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[2015] ZAKZDHC 52
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Body Corporate of Valence House (SS : 183/1992) v Malani NO and Others (9462/2014) [2015] ZAKZDHC 52 (25 June 2015)
In
the High Court of South Africa
KwaZulu-Natal
Local Division, Durban
Case
No : 9462/2014
In
the matter between:
The
Body Corporate of Valence House (SS :
183/1992)
Applicant
and
Shameem
Malani
NO
First
Respondent
Kapilroy
Neermul Singh
NO
Second Respondent
Rajendra
Kandhir
NO
Third Respondent
Usha
Singh
NO
Fourth Respondent
Shamil
Rabichundra Maharaj
NO
Fifth Respondent
Judgment
Lopes
J
[1]
The applicant brings an application before this court for an
arbitration award to be made an order of court in terms of
s 31
of
the
Arbitration Act, 1965
.
[2]
The following matters are relevant to this application:
(a)
the five respondents were the trustees of the Valence House Trust
which was at all material
times, and remains the registered
owner of units 1, 2, 3, 4 and 22 in the sectional title scheme,
Valence House;
(b)
those units are not residential units and are used for commercial
purposes.
(c)
at some stage the body corporate instituted action out of the Durban
Magistrates’
Court against the trustees for payment of
outstanding levies, etc due by the Trust. A plea
was taken that the
matter should have been referred for hearing by
way of arbitration proceedings, and the proceedings in the
Magistrates’ Court
were then left in abeyance;
(d)
on the 23
rd
September 2013 the body corporate of Valence
House served a notice on the trustees in terms of Rule 71(2) of the
Management Rules
contained in Annexure 8 to the regulations to the
Sectional Titles Act, 1986
. That notice recorded the existence
of a dispute between the body corporate and the Trust relating to the
failure of the
Trust to pay levies due to the body corporate in
respect of units 1, 2, 3, 4 and 22 of the scheme, and that if the
dispute was
not resolved within fourteen days, either party may refer
the matter to arbitration;
(e)
on the 9
th
October 2013 the body corporate caused a second notice to be served
on the trustees, this time referring the dispute to arbitration
and
setting out the names of three possible arbitrators and requesting
the trustees to advise whether any of those names were acceptable
to
the Trust. As no agreement was reached, the attorneys acting
for the body corporate approached the Chief Registrar of
Deeds who
nominated Mr J R Archer as the arbitrator. This was presumably
pursuant to the provisions of
Rule 71(4)
of the management rules;
(f)
on the 6
th
May 2014 the body corporate caused its
statement of claim to be served upon the trustees and Bilal Malani &
Associates, the
attorneys who had hitherto represented the trustees;
(g)
as no reply was received to the statement of claim within the
fourteen day period allocated,
on the 23
rd
May 2014 the
body corporate caused a notice of set down of the arbitration
proceedings for the 5
th
June 2014 at 9.00am to be served
on both the trustees and the trustees’ erstwhile attorneys;
(h)
on the 5
th
June 2014 a Mr C Malani appeared at the
arbitration hearing, and informed the arbitrator that he was the
husband of the first respondent
who had passed away, and that he was
authorised to represent the other trustees. Mr C Malani then
applied for the matter
to be adjourned for two weeks on the basis
that his attorney, Mr B Malani of Bilal Malani & Associates, was
not available on
the 5
th
June 2014 to represent the
trustees;
(i)
after hearing argument on the matter the arbitrator granted the
application
for a two week adjournment to the 19
th
June
2014. In addition he ruled that the trustees were to file their
statement of defence on or before the 12
th
June 2014.
He also made an order for the wasted costs occasioned by the
adjournment;
(j)
on the 19
th
June 2014 and at the arbitration hearing,
there was no appearance on behalf of the trustees. The
arbitrator then instructed
the applicant’s attorney to
telephone Mr Malani of Bilal Malani & Associates. Mr Bilal
Malani advised the attorney
that he had no instructions to act for
the trustees and would not be appearing. He indicated that his
previous involvement
had been due to a family connection, but that he
was no longer acting;
(k)
a short while later, and as the body corporate’s attorney was
about to lead
evidence, the proceedings were interrupted when the
body corporate’s receptionist advised the hearing that Mr C
Malani had
telephoned to say that he would not be available for
today’s hearing. The arbitrator then instructed that the
arbitration
should proceed, and having heard the evidence, made an
award of R1 882 622,40, together with interest thereon
calculated
at the rate of 21 per cent per annum from the 1
st
April 2014 to date of final payment, to be compounded monthly, and
the costs of the arbitration on an attorney and client scale.
The arbitrator’s award was made on the 7
th
June 2014.
[3]
The body corporate now seeks to have that award made an order of
court together with an order that
sections 1
,
2
,
3
,
4
and
22
are
declared to be executable. That application was issued on the
11
th
August 2014. The matter was opposed with the trustees filing
answering affidavits and the matter came before me to be heard
on the
18
th
June 2015. On that day Mr
Motala,
who appeared for the trustees, indicated that he required an
adjournment because he had been briefed at the last minute and had
not had time to familiarise himself with the papers. I
accordingly adjourned the matter to the 19
th
June 2015 to enable him to do so. I should mention that I
would, in any event, not have been able to hear the matter on the
18
th
June 2015 because there was insufficient time at the end of the court
day to hear the matter which was set down as the second opposed
application on the Motion Court roll.
[4]
On the 19
th
June 2015 Mr
Motala
moved a substantive application for an order condoning the late
filing of the trustees’ heads of argument, and postponing
the
matter to a date to be arranged with the Registrar to enable him
fully to appraise himself of the matter. I condoned
the late
filing of the heads of argument and refused the application for an
adjournment on the basis that Mr
Motala
had
had sufficient time to prepare the matter. My view in that
regard was vindicated by the fact that Mr
Motala
argued the matter at length and had prepared supplementary heads of
argument to assist him in doing so.
[5]
Mr
Motala
then raised the problem that the first respondent, Shameem Malani was
deceased. He indicated that the matter should be adjourned
to
enable an executor to be appointed and to ensure that the Trust and
its beneficiaries and trustees were not in any way prejudiced
in the
conduct of the proceedings. Mr
Motala
was unable to cite any authority for the proposition that an executor
would step into the shoes of a deceased trustee and take
over the
functions of that trustee.
[6]
In the absence of a trust deed indicating that the remaining trustees
were unable to continue to represent the Trust in the
present
litigation, and in the absence of any indication of prejudice to the
other trustees or beneficiaries of the Trust, I directed
that the
hearing continue. As I understand the position, the office of
trustee is a personal position and is not automatically
transmitted
to an executor on the death of the trustee. Whilst it may be
the case that trust property passes to the executor
of a deceased
trustee’s estate in an ownership-trust, it was not suggested
that that could prevent a creditor from continuing
to pursue an
application with regard to the trust property. Had the position
been otherwise, I would have expected the Trust
to have dealt with
this matter in its papers. The death of the first respondent,
although apparently having taken place prior
to June of 2014, was not
established by the production of a death certificate by the
respondents. No evidence or legal argument
was put before me to
suggest that her death was a barrier to the continuation of the body
corporate’s application, and no
copy of the Trust deed was made
available to me.
[7]
Mr
Motala
raised the following defences to the arbitration
award being made an order of this court.
(a)
The authority of Mr C Malani
Mr
Motala submitted that there was no indication that Mr C Malani had
authority to represent the trustees in the arbitration.
Mr
Motala
was, however, unable to indicate to me any statement in
the papers which challenged the authority of Mr C Malani to appear on
behalf
of the trustees. It is clear from the arbitrator’s
award that Mr C Malani indicated to those present at the arbitration
proceedings on the 5
th
June 2014 that he had authority to
represent the trustees.
In
the answering affidavit which was deposed to by the second
respondent, he stated that the arbitrator had failed to call for a
trustee’s resolution confirming the purported mandate of Mr C
Malani to represent the Trust at the hearing on the 5
th
June 2014. The second respondent states further that Mr Malani
did not inform the trustees of the arbitration notices and
of the
pending arbitration. This is confirmed in an affidavit by Mr C
Malani.
In
my view these submissions do not assist the trustees because:
(i)
in his affidavit Mr Singh, the second respondent, does not deal in
any way with
how it came about that Mr C Malani appeared at the
arbitration, save to state that Mr C Malani would investigate the
matter and
advise the trustees if the matter was not resolved.
In his confirmatory affidavit Mr C Malani does no more than confirm
the
contents of Mr Singh’s affidavit. He in no way
purports to deal with the circumstances under which he came to appear
at the arbitration, and why he failed to appear at the resumed
hearing. In my view this is the least one would have expected
of Mr C Malani. The reluctance of both Mr Singh and Mr C Malani
to take the court into their confidence with regard to the
facts of
the matter lead to the inevitable conclusion that what is stated is
not the truth, or not the entire truth;
(ii)
none of the other trustees have deposed to affidavits confirming the
allegation by
Mr Singh that the trustees were not aware of the
arbitration in circumstances were one would have expected them to
have done so;
(iii)
Mr C Malani gives no explanation whatsoever as to why he did not
attend the arbitration
hearing on the 19
th
June 2014. Nothing in the answering affidavits of the trustees
indicates why Bilal Malani & Associates were not instructed
to
appear.
In
all the circumstances the suggestion that Mr C Malani had no
authority to appear on behalf of the trustees, and that the trustees
were unaware that the arbitration was proceeding, are rejected.
(b)
The authority of Mr J Kruger
In the trustees’
answering affidavit, Mr Singh denies that Mr Kruger was ‘duly
mandated and/or authorised to proceed
with and represent the
Applicant at the Arbitration proceedings and for that matter launch
this application.’
There
are two points to be made in this regard:
(i)
that in testifying at the arbitration hearing, Mr Kruger acted as a
witness
for the body corporate; and
(ii)
the trustees have followed the wrong procedure in challenging the
authority upon
which the body corporate brought this application.
In
his supplementary heads of argument Mr
Motala
submitted that no resolution was relied upon by the body corporate to
authorise the institution of this application. He submitted
that the failure to put up such a resolution is fatal to the
application.
See:
ANC
Umvoti Council Caucus and Others v Umvoti Municipality
2010
(3) SA 31
(KZD) at page 38 B – 43 G.
In
the present application there was no challenge in terms of Rule 7(1)
of the Uniform Rules. The attorneys of the Trust have
therefore
followed the incorrect procedure. The challenge to the
authority of the body corporate is therefore dismissed.
(c)
Lis alibi pendens
Mr
Motala
has submitted that as the cases in the Magistrates’ Court have
not yet been finalised, this application is incompetent and
falls to
be dismissed.
I
have grave difficulty with the suggestion that a party in
Magistrates’ Court proceedings raises the dilatory defence that
the action should have been referred to arbitration, and then when it
is referred to arbitration, raises the dilatory defence to
the
holding of the arbitration proceedings that the actions in the
Magistrates’ Court have not been finalised. It is
clear
that the body corporate has no intention of continuing with those
actions. The only matter which remains outstanding
in the
actions is the question of costs, and there is no reason why the
trustees cannot have the matter set down for the hearing
of costs on
the basis that their plea has been successful. That, however,
is a different matter to raising the presence of
the actions as a
dilatory plea in the arbitration and in these proceedings.
Where
actions have been withdrawn, but the costs still not paid, that does
not provide a basis for the
lis
pendens
defence.
In
RSA
Faktors Bpk v Bloemfontein Township Developers (Edms) Bpk en andere
1981
(2) SA 141
(OPD) the court reiterated that a defence of
lis
pendens
rests upon the existence of a pending earlier action and depends on
the actual existence of the other action. The payment
of costs
is not regarded as part of the action in law and the costs procedure
does not form part of the original action between
the parties.
Inasmuch
as it may be suggested in this application that the body corporate
has not specifically set out in its papers that the
Magistrates’
Court actions have been withdrawn, it could hardly be suggested that
the body corporate is able to continue
with those actions on the
basis of the original causes of action. Its conduct in bringing
the arbitration proceedings and
persisting with this application
evinces an unequivocal intention to abandon the actions relied on in
the Magistrates’ Court.
Indeed, Mr
Stewart
,
who appeared for the body corporate, indicated in argument that the
body corporate would not persist with those actions.
In support
of this suggestion he referred me to
Body
Corporate Pinewood Park v Dellis (Pty) Ltd
2013
(1) SA 296
(SCA) where it was held that a court retained the
discretion to stay proceedings or to order the continuation of the
actions.
The body corporate in this matter having voluntarily
decided to proceed with arbitration proceedings, can hardly suggest
that it
is in any way entitled to proceed with the actions in the
Magistrates’ Court.
The
Magistrates’ Court did not, as I understand it, make a decision
in the actions, but rather the body corporate acceded
to the
suggestion in the plea that the matter should be referred for
arbitration. Insofar as considerations of reasonableness
and
fairness are applicable, on the basis that the trustees
complained of a lack of arbitration proceedings, and in circumstances
where the body corporate complied with that complaint by instituting
arbitration proceedings, a defence of
lis
pendens
should not be available to the trustees. It is accordingly
rejected.
(d)
The arbitrator
The
suggestion is made in the answering affidavits that the arbitrator
was not independent, not experienced or suitably qualified
and should
not have been appointed. As the appointment was in accordance
with the procedure laid down in Management Rules,
I do not believe
that there was any onus on the applicant to have dealt with these
matters in bringing the application. No
acts are alleged in the
answering affidavits which would suggest that the arbitrator was
unqualified.
Similarly,
with regard to bias on the part of the arbitrator, none of the
suggested shortcomings of the arbitrator have any basis
in fact.
In this regard a warning to Mr C Malani by the arbitrator that no
further adjournments would be granted is not an
indication of bias,
but rather an indication by the arbitrator that he intended to get on
with the arbitration and complete it.
Obviously if a subsequent
application for an adjournment had been made and the arbitrator has
unreasonably refused that adjournment,
that would be a matter for
complaint, but that is not what happened. In my view, this
defence has no merit.
(e)
No cause of action
Mr
Motala
submitted that the application should fail because no
copy of the Management Rules had been put up by the applicant.
In the
arbitration notices served upon the trustees the body
corporate refers to the Management Rules of the
Sectional Titles Act,
1986
. A perusal of the Act indicates that the Management Rules
are contained in Annexure 8 to the regulations promulgated in terms
of the Act. In my view these rules are readily accessible and
there was no need for them to have been put up in this application.
In my view this point has no merit.
(f)
Material disputes of fact
Mr
Motala
submitted that there were numerous disputes of facts on
the papers such as to preclude me from making any finding. This
related
in the main, as I understood his submissions, to the fact
that the trustees objected to paying for municipal rates, water,
electricity
and maintenance for the units owned by it on the basis
that the properties concerned were commercial in nature and not
residential,
and accordingly, in a mixed use sectional title scheme
the charges which have been levied by the body corporate have been
unfair.
If
these matters were such as to raise a dispute, then the trustees
should have had them dealt with them at or prior to at the
arbitration proceedings. They cannot be raised now in order to
challenge the arbitrator’s award. There is no evidence
whatsoever that the trustees have done anything, during the period in
which the Trust has been the registered owner of the units,
to
challenge the rulings and decisions of the body corporate. If
there had been such challenges, they were not put up as
part of the
papers.
I
am accordingly of the view that there is no dispute which should be
referred for the hearing of oral evidence.
(g)
Set-off
Mr
Motala
submitted that the trustees were entitled to set-off
against the amounts owed by the Trust to the body corporate, amounts
which
had been overpaid, etc by the Trust. As there were no
particulars whatsoever to suggest any particular amount which had
been
overpaid, nor yet any facts to suggest that those amounts were
simultaneously due, owing and payable with the arbitration award,
this defence has no merit and I dismiss it.
(h)
Reasonableness of the notices
Mr
Motala
submitted
that the application should be dismissed because the time periods
which were set down in the arbitration proceedings were
unreasonable. The trustees knew since 2013 that the body
corporate intended to conduct arbitration proceedings against them.
When the statement of claim was served on the trustees in May 2014,
they did not deliver a reply, and at the hearing asked for
time
because the Trust’s attorney Mr Bilal Malani was not available
to represent the trustees. The arbitrator granted
the trustees
the indulgence of the adjournment which they sought, which was for
two weeks. During that period the trustees
did not, as they
were enjoined to do, deliver a reply to the body corporate’s
statement of claim. In addition the trustees
did not appear at
the hearing despite their attorney having been advised as well as Mr
C Malani. In those circumstances I
do not believe that the
trustees can raise the defence that they were given an unreasonable
period of time within which to comply
with the requirements of the
arbitration process.
[8]
In all the circumstances I grant an order in terms of prayers 1, 2, 3
and 5 of the Notice of Motion, save that there will be
no order for
costs in relation to the hearing on the 18
th
June 2015
Date
of hearing : 19
th
June 2015.
Date
of judgment : 25
th
June 2015.
For
the Applicant : M E Stewart (instructed by Biccari Bollo Mariano
Incorporated).
For
the Respondent : Attorney A Motala representing A S Kader Attorneys.