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[2018] ZAFSHC 41
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Valortrade 74 (Pty) Ltd t/a MC Steelworks v Sasol Chemical Industries Limited (3360/2016) [2018] ZAFSHC 41 (12 April 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE
DIVISION,
BLOEMFONTEIN
Case
No
: 3360/2016
In
the matter between:
VALORTRADE 74 (PTY) LTD
t/a M C STEELWORKS
Applicant
And
SASOL CHEMICAL INDUSTRIES
LIMITED
Respondent
HEARD
ON:
22 March 2018
JUDGMENT
BY
:
LOUBSER, J
DELIVERED
ON
:
12 APRIL 2018
JUDGMENT
[I]
INTRODUCTION
:
[1]
On
9 May 2006
the
Applicant and the Respondent concluded a written agreement in terms
of which the Applicant would provide miscellaneous welding
maintenance and construction works to the Respondent for a certain
period of time. The contract contained a dispute resolution
clause providing for a process whereby disputes between the parties
would be resolved without the need of resorting to formal litigation
in the Courts.
[2]
Long before the contract period came to an end, the Respondent
suddenly suspended the contract on
15 August
2013
and then went on to terminate the
contract on
20 June 2014
.
On
16 September 2015
the Applicant for the first time declared a dispute in writing with
the Respondent in order to invoke the provisions of the dispute
resolution clause in the contract. The Respondent reacted by
contending that the declaration of a dispute was out of time,
and
that it would therefore not cooperate in the process of resolving the
dispute as envisaged by the clause in question.
[3]
The Applicant now makes application in terms of Section 8 of the
Arbitration Act no. 42 of 1965 (“the Act”) for
orders to
the effect that its failure, if any, to timeously invoke the
provisions of the clause, be condoned, that the Respondent
be
directed to engage in the dispute resolution process, and that the
action meanwhile instituted by the Applicant against the
Respondent
in this Court on
21 July 2016
, be stayed pending the outcome
of the resolution process.
[II]
THE FACTS
:
[4]
The dispute resolution clause reads as follows:
“
If any dispute
or difference shall arise between the parties out of or in relation
to or in connection with this contract or the
interpretation thereof
or any breach thereof or its termination, both while in force and
after its termination, the party claiming
such dispute or difference
shall forthwith advise the other in writing thereof. Within
fourteen (14) days of receipt of such
notice, the parties shall meet
and negotiate in good faith in order to resolve such dispute or
difference.
”
[5]
The clause further provides that, should the parties fail to resolve
the dispute within fourteen (14) days of their first meeting,
either
party may refer the dispute to mediation. Failing such a
resolution, the dispute, if arbitrable in law, shall be finally
resolved by an arbitrator or arbitrators appointed by AFSA. It
is common cause between the parties that their dispute is
arbitrable
in law.
[6]
According to the Applicant, it could not forthwith declare a dispute
in terms of the clause, since the Applicant was not aware
that there
was a dispute prior to the termination of the contract and the
acceptance of the termination. This is so because
the Applicant
has never been appraised of the exact nature of the allegations
against it, and has therefore been deprived of the
opportunity to
properly consider and rebut the allegations.
[7]
It is common cause that, at a meeting of the parties some two (2)
weeks after the suspension of the contract during
August 2013
,
the Applicant was advised that it would be informed of the specific
allegations against it. It appears from the papers that,
since
then, and until the time of the declaration of a dispute on
16
September 2015
, the Applicant constantly engaged with the
Respondent, occasionally assisted by its attorneys, to obtain the
specifics of the allegations
against it, but without any success.
The Applicant alleges in its founding affidavit that it still has no
detail relating
to the allegations that resulted in the suspension
and the termination of the contract.
[III]
THE ISSUES
:
[8]
The issues to be determined are therefore the following:
8.1 Did the Applicant
fail to timeously invoke the provisions of the dispute resolution
clause?
8.2 If so, did the
Applicant show sufficient cause to be granted condonation for its
failure?
8.3 And if so, should the
Respondent be directed to engage in the dispute resolution process
and the pending action be stayed for
such purposes?
[IV]
DETERMINATION
:
[9]
As for the first question above, the express terms of the dispute
resolution clause are clear to the effect that the party claiming
a
dispute or difference “
shall forthwith
”
advise the other in writing thereof, such dispute or difference
having arose from the interpretation of the contract or
any breach
thereof, or its termination. It is self-evident that the word
“
forthwith
”
means immediately and without delay. At best for the Applicant,
it could mean without any reasonable delay.
[10]
As indicated above, the Applicant deemed fit to declare a dispute
only on
16 September 2015
that is some two (2) years after the contract was suspended and some
fifteen (15) months after the contract was terminated.
The
clause in question refers to a dispute or difference arising from any
breach of the contract or the termination thereof.
In the
summons issued by the Applicant in the pending action in this Court,
under the above case number, the Applicant’s
cause of action
consists of a breach of contract in that the notice of suspension
lacked legality and in that the notice of termination
was issued
without affording the Applicant any opportunity to be heard.
[11]
The Applicant must therefore have been aware of a breach of contract
already on the date of suspension, but at best for it,
on the date of
termination. It stands to reason that the Applicant has
therefore failed to declare a dispute “
forthwith
”
in breach of the dispute resolution clause contained in the contract
between the parties.
[12]
The next question is then whether the Applicant has shown sufficient
cause for condonation of his late referral of the dispute
to the
resolution process. In terms of the established requirements
for an order of condonation, the defaulting party must
provide the
Court,
inter alia
,
with a reasonable explanation for his delay. In the present
case, the Applicant relies on the reluctance of the Respondent
over a
period of time to furnish it with a detailed account of the
allegations against it. Were this the only requirement
to be
determined, the Applicant would not have succeeded, the reason being
that when he eventually gave his notice of a dispute,
he was in no
better position than before regarding the detail of the allegations.
In this respect the Court is also mindful
of the fact that at the
time of instituting these application proceedings, the Applicant on
his own version, was still not informed
of the detail of the
allegations. In addition, the Applicant provided no explanation
at all for the delay of some nine (9)
months from the date of summons
to the date of issue of this application on
13
April 2017
.
[13]
In my view, it speaks for itself that the initial suspension and the
following termination already created a massive dispute
between the
parties upon which the Respondent was obliged in terms of the
contract to invoke the dispute resolution process without
delay.
Full information relating to the detail of the allegations was not a
prerequisite.
[14]
But that is not where the enquiry ends. In terms of Section 8
of the Act, the Applicant is required to demonstrate that
it would
suffer undue hardship in the event of the Court not condoning the
late referral. The Applicant indeed deals with
this requirement
by stating in its Founding Affidavit that it would suffer hardship
which is disproportionate to its fault if condonation
is not
granted. When it comes to the specific nature of the hardship
itself, the Applicant alleges as follows:
“
In the event
that condonation is not granted, the Applicant will be deprived of
the opportunity to properly ventilate the matter,
to recover its
losses and, in all probability, its existence will terminate, thereby
affecting the lives of its members and employees.
”
In
a further paragraph, the Applicant states that it shall be gravely
prejudiced if the dispute is not ventilated. The Applicant
provides no further grounds for the undue hardship it relies on.
[15]
In
ADMINISTRATEUR, KAAP v ASLA CONSTRUCTION
(PTY) LTD
1989 (4) SA 458
(C)
the Court remarked that the proof of undue hardship in terms of
Section 8 is an essential prerequisite for any relief under the
section (
at 470 F
).
Quoting with approval from the English case of
THE
JOCELYNE
(1977) 2 Lloyds Reports 121
,
the Court explained that undue hardship means,
inter
alia
, excessive hardship, and where the
hardship is due to the fault of the Claimant, it means the
consequences of which are put out
of proportion to such a fault.
[16]
In the present case, the hardship, if any, is due to the fault of the
Applicant. As indicated hereinbefore, the Applicant
should have
declared the dispute without any delay when the contract was
terminated by the Respondent on
20 June 2014
at the very latest. It only came to Court seeking condonation
in
April 2017
, that is
almost three (3) years later, claiming that it will suffer undue
hardship in the sense that it will be deprived of the
opportunity to
ventilate the matter properly and to recover its losses if
condonation is not granted.
[17]
In my view, the Applicant has failed to prove any hardship relating
to an opportunity to ventilate the matter and to recover
its losses.
Such opportunity will certainly avail the Applicant in the pending
action proceedings and the prelude thereto,
while an order condoning
the inordinate delay will only serve to prejudice the Respondent in
circumstances where the lines have
already been drawn in the action
proceedings. The Applicant has not alleged any other hardship
in his Founding Affidavit,
for instance that he is no longer able to
fund the pending action or that a date for the hearing of the action
could not be found
in the near future. I therefore find that
the Applicant has not shown sufficient cause to be granted
condonation.
[18]
In the premises, it is not necessary to consider the question as to
whether the Respondent should be directed to engage in
the dispute
resolution process and whether the action should be stayed for such
purposes.
[19]
The following order is made:
1. The application is
dismissed with costs.
_________________________
P J LOUBSER, J
For
the Applicant
: Advocate R Bedhesi SC
Instructed
by
: Bhikha Incorporated, c/o Webbers,
Bloemfontein
For
the Respondent
: Advocate P Ellis SC
Instructed
by
: T O’Reilly, Symington &
De Kok Attorneys, Bloemfontein