Summary of Judgment

1. Introduction

The judgment concerns an application for leave to appeal brought in the High Court of South Africa, Gauteng Division, Johannesburg. The applicant was Toro Ya Africa Consultants (Pty) Ltd (“Toro”). The respondents were Stuart John Riddle N.O. (cited in his capacity connected to the arbitration, and effectively the arbitrator) and Good Purpose Construction (Pty) Ltd (“Good Purpose”).

The procedural history was central to the disposition of the leave application. On 26 July 2023, the court had already delivered a judgment dismissing Toro’s review application (with costs) in which Toro sought to set aside an arbitration award. In that earlier judgment, the court held that the arbitration procedure adopted, namely determination on agreed facts and a documentary bundle without oral evidence, was a procedure agreed by the parties and within the arbitrator’s powers. The court also held that an alleged misapplication of the onus was not, on the authority relied upon, a basis to set aside an award as a reviewable irregularity.

The subject-matter of the present application was whether Toro had established the statutory and common-law threshold for leave to appeal against the July 2023 judgment dismissing the review, with Toro reframing its complaint primarily as one of procedural unfairness amounting to a gross irregularity in the arbitration proceedings.

2. Material Facts

The dispute arose from a private arbitration between Good Purpose (as claimant) and Toro (as respondent). In the arbitration, the matter was determined without oral evidence, on the basis of agreed facts and a bundle of documents placed before the arbitrator.

A material feature relied upon by the court was that the procedure to determine the dispute on documents and agreed facts was agreed between the parties, and that the parties were legally represented. The judgment treated the selection of procedure as having been a live issue from the start of the arbitration process and during argument, rather than a feature imposed without opportunity for engagement.

Toro’s complaint in the leave application was not pursued on the basis that the arbitrator committed an irregularity by simply erring in law or fact, but instead that the arbitrator’s choice to proceed on a “documents only basis” denied Toro a fair hearing, which Toro characterised as a gross irregularity. Toro also advanced that the arbitrator’s approach to the onus of proof was incorrect, and that if the onus had been properly applied, the outcome might have been different.

The court treated it as important that, on the procedure actually followed, each party fully ventilated its case on the evidence it elected to place before the arbitrator, and that the arbitrator had not solicited or instigated an unfair process but had merely alerted the parties to a procedural aspect that had to be settled before commencement.

3. Legal Issues

The central legal questions were whether Toro had demonstrated grounds justifying leave to appeal against the judgment dismissing its review, and in particular whether there were reasonable prospects that an appellate court would reach a different conclusion on the alleged reviewable irregularity.

More specifically, the court was required to determine whether the arbitration procedure adopted, namely a documents-only determination, could amount to a gross irregularity as contemplated by section 33(1)(a) or (b) of the Arbitration Act 42 of 1965, when that procedure was agreed by the parties and applied within the arbitrator’s powers.

The court also had to deal with the role of an alleged misallocation or misapplication of the onus of proof in review proceedings and whether that point materially advanced Toro’s case for leave to appeal. The issues were therefore largely concerned with the application of legal standards to the established procedural facts of the arbitration, together with the evaluative assessment inherent in deciding whether the threshold for leave to appeal (reasonable prospects of success) was met.

4. Court’s Reasoning

The court’s reasoning proceeded from the statutory framework in section 33(1) of the Arbitration Act 42 of 1965, which permits setting aside an award where an arbitrator misconducts themselves, where there is a gross irregularity in the conduct of proceedings, or where the tribunal exceeds its powers. The court emphasised that not every alleged unfairness or procedural misstep qualifies as a gross irregularity under the Act.

The court relied on Palabora Copper (Pty) Ltd v Motlokwa [2018] ZASCA 23, treating it as determinative of two linked propositions relevant to the leave application. First, arbitration is an agreed process, in which parties submit to the procedure adopted by the arbitrator, provided it remains within the arbitrator’s powers and does not involve a misconception of the nature of the inquiry. Second, a mere error on a point such as the onus of proof is not, without more, a reviewable irregularity capable of sustaining the setting aside of an award.

Against that legal background, the court evaluated Toro’s reframed contention that a fair or prudent arbitrator would have insisted on oral evidence due to the complexities of the dispute, and that proceeding on documents only denied Toro a fair hearing. While the court accepted in principle that choosing an improper procedure could, in some circumstances, lead to unfairness, it was not persuaded that this case crossed the threshold of a gross irregularity as contemplated in section 33(1)(a) or (b). The court considered that the procedure was not imposed on unwilling parties; rather, it was agreed by represented parties, and the arbitrator’s conduct remained within the ambit of the powers conferred by the arbitration agreement and process.

The court also rejected the suggestion that the documents-only procedure resulted from the arbitrator “planting the seed” or instigating that approach. On the facts relied upon, the arbitrator had merely alerted the parties to a procedural matter requiring agreement before the arbitration commenced, and the chosen procedure remained one adopted by the parties themselves.

On the onus point, the court characterised Toro’s submission as reaching no higher than asserting that, had the onus been applied correctly, the outcome may have differed. The court held that this did not satisfy the requirement for leave to appeal, which demands a showing of a genuine prospect that an appellate court would come to a different conclusion. In addition, the court reiterated that, on the authority relied upon, alleged misapplication of onus is not in itself the kind of irregularity contemplated by section 33 as a basis to set aside an award.

5. Outcome and Relief

The court dismissed Toro’s application for leave to appeal. The dismissal was accompanied by an order that Toro pay the costs of the leave application.

Cases Cited

Palabora Copper (Pty) Ltd v Motlokwa [2018] ZASCA 23.

Legislation Cited

Arbitration Act 42 of 1965, section 33(1)(a) and section 33(1)(b).

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that Toro failed to establish grounds for leave to appeal against the earlier judgment dismissing its review application. It held that the arbitration procedure complained of, namely determination on agreed facts and documents without oral evidence, was a procedure agreed by the parties, implemented within the arbitrator’s powers, and did not constitute a gross irregularity under section 33(1) of the Arbitration Act. It further held that Toro’s onus-related complaint, advanced only to the extent that a different onus application might have produced a different outcome, did not meet the threshold for leave to appeal and, in any event, did not constitute a reviewable irregularity on the authority applied. The application for leave to appeal was therefore dismissed with costs.

LEGAL PRINCIPLES

A party seeking to set aside an arbitration award under section 33(1) of the Arbitration Act 42 of 1965 must show misconduct, a gross irregularity in the conduct of proceedings, or that the tribunal exceeded its powers; not every procedural complaint or alleged unfairness meets this statutory threshold.

Arbitration is an agreed process. Where parties, represented by legal practitioners, agree on a procedure for the arbitration—such as determining the matter on agreed facts and documents without oral evidence—that agreed procedure will generally prevail, provided it remains within the arbitrator’s powers and does not involve a misconception of the nature of the inquiry.

An alleged error regarding the onus of proof, framed as a legal misdirection, is not without more a basis to set aside an award as a gross irregularity in terms of section 33(1), as applied in the authority relied upon by the court.

For leave to appeal, it is insufficient to assert that a different approach may have led to a different result; the applicant must demonstrate the requisite prospects that an appellate court would come to a different conclusion on the issues that matter to the outcome.