About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Eastern Cape High Court, Mthatha
SAFLII
>>
Databases
>>
South Africa: Eastern Cape High Court, Mthatha
>>
2015
>>
[2015] ZAECMHC 61
|
|
Mdia's Travel CC v Siyaya Teledata Comm And Couriers CC (2730/14, 2807/15) [2015] ZAECMHC 61 (16 July 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
Not
Reportable
(EASTERN
CAPE LOCAL DIVISION, MTHATHA)
CASE
NO: 2730/14
&
2807/14
Delivered
on: 16/07/15
In
the matter between:
MDIA’S
TRAVEL CC
Applicant
and
SIYAYA
TELEDATA COMM AND
COURIERS
CC
Respondent
JUDGMENT
NHLANGULELA
ADJP:
[1]
Pursuant to a consent order made on 19 March 2015 consolidating Case
No. 2730/14 and Case No. 2807/14, both matters served before
me in
the opposed court on 23 June 2015 with the applicant asking for an
order that an arbitration award made on 21 August 2014
be made an
order of this Court in terms of
s 31
(1) of the
Arbitration Act 42 of
1965
.
[2]
The issue for determination in both matters is whether the
arbitration proceedings held on 15 July 2014 are a nullity to the
extent, as contended for on behalf of the respondent, the arbitration
process does not comply with the arbitration agreement read
with the
rules of the Arbitration Foundation Of Southern Africa (AFSA).
[3]
In terms of a written agreement concluded by the parties on 20
October 2013 the applicant was employed by the respondent to
supply
courier services at a fee involving distribution of medical products
to the National Health Laboratory Services situate
in and for the
convenience of various hospitals of the Southern Transkei.
The written agreement contains a usual
non-variation clause as well
as a breach clause to be applied in the event that either party has
failed to discharge its obligations.
The agreement also
contains the arbitration clause, in clause 14, in terms whereof all
disputes arising from a breach of the courier
service agreement will
be dealt with. Sub-clauses 14.2 and 14.3 contain the
arbitration procedure. I quote the provisions
of the
sub-clauses below:
“
14.2
If either party to this Agreement be dissatisfied with or unwilling
to accept mediation or an opinion expressed
by the mediator then
either party may, by written notice served upon the other, within 2
(two) calendar months of the date of declaring
a dispute or of the
mediator’s decision, require that the dispute or difference
arising out of this Agreement shall be referred
to arbitration.
14.3
Such arbitration shall be conducted in accordance with the rules of
the Arbitration Foundation of Southern
Africa,
provided that:
14.3.1 the
arbitration proceedings shall take place within the borders of the
Southern Transkei (Canzibe, Cofimvaba, Cala,
All Saints, Madwaleni,
St Barnabas, St Lucy’s Willowvale and Zitulele) Southern
Transkei routes.
14.3.2 it
shall not be compulsory to apply the requirements of the law of
procedure or the usual rules of evidence strictly;
14.3.3 the
arbitrator shall be an advocate or attorney with at least 15
(fifteen) years practical experience as appointed
by the President of
the _______________ Bar Council;
14.3.4 the
arbitrator shall be entitled to call for the assistance and/or
evidence of specialists and/or professionals as
in his opinion may be
required in view of the essential nature of the dispute or any
particular facet thereof;
14.3.5
the decision of the arbitrator shall be final and binding on both
parties and may be made an order of a competent court.”
[4]
Acting in accordance with the obligations as provided for in the
agreement, the applicant commenced with its services in November
2013. However, it was later on compelled to suspend the
services due to the alleged failure by the respondent to pay in full
for services discharged in November 2013, December 2013, January 2014
and March 2014. The respondent declared a dispute upon
receipt
of a letter of demand for payment and proceeded to unilaterally
cancel the agreement. The cancellation was not accepted
by the
applicant. To address this and the claim for non-payment for
services rendered it referred the dispute to mediation,
which the
respondent regarded as flawed. The applicant took further steps
to refer the matter to arbitration, which step
is regarded by the
respondent as a nullity.
[5]
The steps taken by the applicant in referring the dispute to
arbitration are the following:
(a)
Mr Siyakubonga Abrahams, addressed as the “director” in
the applicant business, and
who deposed to affidavits on behalf of
the applicant, advised the respondent by means of a letter dated 17
June 2014 that the applicant
intended to refer the dispute to
arbitration as the applicant was authorised to do so in terms of the
arbitration agreement.
(b)
On 08 July 2014 Mr Abrahams delivered a Notice of Set Down Of
Arbitration informing the respondent that
the arbitration hearing
will take place at 7 Miller Street, Mthatha on 23 July 2014 at 11h00
before Advocate M.M. Matyumza, who
is cited in Case No. 2807/14
as the 2
nd
respondent for the reason that he is the
arbitrator.
(c)
On 09 July 2014 Mr Abrahams addressed a letter to the respondent
informing it that the arbitration pre-hearing
will take place on 15
July 2014 at 11h00 in Advocate Matyumza’s chambers.
(d)
On 19 July 2014 Mr Abrahams sent the statement of facts by email to
the respondent which would be used
at the hearing on 23 July 2014.
(e)
On 21 July 2014 Mr Abrahams drew up a “Notice To Amend
Pre-Arbitration Meeting Minute”
inviting the respondent to
lodge objections to the amendment sought.
(f)
Both the preparatory arbitration meeting and the arbitration hearing
took place in the absence
of the respondent.
(g)
Advocate Matyumza presided over the arbitration hearing that
culminated in the award in the sum of R1 587 275,00
and
costs being made in favour of the applicant.
(h)
The applicant has placed the award before the Court so that it may be
converted into a judicial order
capable of being executed in the
normal course.
[6]
It is common cause that the respondent took a decision to stay away
from the arbitration process pursuant to the attitude it
had adopted
that the process was not the one as contemplated in clauses 14.2 and
14.3 of the arbitration agreement. This
legal objection seems
to have been raised against the applicant by means of a letter dated
15 July 2014. Applicant’s
reply to this objection is that
the provisions of clause 14 of the agreement do not support the
respondent’s case.
[7]
The statements by Mr Plaatjie made on affidavit have relevance to the
point of procedural objections raised on behalf of the
respondent.
He said:
“
8.1
In terms of the Rules of the Arbitration of Southern Africa, it is
the Foundation itself which:
8.1.1
register’s a claimant’s claim;
8.1.2
embarks on preparatory steps antecedent to the hearing of the claim;
8.1.3
issues notices;
8.1.4
appoints the arbitrator; and generally ;
8.1.5
conducts the arbitration proceedings to finality.”
[8]
To the statements as aforementioned Mr Abrahams stated on affidavit
that clause 14 of the agreement provides that arbitration
will be
concluded in accordance with the rules of AFSA, not that the
arbitration must be referred to and/or conducted by AFSA.
[9]
Further issues emerged during argument.
Mr
Zilwa
,
for the applicant, submitted that the resolution of the respondent
did not authorise the deponent, Mr Plaatjie, to represent the
respondent in Court. On the other side,
Mr
Jozana,
for
the respondent, submitted that the arbitrator had no jurisdiction to
preside over the arbitration proceedings because he was
neither
appointed in terms of AFSA rules nor the agreement of the parties.
On this point counsel referred to the case of
Vidavsky
v Body Corporate of Sunhill Villas
2005
(5) SA 200
(SCA) at 207, paragraph 14, contending that the absence of
jurisdiction alone must yield to a nullity of arbitration
proceedings.
Mr
Jozana
submitted further that the notices issued by Mr Abrahams to convene
the arbitration tribunal, in so far as they were issued in
accordance
with AFSA rules, fell foul to the legal principle stated in the case
of
Minister
of Law And Order And Another v Dempsey
1988
(3) SA 19
(A) at 38 B-C that where the law provides that a state of
affairs must exist for a conduct to be valid (the jurisdictional
factor)
the absence of that state of affairs renders the conduct
invalid.
[10]
The objection that Mr Plaatjie lacks
locus
standi
to champion the cause of the respondent in this Court is not
supported by the resolution, annexure “JP 10”, read as
a
whole. It must be dismissed.
[11]
In my view the decision of the issues of jurisdiction of the tribunal
and the manner of convening of the tribunal by notices
are
inextricably linked to the broad issue of whether the arbitration
process was the one as contemplated in clause 14 of the agreement
as
read with the Rules of AFSA. In dealing with this broad issue
the starting point is to look at the meaning of the words
used in
clause 14 to establish what exactly the parties intended the
arbitration process to be. That is, did they intend
that the
AFSA arbitration rules/procedures be included or excluded in their
agreement regarding the setting up of the arbitration
tribunal.
In other words, is the arbitration that was convened by Mr Abrahams
acting on behalf of the applicant the one that
both parties had
intended to address their contractual disputes?
[12]
It is a well-known fact that it is never possible to read the mind of
the parties to a contract. As a result the tools
of
interpretation as developed in the case of
Coopers
and Lybrant v Bryant
[1995] ZASCA 64
;
1995
(3) SA 761
(A) at 767E – 768E must be used. Briefly
stated, not only should the Court interprete the words used in a
contract
in a vacuum but the Court is enjoined to have regard to the
contract as a whole to find the context in which the words or phrase
is used. If necessary, the Court will also have to look
at the background and the surrounding circumstances which gave
rise
to the making of the contract. It is against these
principles of law that the words in clause 14: “in accordance
with the rules of the Arbitration Foundation Of Southern Africa”
and the
proviso
thereto must be interpreted. It is imperative that the true
meaning of these words/phrases must be ascertained because each
party
interpretes them differently. On the one hand
Mr
Zilwa
interpretes the arbitration clause to mean that the parties embraced
the arbitration regime of the AFSA in such a way that the
AFSA rules
will apply but on condition that or subject to (provided) the
appointment of the arbitrator is left to the President
or Chairman of
the Bar. He went further to contend that AFSA rule 3.3 referred
to by
Mr
Jozana
means that AFSA rules can supplement the provisions of clause 14 only
in the event that the agreement is silent on the matter of
the
appointment of the arbitrator.
[13]
Mr
Jozana’s
main
argument, based on paragraph 8 of Mr Plaatjies’s affidavit, is
that by agreeing in clause 14.2 to make the AFSA rules
applicable to the parties (by choosing the words: “the dispute
or difference arising out of this Agreement shall be referred
to
arbitration”) the parties bound themselves to seek
registration of the applicant’s claim with AFSA’s
Secretariat who should appoint an arbitrator, arrange a venue where
the arbitration proceedings will take place, issue notices
and
collect fees for such administrative services. He argued that
it is in accordance with these strictures that the arbitration
must
have been conducted. He contended further that the phrase:
“provided that” means that the arbitration process
in
this case would have been valid only if the AFSA had itself appointed
the arbitrator in terms of its own criteria.
[14]
The question arising is whether the arbitration process that was
initiated by the applicant was authorised by Clause 14 of
the
agreement. I answer this question below.
[15]
I start with interpreting clause 14 by scrutinizing the grammatical
meaning of the words used therein. Clauses
14.2 and 14.3
read that either party dissatisfied with the results of mediation may
refer the dispute to arbitration in accordance
with the AFSA rules.
The respondent is aggrieved by the fact that the applicant did
not cause the dispute to be registered
with AFSA. The reason
why the applicant did not do so lies in the
proviso
to clause
14.3 and read with clause 14.3.3 which provide that the arbitration
shall be conducted by an advocate with 15 years practical
experience
as appointed by the Bar Council. Whereas the main provisions of
clause 14.3 provide for arbitration process that
is set in motion by
AFSA in terms of AFSA rules, the
proviso
to clause 14.3
provide for a process which is initiated by the parties themselves.
This distinction is borne out of the meaning
of the term “
proviso,
which is defined by Claasen in the “Dictionary of Legal
Words and Phrases”, Volume 3, Second Edition as follows:
“
A
stipulation introduced into a section of a statute, or into a clause
of an agreement, providing that the preceding part of the
section or
clause is subject to the provisions of the stipulation. See:
Reloomal
v R
of
R
Potchefstroom
1927 AD 401
, as a safeguarding clause having an em-powering effect.
Sometimes ‘provided’ is equivalent to ‘if’
or
on condition that’ (
Walker
v Standard Bank of SA Ltd
1923 AD 440).
As compared with brackets in the interpretation
of statutes, see Brackets. The true function of a
proviso
was explained in
Mphosi
v Central Board for Co-operative Insurance Ltd
1974
(4) SA 634
(A) 645. See Exception, Exemption, Proviso Excuse or
Qualification; Provided.”
[16]
In Shorter: Oxford English Dictionary the term “
proviso
”
is defined as follows:
“
A
clause in a legal or formal document, making some condition,
stipulation, exception, or limitation, or on the observance of which
the operation or validity of the instrument depends;
gen.
a condition, a qualification, a stipulation, a provision.”
[17]
It appears from the definition of the term “
proviso
”
as aforementioned that the parties retained the power to appoint the
arbitrator. That being the case, the parties
had, by
implication, left it to themselves to issue notices of a hearing
exactly as Mr Abrahams did. In the circumstances
the
supplementation of the arbitration agreement of the parties by
application of AFSA rules as referred to in Article 3.3 does
not
kick-in. It must follow that it was not intended by the parties
that AFSA would be responsible to issue arbitration notices
for a
hearing that would not be conducted by it. The cases of
Vidavsky and Dempsey, supra,
do not find application to this
case in my view.
[18]
The answer to the question raised in paragraph 14 above is that the
arbitration process that was initiated by Mr Abrahams at
the behest
of the applicant was duly authorised by clause 14 of the arbitration
agreement of the parties. Further,
therefore, the
arbitrator did have jurisdiction to preside over the matter on 23
July 2014.
[19]
I next deal with the merits of the dispute between the parties.
The Court must take into account the fact that the respondent
was in
wilful default of attending the arbitration hearing. The
technical objection based on the provisions of clause 14
of the
arbitration agreement is, in my view, not a good reason for the
failure to attend the hearing and place its defence on the
merits
before the arbitrator for determination together with the technical
objections. In any event in this Court the arguments
on the
merits of the case were not addressed on behalf of the respondent.
Nothing of it came up even in the heads of argument.
Consequently, the findings already made on the issue of
non-compliance with the arbitration agreement are dispositive of both
applications. In the event the relief sought by the applicant
in Case No. 2730/14 falls to be granted. The relief sought
by
the respondent in Case No. 2807/14 must be dismissed.
[20]
On costs, I take into account that the respondent’s alleged
obfuscatory tactics are more apparent than real. The
applicant
had rights in terms of the arbitration agreement which it duly
exercised. It got the desired results in the arbitration
tribunal. The same may be said in the present matter. In
the circumstances, the equitable approach dictates that the
Court
must be mindful of not putting the respondent in double jeopardy,
more particularly in that the arbitrator has already
make an
award of costs against the respondent. All that remains for
this Court to do is to fix costs that are relevant for
the present
consolidated applications, taking into account that the determination
of both matters swung on a single point of non-compliance
with the
provisions of clause 14. Again it must be said that the
respondent’s objections were raised in annexure
“SP 10”,
the letter dated as far back as 15 July 2014.
Preparations on the issue of non-compliance with
clause 14 would have
started well before the arbitration proceedings and carried over with
relatives ease into the present matter.
Such a technical point
is in my view miniscule and, therefore, less burdensome to prepare
for and present before the Court.
[21]
Whilst it might have been necessary for the applicant to engage the
services of Senior Counsel, I struggle to find the justification
for
the engagement of two counsel. For these reasons an award of
the ordinary scale of costs and the costs of one Counsel
is
appropriate.
[22]
In the result the following order shall issue:
1.
The arbitration award delivered on 21 August 2014 by the Arbitrator
in the Arbitration
hearing between the applicant and the respondent
attached to the papers as annexure “A” be and is hereby
made an order
of this Court.
2.
The application under Case No. 2807/14 be and is hereby dismissed.
3.
Siyaya Teledata Comm and Couriers CC to pay costs incurred in both
matters, including
costs of Senior Counsel only.
________________________
___________
__
Z. M. NHLANGULELA
ACTING DEPUTY
JUDGE PRESIDENT
Counsel for the
applicant
:
Adv. P.H.S. Zilwa
S.C.
appearing
with
Adv. L. Sambudla
Instructed
by
:
X M Petse Inc
MTHATHA.
Counsel for the
respondent
:
Adv. A.N. Jozana
Instructed
by
:
Makade Attorneys
MTHATHA.