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[2016] ZAGPPHC 808
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Motlokwa Transport and Construction (Pty)Ltd v Palabora Copper (Pty)Ltd (99212/2015) [2016] ZAGPPHC 808 (8 September 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
Number: 99212 / 2015
DATE:
8/9/2016
In
the matter between:
MOTLOKWA
TRANSPORT
AND
..
CONSTRUCTION(PTY)LTD
….........
APPLICANT
And
PALABORA
COPPER (PTY)
LTD
.................................................................
RESPONDENT
JUDGMENT
Fabricius
J,
1.
The
Applicant herein, Motlokwa Transport, seeks an order that the
arbitration award
dated
9 December 2015 by C. Claassen J, be made an order of Court in terms
of
Section 33
(1) of the
Arbitration Act 42 of 1965
.
The
Respondent, Palabora Copper, opposed this application and filed a
counter-application seeking that the relevant award of the
arbitrator
be set aside in terms of the provisions of
Section 33
(1) (b) of the
said
Act
2.
Palabora
Copper (Pty) Ltd had previously issued summons in the High Court,
Motlokwa
Transport as Defendant pleaded thereto, and ultimately the issue was
set down before the High Court. When no Judge was
available on that
particular day of the hearing, the parties referred the dispute to
arbitration.
3.
An
arbitration agreement was drawn up and the preamble thereto reads as
follows:
"There
is a dispute between the parties, as presently embodied in the
Gauteng Division pleadings under case number 13606 /15,
as to whether
an agreement came into being between the parties, and if so, whether
it was validly cancelled
("the
dispute")".
Under
the heading "The Powers Of The Arbitrator'', it was said that
the dispute to be determined by the arbitrator may be widened
by
amendments to the pleadings (to be filed) as agreed by the litigants
or as allowed by the arbitrator, and his powers and jurisdiction
to
determine the dispute shall be accordingly extended. In relation to
the regulation of procedural or evidential matters, the
arbitrator
shall have the same powers, directions and authority over the
litigants as a Judge of the High Court. All applications
of
whatsoever nature (either pending or which may arise) will be dealt
with by the arbitrator in accordance with the
Uniform Rules of
Court,
and according to the time periods provided therefor in
the
Rules,
as amended, adapted and/or abridged as an
arbitrator may in his discretion allow, and as expeditiously as
possible.
4.
Under
the heading "PROCEDURAL RULES FOR ARBITRATION", the
agreement states that the arbitration will be conducted in accordance
with the provisions of the
Arbitration Act
and
the
Uniform Rules of the High Court
as
adapted,
abridged and/or deviated from as the arbitrator may in his discretion
allow, having regard to the exigencies of the matter.
The parties
also agreed that the case would proceed on both merits and quantum,
and also agreed that the award would not be subject
to an appeal. It
is therefore clear that the arbitrator was granted wide discretionary
powers in a number of material requests.
5.
A
pre-arbitration meeting was held on 24 July 2015, and the relevant
Minute recorded further arrangements relating to the exchange
of
documents and interlocutory disputes and processes.
6.
At
the commencement of the hearing, the arbitrator was referred to the
pleadings which were analysed in some detail, and the onus
of proof
was also discussed.
7.
According
to the amended Particulars of Claim, Plaintiff issued a written
Request for Proposal to a number of potential tenderers
for the
rendering of transportation, crushing, and other services to the
Plaintiff. Plaintiff then awarded the tender in writing
to the
Defendant on 23 December 2014 for the period 1 March 2015 to 31
December 2016, "depending on the smelter plant future".
It
is alleged that Defendant signed acceptance of the letter of award,
and returned the same to Plaintiff. The notification was
conditional
upon the conclusion of a contract, so it was alleged. Defendant
failed to sign the draft contract as a result of which
no agreement
came into being. Plaintiff contended that no agreement came into
being between the parties for lack of consensus and
pleaded the
relevant reasons. In the alternative, it was alleged that in the
event of it being found that an agreement had come
into being, such
agreement was induced by mutual mistake and the parties were mutually
mistaken with regard to each other's intention,
details of which were
so pleaded. In the alternative to that allegation, Plaintiff also
pleaded that it erred regarding Defendant's
tender, and that such
error was reasonable, and that the mistake was
iustus.
Reasons
for that allegation were then also pleaded. As a further alternative,
it was pleaded that in the event of it being found
that an agreement
had come into being, Plaintiff then contended that by refusing to
sign the draft contract, and by contending
for a different
interpretation of the contents and meaning of a particular
notification, the Defendant had repudiated the agreement.
Plaintiff
accepted this repudiation and cancelled the agreement, alternatively
cancelled it by the issue of summons. As a result,
so it was alleged,
the agreement has been duly cancelled. The order that was sought by
Plaintiff was the following:
1.
"An order declaring that no agreement came into being between
the parties pursuant to the Defendant's tender dated 10 December
2014
and the Plaintiff's purported acceptance thereof on 23 December 2014;
and
2.
Alternatively to 1. above, an order confirming or declaring that any
agreement that may have come into being pursuant to the
Plaintiff's
purported acceptance of the Defendant's tender dated 10 December 2014
was duly cancelled by the Plaintiff'.
8.
A
plea was filed and it was alleged that an agreement had been
concluded and the details of such written agreement were then stated.
It was also denied that the agreement was induced by mistake, that
the parties were mutually mistaken, that any misrepresentations
were
made and there had been no consensus.
9.
In
a counter-claim the Defendant, Palabora Copper, pleaded that it was
willing and able to perform in terms of the agreement and
tendered
compliance with whatever obligations it had. It therefore sought an
order declaring that Plaintiff's purported cancellation
of the
agreement was of no force and effect, that the Plaintiff be directed
to give effect to the agreement and permit Defendant
to perform in
terms thereof. In the alternative, and in the event of it being found
that the Defendant was not entitled to enforce
the agreement, then
Defendant pleaded that Plaintiff's refusal to permit the Defendant to
perform, constituted a breach of the
agreement. It was also alleged
that, but for such breach, the Defendant would have performed in
terms of the agreement and as a
result of Plaintiff's breach, it
suffered damages in the amount of some R 3 9 million, alternatively R
33 million, which amount
represents the revenue that the Defendant
would have earned less the costs and expenses it would have incurred.
10.
It
is clear from the arbitration agreement and Counsel's submissions to
the arbitrator at the commencement of the hearing, that
the
arbitrator had to decide the stated issue between the parties with
due regard to the pleadings in the High Court, and any evidence
presented.
11.
In
the counter-application, Palabora Copper confined itself to the
grounds for review provided in terms of Section 33 ( 1) (b) of
the
Act,
namely that the arbitrator committed a number of
gross irregularities and exceeded his powers. In particular, the
Respondent contended
that the arbitrator had exceeded his mandate in
"instructing" the claimant to amend its plea to the
Applicant's counter-claim,
that he made an award that neither party
had asked for, that he did not determine the assumptions or the
Respondent's defence to
the Applicant's counter-claim in accordance
with the provisions of clause 3 of the parties' agreement In
Principle On Quantum,
that he entertained verbal exceptions, or a
verbal exception, to theRespondent's plea to the Applicant's
counter-claim, and prohibited
the Respondent from leading evidence on
these defences, that he strayed beyond the parties'
definition
and limitation of the issues in their pleadings in finding that the
agreement that formed the subject matter of the arbitration
had been
cancelled, and that he failed to make a determination, despite being
obliged to do so, on the Applicant's main counter-claim
for specific
performance, with damages being an alternative counter-claim. It was
alleged that these grounds, whether individually
or collectively,
precluded the proper presentation of the Respondent's case and
resulted in the Respondent not having "a fair
hearing".
12.
During
the hearing, and on 8 December 2015, a written "AGREEMENT IN
PRINCIPLE ON QUANTUM", was arrived at by the parties.
This
agreement related to the quantum of the counter-claim and states that
it was premised on, and subject to the following assumptions
being
established, namely
2
.1 That the Defendant would have succeeded in timeously obtaining
finance for the amount of approximately R54 million in order
to
purchase the equipment necessary to perform the work, and an
additional approximately R 6 million, as working capital;
Alternatively
2.2
That the Defendant would have succeeded in timeously
2.2.1
Obtaining finance for the amounts approximately R 19.4 million for
the purchase of equipment, and a further approximately
R 6 million in
respect of working capital; and
2.2.2
Entering into a rental agreement for the renting of the balance of
the equipment required to the value of approximately R
34 million;
2.3
That the Defendant would have purchased, alternatively rented all of
the necessary equipment in time, in order to have the same
delivered
to the mine on or before 1 March 2015.
3
The claimant intends persisting with all of its defences as set out
in its plea to the counter-claim.
4
If the assumptions in paragraph 2 above are proved, and depending
that upon any finding in relation to the claimant's defences
to the
counter-claim first being made, the parties agree to the following:
4.1
R 3 9 885 315 in the event of it being proved that the equipment
would have been purchased;
alternatively
4.2
R 33 007 175 million in the event of it being proved that the
equipment would have been hired."
13.
At
the hearing before the arbitrator the Plaintiff, Palabora Copper, did
not persist with its claim for specific performance. The
effect of
this agreement was debated in great detail before the arbitrator and
the crux of that particular issue between the parties
was dealt with
by the arbitrator as follows: (Bundle 8 p. 72 6 )..."in effect
is the clear reading of clause 2 however it
is also clear to me that
clause 2 does not specifically state upon whom the onus is to prove
the allegations in paragraph 2 of
Annexure A.
In
my mind that further enhances the argument that the literal effect of
this document was never properly understood. It seems to
me that
grave injustice would occur if this document drafted in this manner
should lead to a dismissal of Defendant's counter-claim
in
circumstances where a witness called by a the claimant as well as the
Defendant's expert witness agree as to the quantum of
loss suffered
by the Defendant as a result of what I have already held to be an
unlawful cancellation of the contract by the claimant.
This confusion
arose because of the progress in the manner in which the matter
proceeded, and I would be doing a grave injustice
to a party who has
an agreed quantum to deny
him
the quantum because of the interspacing of a document which was
clearly not understood by Counsel from both parties in the same
manner. Mr Bekker SC seemed to argue that the document is clear in
its wording. I disagree with that, because the document had
to be
interpreted in the context in which it was prepared, and in the
context in which the manner in which it was argued, and in
the
context of the progression of the matter as it proceeded from
yesterday to today. In those circumstances I am therefore of
the view
that there was no need on the part of the Defendant to establish the
allegations or what is called assumptions referred
to in paragraph 2
of Annexure A. If that is my conclusion it follows that once there
was a duty on the Defendant to establish that
which was really a
defence originally raised by the claimant then the agreed quantum
stands and the Defendant is therefore entitled
to an order for the
quantum as agreed between the parties being the amount stated in
paragraph 4.1 of Annexure A I therefore make
an award in favour of
the Defendant in the amount of R 3 9 805 315 ..."
There
is a further judgment by the arbitrator dated 11 December 2015 which
in some detail deals with the issues between the parties
as per the
pleadings, and also with reference to the evidence led. It dealt with
the defences of lack of consensus, mutual mistake
and concluded that
a contract did in fact come into being, consisting of various
documents that were referred to in the ruling.
It was also held that
the contract could not be vitiated by the defences raised in the
pleadings by the claimant. There is a further
'judgment' by the
arbitrator which deals with the ruling that a contract did come into
being between the parties and what the terms
of this contract were.
(Bundle 8 p. 680)
This
judgment also dealt with a "verbal exception" to paragraphs
7.3
and 7.4 of the Plea to the counter-claim. The relevant
part that is sought to be held objectionable reads as follows:
"It is
therefore in my view a no-defence to the
claimant's counter-claim to rely on contingencies which never
occurred, and for which there
was no cancellation by the claimant at
all in the first place and for those reasons I am of the view that
the exception taken by
Mr Wassermann is successful and that defences
raised in paragraph
7.
3 and
7
.4 should be struck out
and they are struck out". In my view this decision was not made
in the context of a material irregularity
so that it can be said that
no fair hearing was conducted. This issue was fully debated and the
arbitrator used his extensive powers
after a consideration of all
relevant issues on the facts and law.
14.
I
need scarcely repeat that the award or the awards of the arbitrator
are not appealable. It is necessary at this stage therefore
to refer
to the relevant principles applicable to the review of an arbitrator
in terms of Section 3 3 of the
Act
and more particularly,
Section 3 3( 1) (b). An erroneous exercise of the power vesting in
the arbitrator cannot be reviewed. It
is clear that the crucial
question is whether any alleged irregularity prevented a fair trial
of the issues. See:
Te/cordis Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA).
The grounds of review must be
construed strictly in relation to private arbitration,
and
the enquiry whether or not a fair hearing was provided is really a
question of fact. The arbitrator analysed all the relevant
facts in
the light of the pleadings and he concluded that an agreement had
come into being. This finding is not appealable and
I cannot discern
any regularity in the proceedings in that context. A claim for
specific performance was not proceeded with and
all allegations
relating thereto, or defences or assumptions, or whatever verbiage
one may apply, became accordingly irrelevant.
The counter-claim was
therefore confined to damages and experts met and agreed upon the
method or formula for the calculation of
the damages. All the issues
and "defences" were considered argued and, where
applicable, dismissed. In a number of instances,
this occurred
without evidence being adduced and on the basis that these issues
lacked merit, and on the basis of what had been
pleaded not
constituting legally valid defences. Again, if the arbitrator was
wrong in this context, this is not appealable and
in my view neither
is it reviewable on the basis of any gross irregularity in the
proceedings.
15.
It
must be remembered that the arbitrator had, in regard to procedural
and evidential matters, the powers and authority of a Judge
of the
High Court. In my view he acted in accordance with the terms of
reference. Issues were separated by agreement and dealt
with by the
arbitrator. The agreement in principle on quantum could not be
construed, in my view, to mean that the Applicant was
obliged to lead
evidence o
n issues t
hat the
Respondent had pleaded and relied on. The Respondent led no witnesses
on quantum. The arbitrator's ruling dealt with all
relevant issues in
that context. The case for specific performance was not proceeded
with and it was therefore also not necessary
that the arbitrator make
a formal finding on this alternative claim. It cannot be said that he
did not make a finding on all the
issues before him.
16.
I
have analysed the complaints against the arbitrators conduct and
rulings. I have also kept in mind the relevant dictum of the
Constitutional Court in
Lufuno Mphaphuli and Associates (Pty)
Ltd v Andrews
2009 (4) SA 529
,
where it was said that the
Courts should not defeat the goals of private arbitration by being
too quick to set proceedings aside
on grounds of alleged gross
irregularity. Further, fairness in arbitration proceedings should not
be equated with the process established
in the
Uniform Rules of
Court,
or the conduct of proceedings before our Courts. It is
clear that the manner of proceeding in arbitration is to be
determined by
agreement between the parties and in default of that by
the arbitrator. Further, it is clear from the
Telcordia
decision
supra
(par. 86) that "it is fallacy to
label a wrong interpretation of a contract, a wrong perception or
application of South African
law, or an incorrect reliance on
inadmissible evidence by the arbitrator as a transgression of the
limits of his power. The power
given to the arbitrator was to
interpret the agreement, rightly or wrongly; to determine the
applicable law, rightly or wrongly;
and to determine what evidence
was admissible, rightly or wrongly. Evidence like I have mentioned
have nothing to do with him exceeding
his powers; they are errors
committed within the scope of his mandate".
17.
In
applying these dicta to the present facts I am unable to find that a
gross irregularity was committed by the arbitrator or that
a fair
hearing was not held, or that any other justiciable irregularity
occurred that entitles me to set aside the proceedings.
It is also
irrelevant whether I would have followed a different process than the
arbitrator did, or whether I would have made different
rulings from
time to time. That is not the test in terms of the provisions of
Section 3 3 ( 1) (b).
18.
Accordingly,
the following order is made:
1.
The arbitration award referred to by the Applicant
(Motlokwa
Transport and
Construction
(Pty) Ltd) and referred to in paragraph 1 of the Notice
of
Motion, dated 11 December 2015, is made an order of Court.
2.
Respondent (Palabora Copper (Pty) Ltd), is ordered to pay the costs
of
this application including costs of two Counsel.
JUDGE
H.J FABRICIUS
JUDGE
OF THE GAUTENG HIGH COURT, PRETORIA DIVISION
Case
number: 99212 /15
Counsel
for the Applicant:
Adv S. J. Bekker SC
…
..................................................................
Adv
A. Ramlaal
…
...........................................
Instructed
by: Mogaswa Inc
Counsel
for the 1
st
to 4
th
Respondents:
Adv J. Wasserman SC
…
................................................................
Adv
J. Daniels
…
.............................................................
Instructed
by: Markram Inc
Date
of Hearing: 31 August 2016
Date
of Judgment: 8 September 2016 at 10:00