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[2021] ZAGPPHC 427
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Tshwane University of Technology v Thondoni Properties and Another (65994/2020) [2021] ZAGPPHC 427 (22 June 2021)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case Number: 65994/2020
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
TSHWANE
UNIVERSITY OF
TECHNOLOGY
Applicant
(registration number:
1924/002602/07)
and
THONDONI
PROPERTIES
First
Respondent
MR
C.J. STOLP
N.O.
Second
Respondent
JUDGMENT
JOUBERT AJ
1.
The Tshwane University of Technology
(referred to herein as “
TUT”)
seeks
to
set
aside what is referred to as an “
interim arbitral award”
(“
the award”)
made
by CJ Stolp, the Second
Respondent in these proceedings (“
the Arbitrator”),
in
terms of
Section 33
of the
Arbitration Act, 42 of 1965
.
2.
The bases on which it is sought that
the award be set aside are that:
2.1.
the Arbitrator misconducted
himself in relation to his duties
as an
arbitrator;
and/or
2.2.
the Arbitrator committed a
gross irregularity in the conduct of
the
arbitration
proceedings.
3.
TUT
and Thondoni Properties CC (the
First Respondent, referred to herein as
“
Thondoni”)
had entered into
a written lease
agreement in respect of a
commercial property known as
Plot 9, Roodepoort, Polokwane, Limpopo
Province (referred to herein
as “
the Property”)
to
be used by TUT as student
accommodation.
4.
In terms of the lease agreement, the
agreement commenced on 1 April 2011
and
expired
on
31
December
2014,
with
the
possibility
of
an
extension
for
a
further year.
5.
The rent payable was R203,000.00 per month for a total of 140
students,
which
rental
amount included utilities
namely water, electricity and maintenance
costs.
6.
The TUT students did not, however,
occupy the Property on 1 April 2011 as, so
TUT claims, it was still
under construction and not yet ready for human
occupation.
The students only occupied
the Property during July 2011.
7.
It
is
TUT’s
case
that,
pursuant
to
the
students’
occupation
of
the
Property,
numerous complaints regarding
the suitability of the Property were lodged and
numerous shortcomings were
found regarding the suitability of the Property for
student accommodation.
8.
On 30 November 2011, TUT addressed a
demand to Thondoni, requesting it to
rectify certain defects
(annexure “
S7
” to the founding affidavit).
This letter was
not addressed
to
Thondoni, but to
“
Ndivho
Consulting Engineers and Project Managers, Attention: Jonas
Tshikundamalema”. TUT claims, however, that the addressee
of
the
letter
is
of
no
consequence
as Mr
Tshikundamalema
is
the
principal of Thondoni.
The content of this letter is
quoted below:
“
Dear
Sir,
NOTICE OF BREACH OF
RENTAL AGREEMENT
We
refer to the rental agreement signed between the Tshwane University
of Technology and Thondoni Properties on 1 April 2011, for
the
renting of the property identifies as Plot 9 Roodepoort, Polokwane.
Add
1 Following previous correspondence and telephonic conversations
between yourself and representatives of TUT, matters that renders
the
renting of the properties absolute were brought under your attention.
However you failed to correct those issues.
Add
2 A number of delegations from TUT visited the property on various
dates and discovered that this property was not habitual
for
occupation by our students.
Add
3 At some stage, TUT had no other choice than to find alternative
accommodation for the students since there was no provision
of water
or electricity.
Add
4 Despite various communications and discussions with you, the
premises are still not in a condition for human occupation.
Add
5 Notice is hereby provided in terms of clause 22 of the referred to
agreement that Thondoni Properties are in breach of the
agreement.
The breach items are captured on page 2 of this notice. You are
afforded, despite the terms of the agreement, up to
31 December 2011
to remedy the breach. Failure will result in immediate termination of
this agreement without further notice.
“
With
reservation of rights and without prejudice of rights.” (Sic)
9.
The next page then contains the following list:
“
List
of items that render performance in breach:
1.
Faulty electricity for the premises and not electricity certificate
is
available.
2.
There is no certificate indicating the quality of the borehole water
and
whether it is fir for human consumption.
3.
The fire protection equipment and fire plan is not according to
standards.
4.
The number of required geysers was not installed and some were
faulty.
5.
Septic tanks and drainage is not according to standards.
6.
No provision has been made for people with disabilities.
7.
Entrance points from the tar road are not completed.
8.
Only two refuse dust bins are provided for the whole residence.
9.
There are no SHE bins provided in the ladies toilets.
10.
No approved building plans are available.
11.
No occupation certificate or Zoning Certificate is available.
12.
No certificate for the quality of the borehole water is available.”
(Sic)
10.
TUT’s attorneys addressed a further demand to Thondoni, on 5
December 2011 (annexure
“S4” to the founding affidavit).
The following is an extract from that letter:
“
We
have been instructed to place on record as follows:
1.
At all material times prior to, and upon the conclusion of the lease,
it
was common cause between the parties that the property identified
in the lease would be used by our client for the accommodation
of
students. As such, it was within the contemplation of all
parties concerned that the property and all structures and fittings
thereon would be fit for human habituation, would comply with all
relevant legislation and would be safe in all respects.
2.
You at all times assured our client that the property would,
immediately
prior to alternatively upon occupation, further
alternatively immediately thereafter, be fit as described above.
3.
In the almost 8 months that have lapsed since the signing of the
agreement,
alternatively the occupation date as referred to therein,
you have been unable to deliver to our client a property which is
safe
for human occupation and use.
4.
Without limiting the general nature of your non-compliance, our
client
(as it has done before) wishes to record as follows:
4.1
the building plans for the property do not conform to the national
building regulations
and Building Standards Act Nr. 103 of 1977, in
that they have not been approved by the relevant Local Counsel;
4.2
the septic tanks and drainage systems used on the property are
insufficient for the
amount of people within the property houses. The
current septic tank is sufficient for 16 to 20 people while the lodge
houses or
was intended to house 140 students;
4.3
there are no facilities for persons with disabilities;
4.4
there is insufficient fire protection and- extinguishing systems in
place;
4.5
there is no certificate of electrical compliance and the electrical
installation on
the premises is unsafe.
Under
the circumstances it is clear that you are unable to perform in terms
of the agreement by providing a property which complies
with
legislation, is fit for human use and is safe.
In
the circumstances our client submits that the contract should by
mutual agreement be cancelled. All payments made by our client
should
be refunded.
Kindly
respond to our client’s submission on or before close of
business this coming Friday the 9th of December 2011,
failing
which our client will proceed in terms of the agreement…”
(Sic)
11.
Yet a further letter was addressed to Thondoni on behalf of TUT on 20
January 2012 (annexure
“S6” to the founding affidavit),
requesting the following documentation:
“
Aforementioned
matter as well as our letter of the 5th of December 2011 refers. We
confirm again that we act herein on behalf of the Tshwane University
of Technology (‘TUT’).
We
place on record that you have failed to adhere to our client’s
demands as contained in the aforementioned letter and further
failed
to respond to the contents thereof.
Our
client maintains its position as set out in the aforementioned letter
and in amplification thereof demand that you provide our
client with
the following documents by close of business Monday the 23rd instant
failing which our client will immediately
cancel the agreement,
remove all persons holding occupation of the building through them
and institute action for recovery of damages
including consequential
damages:
1.
the certificate of electrical compliance;
2.
the local city counsel’s approval of the building plans; and
3.
a valid occupational certificate.
In
general our client’s rights remain reserved.”
12.
Following this correspondence addressed by TUT to Thondoni, TUT
cancelled the lease agreement
with Thondoni on 30 January 2012.
13.
TUT
instituted
a
claim
against
Thondoni
for
a
refund
of
TUT’s
deposit
in
the
amount of R609,000.00.
14.
Thondoni
disputed the
validity of TUT’s cancellation of the lease agreement and
further instituted a
counterclaim against TUT for the recovery of damages which
Thondoni alleged it suffered
as a result of the alleged unlawful cancellation of
the lease agreement by TUT.
15.
During 2014, the dispute between TUT
and
Thondoni
was
referred
to
arbitration, with the Second
Respondent being appointed as the Arbitrator.
16.
In
the
course
of
this
arbitration,
Thondoni
requested
a
separation
of
issues
which had the effect that the
parties only proceeded on arbitration with TUT’s
claim and that the
counterclaim was postponed.
17.
The Arbitrator was called upon in
the arbitration, to decide the following issues
(as quoted from the award):
“
9.1
Whether the conclusion of the Lease
was induced by a
material
misrepresentation on the part of Thondoni;
9.2
If that cannot be found, whether Thondoni committed a breach of the
contract;
9.3
And if so, whether TUT was entitled to legitimately cancel the Lease
when it purported
to do so;
9.4
And whether it effectively did so;
9.5
With regard to the counterclaim and only if the claim fails;
9.5.1
Whether TUT’s actions, by exiting the premises and indicating
that they regarded the Lease as cancelled,
was a repudiation of the
agreement;
9.5.2
Whether Thondoni is entitled to recover rent from TUT.”
18.
The findings made by the Arbitrator in respect of these issues were
as follows:
18.1.
On the issue of material
misrepresentation:
“
17.
TUT do not, in their statement of claim, rely on a representation
consisting of a nondisclosure. There is no suggestion to be
found,
either in the pleadings, or the trial bundle of documents or the
evidence of Mr Sibanda, that Thondoni concealed the fact
that there
were no building plans, occupational certificate or electrical
compliance certificate, when the agreement was being
negotiated.
Quite to the contrary, from Mr Sibanda’s evidence, and the
documentation and e-mails exchanged between the parties
prior to the
conclusion of the agreement, it appears that TUT called for those
documents but nevertheless signed the Lease without
any of these
documents having been provided. At best there seems to have been an
undertaking to provide these at a later stage
when they became
available. The non- disclosure, to the extent that there was one,
never induced TUT into concluding the Lease.
18.
The representations relied upon and supported by the evidence of Mr
Patson Sibanda
do not relate to statements of fact, but rather a
promise or undertaking by Thondoni that the student accommodation at
the leased
premises would, at some future point, once completed, be
fit for human occupation and safe for use for occupation and that
services
would function correctly and safely. TUT was fully aware
that the premises were not ready for occupation by 1 April and the
students
only moved in towards the end of July.
19.
I am also unable to find that the representations were false or would
have influenced
or induced TUT (or any reasonable person for that
matter) to enter into the contract. From the evidence,
including
documentary evidence, it is more than obvious that TUT
signed the agreement under pressure of their own management and
student
body, and despite the fact that to their own knowledge, their
own internal rules for entering into lease agreements, had not been
complied with, and that the buildings on the lease premises were
still under construction.”
18.2 In
respect of the terms of the lease:
“
22.
The Claimant pleaded the relevant express, alternatively tacit or
implied terms of the lease agreement in paragraph 21 of its
amended
statement of claim. The Defendant admitted the alleged terms to the
extent that they are reflected in writing in the annexed
Lease and
accord with them. This has the effect that the only alleged terms
that remained in dispute were the terms pleaded in
the following
paragraphs of the statement of claim:
22.6
‘The premises shall, in all respects, be suitable for the
lawful occupation and use as student
accommodation premises’.
22.6(a)
‘The premises shall, in all respects, be fit for
the purpose
for which the premises were intended to be used by the Claimant,
namely, student accommodation’.
22.7
‘The Defendant undertook to attend to execute certain
structural and external repairs within
a reasonable time after notice
had been given to the Defendant that such structural and external
repairs be done. In addition,
the Defendant was obliged, in terms of
paragraph 16.2 of the agreement, to rectify and repair any defect of
which the Defendant
was informed of in writing by the Claimant.’
22.8
‘That the Claimant’s students would be able to occupy the
premises lawfully, and that an
occupational certificate would have
been issued by the local authority, authorizing the occupation of the
premises, and that all
other services available at the premises for
the students, such as, inter alia, water and electricity, would be
safe and in such
a state that the said services can be used both
lawfully, effectively and practically, by the students.’
23.
These alleged terms cannot be found expressed in the written lease
agreement and must therefore be taken to be alleged, tacit
or implied
terms.
……
27.
The obligation of a lessor to deliver to a lessee, premises
suitable for occupation
and intended use and fit for the purpose of
intended use, is a term implied by common law and can readily be
found to be implied
terms of a lease contract.
28.
With regard to the implied terms pleaded in paragraphs 21.6 and
21.6(a) of the statement
of claim, namely that the premises are
suitable for occupation and intended use and fit for purpose, I find
them to be implied
terms of the Lease and part and parcel of the
lessor’s common law obligations to deliver the thing let to the
lessee corresponding
to the description in the contract and to place
and maintain the property in a condition fit for purpose. The
Defendant moreover,
accepted, in its heads of argument, those terms
to be common cause.
29.
I cannot, however, find that the imputation of lawfulness of the
occupation is a term
implied by law.
30.
From the expressed terms of the Lease and from the surrounding
circumstances
gleaned from the evidence presented, I am unable
to make a finding that both parties considered and agreed about the
issue of the
lawfulness or otherwise of the occupation and use of the
premises at the time of conclusion of the Lease, but did not bother
to
express their agreement on this particular point. The lawfulness
requirement is therefor not an actual tacit term.
31.
I do find, however, that the question as to whether the premises
would have been
lawfully
fit for use or occupation to
be an imputed tacit term. I find that had the question been posed to
the parties at the time as to
whether the premises would have been
lawfully fit for use or occupation, the answer seems inevitable that
it would have been ‘of
course, we didn’t trouble to say
that, it is too clear’ and obvious.
……
33.
As far as the terms alleged in paragraph 21.8 of the particulars of
claim are concerned,
I have concluded that it was a tacit term of the
lease that the TUT students would be able to occupy the leased
premises
lawfully
.
34.
I am unable to find that it was a tacit or implied term of the Lease
that an occupational
certificate would have been issued by the local
authority authorising the occupation of the premises. From the
expressed terms
of the Lease in conjunction with the surrounding
circumstances prevailing at the time of the conclusion of the Lease
(as gleaned
from the evidence presented), an implication of a
stipulation that an occupational certificate would have been issued
by the local
authority does not necessarily arise that the parties
must have intended that the suggested stipulation should exist.
Neither can
I find any authority to the effect that such a term is
implied by law or put differently that such a term would be a
naturalia
of an agreement of lease. Reading in such an implied term
would also fly in the fact of the SCA decision in Wierda Road West
Properties
(Pty) Ltd v SizweNtsalubaGobodo Inc 2018(3) SA 95 (SCA).
35.
Finally, with regard to the Claimant’s contention that it was a
tacit or implied
term of the Lease that all other services available
at the premises for the students, such as, inter alia, water and
electricity,
would be safe and in such a state that he said services
could be used both lawfully, effectively and practically by the
students,
I, by parity of reasoning, I find these terms to be
implicit or tacit terms.”
18.3 In
respect of a possible breach of those terms on the side of Thondoni:
“
37.
The Claimant claims that the Defendant breached the terms of the
Lease in the following respects:
37.1
Failing to ensure that the premises were habitable and fit for human
accommodation.
37.2
Failing to ensure that the premises are suitable and safe for lawful
occupation and use by students
on the premise that:
37.2.1
building plans for the premises (student accommodation) have not been
approved by the relevant local authority;
37.2.2
the structures which the students occupied, were effected in
violation of section 4(1) of the National Building Regulations
and
Buildings Standards Act 103 of 1977 (Building Regulations Act);
37.2.3
the septic and drainage systems on the premises were substandard and
insufficient in their capacity for the number of students
which
needed to be accommodated at the premises;
37.2.4
there were insufficient fire protection and fire extinguishing
systems in place as required by law;
37.2.5
the electrical installation on the premises was unsafe and of a
substandard;
37.2.6
there was no valid occupation certificate as contemplated by section
14 of the Building Regulations Act.
…
.
39.
The residence may not have been entirely to the satisfaction of the
students who occupied
the residence, but that, in itself, does not go
anywhere near indicating that the residence was not habitable and fit
for human
occupation.
40.
With regard to the second alleged breach, namely, failure to ensure
that the premises
are suitable and safe for lawful occupation and
use:
40.1
the lack of building plans; and/or
40.2
the premises having been erected in violation of section 4(1); and/or
40.3
the substandard and insufficient septic and drainage systems on the
premises; and/or
40.4
the insufficient fire protection and fire
extinguishing systems
on the premises; and/or
40.5
the unsafe and substandard electrical installation on the premises;
and/or
40.6
the absence of a valid occupation certificate; do not make the
occupation and use of the premises by
TUT or its students, unlawful.
Wierda
Road West Properties (Pty) Ltd v SizweNtsalubaGobodo Inc 2018(3) SA
95 (SCA).
41.
The alleged failure by Thondoni to deliver the leased premises to TUT
in a condition
suitable and safe for occupation and use as student
accommodation, on the basis of the substandard nature and incapacity
of the
septic and drainage systems, the insufficiency of the fire
protection and fire extinguishing systems in place, and the unsafe
and
substandard electrical installation, may constitute a breach of a
term of the Lease by Thondoni.
42.
The uncontradicted evidence adduced by the witnesses for the
Claimant, and the absence
of any countervailing evidence on behalf of
the Defendant, is sufficient to justify the conclusion that on
delivery of the premises
to TUT, there existed the alleged
shortcomings with regard to the septic and drainage, fire protection
and electricity systems
in the leased premises, and that Thondoni
therefore may have committed a breach of the Lease.”
18.4 As
to whether TUT was entitled to cancel the lease:
“
45.
The Claimant pleaded that it was entitled to summarily cancel
the Lease on the premises that the Claimant’s continued
use and
occupation of the premises would be a violation of the provisions of
section 4 of the Building Regulations Act which would
entitle the
Claimant to summarily terminate the Lease. The reported decision of
the SCA in Wierda Road West Properties (Pty) Ltd
v
SizweNtsalubaGobodo Inc 2018(3) SA 95 (SCA) found that
continued use and occupation of leased premises by a lessee, where
there were no approved building plans, would not be illegal. I
accordingly find that the Claimant was not entitled to terminate
the
Lease summarily as a result of there being no approved building plans
for the premises.
46.
The breach of contract by Thondoni, namely that Thondoni failed
to deliver the leased premises to TUT in a
condition suitable and
safe for occupation and use, I find not to be of a sufficiently
serious nature as to justify summary cancellation
by TUT. The breach
patently does not go to the root of the contract or affect a vital
part or term of the contract, or relate to
a material or essential
term of the contract, or relate to a material or essential term of
the contract, or was a substantial failure
to perform. TUT and its
students did, after all, occupy the premises and seemed content to
continue to use the premises pending
the rectification of the
complaints. TUT did retain the use and occupation of the premises
from 18 July until the end of January
of the following year. The
evidence provides a clear picture of Thondoni actually remedying or
attempting to remedy whatever complaints
TUT or its students may have
levelled and for the rectification of which Thondoni was responsible.
The defective, inadequate or
incomplete performance by Thondoni,
nevertheless constituted some performance which TUT accepted by
allowing their students to
occupy the student accommodation.
Ultimately, I find that the breach is not as serious as would allow
TUT to summarily cancel the
contract. After occupation TUT would have
had to act in terms of clauses 16 and 22 if there were any defects
that needed to be
rectified or repairs that needed to be done.”
18.5
The Arbitrator then turned to a consideration of the question whether
the lease contained a cancellation
clause:
“
48.
The Lease contains a cancellation clause in clause 22.1 thereof which
reads as follows:
‘
It
is deemed to be a breach of contract, (1) if one of the parties fails
to comply with any term or condition of this agreement,
and (2),
furthermore fails to comply with the said term or condition within 7
days of being notified in writing by the other party
about such
breach, and (3), the latter party is then entitled to cancel the
agreement in full, including all incomplete assignments
and tasks,
without infringing any right of the party who cancels, which right
should exist in terms of this agreement or could
have been obtained
otherwise.’
49.
In order for TUT to acquire a right of rescission (and entitlement to
cancel the agreement), TUT would
have had to notify Thondoni in
writing of Thondoni’s breach of the Lease and demanded of
Thondoni, compliance with
the term allegedly breached, within 7
days of being notified thereof.”
18.6
The Arbitrator then considered whether TUT had acquired the right to
cancel the agreement:
“
50.
TUT pleaded that the letters of demand dated 5 December 2011 and 20
January 2012, attached to the statement of claim as annexures
B1 and
B2, constituted written notification of the breach of a term or
condition of the Lease and a demand to rectify and repair
the defects
(which constituted such breach) within 7 days, whereby TUT would
acquire a right to cancel if Thondoni failed to rectify
its breach
within the 7 day notice period.
51.
A simple reading of annexure B1 indicates a recordal of certain
allegations pertaining
to the suitability and fitness for purpose of
the leased property, and that Thondoni had by then, not been able to
deliver a property
safe for human occupation and use, and followed by
a statement ‘that it is clear that (Thondoni) are unable to
perform in
terms of the agreement by providing a property which
complied with legislation, is fit for human use and is safe’.
No mention
is made of any specific breach in order for Thodoni to be
able to identify the alleged breach or to correct its alleged breach.
Most importantly, the letter is not a demand at all. At most it is an
invitation to agree to a cancellation of the Lease.
52.
On a reading of annexure B2, the Claimant confirms its contention
that the Defendant
failed to adhere to the demands contained in B1
demand of Thondoni to provide certain documents (certificate of
electrical compliance;
approved building plans and occupational
certificate) by 23 January, failing which the Lease would be
cancelled.
53.
However, clause 22.1 of the Lease requires a 7 day notice period and
the 3 day notice
is patently inadequate to trigger the right to
cancel.”
18.7
The Arbitrator ultimately found that:
“
56.
This inevitably leads me to finding that the Claimant did not acquire
an accrued right to cancel the contract and that the Claimant
failed
to establish that it legally cancelled the lease by means of the
letter attached to the particulars of claim as annexure
‘C’.”
19.
Although the Arbitrator’s findings on the first two issues were
not found in favour
of TUT, it does not appear to take issue with
those particular findings and only seeks to attack the findings as to
whether TUT
was entitled legitimately to cancel the lease agreement
and whether it effectively did so, specifically that in paragraph 56
of
the award, quoted above.
20.
The application is opposed by the Thondoni, who chose not to file an
answering
affidavit,
but
delivered
a
notice
in
terms
of
rule
6(5)(d)(iii),
wherein
Thondoni
gives notice of its intention
to raise the following points of law:
20.1.
that the application constitutes an
abuse of process whereby TUT, under
the guise of a review,
endeavors to prosecute an appeal;
20.2.
the application does not disclose a cause of action;
20.3.
there is no basis to aver that the
Arbitrator misconducted himself and/or
committed
a
gross
irregularity
in
the
conduct
of
the
arbitration
proceedings;
20.4.
TUT’s assumption that
the
lawfulness of the
students’ occupation
depended
on
an
occupancy
certificate
or
approved
building
plans,
is
incorrect;
20.5.
TUT incorrectly
avers
that
the
Arbitrator
misdirected
himself
by
“
completely
ignoring the demand dated 30 November 2011”
.
21.
Counsel
for
TUT
chose
to
criticise
the
use
by
Thondoni
of
the
phrase
“
the application
does not disclose a cause of action”
,
as
seeking
to
insert
into
application proceedings what,
in essence, constitutes an exception.
Whilst the use of the phrase
might be inappropriate, the contention counsel for Thondoni
clearly sought to get across,
was that in its view, TUT had not made out a case
for the relief sought. This
contention it is clearly entitled to make.
22.
The Arbitrator did not participate
in these proceedings.
23.
Section 33
of the
Arbitration Act,
42 of 1965
provides the grounds on which an
arbitration award may be set
aside. This section provides as follows:
“
33.
(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;
and
(c)
an award has been properly obtained, the court may, on the
application of any
party to the
reference
after due notice to
the other party or parties, make an order or set aside….”
(Emphasis
added.)
24.
In
Palabora Copper (Pty) Limited v Motlokwa Transport &
Construction (Pty) Ltd
2018 (5) SA 462 (SCA), the Supreme Court
of Appeal stated (at paras [7] – [8]):
“
[7]
The legal principles that govern the circumstances in which a court
can set aside an arbitration award
are reasonably clear, although
their application in any particular instance may be problematic. The
statutory provision invoked
in the present case is s 33(1)(b) of the
Act, which reads as follows:
‘
(1)
Where —
(a)
……..
(b)
an arbitration tribunal has committed any gross irregularity in the
conduct of the
arbitration proceedings or has exceeded its powers; or
(c)
…….
the
court may, on the application of any party to the reference after due
notice to the other party or parties, make an order setting
the award
aside.'
[8]
This provision was the subject of detailed consideration by this
court in Telcordia. It suffices to say that where an arbitrator
for
some reason misconceives the nature of the enquiry in the arbitration
proceedings with the result that a party is denied a
fair hearing or
a fair trial of the Wallis JA (Dambuza JA, Van der Merwe JA, Plasket
AJA and Schippers AJA concurring) issues,
that constitutes a gross
irregularity. The party alleging the gross irregularity must
establish it. Where an arbitrator engages
in the correct enquiry, but
errs either on the facts or the law, that is not an irregularity and
is not a basis for setting aside
an award. If parties choose
arbitration, courts endeavour to uphold their choice and do not
lightly disturb it. The attack on the
award must be measured against
these standards.”
25.
A mere dissatisfaction with the outcome of an arbitration does not
constitute reason to
seek to set the award aside.
26.
TUT
contends that in making
his finding, the Arbitrator:
26.1.
misconducted
himself in
relation to the duties as an arbitrator; and/or
26.2.
committed
a
gross
irregularity
in
the
conduct
of
the
arbitration
proceedings.
27.
The case advanced by TUT
on
paper
is
that
it
would constitute
a
ground
for
misconduct when an arbitrator
ignores relevant evidence, alternatively makes
findings unsupported by
evidence before the Arbitrator.
28.
TUT’s
case
is
that
the
Arbitrator
ignored
the
demand
contained
in
the
letter
dated 30 November 2011 (which
I have quoted above).
29.
TUT
claims that, whilst this letter
is not addressed to Thondoni, the person who
it is addressed to the
natural person responsible for Thondoni and further that
Thondoni responded to this
letter.
These
contentions have not been denied by
Thondoni.
30.
Mr
Eastes (for TUT) argued that the
Arbitrator should not have ignored the letter
of 30 November 2011 for at
least the following reasons:
30.1.
the
letter
had
been
addressed
to
the
natural
person
who
represented
Thondoni;
30.2.
there is no indication that if the
letter had been addressed to Thondoni,
the reaction would have been
different;
30.3.
it is fundamentally wrong to expect
from a party to put in his pleadings
all material evidence.
The evidence that the letter
of 30 November 2011
had
been sent, received and responded to formed part of the evidence
the Arbitrator was required
to have regard to, to make his findings, and
30.4.
the
letter
was
further
specifically
referred
to
in
an
exchange
of
better
particulars prior to the
arbitration.
31.
Mr
Eastes
argues
that
in
ignoring
the
30
November
2011
demand
(as
TUT
contends) or at the very
least and not have regard to that demand, the Arbitrator
shirked his duty and reneged
on his agreement with the parties to arbitrate the
matter.
This
would
amount
to
the
type
of
conduct
referred
to
in
Stocks
Civil
Engineering (Pty) Ltd v
RIP N.O. and Another
2002
(3) BLLR 189
(LAC) at para
[52].
The relevant extract from
this judgment is set out below:
“
52.
In my view the following principles emerge: A court is entitled
on review to determine whether an arbitrator
in fact functioned as
arbitrator in the way that he upon his appointment impliedly
undertook to do, namely by acting honestly,
duly considering all the
evidence before him and having due regard to the applicable legal
principles. If he does this, but reaches
the wrong conclusion, so be
it. But if he does not and shirks his task, he does not function as
an arbitrator and reneges on the
agreement under which he was
appointed. His award will then be tainted and reviewable. It is
equally implicit in the agreement
under which an arbitrator is
appointed that he is fully cognizant with the extent of and limits to
any discretion or powers he
may have. If he is not and such ignorance
impacts upon his award, he has not functioned properly and his award
will be reviewable.
An error of law or fact may be evidence of the
above in given circumstances, but may in others merely be part of the
incorrect
reasoning leading to an incorrect result. In short,
material malfunctioning is reviewable, a wrong result per se not
(unless it
evidences malfunctioning). If the malfunctioning is in
relation to his duties, that would be misconduct by the arbitrator as
it
would be a breach of the implied terms of his appointment.”
32.
It is further contended on behalf of TUT that the failure by the
Arbitrator to take into
account the 30 November 2011 demand indicates
a latent defect in the thought process of the Arbitrator.
33.
Reliance was placed on
the
statement made by Van
Dijk
AJA in
Stocks
Civil
Engineering
(Pty)
Ltd
(supra)
at paras [53]
– [55]:
“
53.
In Goldfields Investments Ltd v City
Council of Johannesburg
&
another
1938
TPD 551
,560
(a case according to Corbett CJ
in
Hira’s
case
87A dealing with the first and narrowest species of review, not
common law review) Schreiner J distinguished between
gross irregularities that are patent – and occur during the
course of the trial – and those that are latent –
that
occur in the mind of the judicial officer . These are only
ascertainable from the reasons given by him. In neither case need
there be intentional arbitrariness of conduct or any conscious
prevented a fair trial of the issues. A wrong conclusion on law
or
fact does not necessarily lead to a conclusion that there has not
been a fair trial. But if a mistake of law leads to a material
misconception of the nature of the inquiry or of the court’s
duties in connection therewith, then the losing party has not
had a
fair trial.
54.
The
concept of irregularity in the proceedings was dealt with by the Full
Court in
Ellis v Morgan and Dessai
1909
TS
576
,
581 which remarked
that
“..an
irregularity
in
the
proceedings
does
not
mean
an
incorrect
judgment;
it refers not to the result but to the methods of a trial, such
as,
for
example,
some
high-handed
or
mistaken
action
which
has
prevented
the
aggrieved
party
from
having
his
case
fully
and
fairly
determined.”
Mala fides is therefore not a prerequisite and the bottom
line is:
has there been a fair trial? See also Paper, Printing, Wood and
Allied
Workers
Union
v
Pienaar
NO
[1993]
ZASCA
98
[1993] ZASCA 98
; ;
1993
4
SA
621
(A)
638H.
In
this
case
Botha
JA
expressed
doubts
whether
the
approach
to
errors
of
law
in
the
context
of
common
law
reviews
as
summarized
in Hira’s case, can be accommodated under section 24(1)
(c)
of the Supreme Court Act 59 of 1959 which grants the power of review
in the
case of gross irregularity in the proceedings (639D). In so
far as errors of law relate to the functions of an arbitrator, I do
not share the doubts. Such errors, if material, amount to a gross
irregularity in the sense this phrase has acquired.
55.
The meaning of the phrase ‘gross irregularity’ has
therefore been widened
to include latent thought processes in the
mind of the arbitrator which adversely impact upon the fairness of
the proceedings.
It must be accepted that the legislature was aware
of this when the
Arbitration Act was
passed.”
34.
In this regard, Mr Eastes’ heads of argument state:
“
14.
The arbitrator grossly misdirected himself and the facts and his
assessment of the law was also fundamentally wrong which amounts
to a
latent defect and his thought process was tainted and it is a gross
irregularity that he is tantamount to a latent thought
process in the
mind of the arbitrator. It is so defective in this matter that it
adversely impacts upon the fairness of the proceedings.”
35.
Counsel for TUT further contents that the failure by the Arbitrator
to have due regard to
the letter of 30 November 2011 goes to the
heart of the case. The argument is that the Arbitrator ignored that
letter.
36.
In response, Mr de Wet SC for Thondoni relied on the judgment of the
Supreme
Court
of Appeal
in
Telcordia
Technologies Inc
v
Telkom
SA
Ltd
[2006] ZASCA 112
;
2007
(3)
SA 266
at
paras
[55]
to
[57],
where
(Thondoni
contends)
the
test
in
Stocks
Civil
Engineering (Pty) Ltd
(
supra)
at
para [55] as relied on by TUT was specifically rejected.
37.
Reliance
was
placed
on
footnote
52
of the
Telcordia
(
supra) judgment.
This footnote states as
follows:
“
52.
A much wider statement by Van Dijkhorst J in Stocks Civil Engineering
(Pty) Ltd v Rip NO (2002) 23 ILJ 358 (LAC) para 38 is
contrary to all
authority. Obviously, the supposition underlying any arbitration
agreement is that the arbitrator has to apply
the law of the land; it
does not follow that if he errs his award can be set aside.”
38.
The award dealt with the letter in the following manner:
“
55.
In argument, TUT attempted to introduce a letter by TUT dated 30
November 2011 addressed to Ndivho Consulting Engineers &
Project
Managers, attention Jonas Tshikundamalema, as a further letter of
demand which would have brought about the right to cancellation.
This
was, however, not the TUT’s case on the pleadings, and in any
event does not unambiguously indicate what Thondoni has
breached and
what TUTU required of Thondoni to do to perge its breach.
56.
This inevitably leads me to finding that the Claimant did not acquire
an accrued right to cancel the contract and that the Claimant
failed
to establish that it legally cancelled the lease by means of the
letter attached to the particulars of claim as annexure
‘C’.”
(Sic)
39.
On a proper reading of the
Arbitrator’s award, it is clear to me that it cannot be
said that he ignored the
letter of 30 November 2011.
The findings contained in
para [55] of the award make
clear reference to this letter and it is obvious to me
that the Arbitrator had
regard to the letter.
40.
The fact that TUT may be of the
opinion that the Arbitrator came to an incorrect
finding as to the import of
this letter, is of no moment.
The authorities are clear
that a mere incorrect finding
on the law and facts is not reviewable.
41.
From the authorities quoted
by both
counsel for TUT and Thondoni, it is clear
that an arbitrator’s
decision can only be sought to be set aside if his finding on
the facts or law is of such
nature that it resulted in a procedurally unfair hearing.
This is clearly not the case
in casu.
42.
I can find no evidence of gross
misconduct or dishonest conduct or any conduct
of the kind which would
render the findings of the Arbitrator reviewable.
43.
In these circumstances, I make the
following order:
43.1.
the application is dismissed, with costs.
I JOUBERT
ACTING
JUDGE OF THE HIGH COURT
Appearances
:
Counsel
for the Applicants:
Adv
Jacques Eastes
Instructed
by:
JJR
Incorporated Attorneys
Counsel
for the Respondent:
Adv
Henk de Wet DC
Instructed
by:
DC
Robertson Attorneys
Date
heard:
3
May 2021
Date
of judgment:
22
June 2021