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[2021] ZAGPPHC 201
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Icon Earthworks (Pty) Ltd v Caliber 293 (Pty) Ltd and Another (10086/2019) [2021] ZAGPPHC 201 (6 April 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE NO: 10086/2019
REPORTABLE:NO
OF INTEREST TO OTHER
JUDGES:NO
REVISED:YES
DATE: 6 APRIL 2021
In the matter between:
ICON
EARTHWORKS (PTY) LTD
Applicant
and
CALIBER
293 (PTY) LTD
Fist Respondent
P
L GOLDSTEIN N.O.
Second Respondent
This judgment was handed
down electronically by circulation to the parties’
representatives by email. The date of the judgment
shall be deemed to
be 6 April 2021.
JUDGMENT
AVVAKOUMIDES
AJ
INTRODUCTION
:
1.
This is an application for leave to appeal
against a judgment of this
court handed down on 28 October 2020 (the judgment). The judgment
dealt with an application by the applicant
to review the award of the
second respondent, sitting as arbitrator. The review was
brought in terms of section 33(1) of
the Arbitration Act, Act 42 of
1965 and was limited to procedural irregularities.
2.
In the review application, the applicant relied
on two grounds of
review, namely that the arbitrator misconducted himself in relation
to his duties as arbitrator, and, that the
arbitrator committed a
gross irregularity in the conduct of the arbitration proceedings or
exceeded his powers. In amplification,
the applicant also submitted
that the finding by the arbitrator:
2.1
regarding the applicability of penalties was wrong;
2.2
the finding by the arbitrator that the applicant had completion dates
to achieve in respect of any phases of work was wrong;
2.3
the finding by the arbitrator that the applicant’s refusal
to
return to the site when called upon to do so constituted a
repudiation of contract between the parties, was wrong;
2.4
the arbitrator did not investigate the evidence, and,
2.5
the arbitrator made findings about a contract not pleaded by the
parties and/or did not grant opportunity for argument to the parties.
3.
In the review application, the first respondent
submitted that the
grounds of review relied upon cannot support the review application
and relied on the following for the submission:
3.1
the fact that the review is limited to procedural
irregularities;
3.2
the authority in
Telcordia Technologies Inc v Telkom SA Ltd
2007
(3) SA 268
(SCA) para [51]
;
3.3
the statutory grounds listed in the Arbitration
Act are narrower than
the common law grounds;
3.4
the principle of party autonomy in arbitration
proceedings is
applicable to the requirement that a court must give due deference to
an arbitrator’s award. What this
means is where an
arbitrator has engaged in the correct inquiry but has erred either on
the facts or on the law, such errors do
not constitute an
irregularity and are not a basis for setting aside an arbitrator’s
award. The first respondent relied
on
Phalaborwa Copper
(Pty) Ltd v Motlokwa Transport and Construction (Pty) Ltd
2018 (5) SA
462
(SCA) at 486 (A)
;
3.5
a review of an arbitrator’s award must
be measured against the
standards aforesaid and where parties choose arbitration, courts
endeavour to uphold the decision of the
parties. It is thus not
the court’s function in a review application to reinterpret a
contract, for example.
3.6
the failure by an arbitrator to deal with
facts that go to the merits
of a case does not constitute an irregularity and neither does it
mean that the arbitrator ignored
such facts. The general principle
applicable to “
gross irregularity”
is that it
concerns the conduct of the proceedings rather than the merits of the
decision made by the arbitrator. It thus
follows that factual
findings by an arbitrator become binding upon the parties.
4.
The review application was dismissed, and
I expressly stated that I
could not align myself with the applicant’s argument that the
arbitrator either misconducted himself
in relation to his duties, or
committed any gross irregularities in respect thereof, or exceeded
his powers. I found that
the arbitrator engaged in the correct
inquiry and, even if he erred on the facts or the law, which I did
not find to be the case,
such errors would not constitute an
irregularity forming the basis for setting aside his award.
Having so held I specifically
stated that I considered this Court to
be bound to the decision in
Phalaborwa (supra)
.
THE
APPLICATION FOR LEAVE TO APPEAL
:
5.
The applicant submitted that
the arbitration award is unusable and therefore unenforceable.
The applicant is critical of the
first respondent by submitting that
because the first respondent has not addressed the fact that the
arbitration award is unusable
and therefore unenforceable, it
effectively concedes that the application of the award remains an
unsolvable equation and unusual
in practice.
6.
The applicant submits that
the acceptance of the first respondent of this scenario after the
award is astounding and could never
have been the objective of an
arbitration, given the resources spent in time and money to resolve
the dispute between the parties.
In particular, the applicant
submitted that the inescapable fact is that the arbitrator failed to
grasp the importance of “
how”
,
should he find that the penalties were to apply, is indeed a
reviewable decision.
7.
This, so argued the
applicant, is the very definition of latent irregularity. If it
is not, then the
jurisprudence
ought to state as much
clearly and unequivocally so that parties in arbitration understand
what an unusable award ultimately means
for them.
8.
The applicant submitted that
the effect of the arbitration award is non-sensical, and it is
striking that the first respondent has
so readily accepted the
arbitration award because it does not actually help the first
respondent to resolve the dispute between
the parties.
9.
Section 17
of the
Superior
Courts Act 10 of 2013
provides that leave to appeal may only be given
where the judge concerned is of the opinion that:
9.1
The appeal would have a
reasonable prospect of success; or
9.2
There is some other
compelling reason why the appeal should be heard, including
conflicting judgments on the matter under consideration.
10.
I am mindful of the fact
that the main application before me was a review of an arbitrator’s
award. I do not intend repeating
the principles governing arbitration
awards, save to state that in order to successfully review an award
it would have to be shown
that the arbitrator misconducted himself in
relation to his duties; or committed a gross irregularity or exceeded
his powers; or
the award was improperly obtained.
11.
There can be no doubt that
the application to review the award was based on procedural aspects
of the arbitration and not any substantive
aspect thereof.
12.
In its written heads of
argument, the main thrust of the application for leave to appeal, it
is submitted that the arbitrator failed
to apply his mind properly to
the matter leading to a latent-gross irregularity in his duties as an
arbitrator when he misconceived
the nature of the inquiry and created
an unsustainable award, modified the contract to support his award,
and ultimately ignored
the Conventional Penalties Act. The submission
pertaining to an unsustainable award together with the submissions
pertaining to
the Conventional Penalties Act were not issues argued
before me in the main application. In my view, it would not
have made
any difference, particularly the submissions pertaining to
the Conventional Penalties Act.
13.
Furthermore, again in its
written heads of argument, the applicant has raised issues which were
not argued before me in the main
application, for example, the
question is posed rhetorically whether the arbitrator has actually
resolved the dispute at hand when
he failed to appreciate the nature
of earthworks and how that related to the completion of “
units”
as described in the penalty section. The main submission
(complaint) is that the arbitrator has not provided a workable
solution to the dispute at hand. The arbitrator, so argues the
applicant, has not resolved the dispute but only raised a further
dispute regarding how one should now consider and/or calculate
penalties.
14.
The submissions of the first
respondent are as follows:
14.1
Firstly, the first
respondent argued, in my view correctly, that an applicant for leave
to appeal is confined to the issues argued
before the court from whom
the leave to appeal is sought. The first respondent explains
the submission by submitting that
the question is whether, on the
issues before it, the court gave judgment in respect of which another
court would reasonably come
to different conclusion. When a
ground has not been argued and the court has not considered such
ground, this test, which
has to be satisfied before leave to appeal
can be granted, cannot apply.
14.2
The first respondent further
submitted that an applicant for leave to appeal is bound by the
grounds set out in its application
for leave to appeal. The
reason for this is because the respondent and the court are entitled
to be informed of the grounds
of the application in order to prepare
for the hearing for leave to appeal. The applicant, so argues
the first respondent,
cannot thus expound upon the grounds advanced
in its application for leave to appeal by means of heads of argument
or oral argument.
14.3
By way of analogy, the first
respondent submitted that considerations which normally apply in
applications for leave to appeal against
the decision of a trial
court are not applicable in this case because this court has had all
the advantages that an appeal court
would normally have, namely
everything which is required to be considered is contained in
documentary form and the court has had
the benefit of the documents
in arriving at a decision to refuse the review application.
14.4
The first respondent
submitted that this court was possessed of all the advantages which a
court of appeal normally has. This, according
to the first
respondent, is an important consideration when considering the
applicant’s submission that this court overlooked
certain
considerations.
14.5
The first respondent
submitted, correctly, if regard is had to the argument in the main
application, that the applicant has now
for the first time contended
that the “
arbitrator’s
contract”
lacks
efficacy and is difficult or impossible to implement in practice.
This is clearly a new argument which was not placed before
the court
in the main application.
14.6
The first respondent
highlighted that there is no dispute between the parties about what
the arbitrator was called upon to decide.
This is so because a
mandate given to the arbitrator is succinct and unambiguous. In
amplification, the first respondent submitted
that the arbitrator’s
mandate was never to pronounce upon whether the contract was good or
bad or whether or not the contract
could lead to complications or
impossibilities when it was applied in practice.
15.
The remaining submissions and arguments contained in the first
respondent’s written heads of argument are largely in response
to the applicant’s written heads of argument and in
response to
the grounds upon which the applicant seeks leave to appeal. I have
considered all the submissions made, written and
oral.I am not
persuaded that an appeal would have a reasonable prospect of success
under the prevailing circumstances and accordingly
the application
for leave to appeal is dismissed with costs.
G.T. AVVAKOUMIDES
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
DIVISION, PRETORIA
Representation
for parties:
On
behalf of Applicant:
Adv P Bellin
Instructed
by: C
de Villiers Attorneys
Email:
caroline@cdvlaw.co.za
On
behalf of First Respondent:
Adv TALL Potgieter SC
Instructed
by:
RN Incorporated
Attorneys
Email:
johan@roelfnelinc.co.za