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[2012] ZAKZPHC 57
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Jenkins v Oram (AR460/11) [2012] ZAKZPHC 57 (30 August 2012)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL, PIETERMARITZBURG
CASE NO. AR460/11
In the matter between:
STUART
GLEN JENKINS
.........................................................................
APPELLANT
and
HOWARD
ERNEST ORAM
...................................................................
RESPONDENT
JUDGMENT
Delivered
on:
30 AUGUST 2012
GYANDA J
[1] This is an appeal against the
decision of Van Zÿl J, handed down on 7 April 2011, leave to
appeal having been granted by
the learned trial judge against the
said judgment. In that matter, Van Zÿl J, granted an order
making an award made by an
arbitrator an order of court at the
instance of the respondent herein. The appellant now appeals against
the grant of that order.
[2] The appellant and the respondent
were formerly partners with regard to a certain immovable property
which, at all material times
hereto was registered in the name of the
respondent. The dispute related to the immovable property situate at
12 Northumberland
Place, Durban North which, as a result of
litigation between the parties under case no. 6245/2006, was
determined by order of this
court dated 3 November 2006 to be a
partnership asset. I do not intend to burden this judgment with all
of the details of the disputes
and the litigation that ensued between
the parties in relation thereto. Suffice to say that the parties had
by agreement entered
into an agreement of settlement dated 2 October
2007 in terms whereof the respondent agreed to sell to the appellant
his half share
in and to the said partnership property for an agreed
amount of R1 425 000-00 [one million four hundred and twenty five
thousand
rand] and, to that end the parties agreed that the matter be
referred to arbitration before a single arbitrator to determine:-
“
6.
As against compliance with Jenkins’ (the appellant’s)
obligations set out hereunder, Oram (the respondent) will do
all
things necessary to transfer ownership of the immovable property
situate at 12 Northumberland Place, Durban North, Durban to
Jenkins
or his nominee.
As
consideration for the foregoing, Jenkins will pay:
6.1
One half of R1 425 000-00 [ONE MILLION FOUR HUNDRED AND TWENTY FIVE
THOUSAND RAND] less the amount referred to in paragraph
6.2
hereunder, to Jenkins’ attorney, to be held in trust; and
6.2
The amount necessary to discharge the home loan obligation to Absa
Bank Limited such loan being secured by a registered mortgage
bond
which is to be cancelled on registration of transfer of the property
to the name of Jenkins or his nominee.
6.3
All costs of transfer, including transfer.”
It was agreed in the said arbitration
agreement that the terms of reference of the arbitrator were:-
“
9.
The arbitrator’s terms of reference are limited to the issue of
whether or not if at all, either party is obliged to account
to the
other for expenditure incurred in relation to or associated with, the
existence and subsequent dissolution of the partnership,
and the
property including, but not limited to, payments made by Jenkins in
satisfaction of the Mortgage Bond”
[3] In consequence of the aforesaid
arbitration the arbitrator found as follows:-
“
29.
I calculate the end position to be as follows:-
Agreed
value of house on dissolution
R1
425 000-00
Less
outstanding bond at dissolution
R87
000-00
Nett
amount for distribution
R1
338 000-00
Less
total expenses paid by Jenkins
R653
938-55
Profit
available for distribution
R684
061-45
Oram’s
share of profit
R342
030-72
This was upon the basis that the
parties had agreed to share the profits 50/50.
[4] Subsequent to the award being
made by the arbitrator, the respondent’s attorneys wrote to the
arbitrator a letter dated
10 February 2009 seeking clarification of
the award in the following terms:-
“
The
parties to the arbitration are unsure as to your finding as regards
liability for settling the bond over the property prior
to transfer
being registered in the name of Mr Jenkins.
…
It
would be appreciated if you could clarify your finding in this
regard…”
The arbitrator responded thereto by
letter dated 10 February 2009 in the following
terms:-
“
I
apologise if my award was not as clear as it might have been. I
believe it to have
been
implicit from the manner in which I set out the figures in paragraph
29 that as Mr Jenkins was taking transfer of the property
at the
agreed valuation of
R1
425 000-00, it was he who would discharge the bond at R87 000-00
which effectively left the partnership the nett amount of R1
338
000-00 for distribution between Mr Jenkins and Mr Oram. This, I
believe, is demonstrated by the following arithmetical calculation
using the same figures.
Agreed
value of house on takeover by Jenkins
R1
425 000-00
Less:
discharge bond
R87
000-00
Less:
payment to Oram
R342
032-72
R
429 030-72
Balance
remaining
R
995 969-28
The
“balance” of the purchase price is then set off against:-
Repayment
to Jenkins of his expenses
R653 938-55
Jenkins
half share of the profits
R342 030-72
R995 969-27
Looked
at yet another way, the discharge of the bond of R87 000-00 is part
of the
“
payment
of the purchase price” of R1 425 000-00 being the sum at which
Jenkins is
“
purchasing”
the house from the partnership. That leaves the partnership the net
sum of R1 338 000-00 for distribution which
is done as per my figures
in paragraph 29 of the award. I hope this clears up the matter.”
It is clear from the above that the
parties were responsible to pay the outstanding bond
in equal shares, that is, each would
be liable to pay 50% of the sum of R87 000-00
[eighty seven thousand rand] to
discharge the bond liability of the partnership.
[5] Initially the appellants opposed
the application of the applicant in the
court
a quo
to make the award
an order of court on the basis:
Firstly, that the award was a
nullity in as much as the arbitrator went
beyond the terms of reference as
contained in the arbitration agreement; and
Secondly, the arbitrator in
“clarifying” the award as he attempted to do
on the unilateral input by the
respondents had acted arbitrarily and
exceeded the scope of his mandate in
terms the arbitration agreement,
and accordingly, the award was a
nullity.
On these two bases, the appellant
argued that the award was a nullity and the court
a quo
could
not make the award an order of court.
[6] As regards the argument by the
appellant that the award was a nullity on the two bases referred to
above, Van Zÿl J, held:-
“
it
is relevant in my view that the parties in concluding the arbitration
agreement, vested the arbitrator with wide discretionary
powers and
even agreed in clause 11 thereof that,
“
no
right of appeal shall lie against the arbitrator’s decision.”
In
Telecordia
Technologies Inc v Telkom SA Ltd
1
(also reported as 2007(5) BCLR 503
and at
[2006] ZASCA 112
;
[2007] (2) ALL SA 243
Harms, JA (as he then was) at pg 259 G)
observed as follows:-
‘
51.
Lastly, by agreeing to arbitration the parties limit interference by
courts to the ground of procedural irregularities set out
in section
33(1) of the Act. By necessary implication they waive the right to
rely on any further ground of review, “common
law” or
otherwise. If they wish to extend the grounds, they may do so by
agreement but then they have to agree on an appeal
panel because they
cannot by agreement impose jurisdiction on the court.’
[7] In these circumstances, Van Zÿl
J,held further:-
“
32.
The present matter has much in common with that of the parties in
Bantry
Construction Services (Pty) Ltd v Raydin Investments (Pty) Ltd
2009(3)
SA 533 (SCA) where Ponnan JA remarked as follows at page 541J to
542C:-
‘
[21]
The legal principles applicable to an enquiry of this kind
was
recently set out by Harms JA on behalf of this court. [
Telecordia
Technologies Inc v Telkom Ltd
2007(3) SA 266 (SCA) 2007(5) BCLR
503; See also
Lufuno Mphaphuli & Associates (Pty) Ltd v
Andrews and Another
2008(2) SA 448(SCA)]. It is not necessary to
recapitulate those principles. Suffice it to state that once again a
litigant has fundamentally
misconceived the nature of its relief. The
parties here had waived the right to have their dispute relitigated
or reconsidered.
Given the nature of Bantry’s opposition, it
was for it to challenge the award by invoking the statutory review
provisions
of s 33(1) of the Act. It ill-behoved Bantry to adopt the
passive attitude that it did. It ought instead to have taken the
initiative
and applied to court to have the award set aside within
six weeks of the publication of the award or alternatively to have
launched
a proper counter-application for such an order. Had that
been done then the Arbitrator could have entered the fray and
defended
himself against the allegations levelled by Bantry, instead
of it falling to Raydin to do so on his behalf – a most
invidious
position for any litigant.
[22]
It follows that the learned judge in the court below cannot
be
faulted and in the result the appeal must fail. It is accordingly
dismissed with costs.”
Van Zÿl J, accordingly, rejected
the appellant’s submission in this regard as baseless.
I am in full agreement with the
decision of Van Zÿl J, in this regard. However, in the light of
the attitude taken by counsel
for the appellant on the appeal before
us, it is not necessary to delve into this issue any further.
[8] On appeal before us, Stokes SC
for the appellant conceded:-
(a) THAT the arbitrator had not
exceeded the terms of the arbitration
agreement; and
(b) THAT the arbitrator in
“clarifying” the terms of his award did no
more than that and could not be said
to have acted irregularly.
He accordingly conceded that the
claims that the award was a nullity on the two bases
raised were clearly wrong in the
circumstances.
[9] He submitted, however, that the
amount of the award was wrong. Working
on the agreed valuation of the
property at R1 425 000-00 [one million four hundred and
twenty five thousand rand], Stokes SC
submitted the following calculation on the basis
of which he asserted that the amount
of the award made by the arbitrator had to be
reduced by half or 50% of the amount
required to settle the outstanding
bond. He accordingly submitted the
following calculation:-
Amount
payable in terms of clause 6.1
R712
500-00
Less
the amount contained in clause 6.2
(i.e
the bond)
R87
000-00
R625
500-00
Less
50% of the expenses
(653938
÷ 2)
R326
969-00
Difference
R298
531-00
Add
50% of the bond obligation
R43
500-00
Total
R342
031-00
[10] I am in complete agreement with
the submission by Stokes SC that the award
made by the arbitrator has to be
reduced by an obligation on the part of the respondent to pay 50% of
the bond obligation as it
was common cause throughout the proceedings
that the parties would be liable for the expenses on the basis of a
50/50 division.
Clause 6.1 of the arbitration and settlement
agreement makes that clear.
[11] Accordingly, in as much as the
arbitrator deducted the whole of the bond amount in arriving at the
amount he determined to
be the award to be made in favour of the
respondent, that amount fell to be reduced by the respondent’s
obligation to pay
50% of the outstanding bond as the arbitrator had
already deducted the full amount of the bond obligation of R87 000-00
[eighty
seven thousand rand] from the agreed purchase price.
It would, in my view, be unfair in
the light of the agreement between the parties to share the expenses
equally for the appellant
to pay the full amount of the bond when the
obligation was upon each party to pay 50% thereof. To that extent the
order of the
court
a quo
fell to be rectified.
[12] Mr De Beer SC’s submission
on behalf of the respondent in this regard is, in
my view, clearly wrong. Accordingly,
I am of the view that the amount of the award to
be made an order of court in terms of
the application before Van Zÿl J, falls to be
reduced by 50% of the amount to be
paid in settlement of the outstanding bond on the
property. To that extent the
appellant is, in my view, successful in the appeal before
us. Quite clearly, Van Zÿl J, in
the court
a quo,
erred in making the award as he did
without taking into account the fact
that both parties were equally responsible to pay
off the outstanding bond.
Once the arbitrator had deducted the
full amount of the bond in determining the nett profits, the court
a
quo
was obliged to deduct therefrom the respondent’s
obligation to pay 50% of the outstanding bond.
[13] There was much argument and
debate in the court
a quo
and before us on appeal as to
whether the arbitration and settlement agreement entered into between
the parties obliged the appellant
to pay the respondent the amount of
the award in cash, or whether the appellant could do so by supplying
a suitable guarantee for
the payment thereof. In the court
a quo
it was common cause that:-
the respondent’s attorney had
himself called for payment of the award or, alternatively, the
provision of a suitable guarantee
in respect thereof on a number of
occasions; and
the appellant’s attorney had
furnished such a guarantee in pursuance to such request.
[14] Additionally, Stokes SC argued
that the practice and custom had developed that even where a contract
of sale of immovable property
had provided for payment or guarantees
to be supplied “upon demand”, this has been held to be
subject to the implied
term that no demand can be made before the
seller is in a position to lodge for the purposes of transfer.
On the strength of
Holtshausen
and Another v Gore NO and Others
2
in which it was held that the fixing
of a date for furnishing of guarantees has to be read in context, and
relative to an ability
to lodge.
To accommodate the position for the
supplying of guarantees, Van Zÿl J, amended the order prayed in
paragraph 1 of the respondent’s
application in the court
a
quo
to include, in the
alternative, the supply of a suitable guarantee and, in this court
both parties indicated that they were satisfied
with such an
amendment to the order.
[15] A further bone of contention
between the parties both in the court
a
quo
and on appeal before
us was the amount to be paid in respect of transfer duty by the
appellant. The respondents via their attorneys
had submitted that the
transfer duty was payable in the sum of R59 000-00 [fifty nine
thousand rand]. The respondent’s attorneys,
however, did not
give a breakdown as to how this amount was made up or calculated. The
appellants correctly, in my view, resisted
paying this arbitrary
amount.
[16] The appellants attorneys, on the
other hand, in communication with the Department of Revenue had
ascertained that the full
amount of the transfer duty payable in
respect of the transaction was the sum of R39 768-33 [thirty nine
thousasnd seven hundred
and sixty eight rand and thirty three cents].
Inasmuch therefore, as the figures supplied by the respondent’s
attorneys do
not appear to be substantiated by a proper calculation,
no reliance can be placed thereon in determining the amount of the
transfer
duty payable. The figures provided by the appellant’s
attorneys are, in my view, properly substantiated and can then be
accepted
as the transfer duty payable in respect of the transaction.
However, and in the event of the
amount of the transfer duty fluctuating for any reason whatsoever,
the rider can be added to this
part of the order to accommodate such
fluctuation or change.
I should add that the parties were
satisfied in the event of such a rider being added to the amount so
determined. That amount,
doing the arithmetic as contended for by the
appellants, is the sum of R55 526-33 [fifty five thousand five
hundred and twenty
six rand and thirty three cents].
[17] A final bone of contention
between the parties related to the payment of the costs of the
cancellation of the bond. It was
argued on behalf of the respondent
that such costs ought to be included as being within the terms of the
“costs of transfer”
and therefore be paid by the
appellant. This, in my view, appeared to be a sensible suggestion in
the circumstances and counsel
for the appellant did not oppose the
grant of this order inasmuch as the amount, it was agreed, was quite
negligible, regard being
had to the other amounts payable in the
transaction. In any event, the cancellation of the bond is a
precondition for the transfer
to be effected and should, in the
present case, be deemed to be part of the costs of transfer which the
appellant is obliged to
bear.
[18] That leaves the question of the
costs payable on appeal. Both parties had argued that costs ought to
follow the result, it
being submitted on behalf of both parties that
it ought to be the successful party. It was common cause between the
parties that
in the event of an order for costs being made in their
favour, that as the services of senior counsel were employed by both
parties,
such costs should include the costs of senior counsel.
[19] I am accordingly of the view
that to the extent I have indicated above in respect the amount of
the award payable to the respondent
and the amount of the transfer
duty payable, the appellant has been substantially successful and to
that extend the appeal ought
to be upheld. I accordingly make the
following order:-
[1] The appeal is upheld with
costs, such costs to include the costs consequent upon the employment
of senior counsel;
[2] The order of the court
a
quo
is replaced with the following order:-
THAT the first respondent is
directed to pay the sum of
R342 030-72 [three hundred and
forty two thousand and thirty rand and seventy two cents], less 50%
of the bond obligation in respect
of the property sold, into the
applicant’s attorney’s trust account (particulars
whereof are set forth in clause
12 of annexure “PLI”
annexed to the founding affidavit), to be retained in trust and not
to be released to or on
behalf of the respondent until registration
of transfer of the property situated at 12 Northumberland Place,
Durban North has
been effected into the name of the first respondent
or his nominee, save that the applicant’s attorney, as
conveyancer
for the purposes of such transfer, may in his discretion
accept a guarantee in a form satisfactory to him in lieu of such
payment;
THAT the first respondent is
directed to provide guarantees for the payment of the bond in favour
of ABSA BANK LIMITED together
with the costs of cancellation of the
said bond as set forth in the letter from BURNE AND BURNE dated 23
January 2009;
THAT the first respondent is
directed to pay the costs of transfer to the applicant’s
attorney as set forth in the pro forma
account dated 12 January 2009
in the sum of R55 526-00 [fifty five thousand five hundred and
twenty six rand together with any
additional amount that is required
by the South African Revenue Services;
THAT the payments to be made and
guarantees to be furnished in terms of this order shall be effected
within 5 (five) days of the
date of this order;
THAT the applicant is directed to
pay the costs of the application, such costs to include all costs
previously reserved, and those
consequent upon the employment of
senior counsel.
_________________
IT IS SO ORDERED
GYANDA
J
_________________
MOKGOHLOA
J I AGREE
_________________
LOPES
J I AGREE
APPEARANCES
DATE
OF HEARING: 8 July 2012
DATE
OF JUDGMENT: 30 August 2012
COUNSEL FOR APPELLANTS: Mr A. Stokes
SC instructed by Stirling Attorneys
c/o redfern & Findlay attorneys
(ref: COD/cr/02/T008/004)
COUNSEL FOR RESPONDENT: Mr H. A. De
Beer SC instructed by Patrick Lander Attorneys c/o Tatham Wilkes
Attorneys
(ref: N R Tatham/Michelle/06G0558/12)
1
2007(3)
SA 266 (SCA)
2
2002(2)
SA 141 (T) at 151-155