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[2009] ZASCA 126
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Road Accident Fund v Cloete NO and Others (474/08) [2009] ZASCA 126; [2010] 2 All SA 161 (SCA) ; 2010 (6) SA 120 (SCA) (29 September 2009)
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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case
number: 474/08
In
the matter between:
ROAD
ACCIDENT
FUND
Appellant
And
PIERRE
FRANCOIS CLOETE N
O
First Respondent
ROGER
REN
È
JULIA THOMAS
Second Respondent
ADV
H M CARSTENS SC (ARBITRATOR)
Third Respondent
Neutral
citation:
Road
Accident Fund v P F Cloete NO
(474/2008)
[2009] ZASCA 126
(29 September 2009)
Coram:
Harms DP, Heher, Maya JJA and Griesel and Tshiqi
AJJA
Heard:
11 September 2009
Delivered:
29 September 2009
Summary:
Arbitration – question of law for opinion of
the court stated by arbitrator in terms of s 20(1) of
Arbitration Act 42 of 1965
– whether High Court had
jurisdiction to hear matter – nature of discretion of
arbitrator and of court
ORDER
On
appeal from:
the High Court, Cape Town (Cleaver J).
Order
:
1.
The appeal is dismissed with costs.
2.
The cross-appeal is upheld with costs.
3.
The costs shall include the costs of two counsel.
4.
The order of the court below is set aside and substituted with the
following:
‘
The
application is dismissed with costs, including the costs of two
counsel, where so employed.’
JUDGMENT
Griesel
AJA:
[1]
This is an appeal and cross-appeal against a judgment of the High
Court,
Cape Town (Cleaver J), which comes before us with leave
of that court. The matter arises from an arbitration between the
parties
in the course of which the arbitrator stated a question of
law for the opinion of the court in terms of s 20(1) of the
Arbitration
Act 42 of 1965 (‘the Act’).
[1]
[2]
The appellant, the Road Accident Fund (‘the Fund’),
established
in terms of the
Road Accident Fund Act 56 of 1996
, is the
defendant in the arbitration. The first respondent (the first
claimant in the arbitration) is the curator
ad litem
for Dr
Els Thomas, a young medical practitioner from Belgium, who was
seriously injured in a motor collision near Cape Town on
8 October
1996 while on vacation in South Africa. The second respondent (the
second claimant in the arbitration) is her father,
Mr R R J
Thomas, acting as her duly appointed ‘bewindvoerder’
(equivalent of a curator
bonis
) in Belgium. (In what follows,
I refer to the respondents individually by name and collectively
as ‘the claimants’
.
) The arbitrator, senior
counsel at the Cape Bar, has been joined as the third respondent. He
abides the decision of the court and
has played no active role in
these proceedings.
Factual background
[3]
Dr Thomas had commenced her own practice near Antwerp in Belgium not
long
before the accident happened. As a result of the injuries
sustained in the collision, she suffers from mental, physical and
psychological
handicaps which prevent her from practising as a
medical doctor and from being gainfully employed at all. After
the appointment
of a curator
ad litem
to represent her, action
was instituted in the Cape Town High Court
against
the Fund to recover damages,
inter alia
, in respect of
the cost of medical care, the cost of accommodation and loss of
earning capacity in respect of Dr Thomas. That
litigation was in due
course settled on the basis that the Fund admitted liability for 70
per cent of the damages suffered by Dr
Thomas due to her injuries. By
agreement between the parties, the quantum of her claim was
thereupon referred for determination
by way of arbitration
in terms of
the Act.
[4]
The hearings relating to the quantum of the claim took place before
the
arbitrator in Belgium over three sessions, during February 2003,
August/ September 2003 and September 2005, before final argument
was
addressed to the arbitrator during March 2006. He made an interim
award on 15 June 2006, as well as a further (final) award
on 19
September 2006.
[5]
At the heart of the dispute between the parties lies the entitlement
of
Dr Thomas to certain benefits in terms of the Belgian social
security system and the question whether any such benefits should be
deducted from the damages payable by the Fund. According to Prof
Guido van Limberghen, professor in Social Security Law at the
Vrije
Universiteit Brussel who submitted an expert report on behalf of the
claimants, self-employed persons in the position of
Dr Thomas qualify
for social security benefits consisting of medical and
‘invalidity’ (disability) insurance;
a family benefit
insurance; pension insurance; and insolvency insurance. The social
security system was established by legislation
and administered by
the state. It is compulsory and regulated by public legislation, not
by private contract.
[6]
The social security scheme for medical insurance is administered
through
insurance institutions, of which the
Onafhankelijk
Ziekenfonds
is one. Dr Thomas is a member of the
Onafhankelijk Ziekenfonds
and has received benefits from
it arising from the injuries sustained in the collision. Part of
those benefits relate to compulsory
cover, and the remainder to
optional cover she enjoyed under those schemes.
[7]
The fact that the accident occurred in South Africa does not deprive
Dr
Thomas of the right to the assistance of the Belgian medical cost
insurance for the self-employed. This entails a right to compensation
for the treatment she received in a South African nursing institution
and the treatment she subsequently received after her return
to
Belgium.
[8]
She is also entitled to employment disability benefits for the period
that she was treated in South Africa and for the period after her
return to Belgium. Under Belgian law the statutory insurance (or
social security) institutions are obliged to pay compensation to Dr
Thomas in anticipation of recovery of damages from any accountable
third party or its insurer involved. The Belgian insurance
institution (in this case the
Onafhankelijk Ziekenfonds
) is
entitled to recover such compensation from the wrongdoer if the
accident occurred in Belgium or in a country that recognises
its
right to recover, of which South Africa is not one.
[9]
It appeared, further, that there is no entitlement to benefits
once
actual compensation has been received from an accountable third
party. Thus Dr Thomas’s right of recovery against the Belgian
scheme will fall away once she receives compensation from the Fund.
There is a statutory duty on a claimant to keep the relevant
insurance institution fully informed as to the existence of claims
against wrongdoers and diligently to pursue such claims. In
this
regard, Prof van Limberghen expressed the following view
regarding the possibility of Dr Thomas recovering double compensation
in respect of
her injuries:
‘
To
enable the [Belgian] insurance institution to recuperate the
compensation of the medical and invalidity insurance, to prevent
doctor Thomas from being compensated twice and to prevent the
Road Accident Fund from escaping its obligations towards doctor
Thomas, the only solution is an agreement entered into between doctor
Thomas and the Belgian insurance institution. In that agreement
doctor Thomas has to undertake to repay the compensation she receives
from the Road Accident Fund to the insurance institution
insofar as
it covers the compensation that she had already received from the
insurance institution.’
[10]
The evidence further revealed that Mr Thomas, on behalf of himself
and his daughter,
had in fact furnished an undertaking to refund to
the Belgian insurance institutions such benefits as Dr Thomas may
receive from
the Fund for the self-same loss.
[11]
Based on the above evidence the Fund took the view, notwithstanding
the undertaking
mentioned above, that the benefits received and to be
received by the claimants from the various social security funds fall
to
be deducted from the damages to be awarded to the claimants.
[12]
The Fund’s view was resisted by the claimants, relying
inter
alia
on
the judgment of Scott J in
Zysset
& others v Santam Limited
.
[2]
In that case, the four plaintiffs, all Swiss citizens domiciled and
resident there, were injured in a motor collision in Namibia.
They
received financial benefits from one or other of two legislatively
constituted compulsory social insurance schemes in Switzerland,
whose
object was the protection of the entire population of
Switzerland against certain consequences of disease and accident.
They sued the defendant for damages as the insurer under the
Compulsory Motor Vehicle Insurance Act 56 of 1972 of the other motor
vehicle involved in the collision. The defendant admitted the
negligence of the driver of the insured vehicle but claimed that
the
financial benefits received from the two social insurance schemes had
to be deducted from the damages they had sustained. It
appeared that
the plaintiffs had entered into an agreement with the Swiss insurance
schemes that, in the event of the plaintiffs
receiving the full
amount of their damages, they would repay to the schemes the
compensation received from those schemes. The issue
before the court
was whether or not the financial benefits from the Swiss schemes were
to be deducted from the damages to be awarded
by the court in the
actions against the defendant.
[13]
The court held that there could be no question of a deduction if the
plaintiffs were
not doubly compensated and the effect of the
agreement was that the plaintiffs would not be doubly
compensated if they were
awarded their full damages, since they would
then have to repay to the Swiss schemes whatever they had received
from them in benefits
in respect of their patrimonial loss; further,
that it was irrelevant that the plaintiffs had not been legally bound
to enter into
the agreement.
[3]
[14]
The court accordingly issued an order declaring that, with regard to
the claim of
each plaintiff, no deduction from the damages as finally
determined by the court was to be made in respect of any amount or
any
portion thereof which was or is to be received from the Swiss
schemes and which in terms of the agreement fell to be repaid to the
Swiss schemes.
[4]
The application
in
terms of
s 20(1)
[15]
It is apparent from the above synopsis that the same, or similar,
questions that
arose in
Zysset
also arose in the present case.
On the face of it, therefore,
Zysset
would constitute binding
authority in respect of the issues to be decided in the present
arbitration. However, it was contended
on behalf of the Fund
that
Zysset
had been wrongly decided. For this reason, the
Fund sought an opportunity of persuading the court of its view.
It accordingly
asked the arbitrator
in terms of
s 20(1) of the Act to state the following questions of
law for the opinion of the court in the form of a special case:
‘
1.1
Whether the value of any of the benefits referred to below received
or to be received
by the First and/or Second Claimants, or anyone
appointed as curator
bonis
or “bewindvoerder” on behalf of Dr Els Thomas, should be
excluded or deducted from any damages to be awarded to the
Claimants
or not:
1.1.1
any benefits received or receivable from the Belgian
Onafhankelijk
Ziekenfonds
pursuant to compulsory cover she enjoyed from that
fund; and/or
1.1.2
any medical and/or disability benefits received or receivable
pursuant to compulsory cover
she enjoyed under the Belgian Medical
and Invalidity Insurance Act of 1994 (“ZIV-Wet 1994”);
and/or
1.1.3
any benefits received or receivable pursuant to compulsory cover she
enjoyed under the
Royal Decree of 3 July 1996 (Belgium); and/or
1.1.4
any benefits received or receivable pursuant to compulsory cover she
enjoyed under the
Belgian medical Cost Decree for the Self-employed
of 1997; and/or
1.1.5
any benefits received or receivable pursuant to compulsory cover she
enjoyed under the
Royal Decree of 3 July 1996 and/or the Employment
Disability Decree for the Self-employed
(
Arbeidsongeschkiktheidsbesluit voor Zelfstandigen
);
and/or
1.1.6
any benefits received or receivable from the
Vlaams Fonds voor
Sociale Integratie van Personen met een Handicap
.’
[16]
The arbitrator was not prepared to state a question in the terms
requested by the
Fund. In his ‘Ruling’, handed down on 15
June 2006, the arbitrator referred to the test laid down by Lord
Denning MR
in
Halfdan
Grieg & Co A/S v Sterling Coal and Navigation Corporation and
another
[5]
and adopted in several subsequent South African decisions,
[6]
where it was held as follows with regard to comparable provisions in
the English Arbitration Act of 1959:
‘
The
point of law should be real and substantial and such as to be open to
serious argument and appropriate for decision by a court
of law as
distinct from a point which is dependent on the special expertise of
the arbitrator or umpire. The point of law should
be clear cut and
capable of being accurately stated as a point of law – as
distinct from the dressing up of a fact as if
it were a point of law.
The point of law should be of such importance that the resolution of
it is necessary for the proper determination
of the case – as
distinct from a side issue of little importance.
If
those three requisites are satisfied, the arbitrator or umpire should
state a case.’
[17]
Having quoted the above passage, the arbitrator proceeded as follows:
‘
The
questions posed [by the Fund] will
inter
alia
involve the construction of the statutory enactments dealt with by
Prof van Limberghen in his report. That part of the report has
been
admitted and is no longer open to debate. Secondly, on Prof Van
Limberghen’s interpretation (as I read it) the
obligation
under the Belgian medical– and invalidity insurance schemes to
pay Dr Els Thomas will fall away once she receives
compensation from
the defendant. The issue of double compensation then does not arise.
Thirdly, an argument that the value of benefits
“receivable”
(as opposed to “received” or “to be received”)
is deductible is in my view without
merit and does not meet the first
of the criteria referred to above.’
[18]
The arbitrator noted, however, that the solution proposed by Prof van
Limberghen
accorded with the judgment in the
Zysset
matter
and, since it was contended on behalf of the Fund that this case had
been wrongly decided and an opportunity had been sought
to persuade a
court to re-examine the judgment and the issues raised therein,
he was prepared to grant the Fund such an opportunity
–
inter
alia
in
view of the fact that ‘a large amount of money is involved
here’.
[7]
He accordingly
directed that a special case in the following terms be referred to
the court for an opinion in terms of s 20(1)
of the Act:
‘
1.
In the matter of
Zysset
& others v Santam Limited
1996 (1) SA 273
(C) this Honourable Court made the following order
(at 282D–E):
“
With
regard to the claim of each plaintiff no deduction from the damages
as finally determined by this Court is to be made in respect
of the
amount, or any portion thereof, which was, or is to be, received from
IV, SUVA, or Berner and which in terms of the agreement
of 7 December
1992 falls to be repaid to IV, SUVA or Berner. Any portion of
the amount received from IV, SUVA or Berner in
respect of patrimonial
loss which in terms of the agreement is not repayable shall be
deducted from the damages so determined.”
2.
The issues which arose from the
Zysset
matter have also arisen
in the present arbitration.
3.
The defendant questions the correctness of the decision in the
Zysset
matter; the claimant contends that it was correctly decided.
4.
This Honourable Court is accordingly in terms of
s 20
of the
Arbitration Act 42 of 1965
requested to determine the following
issue:
Whether on the facts stated therein the order in the
Zysset
matter was correctly made or not. If not, the court is requested
to state what the order should have been
.
’
The high court
[19]
The Fund was not satisfied with the arbitrator’s formulation of
the issue and
applied to the high court for an order (1) compelling
the arbitrator to state the questions of law in the form as initially
formulated on behalf of the Fund;
[8]
alternatively, and in any event, (2) to determine the issue as
formulated by the arbitrator in the special case. The claimants
opposed the application and sought to persuade the court that it
should decline to hear the matter.
[20]
The learned judge, like the arbitrator, felt obliged,
inter alia
in the light of the test laid down in
Halfdan Grieg
and ‘in
view of the amount involved and the importance of the issue’,
to deal with the question of law stated by the
arbitrator. Having
heard argument, the high court upheld the Fund’s argument
that the
Zysset
case had been wrongly decided. The court,
however, did not consider it ‘or appropriate to redraft the
order’, as requested
by the arbitrator. (The correctness
or otherwise of the high court’s opinion as such is not in
issue before us by reason
of s 20(2) of the Act,
which
provides that ‘(a)n opinion referred to in subsection
(1) shall be final and not subject to appeal and shall be binding
on
the arbitration tribunal and on the parties to the reference.’)
[21]
The learned judge thereafter dealt with the relief claimed in para 1
and stated as
follows (at paras 29–31):
‘
Counsel
were in agreement that it would not be appropriate at this stage
either to direct the arbitrator to refer the questions
to this court,
or for me to decide the questions myself. The reason is that it will
be necessary to establish what the objects
of the Belgian scheme are
in order to come to a decision as to whether payments received under
this scheme are payments which are
to be deducted from the amount of
damages awarded.
I
accordingly direct that in respect of the questions raised, the
arbitrator may receive such further evidence as the parties may
wish
to present concerning the objects of the Belgian scheme and he may
then state the questions as points of law (together with
his findings
of fact) if he concludes on such further evidence that the objects of
the Belgian scheme are materially different
from those of the Swiss
scheme considered in
Zysset.
The
authority to refer the matter back to the arbitrator relates only to
the question of benefits already received from the Belgian
scheme and
not to any future benefits which Dr Thomas may receive. …’
[22]
The order issued by the registrar pursuant to the judgment did not
reflect the directives
contained in paras 30 and 31 quoted above and
read as follows:
‘
1.
The court concluded that the decision in
Zysset
& others v Santam Ltd
1996
(1) SA 273
(C) is incorrect and that in that case the amount or any
portion thereof which was received by any of the plaintiffs from IV,
SUVA
or Berner should have been deducted from the amount of damages
awarded to him or her.
2.
First and second respondents [claimants] are to pay the applicant’s
[Fund’s] costs.’
[23]
Both sides were dissatisfied with the judgment as well as the form of
the order of
the high court and sought leave to appeal and to
cross-appeal against it. In his judgment granting the necessary
leave, the learned
judge clarified the original order by explaining
that ‘what [he] had intended to convey, was that in respect of
past benefits
[he] neither granted nor refused the application, but
in respect of future benefits the application was refused’. In
terms
of the provisions of uniform rule 42(1)(b), the original order
was accordingly amended by insertion of the following new para 2
(and
consequential renumbering of the existing para 2):
‘
2.
The relief sought in para 1 of the notice of motion is refused
insofar
as it pertains to benefits ‘to be received’ /
‘receivable’ by or for the benefit of Dr Thomas. Save as
aforesaid no order is made on para 1 of the notice of motion.’
On appeal
[24]
In its appeal to this court, the Fund took issue, mainly, with the
rider added in
the new para 2 of the order (based on the first
sentence in para 31 of the judgment quoted above) to the effect that
future benefits
were to be excluded from the scope of any further
enquiry before the arbitrator. The Fund contended that there was no
distinction
in principle or in law between past and future benefits
and asked that para 2 of the order (as amended) should be set aside.
[25]
In their cross-appeal, on the other hand, the claimants argued that
the high court
should have declined to deal with the
Zysset
question at all and should have dismissed the application. The
cross-appeal is based on two alternative grounds: first, that the
high court had no jurisdiction to furnish its opinion on the question
as stated by the arbitrator; second, that the court erred
in
exercising its discretion to furnish its opinion. In the light of the
issues raised, I find it convenient to deal with the cross-appeal
first.
Jurisdiction
[26]
Regarding the question of jurisdiction, the claimants argued that in
terms of s 20(1)
of the Act an arbitrator is not entitled
mero
motu
to
refer a question of law to a court.
[9]
In this case, the question as formulated by the arbitrator was one
which neither party had asked him to state. A
comparison
of the questions raised in para 1 of the notice of motion and the
question actually stated by the arbitrator reveals
that they are
materially different questions. The questions which the appellant
asked to be stated did not in their formulation
mention
Zysset
at
all.
In
effect, therefore, the arbitrator decided
mero
motu
to
state the question – something which he was not legally
empowered to do.
[27]
The claimants submitted, further, that
Zysset
would
no doubt have been raised in argument before a court had the
arbitrator reserved the questions requested by the Fund, it is
by no
means obvious that the court would have had to determine whether
Zysset
was right or wrong or that a
finding on that question (if made) would have been decisive of the
questions of law which the Fund
actually asked the arbitrator to
state.
[28]
I doubt whether it would be correct, on these facts, to hold that the
high court
had no jurisdiction to hear the matter. In my view, the
argument amounts to no more than this, that the high court
erroneously
exercised the powers it enjoyed in terms of s 20(1);
not that it did not have the necessary power at all.
[10]
[29]
There was also some debate before us as to whether the question
stated by the arbitrator
meets the jurisdictional threshold of being
a ‘question of law’. In the form that the question has
been framed, it
requires the court to examine the
facts
in
Zysset
in order to determine
whether or not the court, on those facts, came to the correct
conclusion; it does not require examination
of the correctness
or otherwise of any underlying legal principle as to which benefits
are collateral and which are deductible
from the patrimonial damages
suffered by a plaintiff. In any event, with regard to the latter
aspect, this court has held that
questions regarding the
deductibility of collateral benefits cannot be answered by reference
to a single juridical test; instead,
‘it is acknowledged that
policy considerations of fairness ultimately play a determinative
role’.
[11]
Moreover,
‘
[p]erceptions
of fairness may differ from country to country and from time to time;
the task of Courts is to articulate the contemporary
perceptions of
fairness in their respective areas of jurisdiction.’
[12]
[30]
More recently, this court, after quoting the above extract from
Dugmore’s
case, expressed agreement
with the statement that ‘questions regarding collateral
benefits are normative in nature; they have
to be approached and
solved in terms of policy principles and equity’ and that, in
doing so, ‘there should always be
a weighing-up of the
interests of the plaintiff, the defendant, the source of the benefit
as well as the community in establishing
how benefits resulting from
a damage-causing event should be treated’.
[13]
[31]
Although this argument is not without merit, I do not find it
necessary, in the light
of my views regarding the alternative
argument, to come to a final conclusion on this aspect of the case. I
accordingly turn to
consider the question whether the high court
erred in the exercise of its discretion in furnishing its opinion.
Discretion
[32]
Counsel for the claimants referred to English authority
[14]
in support of the proposition that the court enjoys a discretion
whether or not to deal with the question of law stated by an
arbitrator. It is correct, as pointed out by counsel for the Fund,
that the cases relied on were decided on the wording of the English
Act, which is materially different from s 20 of our Act.
[15]
Nonetheless, I have no doubt that the position in our law is similar;
in other words, the mere fact that an arbitrator has seen
fit to
state a question of law for the opinion of the court does not oblige
the high court to furnish such opinion. If the court
should consider,
for example, that on proper analysis the question of law posed is
irrelevant to the issues in the arbitration
or that the facts
recorded in the special case do not enable the law point to be
sensibly adjudicated, the court would be justified
in declining to
decide the point. This must be so, as otherwise the courts could
theoretically be swamped with irrelevant
and unnecessary
questions of law arising from arbitrations.
[33]
As for the factors influencing the exercise of an arbitrator’s
discretion in
terms of s 20(1), it has until recently been
accepted by our courts that, when the three requisites as laid down
by Lord Denning
in the
Halfdan
Grieg
matter
are satisfied, an arbitrator should be obliged to state a case.
[16]
In
Telcordia
,
[17]
however, this court firmly rejected that approach. In a
unanimous judgment, Harms JA re-examined the scope of s 20 of
the Act and
inter
alia
said
the following:
‘
The
first matter I wish to address is the nature of the arbitrator’s
discretion. Eloff J, in
Kildrummy
,
sought to curtail the general and unrestricted discretion the section
gives to the arbitrator. There is no reason, having regard
to the
wording of the section, for such an approach. Rules circumscribing
the way any discretion has to be exercised are generally
unacceptable. Eloff J sought to justify his approach with reference
to a
dictum
by Denning MR in
Halfdan
Grieg.
’
[18]
[34]
After quoting the
dictum
from
Halfdan
Grieg
on
which the arbitrator relied, Harms JA pointed out that Lord Denning
was ‘a proponent of the view that all matters of law
should
fall within the sole domain of courts’ and that the other two
members of the court, Scarman and Megaw LJJ, did
not associate
themselves with the limitation placed on the discretion of an
arbitrator by Lord Denning. Harms JA thereupon proceeded
to hold that
‘there is no obligation on an arbitrator to state a case
if the requirements set out by Denning MR are
present. They are
important factors to consider but they are not definitive’.
[19]
[35]
In the light of this judgment, it is clear, to the extent that both
the arbitrator
and the high court regarded themselves as bound
by the test laid down in
Halfdan Grieg
, that they had unduly
fettered their respective discretions and had exercised it on the
basis of an incorrect principle. It follows
from the foregoing that
this court is at large to consider the matter afresh.
[36]
Further factors relevant to the exercise of the court’s
discretion become evident
when one has regard to the purpose of s 20.
It has been stated that the purpose of s 20 is ‘to ensure
that the
ultimate control over legal issues arising in the course of
an arbitration is left to the Court’.
[20]
This can no longer be regarded as good law. The fact is that when
parties agree to refer their disputes to arbitration, they select
an
arbitrator as the judge of fact and law. Ordinarily, the award of the
arbitrator is final and conclusive, irrespective of how
erroneous,
factually or legally, the decision was.
[21]
Section 20, therefore, constitutes an exception to the general
principle that it is the function of the arbitrator to decide finally
all
matters referred to him,
including questions of law.
[22]
For this reason, and out of deference to the principle of party
autonomy,
[23]
the court’s
powers in terms of s 20 should in my view be sparingly
exercised. As it was put by Donaldson LJ
in
Babanaft’s
case,
[24]
with reference to the (now repealed) s 2 of the English
Arbitration Act of 1979:
‘
Section 2
is the successor in title to the old consultative case, which more
aptly describes its nature. Put colloquially,
the arbitrator or the
parties nip down the road to pick the brains of one of Her Majesty’s
judges and, thus enlightened,
resume the arbitration.
It
is essentially a speedy procedure designed to interrupt the
arbitration to the minimum possible extent and it is an exception
to
the general rule that the courts do not intervene in the course of an
arbitration.
’
[37]
Further guidance as to the factors that should be taken into account
by a court before
exercising its powers in terms of s 20(1) can
be found, I suggest, in the provisions of s 45(1) and (2) of the
current
English Arbitration Act of 1996, under the heading
‘
Determination
of preliminary point of law’.
[25]
Sub-section
(1) provide
s
that the court may ‘determine any question of law arising in
the course of the proceedings which the court is satisfied
substantially affects the rights of one or more of the parties’.
Sub-section (2)(b)
inter
alia
provides
further that an application under this section shall not be
considered unless ‘… the court is satisfied –
(i)
that the determination of the question is likely to produce
substantial savings in costs, and (ii) that the application
was made
without delay’.
[38]
Applying the above principles to the question posed by the arbitrator
in this case,
the high court rightly expressed reservations with
regard to the form of the question, pointing out that ‘(i)t is
of course
unusual for the validity of an existing judgment to be
called in question in the course of arbitration proceedings’.
In my respectful opinion, however, it is not only ‘unusual’,
but also inappropriate, where the very issue stated
by the
arbitrator has already been decided by a single judge in the same
Division and where there are no conflicting judgments
on the
point,
[26]
to state that same
point yet again for the opinion of another court.
[39]
The mere fact that the Fund sought an opportunity to persuade a court
to re-examine
the judgment and the issues raised in
Zysset
should
not have persuaded the arbitrator to state a question of law for the
opinion of the court, nor should it have persuaded the
court to
answer the question so stated. When the parties agreed to have their
dispute resolved by arbitration instead of litigation
they must be
assumed to have agreed that it would be decided on the basis of
prevailing South African law,
inter
alia
as
laid down in
Zysset
.
[27]
If either of them had wished for an opportunity to ask the court to
review or change the substantive law, eg by reversing
a binding
precedent, then arbitration was the incorrect procedure to achieve
that result. I accordingly agree with the submission
on behalf
of the claimants that it is neither appropriate nor just to use
the court’s jurisdiction under s 20(1)
to reverse, in a
way which is not subject to an appeal, an existing and otherwise
binding precedent.
[40]
Furthermore, far from being of decisive importance to the dispute
between the parties,
the relevance of the question stated in relation
to the arbitration, is questionable. As pointed out above,
[28]
the principal dispute between the parties in this case related to the
question whether certain benefits in terms of the Belgian
social
security system to which Dr Thomas is entitled should be deducted
from the damages payable by the Fund. The question stated
by the
arbitrator, however, does not seek an answer to this issue. As
matters now stand, it is not known whether the high court’s
finding that
Zysset
was wrong will have any
practical effect on the determination of the dispute: the court
simply does not know whether the result
of its finding will be that
any past benefits received by Dr Thomas are deductible from her
damages. Were the order of the high
court to be implemented, the
matter will first have to go back before the arbitrator (whose final
award has in the meantime
been made) so as to reopen the arbitration
in order to ‘receive such further evidence as the parties may
wish to present
concerning the objects of the Belgian scheme’,
after which ‘he may then state the questions as points of law
(together
with his findings of fact) if he concludes on such further
evidence that the objects of the Belgian scheme are materially
different
from those of the Swiss scheme considered in
Zysset
’
.
[29]
Thus it may appear, once the new evidence has been led, that the
Belgian schemes are different and distinguishable from the Swiss
schemes considered in
Zysset
,
in which event the whole process in terms of s 20 –
including the present appeal – would prove to have been a
protracted and expensive exercise in futility. In that case, an
opinion by the court as to whether or not
Zysset
had
been correctly decided would be completely academic and hence
irrelevant. This would be contrary to the principle that
the court
does not ordinarily in terms of s 20(1) give opinions on
assumptions or on academic or hypothetical questions.
[30]
It would also be contrary to the principle that it would normally be
premature to state a question of law for an opinion until
such time
as the primary facts relevant to the decision have been determined by
the arbitral tribunal.
[31]
[41]
Finally, it has been argued on behalf of the claimants that the
matter has become
moot. In this regard, it appeared that since the
Fund launched its application in terms of s 20, the arbitrator
handed down
his award on 15 June 2006, laying down certain
parameters for the quantification of the award. Thereafter,
the parties
and their respective actuaries collaborated, debated and
agreed on the final amount due to the claimants. A final award was
subsequently
made in September 2006 after certain further
disputes had arisen. Such award has been quantified by the parties
and payment in
full has been made by the Fund pursuant to such award
during October 2006. In making the payment, the Fund did not reserve
any
of its rights pertaining to the reduction of the amount paid or
repayment of any portion thereof. The Fund also did not request
that
finalisation of the matter be held in abeyance pending finalisation
of this application. No amount was held back to cover
the contingency
that the award might be reduced in consequence of a favourable
decision on the points of law. Furthermore, the
Fund failed to
exercise the right conferred by the arbitration agreement to appeal
against the arbitrator’s award. In the
circumstances, so
it was argued, the
lis
referred to arbitration
had been finally adjudicated and there was no further scope for
the court’s opinion as contemplated
in s 20. Moreover, the
arbitrator would not have been entitled to amend his award of 19
September 2006 and in any event the
respondents would be under no
obligation to repay anything to the appellant. Accordingly, so it was
argued, the Fund’s payment
was akin to a payment made after an
appealable judgment has been granted, which payment – in the
absence of a reservation
of rights or protest – is unequivocal
and inconsistent with an intention to challenge the correctness of
the judgment and
amounts to peremption.
[32]
[42]
Again, it is not necessary to make a definite finding with regard to
this issue.
It is sufficient, in this context, to refer to the
overarching requirement of public policy that the principle of
finality
in litigation should generally be preserved rather than
eroded –
interest
rei publicae ut sit finis litium
.
[33]
In this instance, it is clear that the high court’s answer to
the question in terms of s 20 will not assist, but will
rather
hamper, finality. The fact of the matter is that the collision
resulting in the damages suffered by Dr Thomas occurred almost
thirteen
years ago and yet no
finality has been reached. If the procedure ordered by the high
court were now to be followed, the whole
process is likely to be
prolonged and the finalisation of the claim will be delayed
indefinitely.
[43]
In the circumstances, I am satisfied that the high court, in the
exercise of its
discretion, should have dismissed the Fund’s
application. It follows that the cross-appeal should succeed.
This conclusion
renders the appeal on behalf of the Fund
academic. In the instance of both the appeal and the cross-appeal,
costs must follow the
result, which should include the costs of two
counsel.
Conclusion
[44]
In the circumstances, the following order is granted:
1.
The appeal is dismissed with costs.
2.
The cross-appeal is upheld with costs.
3.
The costs shall include the costs of two counsel.
4.
The order of the court below is set aside and substituted with the
following:
‘
The application is
dismissed with costs, including the costs of two counsel, where so
employed.’
b
m griesel
Acting
Judge of Appeal
HARMS
DP (heher JA, Maya JA and Tshiqi AJA concurring):
[45]
I have read the judgment of Griesel AJA and I agree with his
conclusion. My
approach differs somewhat from his and,
accordingly, I prefer to state my reasons separately. Since he has
stated the facts fully
it is not necessary to mention them in any
detail.
[46]
I first deal with the arbitrator’s stated case, which is quoted
in Griesel
AJA’s judgment (at para 18). The question put was
whether
Zysset
[34]
was correctly decided on its facts. That, as put, was not a question
of law. What the arbitrator apparently had in mind was to
ask the
court whether a party, who claims compensation, can avoid the
application of the rule against double compensation by voluntarily
entering into an agreement with the ‘insurer’ to repay
the latter once compensation is received from the wrongdoer.
(The
arbitrator did not intend to refer any question about future benefits
because, as he said, he had found as a fact that Dr
Thomas’s
right of recovery for future benefits will fall away once she
receives compensation from the RAF.)
[47]
The first question that springs to mind is whether this is a question
of law because,
unless it is such a question it could not be stated.
Griesel AJA has dealt with the question but chose to leave it open
(at paras
29-30). I prefer to answer the question with reference to
the authorities quoted by him: it is a value judgment.
[35]
In addition, Scott J, in
Zysset
,
in finding that the plaintiff could use such an agreement, based his
conclusion on the facts of the case. He did not purport
to lay
down a generally applicable rule that applies in isolation and
divorced from the facts (at 281F–282B). Also, in ‘overturning’
Scott J’s judgment, the learned judge below invoked
‘considerations of public policy, reasonableness
and
justice’.
[48]
It is accordingly not surprising that the arbitrator formulated the
stated case with
reference to the particular facts of that case. The
answer given by the high court involved a referral back to the
arbitrator to
enable him to determine whether the facts in this case
(which dealt with Belgian law and social insurance schemes) differed
from
the facts in
Zysset
(which dealt with those of
Switzerland).
[49]
Since precedents are quoted for their principles and not for their
facts the arbitrator
erred in asking that question. The question and
answer were not ‘legal’. I accordingly conclude that the
high court
had no jurisdiction to consider the arbitrator’s
stated case.
[50]
The next issue relates to the RAF’s prayer compelling the
arbitrator to state
a question of law for the opinion of the court.
The high court dismissed the application as far as future benefits
are concerned
because, as mentioned, the arbitrator had found as a
fact that Dr Thomas’s benefits will fall away once the RAF
compensates
her. That leaves the question relating to past benefits:
can Dr Thomas avoid the application of the rule against double
compensation
by voluntarily entering into an agreement with the
‘insurer’ to repay the latter once compensation is
received from
the RAF? I have already held that this is not a
question of law and this means that the high court did not have the
jurisdiction
to consider the application.
[51]
There is a further reason why the high court did not have
jurisdiction. It is common
cause that before the hearing in the court
below the arbitrator issued a final award; the RAF did not use its
right of appeal;
it did not seek to set aside the award by way of
review; and it paid the award in full without any conditions
attached. A court
cannot order an arbitrator to state a question of
law that has no bearing on the arbitration. The question of law must,
in terms
of
s 20(1)
of the
Arbitration Act 42 of 1965
, be stated
before the making of the final award. This was no longer possible.
[52]
It follows from this that matters that Griesel AJA considers to
relate to discretion
in my view have a more profound effect –
they go to jurisdiction.
L
T C HARMS
Deputy
President
APPEARANCES:
FOR
APPELLANT:
W R E
Duminy SC
Instructed
by:
Edward
Nathan Sonnenbergs Inc.
Foreshore,
Cape Town
Webbers
Bloemfontein
FOR
RESPONDENTS:
Owen
Rogers SC and A S de Villiers
(1st &
2nd Resp)
No
appeareance on behalf of 3rd Resp
(Abides
the decision of the Court)
Miller
Bosman Le Roux
Somerset
West
Naudès
Inc
Bloemfontein
[1]
Section 20(1) of the Act provides:
‘
An
arbitration tribunal may, on the application of any party to the
reference and shall, if the court, on the application of any
such
party, so directs, or if the parties to the reference so agree, at
any stage before making a final award state any question
of law
arising in the course of the reference in the form of a special case
for the opinion of the court or for the opinion of
counsel.’
[2]
1996 (1) SA 273
(C
).
[3]
At 281G–282B.
[4]
At 282E.
[5]
[1973] 2 All ER 1073
(CA) at 1077
c-g
(other case references
omitted).
[6]
Cf
Administrator,
Transvaal v Kildrummy Holdings (Pty) Ltd & another
1978 (2) SA 124
(T) at
127H–128A;
Dorman
Long Swan Hunter (Pty) Ltd v Karibib Visserye Ltd
1984
(2) SA 462
(C) at 472G–H;
Government
of the Republic of South Africa v Midkon (Pty) Ltd & another
1984 (3) SA 552
(T) at
560E.
[7]
The eventual award in favour of the claimants exceeded R25 million.
[8]
As quoted in para 15 above.
[9]
See
Midkon,
n 6
above, at 559I.
[10]
Cf in this regard the
dictum
by
Lord Steyn in
Lesotho
Highlands Development Authority v Impregilo SpA
[2005]
UKHL 43
para [24], quoted with approval in this court in
Telcordia
Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007
(3) SA 266
(SCA) para 52.
[11]
Standard
General Insurance Company Ltd v Dugmore NO
1997
(1) SA 33
(A) at 42B.
[12]
At 42B–C
.
[13]
Erasmus,
Ferreira and Ackermann & others v Francis
[2009] 3 All SA 500
(SCA) para 17, quoting with approval from Neethling, Potgieter and
Visser
Law
of Delict
5ed
(2006) pp 215–216.
[14]
See
Babanaft
International Co SA v Avant Petroleum Inc
[1982]
3 All ER 244
(CA) at 252
h–i
;
Taylor
Woodrow Holdings Ltd & another v Barnes & Elliott Ltd
[2006]
EWHC 1693
(TCC) paras 55–56.
[15]
See
Midkon
,
n 6 above, at 526G–I;
Telcordia
,
n 10 above, para 152; Butler & Finsen
Arbitration
in South Africa – Law and Practice
(1993)
p 207.
[16]
See para 16 above.
[17]
Note 10 above.
[18]
Para 151.
[19]
Para 152.
[20]
Dorman
Long,
n
6 above at 472H;
Kildrummy’s
case,
note 6 above at 129A; 130D–E.
[21]
Telcordia
para
55.
[22]
Butler
& Finsen
op
cit
p
206.
[23]
Cf
Telcordia
para
4.
[24]
Note 14 above, at 252
i
–
253
a
(emphasis added).
[25]
Section 45 of the 1996 Act is comparable with s 2 of the
repealed 1979 Act.
[26]
To the contrary,
Zysset’s
case
has been referred to on several occasions with approval, including
by this court: see
Van
Wyk v Santam Bpk
1998
(4) SA 731
(C) at 737C–738G;
Ongevallekommissaris
v Santam Bpk
[1998] ZASCA 93
;
1999
(1) SA 251
(SCA) at 261H;
D’Ambrosi
v Bane & others
2006
(5) SA 121
(C) paras 27–28.
[27]
The arbitrator, it may be noted, was eminently qualified to deal
with the issues in dispute, having been counsel for the defendant
in
Zysset.
[28]
Para 5 above.
[29]
Para 30 of the judgment of the high court, quoted in para 21 above.
[30]
Dorman
Long,
n
6 above, at 478D;
Telcordia
,
n 10 above, para 155.
[31]
Butler & Finsen
op
cit
p
208 and the authorities cited in footnote 256.
[32]
Dabner
v SAR & H
1920
AD 583
at 594.
[33]
Firestone
SA (Pty) Ltd v Genticuro AG
1977
(4) SA 298
(A) at 309A.
[34]
Zysset
& others v Santam Limited
1996
(1) SA 273
(C
).
[35]
Media
Workers Association of SA v Press Corporation of SA Ltd (’Perskor’)
1992 (4) SA 791
(A).