awarded the applicant an amount of R291
553.70 instead of the full amount claimed.
[13]
The arbitrator did not agree with this submission, and the
adjudicator’s view in this regard,
as he believed that the
situation in point was one rather closely allied to clauses 26.6,
26.7 and 26.8 of the PBA where, the failure
by the Principal Agent
(PA) to make a fair assessment of the contractor’s claim
(applicant) and adjust the contract value
within 20 working days, the
claim would be deemed to be refused, following which the contractor
could give notice of a disagreement
where no assessment is received.
[14]
In accordance with this view, the arbitrator rejected the above
submission by the applicant,
and held that the final amount due to
the applicant, if any, was yet to be calculated.
[4]
He thereafter continued to do the said calculation, after which he
concluded that the total amount due to the applicant by the
second
respondent was the amount of R507 260.98, which amount became the
final award excluding costs.
[5]
[15]
This is the conduct which the applicant alleges to have been beyond
the powers of the first respondent
as arbitrator, thus committing a
reviewable irregularity.
[16]
The application
in casu
was launched on 15 December 2021, approximately 4 months and 12 days
after the publication of the award. The applicant acknowledges
that
the review ought to have been launched by no later than 3 August
2021, a period which falls within 6 weeks of the publication
of the
first respondent’s award. To that end it seeks condonation of
the late filling of the review application.
[17]
Section 33(2) of the Arbitration Act which deals with reviews
provides that –
‘
An
application pursuant to this section shall be made within six weeks
after the publication of the award to the parties: Provided
that when
the setting aside of the award is requested on the ground of
corruption, such application shall be made within six weeks
after the
discovery of the corruption and in any case no later than three years
after the date on which the award was so published.’
[18]
The applicant contended that the delay in bringing the application
was not due to any negligent,
careless or intentional conduct on its
part, but rather due to circumstances beyond its control. It further
argued that it enjoys
good prospects of success in the review. The
respondent argued the contrary, submitting that the application ought
to be dismissed
with costs, on this ground alone. It also raised a
number of points
in limine,
inter alia,
that the
applicant had failed to lodge its application in terms of section
33(1) of the Arbitration Act.
[19]
It is a well-established principle that condonation is not to be had
for the mere asking, and
that good cause must be shown to exist for
it to be granted. The defaulting party must set out the full
circumstances, showing
a reasonable and acceptable explanation for
the delay, which covers the entire period of the delay. The standard
for considering
an application for condonation is the interests of
justice. Whether it is in the interests of justice to grant
condonation depends
on the facts and circumstances of each case.
[20]
In
Bertie
van Zyl (Pty) Ltd and Another v Minister of Safety and Security and
Others
,
[6]
the Constitutional Court held that in determining whether condonation
may be granted, lateness is not the only consideration. It
was said
that the test for condonation is whether it is in the interests of
justice to grant condonation. Ngcobo CJ,
[7]
in
Bernert
v Absa Bank Ltd,
[8]
on the question of whether condonation should be granted, stated that
factors relevant to a condonation inquiry include, but are
not
limited to - the extent and the cause of the delay, the prejudice to
other litigants, the reasonableness of the explanation
for the delay,
the importance of the issues to be decided in the intended appeal,
and the prospects of success. None of these factors
is however
decisive; the enquiry is one of weighing each against the others and
determining what the interests of justice dictate.
[9]
[21]
On the interests of justice as the standard for consideration for
condonation, the Constitutional
Court in
Grootboom
v National Prosecuting Authority and Another
held
:
[10]
‘…
the
standard for considering an application for condonation is the
interests of justice. However, the concept “interests of
justice” is so elastic that it is not capable of precise
definition. As the two cases demonstrate, it includes: the nature
of
the relief sought; the extent and cause of the delay; the effect of
the delay on the administration of justice and other litigants;
the
reasonableness of the explanation for the delay; the importance of
the issues to be raised in the intended appeal; and the
prospects of
success. It is crucial to reiterate that both Brummer and Van Wyk
emphasize that the ultimate determination of what
is in the interests
of justice must reflect due regard to all the relevant factors but it
is not necessarily limited to those listed
above. The particular
circumstances of each case will determine which of these factors are
relevant.’
[22]
The explanation for the delay proffered by the applicant is that the
delay was occasioned by
a
bona fide
misunderstanding of the
purport of the award on its part and its erstwhile representative.
The submission is that the applicant’s
representative
understood the award to have awarded the applicant the full amount of
its final account to the second respondent,
being R1965 220.70, less
the amount of R291 553.70 which was awarded in the adjudication which
preceded the arbitration.
[23]
It is contended that, labouring under the above impression, and
having received payment of only
R510 665.88 from the second
respondent, and believing the second respondent to have been badly in
default of the award, the applicant
first sought to enforce the award
as it believed it stood. It was only after extensive consultation
with its attorneys that it
became evident on or about 28 October 2021
that its understanding of the award was incorrect, and only at that
point was it decided
to seek a review of the award instead.
[24]
Having decided on the review approach as indicated above, the
applicant, it is alleged, was only
able to consult and give
instructions to its attorneys on the new mandate between 8 and 10
December 2021 because its attorneys
were fully booked with other
cases for the month of November and the first week of December. It is
further submitted that given
the volume of papers in the matter, it
would have been very costly for the applicant to instruct other
attorneys to launch the
review application.
[25]
I have gone through the award by the arbitrator
[11]
and I find myself quite perplexed as to the ambiguity referred to in
the applicant’s papers, which led to the confusion regarding
the award, and the ultimate delay in the launching of the review
application.
[26]
The applicant, through its representative, Mr Gcora, in a much
belated letter
[12]
, even
sought some clarification on the award from the arbitrator. This
appears to me to have been more of an attempt to have the
arbitrator
review his decision than any clarity seeking exercise. From line 4,
the letter reads as follows:
‘
The
claimant was however prevented from noticing a potential ambiguity in
the award by the manner in which the award was published.
In its
current form as published, paragraphs 57 to 63 do not form part of
the arbitrator’s decision, they form part of the
reasons for
the award.
To the extent that paragraphs 57 to 63 form part of the
decision, not the reasons, these paragraphs would be inconsistent
with how
the arbitrator dealt with a matter where no notice of
dissatisfaction has been filed if the arbitrator has regards to
paragraph
24 of the award.
’ (emphasis intended)
[27]
This is perplexing on a number of levels. In the first instance, from
paragraph 56 of the award
it is captioned “
ARBITRATOR’S
DECISIONS
.” It is therefore beyond me to understand how one
can conclude that these are not decisions but reasons, when the award
itself
identifies them as decisions. Furthermore, in the same
paragraph, the very next sentence states that to the extent that
these are
actually decisions and not reasons, they are inconsistent
with how the arbitrator dealt with the matter at paragraph 24. At
this
juncture, perhaps a closer look at paragraph 24 might be
opportune.
[28]
The relevant portion of paragraph 24 reads as follows:
‘…
The
Arbitrator thus deems that the Respondent was either satisfied with
the Determination or made a decision not to give a notice
of
dissatisfaction. In either event, no notice of dissatisfaction was
received and thus the Respondent is now precluded from raising
any
dissatisfaction during these Arbitration proceedings. The Respondent
is required to defend against or answer the Claimant’s
Statement of Claim. Furthermore, the Arbitrator is not required to
make an Award on the unlawfulness or otherwise of the termination.’
It
is not clear to me from the above where the alleged inconsistency
arises.
[29]
The entire challenge of the arbitrator’s award centres around
the submission made by the applicant
regarding its final account,
which submission was never disputed by the second respondent, and
which appears to have been accepted
by the adjudicator. In my view,
the applicant in this regard seems to conflate submissions with
evidence, where undisputed evidence
has to be accepted as the only
evidence on a particular issue and the issue decided solely based on
that evidence.
[30]
Submissions on the other hand pertain to a view of a party on a
particular subject matter or
one’s argument to support their
case. Whether or not contrary submissions are made, a presiding
officer still has to assess
and weigh the submissions made and to
make a determination on their validity or acceptance. She or he
cannot be said to be bound
thereby simply because there were no
contrary submissions made. This being the crux in the present matter,
it follows that the
entire case for the applicant is fatally flawed.
[31]
The inconsistency alluded to between paragraph 24 and the decisions
from paragraph 56 is purely
fictional. The arbitrator dealt
with the applicant’s claim as was presented before him, and in
his reasoning, stated
quite clearly what the crux of the matter was,
which he summed up to be what the applicant was entitled to in terms
of the agreement.
With the applicant having been dissatisfied with
the outcome of the adjudication, which was an award of R291 553.70,
and hence
took the matter to arbitration, I do not see how the
arbitrator’s reasoning can be faulted in this regard.
[32]
In his award, the arbitrator considered the applicant’s
statement of claim which raised
certain points in issue,
inter
alia;
the failure by the PA to issue recovery statements for
interest on late payments, and
failure by the PA to adjust the
contract value.
(emphasis intended) To do the necessary
determinations in this regard therefore, he had to consider the PBA
in terms of which the
agreement between the parties was regulated. To
then turn and say that by him doing so he had impermissibly entered
into the arena
I find to be quite fallacious on the part of the
applicant.
[33]
Section 33(1) of the Arbitration Act provides as follows:
‘
1. Where –
(a)
Any member of an arbitration tribunal has misconducted himself in
relation to his duties as arbitrator or umpire; or
(b)
An arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration proceedings or has exceeded
its powers; or
(c)
An award has been improperly obtained,
The
court may, on application of any party to the reference after due
notice to the other party or parties, make an order setting
the award
aside.’
[34]
A party challenging an award must establish, not only that there is
no evidence on which a reasonable
man would have made it, but also
that the lack of evidence is so glaring that misconduct on the part
of the arbitrator can be inferred.
[13]
The term ‘misconduct’ refers to mala fides or moral
turpitude and not to legal misconduct which does not involve moral
turpitude. And gross irregularity relates to the conduct of the
arbitration proceedings, and not the result thereof. The irregularity
must have been so serious that it resulted in the aggrieved party not
having his case heard.
[14]
[35]
The conduct of the arbitrator can in no way be equated to the one
referred to above. In fact,
even the applicant itself does not allege
in its papers that the arbitrator misconducted himself or acted moral
turpitude.
[36]
Pertaining to the explanation for the delay, specifically the
confusion or ambiguity in the award
leading to a different course of
action before the review application was launched, I am not at all
persuaded. As stated earlier
in this judgment, it seems to me that
that there was merely an attempt, albeit very belatedly so, to have
the arbitrator review
his award, rather than seeking any clarity on
the award, which I find to have been as clear as the day.
[37]
The award is self-explanatory and patently clear, both under the
title ‘Arbitrator’s
Decisions’ from paragraphs 56
to 74; as well as the ‘Arbitrator’s Final Account
Summary’ at paragraph 75,
where a unit by unit breakdown of the
amounts, up to how the total amount was reached is given; and finally
paragraph 76 where
the ‘Final Award Except Costs’ is
given. Throughout the award, at no point is there any reference to
the applicant
being entitled to the entire amount of its claim. I
therefore find it quite farcical for the applicant to claim that it
was under
the impression that the award was for the entire amount of
its claim.
[38]
As for the explanation that between October and December the
applicant could not give instructions
to its attorney who was busy
with other matters, nor could it instruct another attorney, I find to
be so unreasonable that it amounts
to no explanation at all. The
explanation given by the applicant for the delay in launching the
review therefore falls far short
of it being said to be an acceptable
explanation.
[39]
Having gone through the award and the conduct of the arbitrator in
coming to same in the present
matter, I can find no evidence to infer
that he misconducted himself in any manner, or committed a gross
irregularity, or that
the award was improperly obtained. Given all
these factors, it follows that there are no reasonable prospects of
success in the
review.
[40]
Given that the applicant has failed to give a reasonable explanation
for the delay in launching
the review application, which was launched
more than 4 months after the award was published, coupled with the
fact that there are
clearly no reasonable prospects of success in the
review, it follows that the interests of justice do not permit the
granting of
condonation in this matter. The applicant has failed to
establish good cause for condonation to be granted. Consequently, the
application
must fail.
[41]
The failure of the condonation application becomes dispositive of the
entire matter, and as such
dispenses with the need to deal with the
striking application and the other issues raised.
ORDER
[42]
In the premises, the following order is made:
THE
APPLICATION IS DISMISSED WITH COSTS.
V P NONCEMBU
JUDGE
OF THE HIGH COURT
APPEARANCES
Counsel
for the Applicant
: N/A
Instructed
by
: Ms Olowookorun
Counsel
for the 2
nd
Respondent :
S J Swartbooi SC
Instructed
by :
M Botha
Office
of the State Attorney
Date
of hearing:
08 September 2022
Date
judgment delivered:
13 December 2022
[1]
Paragraph
76 of the arbitrator’s award (annexure “TWB5” to
the founding affidavit).
[2]
Paragraph 85 of the arbitrator’s award (annexure “TWB5”
to the founding affidavit).
[3]
Act 42 of 1965.
[4]
Paragraph
59 of annexure “TWB5” to the founding affidavit.
[5]
Paragraph
76 of annexure “TWB5” to the founding affidavit.
[6]
2010 (2) SA 181 (CC).
[7]
As
he then was.
[8]
2011
(3) SA 92
(CC).
[9]
At
para [14].
[10]
(CCT
08/13)
[2013] ZACC; 2014
(2) SA 68 (CC);
2014 (1) BCLR 65
(CC); 2014
35 ILJ 121 (CC) (21 October 2013) par 22.
[11]
Annexure
“TWB5” to the founding affidavit.
[12]
Dated
28 October 2021.
[13]
Mc
Kenzie v Basha
1951
(3) SA 783
(NPD at 786.
[14]
Bester
v Easigas (Pty) Ltd and Another
1993 (1) SA 30
(C).