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[2018] ZAGPPHC 25
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Tubatse Chrome (Pty)Ltd v Walking Stick Transport CC (10623/2015) [2018] ZAGPPHC 25 (15 February 2018)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO:10623/2015
In
the matter between:
TUBATSE
CHROME (PTY) LTD
Applicant
and
WALKING
STICK TRANSPORT
Respondent
JUDGMENT
1.
This is an application for payment of the costs in the action
instituted by the respondent
, as plaintiff, against the applicant,
as defendant, prior to the parties' reference of the dispute between
them to arbitration.
2.
The relevant facts of the matter are largely common cause. Briefly,
they are the following.
The respondent instituted an action against
the applicant in the course of 2015 claiming damages for breach of
contract. The pleadings
were closed and on two occasions the matter
was set down but did not proceed. On the first occasion, 6 May 2016,
the matter was
postponed as the trial was not ready to proceed and
costs were reserved. On the second occasion, 25 November 2016, the
matter was
postponed for the reason that no judges were available to
hear the matter. On this second occasion an order was made by
agreement
between the parties that costs should be costs in the
cause. From the evidence before this court it is not known what the
facts
and circumstances were which lead to the costs being reserved
on 6 May 2016.
3.
Thereafter, on 2 December 2016 the party signed an arbitration
agreement in terms of which they
agreed that the dispute be referred
to arbitration.
4.
The arbitration was concluded before retired Justice Harms as
arbitrator who made an award as follows:
"The claim is dismissed
with costs as defined in clause 9.1 of the Arbitration Agreement."
5. The
applicant, as successful party in the arbitration proceedings,
subsequently demanded from the
respondent payment of the costs
relating to the action proceedings instituted in the high Court prior
to the reference to arbitration.
The respondent denied that the
applicant was entitled to such costs and that is the issue which this
court has to decide.
6.
It is necessary to refer to certain clauses in the Arbitration
Agreement. They are the following:
"1
INTERPRETATION
1.1
In this Agreement, unless the context indicates a
contrary intention, the following words and expressions bear the
meanings assigned
to them and cognate expressions bear corresponding
meanings –
1.1.1
"Act" means the
Arbitration Act, 42 of 1965
, as amended;
2
RECORDAL
2.1
Walking Stick has instituted action proceedings against Tubatse in
the Gauteng Division, Pretoria
of the High Court under case number
10623/15 ("the Claim").
2.2 The
Parties wish to have the dispute referred to and disposed of by
Arbitration in terms of the
Act, the Rules and the terms of this
Agreement."
3
WHEREFORE THE PARTIES AGREE AS FOLLOWS:
3.1
The parties are in agreement that the dispute is arbitrable and
hereby referred to Arbitration.
5
POWERS OF THE ARBITRATOR
5.1
The Arbitrator shall determine the claim, together with all ancillary
issues, including
any issues of law and/or fact, arising therefrom in
the pleadings, in accordance with the laws of the Republic of South
Africa.
5.2
The Arbitrator have all such powers in the conduct of the arbitration
as conferred
by the Act and as set out herein and, as between the
parties, shall have the same powers and jurisdiction as would a High
Court
Judge presiding in a court of first instance.
6
PROCEDURE
6.1
All pleadings have been exchanged between the Parties, which define
the issues in
the Arbitration .
9
COSTS
9.1
The costs of the arbitration, including the costs of the Arbitrator,
the recording and transcription of the proceedings, and
the costs of
either Party in preparing for and conducting the Arbitration, shall
be costs in the cause as determined by the Arbitrator,
or, if
applicable, costs in the cause as ultimately determined by the
appeal.
7.
On12 June 2017 the applicant's attorneys addressed a letter to the
respondent's attorneys stating
that: "(i)nsofar as costs until
the 12th December 2016, kindly let us have your client's notice of
withdrawal of the action
and the tendering of our client's costs of
therein."
8.
In responding to this letter the respondent denied liability for such
costs stating, inter alia,
that clause 9.1 of the arbitration
agreement governed "everything".
9.
It was submitted on behalf of the applicant that clause 9.1 of the
arbitration agreement only covers
the costs of the arbitration and
does not cover the litigation costs up to the arbitration. Such costs
of the litigation. according
to the applicant, had not been
determined and in light of the fact that the applicant was successful
in its defence in the arbitration
proceedings, it is also entitled to
the costs of the action up to the date of the signature of the
arbitration agreement. It was
further submitted by the applicant that
the arbitration agreement was never meant nor intended to deal with
the costs of the action
up to and until the arbitration agreement was
signed. It was submitted that it was self-evident at the time of the
signing of the
arbitration agreement that the costs of the action
would follow the result.
10.
The respondent's answering affidavit comprised four pages. Most of
the factual allegations of the applicant were
admitted or merely
noted. I shall refer to those aspects which constitute the
respondent's answer to the application. The applicant
referred to a
letter written by the respondent on 13 June 2017 in response to the
applicant's claim for payment for costs of the
court proceedings
prior to the reference to arbitration. The respondent admitted the
contents of this which stated, inter alia,
as follows:
"We
find this bizarre as you were aware that once the arbitration route
kicks in, then everything is determined by the forum
as per clause
9.1 of the agreement.
We
have also for the record advised our client prior to opting for this
route that in the event the order is in their favour, they
are
entitled to costs as per clause 9.1 and nothing else.
Our
client is not willing to accept any cost order from a different court
for this matter and instructs us to oppose any application
against
him."
11.
The respondent further denied that it had erred in its interpretation
of clause 9.1 and more particularly the respondent
denied the
applicant's interpretation that clause 9.1 only covered the costs of
the arbitration and did not cover the litigation
costs up to the
arbitration. The respondent also denied the allegation by the
applicant that the reason for the arbitration agreement
only dealing
with the costs after the signing of the arbitration agreement and
that it was not meant to nor intended to deal with
the costs of the
action up to and until the arbitration agreement was signed was that
it was self-evident at the time of the signing
of the agreement that
the costs of the action would follow the result. The respondent
consequently also denied the applicant's
submission that since the
applicant was successful in its defence in the arbitration
proceedings, it is entitled to the costs of
the action up to the date
of the signature of the arbitration agreement.
12.
Lastly, it may be noted that in response to the applicant's reference
to the signed arbitration agreement
, the respondent in paragraph 3
of the answering affidavit referred in addition to clause 2.2 of the
arbitration agreement in terms
of which the parties agreed that the
High Court dispute will be disposed of in terms of the
Arbitration
Act.
13.
On
behalf of the applicant advocate Smit submitted, inter alia, that
the court is still ceased with the proceedings which have merely
been
stayed. He submitted that the action is therefore still "alive"
and that this court can make an order as far as
costs of the
proceedings before it are concerned. In support of this argument I
was referred to the matter of GK Breed (Bethlehem)
Edms Bpk v Martin
Harris & Seuns (OVS) EdmsBpk
1984 (2) SA 66
(0).
14.
In Rood, at p71D to 72H the court, per Lichtenberg J, dealt as
follows with the consequences of his order that the
special plea of
the defendant that the dispute between the parties should be
subjected to arbitration as envisaged in the arbitration
clause in
the parties' agreement, should be granted:
"In
sy smeekbede vra verweerder dat eiser se eis met koste afgewys word.
Eiser vra daarenteen dat - indien verweerder se spesiale
pleit sou
slaag - die aksie slegs gestuit word hangende die afhandeling van die
arbitrasieverrigtinge. Mnr Cillie, namens verweerder,
het betoog dat
dit sinneloos sou wees om die aksie bloot te stuit omdat daar niks
oorbly wat hierdie Hof kan beslis nie indien
sowel die hoof-asook die
alternatiewe verweer deur 'n arbiter beslis moet word want, so lui
die betoog, sowel ingevolge die gemenereg
asook in terme van die
ondertiawige arbitrasieklousule is arbitrasie finaal en is daar niks
wat na afsluiting van die arbitrasie-verrigtinge
met betrekking tot
die onderhawige geskille nog deur hierdie Hof besleg kan of hoef te
word nie. Hy het verder aangevoer dat 'n
bevel wat slegs stuiting van
die aksie, met koste teen eiser en dus ten gunste van verweerder,
gelas, slegs die koste van die spesiale
pleit en die Hofverrigtinge
in verband daarmee sou betrek, met die gevolg dat daar dus nie nou
reeds oor die koste van die res
van die saak 'n beslissing gevel word
nie maar dat die partye na die voltooiing van die
arbitrasieverrigtinge sal moet terugkom
na hierdie Hof ten einde 'n
beslissing oor die koste te verkry waaroor daar nie nou beslis word
nie omdat die aksie slegs gestuit
word maar nie afgewys word nie.
Sodanige "terugkoms" na hierdie Hof sal vanselfsprekend ook
weer verdere koste meebring.
Dit kan alles uitgeskakel word deurdat
daar nou reeds 'n finale bevel van afwysing van die aksie, met koste,
gemaak word. Die arbiter
kan wel 'n bevel met betrekking tot die
koste van verrigtinge voor horn maak (art 35 van die Arbitrasiewet) ,
maar hy het geen
regsmag om oor die Hofkoste wat oorstaan nadat die
Hofaksie gestuit is, te beslis nie. Mnr Cillie het my egter na geen
gesag verwys
ingevolge waarvan die bevel wat hy aanvra, 'n bevoegde
bevel is nie.
'n
Spesiale pleit waarin arbitrasie as (spesiale) verweer geopper word,
is 'n "plea in bar"; sien The Rhodesian Railways
Ltd-
beslissing supra te 367; Pillay v Pillay
1934 NPD 135
te 137; Nash v
Muirhead (1908) 18 CTR 444 te445. 'n "Plea in bar" is
afwysend van aard, nl 'n "declinatory plea",
maar die
spesiale pleit van arbitrasie is in ons reg nog steeds as opskortend
beskou, naamlik as 'n "dilatory plea";
sien Herbstein en
Van Winsen The Civil Practice of the Superior Courts in South Africa
3de uitg te 326 - 327; Beck Theory and Principles
of Pleading in
Civil Actions 4de uitg para 72, Die spesiale pleit van arbitrasie is
inderdaad opskortend van aard, en dit is nie
afwysend of deklinatoor
nie omdat die Hof se regsbevoegdheid nie deur arbitrasie uitgesluit
word nie maar slegs gestuit word, hangende
die uitslag van die
arbitrasie. Die Hof se regsbevoegdheid bly steeds bestaan, al word
die geskil na arbitrasie verwys, en op die
Hof se regsmag kan te
eniger tyd weer aanspraak gemaak word. In die Parekh- beslissing
supra te 305E - H word dit deur DIDCOTI
R soos volg opgesom:
"An
arbitration agreement does not deprive the Court of its ordinary
jurisdiction over the disputes which it encompasses. All
it does it
to oblige the parties to refer such disputes in the first instance to
arbitration, and to make it a prerequisite to
an approach to the
Court for a final judgment that this should have happened. While the
arbitration is in progress, the Court is
there whenever needed to
give appropriate directions and to exercise due supervision. And the
award of the arbitrator cannot be
enforced without the Court's
imprimatur, which may be granted or withheld. But that is by no means
all. Arbitration itself is from
an absolute requirement , despite the
contractual provision for it. If either party takes the arbitrable
disputes straight to Court,
and the other does not protest, the
litigation follows its normal course, without a pause. To check it,
the objector must actively
request a stay of the proceedings. Not
even that interruption is decisive. The Court has a discretion
whether to call a halt for
arbitration or to tackle the disputes
itself. When it chooses the latter, the case is resumed, continued
and completed before it,
like any other. Throughout, its
jurisdiction, though sometimes latent, thus remains intact."
Die
bogenoemde betoog van mnr Gillie is logies sowel as wat sy praktiese
gevolge met betrekking tot koste betref aantreklik, maar
dit verloor
, na my mening, uit die oog dat die hele wese van 'n spesiale verweer
wat op arbitrasie gegrond is, slegs opskortend
van aard is met
betrekking tot die Hof se regsmag, maar dat dit daardie regsmag nie
uitsluit nie, en derhalwe is dit, meen ek,
regtens onvanpas om eiser
se hele aksie op hierdie stadium, dit wil se voordat
arbitrasieverrigtinge tussen die partye plaasgevind
het en afgehandel
is, af te wys maar moet die onderhawige geding in hierdie Hof slegs
gestuit, dit wil se opgeskort, word hangende
die uitslag van
arbitrasieverrigtinge tussen die partye.
Die
volgende bevele word derhalwe gemaak:
(1)
Die eiser se aksie word gestuit tot.dat die geskille tussen eiser en
verweerder by wyse van arbitrasie
besleg is ingevolge die bepalings
van klousule 28 van die ooreenkoms aangegaan tussen eiser en
verweerder; en
(2)
eiser word gelas om die koste te betaal wat verbonde is aan die
verrigtinge in verband met
verweerder se spesiale pleit.
15.
On behalf of the respondent Advocate Tshabalala submitted that the
matter of Breed is not applicable
in casu
for the reason that
in that case the court dealt with the state of affairs envisaged in
section 6
of the
Arbitration Act namely
of a party approaching the
court subsequent to an agreement to refer a dispute between the
parties to arbitration. In the present
matter the parties decided
after the close of pleadings to enter into an arbitration agreement.
Consequently, so it was submitted,
the court proceedings were not
stayed as envisaged in
section 6
of the
Arbitration Act.
16.
It was further submitted that due to logistical challenges the
parties decided to enter into the arbitration agreement
and that the
parties simply wanted their dispute to be adjudicated by abitration.
17.
Advocate Tshabalala further submitted that the issue of the High
Court costs was not submitted for the decision
of the arbitrator.
Consequently the arbitrator was not wrong in not dealing with the
High Court costs. He emphasised that the parties
had decided to
abandon the action that was serving before the High Court and
consequently both parties waived their rights to seek
costs against
each other. He submitted that the abandonment of the court process
was a compromise and it was never the intention
to return to the High
Court and that the proceeds before the High Court had not been
stayed.
18.
In the answering affidavit the respondent did no more than to deny
the applicant's contentions and to refer to paragraph
2.1 and 2.2 of
the arbitration agreement which merely reflect that the respondent
had instituted action in the High Court and that
the parties wish to
have the dispute referred to and disposed of by arbitration in terms
of the Act, the Rules and the terms of
the arbitration agreement.
19.
The respondent did not say that the issue of the High Court costs was
part of the issues referred to the arbitrator
and that he should have
adjudicated that issue. In fact Advocate Tshabalala specifically
stated that that was not the respondent's
case.
The
respondent relied only on the argument that the parties had abandoned
the High Court process and had waived their rights in
respect of the
costs incurred in that process.
20.
I agree with the argument on behalf the applicant that the respondent
never raised the issues of abandonment and
waiver in the opposing
affidavit. All that was raised was that the dispute between the
parties was referred to arbitration and
the only inference to be
drawn from that was that the High Court costs was an issue which had
also been referred to the arbitrator.
Yet that inference was
disavowed on behalf of the respondent during argument. In any event,
there is no evidence before this court
that the parties waived their
rights in respect of costs of the High Court proceedings and I can
therefore not come to such a conclusion.
If anything, the
probabilities are against such a notion, for there would be no good
reason to abandon costs incurred simply because
a different forum to
adjudicate the dispute had been selected. This is especially so since
the costs incurred by the time that
the parties decided to arbitrate
must already have reached very high numbers. It would have included
the commencement of the case,
the preparation, consultations,
research and the drafting of pleadings as well as the pre-trial
procedures prescribed by the Rules
of Court and the appearances in
the High Court on two occasions. One would not expect a waiver of the
right to claim such costs
from the opposing party without some
deliberate agreement in that regard by the parties or very clear
indications to that effect.
There was no such agreement between the
parties and no evidence to form a basis to infer such a waiver as
suggested on behalf of
the respondent.
21.
In my view the correct approach of the matter is to regard the
decision by the parties to proceed before an
arbitrator instead of
before the High Court, as akin to an order by the court in terms of
section 6
of the Act namely that the proceedings before the court be
stayed and the matter to proceed on arbitration before an arbitrator.
Consequently that the proceedings before this court is still alive -
at least to enable the parties to approach the court for an
order in
respect of the costs of the proceedings prior to the submission to
arbitration, as is the case
in casu.
It would furthermore
retain the authority of the court during the arbitration proceedings
as was mentioned in the Breed matter.
22.
There is nothing that I can see, and there was nothing suggested
during argument , that would militate against such
an approach. An
appropriate order for costs can sometimes be the subject of intricate
arguments and the consideration of many facts
or procedures and the
Rules of Court in general. Such issues mostly relate to procedural
and other questions which have little
or nothing to do with the real
disputes between the parties. A court would be better placed to
adjudicate such issues than the
arbitrator whom the parties have
selected to concentrate on the merits of their dispute. For the
arbitrator to make a finding on
such issues, one would have expected
a specific reference thereto in the arbitration agreement.
23.
In the result I find that this court is entitled to decide the issue
of costs relating to the proceedings prior
to the conclusion of the
arbitration agreement.
24.
In deciding the issue of costs, which is a matter of judicial
discretion, I have considered the versions of the
respective parties,
the submissions on their behalf and especially also the award of the
arbitrator. In my view there is no reason
why the costs incurred
during the proceedings before the High Court should not follow the
outcome of the dispute as expressed in
the arbitrator's award.
Regarding the costs that were reserved on 6 May 2016 nothing was
placed before this court other than to
say that the matter was
postponed as the trial was not ready to proceed. In such
circumstances the reserved costs should also follow
the cause and be
paid by the respondent.
25.
As far as the costs of this application are concerned there is no
reason why costs should not follow the event.
26.
In the result the following order is made:
1.
The respondent is ordered to pay the costs, including previously
reserved costs, of the action
instituted under case number 10623/15.
2.
The respondent is ordered to pay the costs of this application.
C.P.
RABIE
JUDGE
OF THE HIGH COURT