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[2012] ZAGPPHC 295
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Jonroux Builders & Contractors (Edms) Beperk v Pty Props 16 (Edms) Beperk (63394/12) [2012] ZAGPPHC 295 (19 November 2012)
NOT
REPORTABLE
IN THE NORTH GAUTENG HIGH COURT,
PRETORIA
(REPUBLIC OF SOUTH AFRICA)
Case
Number: 63394/12
In
the matter between:
JONROUX BUILDERS & CONTRACTORS
(EDMS) BEPERK PLAINTIFF
and
PTY
PROPS 16 (EDMS) BEPERK DEFENDANT
JUDGMENT
Delivered
on: 19 November 2012
POTTERILL
J,
1.
The plaintiff set the matter down for trial. At the commencement of
the trial I was informed that by agreement between the parties
only
the special plea, excluding paragraph 7.4 of the special plea, is to
be argued and decided. I accordingly in terms of rule
33(4) ordered
separation of the Special Plea from the other issues before Court.
2.
The second amended special plea of the defendant reads as follows:
“
1.
The plaintiff’s claim against the defendant is based upon the
terms, conditions and provisions of a written Principal Building
Agreement which was entered into between the parties.
2.
The plaintiff has erroneously contended, in paragraph 2.2 of it’s
declaration, that, in concluding such written agreement,
the parties
did not incorporate pages 25 to 27 thereof.
3.
The parties incorporated all of the pages of the written agreement,
and a complete copy thereof is annexed hereto marked “A”.
4.
Clause 40 of annexure “A” hereto details and prescribes
the dispute settlement procedure which was to be followed
in the
event of any disagreement arising between the plaintiff and the
defendant as to any matter arising out of or concerning
the
agreement.
5.
Such dispute settlement mechanism prescribes and stipulates that, in
the first instance, any such dispute was to be submitted
to
adjudication and that the adjudicator’s decision would be
binding on the parties who would give effect to it without delay
unless and until it may subsequently be revised by an Arbitrator in
terms of clause 40.5.
6.
Clause 40 of the agreement further stipulates and prescribes the
procedure which was to be followed in the event of a party being
dissatisfied with the decision given by the adjudicator, and
prescribes further that any dispute which is the subject of a notice
of dissatisfaction shall be finally resolved by way of arbitral
proceedings.
7.1
Although the Plaintiff initially, as it was obliged to do. failed to
invoke and/or follow the relevant dispute resolution procedures
and
mechanisms provided for and prescribed in terms of Clause 40 on Annex
“A" hereto prior to the institution of this
action, the
Plaintiff during June 2011 as to provided for in Clause 40 of Annex
“A" hereto referred the matter to Adjudication.
7.2
The Adjudicator provided his award on the 21st of June 2011.
7.3
Consequently, the matter has been finally resolved by way of a
dispute resolution proceedings, as provided for in terms of Clause
40
of Annex “A"hereto."
3.The
common cause facts setting out the relevant background to the matter
is the following:
3.1
The plaintiff issued a simple summons against the defendant founded
on a written agreement whereupon work was done and the amount
of R1
335 614, 29 is claimed pursuant thereto.
3.2
The defendant delivered a notice of intention to defend whereupon the
plaintiff filed and served an application for summary
judgment.
3.3
The defendant filed an affidavit resisting summary judgment. In this
affidavit inter alia as bona fide defence is raised the
fact that the
plaintiff did not attach to the summons the written agreement, the
Principal Building Agreement. In this agreement,
clause 40 prescribed
what procedure is to be followed in the event of any disagreement
arising as to any matter arising out of
or concerning the contract.
The plaintiff did thus ignore the contract and clause 40 thereof.
[Paragraphs 8 & 9 of the answering
affidavit], “The
aforegoing is compounded when regard is had to the plaintiff
attorneys’ own letter of 16 July 2009,
a copy of which is
annexure “NT hereto. In that letter, the plaintiffs attorneys
themselves declared a dispute in terms of
clause 40 of the agreement
and recognised that, thereafter, such dispute would have to be
referred to adjudication...” [Paragraph
10] This letter was
dated 16 July 2009 and the application for summary judgment was to be
heard on 20 January 2010.
3.4
The attorneys for the plaintiff by notice removed the application for
summary judgment from the roll “whereas the Respondent
disclosed a possible bona fide defence. ” [p82 of notices
bundle]
3.5
The plaintiff then filed its declaration. Paragraph 2.2 of the
declaration read as follows:
“
7?
Afskrif van die kontrak word hierby aangeheg as aanhangsel “A”
en hierin geinkorporeer en ten opsigte waarvan bladsye
25-27 nie deur
die partye geinkorporeer is nie. ”
3.6
The defendant filed a special plea to the declaration and also
pleaded over. The defendant attached a copy of the signed agreement
including the initialled pages 25-27. A special plea was raised that
the action be stayed pending the invocation and final determination
of the parties’ disputes by way of dispute settlement
provisions as contained in clause 40 of the agreement between the
parties.
3.7
The plaintiff thereupon did not take any further steps in the action,
but instead referred the matter to adjudication.
3.8
The adjudication proceeded before an appointed Adjudicator. Both
parties filed pleadings and supporting documentation. The parties’
legal representatives made written submissions. On 21 July 2011 the
Adjudicator made an award in favour of the plaintiff in the
amount of
R169 811, 20.
3.9
The defendant in a letter dated 2 August 2011 to the plaintiff’s
attorney noted its dissatisfaction with the Adjudicator’s
decision. This dissatisfaction was withdrawn in a letter dated 4
August 2011. The amount as awarded by the Adjudicator was tendered
and the plaintiff was requested to withdraw the action.
3.10
The plaintiff’s attorney on 5 August 2011 noted its objection
to the award of the arbitrator. Paragraph 3 of this letter
reads as
follows:
“
Dif
is verder ons opdrag om kennis te gee, soos ons hiermee doen, dat
ingevolge klousule 40 van die JBCC kontrak tussen die Werkgewer
en
Kontrakteur die dispuut finaal verwys word vir beslissing deur ‘n
Arbiter (klousule 40.5).”
1.3
Both attorneys took certain stances reflected in their
correspondence, which is not relevant and in any event came to
nothing.
The result was however that the plaintiff’s attorney
on 16 August 2011 resorted to requesting the Association of
Arbitrators
for the appointment of an Arbitrator.
1.4
The defendant in a letter dated 17 August 2011 to the Chairman of the
Association of Arbitrators set out the following:
In
Annex “R1” the Contractor refers to a request to the
Adjudicator that he arithmetically rectifies the Adjudicator’s
Determination. A copy of that request is annexed hereto and which is
dated the 28th July 2011. We also enclose herewith a copy
of a letter
from ourselves to the Adjudicator dated the 29th July 2011 which
deals with that letter. Quite simply the Contractor’s
request
of a so- called correction can under no stretch of the imagination be
considered a request as is envisaged in terms of
Rule 7.2.1 of the
Adjudication Rules.’\par. 5]
In
the event that you are inclined to appoint an Arbitrator then we
object to the appointment of the parties referred to subparagraph
2.3.1 of the Contractors letter.”
The
reasons forwarded in the letter were that that no CV’s of the
“to be appointed Arbitrators” were attached
and since
technical issues were to be decided upon, the CV’s were a
necessity.
3.13
On 14 September 2011 the defendant’s attorneys wrote to the
plaintiff's attorneys with the following in par 2 thereof:
"...In
breach of the Arbitration Agreement the Contractor issued summons out
of the North Gauteng High Court, ft remains in
breach in this regard
and the only manner in which the breach can be cured is for the
Contractor to withdraw that action and tender
the Employer’s
costs. There is no question that the action was informally stayed
pending the matter being pursued by way
of dispute resolution and
such allegation is denied. [Par 2]
Until
the Contractor withdraws the action and tenders costs(as it is
obliged to do) then the Employer will exercise its rights,
as it is
entitled to do. whether the Contractor pursues the matter by way of
either litigation or in terms of the Dispute Resolution
mechanism.[Par 3]
In
the event of the Contractor withdrawing the action, as
aforementioned, then any defence raised that the Contractor is in
breach
of the Dispute Resolution Clause, alternatively that the
matter is lis pendens obviously falls away... ”
3.14
The plaintiff's attorney react hereupon in a letter dated 21
September 2011 as follows:
”
Dit
is weens die Verweerder se onophoudelike aanhoudende tegniese besware
teen dispuutbeslegting, wat onnodige koste veroorsaak
en uitrek van
die saak meebring, wat ons klient noop om met die aksie voort te gaan
todat[sic]
die Hof mag besluit om die aksie op versoek van die Verweerder op te
skort hangende arbitrasie.”
3.15
A notice of set-down for trial for this court is served on the
defendant on 2 February 2012.
3.16
The defendant filed, served and effected an amendment to the special
plea on 23 July 2012. A further amendment to the special
plea was
effected on 28 October 2012. This is the amendment quoted in
paragraph 2 supra including paragraph 7.4
4.1
On behalf of the defendant it was argued that on the common cause
facts the matter was referred to adjudication in terms of
clause 40
of the written agreement between the parties. The Adjudicator made
his decision on 21 July 2011. As it stands the adjudication
process
was completed in terms of 40.3 of the contract, but the Arbitration
process has not commenced. The effect of clause 40.3
is that the
Adjudicator’s decision while subject to the Plaintiff’s
notice of dissatisfaction, is binding upon the
parties. Although
adjudication like mediation is administrative in nature in the normal
course it was styled in clauses 40.2 and
40.3 with the peremptory
rider that it is “binding between the parties.’{40.3], If
there was a notice of dissatisfaction
then it was to be finally
resolved by the Arbitrator. If there was no notice of dissatisfaction
then the Adjudicator’s decision
was final and binding. As it
stands now the Adjudicators award is binding inter partes until an
Arbitrator finds on the notice
of dissatisfaction.
4.2
The plaintiff however in flagrant breach of clause 40 while noting
dissatisfaction and requesting Arbitration proceeded to set
this
action down for trial. The plaintiff is ignoring the sanctity of the
contractual agreement which it cannot do. The plaintiff
cannot if not
happy with the Adjudicator’s decision resort back to the action
hoping for a different outcome. It was not
disputed that the
plaintiff could start proceedings by way of action, but once the
defendant objected to the proceedings in terms
of the dispute
settlement agreements in the contract and the plaintiff proceeded
with adjudication the plaintiff cannot resort
back to the action
proceedings.
4.3
As support for this contention I was referred to Aveng Africa t/a
Grinaker-LTA v Midross Investments 2011(3) SA 631 and 641
at E-H and
A-B. The plaintiff abandoned the litigation to pursue the dispute
settlement procedures, now saddled with a decision
they are not happy
with they resurrect the action proceedings. In the words of the
Aveng-matter supra “this is not something
that a court will
countenance."
The
action must thus be dismissed with costs, alternatively plus petitio
be stayed with the wasted costs contingent to the set-down
to be
borne by the plaintiff.
5.1
The first argument raised by the plaintiff was that they were
entitled to institute action. Support for this submission was
found
in PCL CONSULTING (PTY)LTD t/a PHILLIPS CONSULTING SA v TRESSO
TRADING 119 (PTY)LTD 2009(4) SA 68 (SCA) where at par.[7]
the
following was found:
“
The
mere fact that parties have agreed that disputes between them shall
be decided by arbitration does not mean that court proceedings
are
incompetent. If a party institutes proceedings in a court despite
such agreement, the other party has two options:
(i)
lt may apply for a stay of the proceedings in terms of
s6
of the
Arbitration Act 42 of 1965
; or
(ii)
it may in a special plea (which is in the nature of dilatory plea)
pray fora stay of the proceedings pending the final determination
of
the dispute by arbitration. ”
5.2
The plaintiff however in view of the special plea did declare a
dispute and refer the matter to adjudication. This was done
informally and without the defendant formally applying that the
action be stayed pending the adjudication process.
5.3
On behalf of the applicant much was made of the fact that in the
proceedings before the Adjudicator the defendant argued that
the
Adjudicator should not entertain the dispute because the plaintiff
did not withdraw the action in this court. The defendant
argued this
despite their special plea relying on the adjudicating process for
the action not to proceed.
5.4
The plaintiff replied to the special plea that they do not accept the
adjudicator’s decision. They attempted to refer
the matter to
Arbitration but the defendant objected despite their special plea
which requested arbitration. The argument was that
the plaintiff
never withdrew its action and only informally tried to settle the
matter by referring it to adjudication. [Par2.5
of the reply.]
5.5
The Adjudicator’s finding is not binding and they may resort
back to the action. The Adjudicator himself stated that the
determination of the Adjudicator is not binding;”..it is only
binding if both parties accept the Adjudicator’s determination.
”[p365 of the bundle].
5.6
Much reliance was also placed on the following quotation in
Administrateur Tvl. V Zenzile 1991(1) SA 21 (A) “Procedural
objections are often raised by immeritorous parties. Judges may be
tempted to refuse relief on the ground that a fair hearing could
have
made no difference to the result, But in principle it is vital that
the procedural and the merits should be kept strictly
apart, since
otherwise the merits may be prejudiced unfairly. ”
5.7
The action can not be dismissed and the defendant never pleaded that
the action be stayed. The defendant’s special pleas
must be
dismissed with costs.
6.1
It is not in dispute that the plaintiff had the right to institute
the action in this Court. The defendant then exercised its
right to
in the special plea raise clause 40 and pray for a stay of the
proceedings pending the final determination of the dispute
by
arbitration.
6.2
The procedure then envisaged in clause 40 is invoked by the plaintiff
by declaring a dispute and referring the matter to adjudication.
The
Adjudicator delivered his decision and the plaintiff noted its
dissatisfaction thereof as entitled to do in terms of clause
40.4.
Clause
40 reads as follows:
“
40.1
Should any disagreement arise between the employer or his agents and
the contractor as to any matter arising out of or concerning
this
agreement either party may give notice to the other to resolve such
disagreement
40.2
Where such disagreement is not resolved within ten (ten) working days
of receipt of such notice it shall be deemed to be a
dispute and
shall be submitted to:
40.2.1#
Adjudication in terms of the edition of the JBCC Rules for
Adjudication current at the time when the dispute is declared.
The
adjudicator shall be appointed in terms of such Rules
40.2.2#
No clause
40.3#
The adjudicators decision shall be binding on the parties who shall
give effect to it without delay unless and until it is
subsequently
revised by an arbitrator in terms of 40.5. Should notice of
dissatisfaction not be given within the period in terms
of 40.4, the
adjudicator s decision shall become final and binding on the parties.
40.4#
Should either party be dissatisfied with the decision given by the
adjudicator, or should no decision be given within the
period set out
in the Rules, such party may give notice of dissatisfaction to the
other party and to the adjudicator within ten
(10) working days of
receipt of the decision or, should no decision be given, within ten
(10) working days of expiry of the date
by which the decision was
required to be given.
40.5#
A dispute which is the subject of a notice of dissatisfaction shall
be finally resolved by the arbitrator as stated in the
schedule.
Where
such
person is unwilling or unable to act, or where no person has been
stated, the arbitrator shall be chosen and appointed by mutual
agreement between the parties. Where no agreement is reached within
ten (10) working days of such notice, the arbitrator shall
be the
person appointed at the request of either party by the chairman, or
his nominee, of the Association of Arbitrators (Southern
Africa). The
adjudicator appointed in terms of 40.2.1 shall not be eligible for
appointment as the arbitrator”
6.3
The plaintiff then in terms of clause 40.5 refers the matter to
arbitration. The defendant objected to the names of the proposed
Arbitrators as there are no CV’s attached. This objection could
easily be solved in terms of the same clause 40.5 in the
event that
both parties can not agree to who the Arbitrator must be. The
plaintiff then makes an about turn and places the matter
for trial in
this court.
6.4
The principle of pacta sunt servanda is an entrenched principle in
our law and was found to underline the Constitutional principle
of
inter alia human dignity. The parties agreed that when a dispute as
to any matter arising out of or concerning this agreement
arose then
the matter was to be referred to Adjudication. The defendant invoked
its right in terms of clause 40 in the special
plea to answer to the
plaintiff’s claim. There was no duty on the defendant to
formally apply for the stay of the proceedings
because they elected
to file a special plea. The plaintiff did not take any further steps
in the action but proceeded with the
dispute resolution proceedings
with the resultant decision of the Adjudicator. The plaintiff has a
right to note its dissatisfaction
with the Adjudicator’s award.
The parties agreed that if such notice was delivered by any of the
parties then an Arbitrator
will finally decide the dispute. This is
the route the parties agreed upon and the plaintiff invoked this
process. The plaintiff
cannot now make an about turn and set the
matter down for trial. Resorting back to the action not only
militates against the contract
and the entrenched principle of pacta
sunt servanda, but is bad in law procedurally and substantively.
There is a decision and
until there is finality on that decision
another court will not bring out another judgment on the same cause
of action. The decision
is binding inter parties until an Arbitrator
finally decides the matter. The Adjudicator in his decision repeated
what the contract
stipulated; his decision is not binding if both
parties don’t accept it. It is in the words of the contract
binding if both
parties accept it. That however does not end the
matter; his decision must be referred to an Arbitrator for finality.
The contract
between the parties thus effectively gave a party a
“right to appeal” which the plaintiff invoked. The
jostling between
the attorneys at to what issues may be raised before
the Arbitrator and who the Arbitrator must be did not give the
plaintiff the
right to resort back to the action. The Arbitrator will
be appointed and the Arbitrator will deal with the issues raised
before
him. The reason for this is trite: parties cannot initiate two
sets of proceedings based on the same claim and then alternate
between
the processes until they receive a result they like.
6.5
The question then arises whether the action must be dismissed or
stayed. The defendant relied on the Aveng-matter supra as support
for
its contention that
the
action must dismissed. The Aveng-matter is however as Wallis J
explained quite unique:
"At
first blush it is distinctly curious to have a party seeking a stay
of proceedings that it instituted. /\s far as the researches
of
counsel go, it is a novel application for which no precedent exist. ”
[par. 1 ].
Already
this matter is then distinguishable from the matter in casu in that
the special plea of the defendant is before court, not
the plaintiff
requesting a stay of its own proceedings. The plaintiff’s
action was not dismissed, but its application to
stay the proceedings
was dismissed thus not authority that the action must be dismissed.
I
am of the view that in this matter the dismissal of the plaintiff’s
claim could be appropriate because the Arbitrator’s
decision
would be final and binding and the plaintiff could not resort back to
these proceedings even if there was somehow a further
appeal
procedure pertaining to the Arbitrator’s decision. However I
did not have argument as to what circumstances could
necessitate a
stay versus dismissal and in view of the defendant's argument that I
alternatively grant a stay I am granting a stay
of the proceedings. I
have the jurisdiction to do so despite the special plea not
requesting a stay because I can grant a stay
as a lessor order.
6.6
The plaintiff incorrectly persisted in setting this matter down for
trial. In the letter of the plaintiff’s attorney quoted
in
paragraph 3.14 supra the foolhardy persistence is expessed “
wat ons klient noop om met die aksie voort te gaan todat[sic]
die Hof
mag besluit om die aksie op versoek van die Verweerder op te skort
hangende arbitrasie.”
7.
I accordingly make the following order:
7.1
The defendants special plea is upheld.
7.2
This action is stayed pending the finalization of the dispute
resolution process.
7.3
The plaintiff is to carry the wasted contingent to the setting down
of the matter for trial.
S.
Potterill
Judge
of the High Court
Matter
heard on: 07 November 2012 Delivered on: 19 November 2012
Attorney
for the Plaintiff:
LEON
MARe & KIE INC
Sanwoodpark,
Building 4, 1st Floor
379
Queenssingell
Lynnwood
Pretoria.
Tel:
012 365 3314
(Ref:
L MARe/YS/(H)R416/09)
Attorney
for the Defendant:
SMIT
JONES & PRATT, p/a HACK STUPEL & ROSS.
2nd
Floor, Standardbank Chambers
Church
Square
Pretoria
Tel:
012 325 4185
(Ref:
Me. J Pretoruis/ms/rf/3770)