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[2011] ZAKZDHC 17
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Gale v Van Doorn and Another (3093/10) [2011] ZAKZDHC 17 (3 March 2011)
1
NOT REPORTABLE
IN THE KWAZULU-NATAL HIGH COURT,
DURBAN
REPUBLIC OF SOUTH AFRICA
Case no. 3093/10
In the matter between:
J GALE
…........................................................................................................
APPLICANT
and
C VAN DOORN
…...........................................................................
FIRST
RESPONDENT
M MACLEOD
….........................................................................
SECOND
RESPONDENT
__________________________________________________________________
JUDGMENT
__________________________________________________________________
GORVEN J:
The sectional title scheme Ditony was
registered under the Sectional Titles Act 66 of 1971 (“the old
Act”). The scheme
comprises two sections, one owned by the
applicant and one owned jointly by the two respondents. There has
been an unhappy history
in the relationship between the parties.
This culminated in the applicant wishing to proceed to arbitration
in respect of various
complaints against the respondents. An
arbitrator, one Richard Morgan (“Morgan”) convened a
pre-arbitration meeting
at the sectional title scheme on 8 October
2008. A minute of that meeting was prepared by Morgan. The meeting
was attended by
Morgan, the applicant and the two respondents.
The minute sets out certain
agreements reached. These include confirmation that Morgan had been
appointed to act as arbitrator,
a determination that the arbitration
would be conducted in accordance with certain rules, a recordal of
the items in issue, agreement
relating to certain of those items and
an agreed schedule for submissions and the hearing. The parties
adhered to the minute
as regards the schedule. The written claim and
the response to it were submitted and a hearing took place on 21
November 2008.
Morgan indicated that he would deliver his award
within seven days of that date but this did not take place. The
award was only
made available towards the latter part of March 2009
as a consequence of the arbitrator only being paid at that stage. It
was
agreed by the applicant that the aspects of the award which
remain relevant to this application and which are capable of being
made an order of court are twofold, namely:
The respondents were, at their
cost, to construct access stairs from the garage of the
applicant’s unit to the
central walkway, which would
include the installation of a door and frame into the side of
the garage. The design would
be in keeping with the existing
architecture and would be acceptable to the applicant.
The costs of the arbitration
would be divided equally between the applicant on the one part
and the respondents on the
other part.
The applicant requests that the
arbitration award be made an order of court and that the respondents
pay the costs of the application.
At the outset of the hearing
before me Mr
Schumann
, who appeared for the respondents,
sought to hand up a supplementary affidavit. This was objected to by
Ms
Oliver
, who appeared for the applicant, and the
respondents did not persist with the attempt to introduce this
supplementary affidavit.
Therefore nothing more need be said on this
score.
The case of the respondent in
opposition can be summarised as follows. Management Rules were
promulgated under the old Act. The
applicant proceeded in terms of
these Management Rules. The initial request for arbitration was made
pursuant to Rule 28 of the
Management Rules. The respondents replied
to this request by the applicant by letter dated 12 November 2007 in
which they said
the following:
We are surprised that
your company has been approached to arbitrate this issue as the
lawyers of choice according to Body Corporate
Rules are Halse,
Havemann and Partners. The above being said, we are still compiling
information regarding Miss Gale’s disregard
for the same Body
Corporate rules she is so quick to quote. It had (sic) become
increasingly apparent that Miss Gale thinks that
she is indeed the
Body Corporate.
Arbitration in this
instance can only be instigated on agreement by all parties on (sic)
the Body Corporate.
The applicant’s attorneys
responded by letter dated 6 December 2007 indicating that they were
not themselves arbitrating
the matter but were acting on behalf of
the applicant. They referred to section 28 of the Management Rules
to the effect that
only when the owners in the scheme were unable to
agree on an arbitrator would Halse, Havemann & Partners nominate
an arbitrator.
The following paragraphs were then included:
The Body Corporate rules
make provision for a senior advocate to be appointed as an arbitrator
in the case of irreconcilable disagreement
between the owners in the
scheme. As we have previously stated, we are of the view that it
would be more cost effective to nominate
an attorney who specialises
in Sectional Title Disputes.
We thus have sought your
consent to appoint an attorney to act as an arbitrator in the matter.
If you are not agreeable thereto
we request that you nominate three
senior counsel for appointment as arbitrator.
This letter was not responded to.
The applicant thereafter requested
attorneys Halse, Havemann & Partners to appoint an arbitrator
but received no response.
The applicant’s attorneys formed the
view that the provisions of Rule 71(4) of the Management Rules
promulgated under the
Sectional Titles Act 95 of 1986 (“the
new Act”) would apply which provided that, where no agreement
was reached,
the registrar of deeds should appoint an arbitrator.
They made such a request and the registrar of deeds appointed Morgan
on
13 May 2008. He convened the pre-arbitration hearing and
thereafter conducted the arbitration itself.
In their answering affidavit, the
respondents did not dispute this recordal by the applicant of the
steps taken by her and her
attorneys. They contented themselves with
disputing the correctness of the advice given by her attorneys to
the applicant as
to the manner in which the arbitrator should be
appointed. The respondents went on, in their answering affidavit, to
admit having
taken part in the arbitration proceedings but having
done so “under the mistaken impression that [Morgan] had been
properly
appointed and that the Arbitration that he was conducting
was legitimate”. The respondents then indicated that despite
their having subsequently been advised that the appointment of
Morgan was irregular and that the entire arbitration process was
therefore flawed and voidable, they attempted to accommodate the
applicant by complying with the agreements reached at the
arbitrator’s meeting. They continued by stating that although
they did not recognise the authority of the arbitrator they
have
complied with all of the issues raised by him except for three. The
first does not concern this application and the second
and third
relate to the two matters mentioned in paragraph 2 of this judgment.
In respect of the stairs, the respondents asserted
that the
applicant was obliged to have plans drawn for that stairway, that
she had not done so and that they therefore withdrew
the “offer
to pay for the applicant’s stairs, on the basis of her gross
ingratitude”. As regards the costs
of the arbitration, they
stated that paying half of the costs of the arbitrator “would
be like paying someone to punish
one, when one has done no wrong,
and the party meting out the punishment has no authority to do so”.
The applicant’s case is that
the respondents agreed to Morgan conducting the arbitration. She
said that, at the pre-arbitration
meeting, Morgan mentioned that he
had been appointed by the registrar of deeds and that the
respondents consented to his continuing.
This is borne out by the
minute which recorded that consent. The respondents, in their
answering affidavit, did not in any way
contest this evidence. In
addition, after the pre-arbitration meeting, Morgan circulated the
minute recording this and other
agreements reached under cover of
the letterhead of his firm, Richard Morgan & Associates, which
is described as conducting
project management and building
engineering and reflects Morgan as a professional engineer.
Mr
Schumann
submitted that the
failure of the applicant to mention at the pre-arbitration meeting
that Morgan had not been appointed in terms
of Management Rule 28
amounted to a material non-disclosure and that this vitiated the
consent of the respondents at the meeting
and thereafter to his
acting as arbitrator.
There are a number of difficulties
with this submission. In the first place, it does not accord with
the facts. The respondents
had, in their letter of 12 November 2007,
shown that they were aware of the manner in which an arbitrator
should be appointed
under Management Rule 28 by quoting from it.
Their letter made mention of an appointment being done by Halse
Havemann & Partners,
not one done by the registrar of deeds. In
addition, as mentioned above, their letter provoked a response from
the applicant’s
attorneys who mentioned that Management Rule
28 required the appointment of senior counsel. The letter even
requested the consent
of the respondents to depart from this and
appoint an attorney but, in the event that they did not agree to
this, to nominate
three senior counsel at the Durban Bar. The
respondents must therefore have understood that what was disclosed
at the pre-arbitration
meeting was that Management Rule 28 had not
been invoked. Despite Morgan not being appointed by Halse Havemann &
Partners,
they consented to the appointment. In addition, as
mentioned, after the meeting Morgan sent the minute under cover of
the letterhead
of his firm which would have made it clear, if the
respondents had remained under any illusions, that he was not a
senior advocate
but a professional engineer and the proprietor of a
firm of engineers. Despite this communication, the respondents at no
time
prior to the arbitration hearing indicated a lack of consent.
How such conduct can amount to a material non-disclosure is not
apparent to me.
The respondents did not say that they
had been misled in any way. All that they said was that they were
under a “mistaken
impression” as to the appointment of
Morgan. No prior representation by the applicant was alleged and
none could have been
given if, as was stated by the applicant
without challenge by the respondents, it had been mentioned that the
registrar of deeds
had appointed Morgan. The only non-disclosure
which might have taken place is that the applicant did not tell the
respondents
that she had invoked Management Rule 71(4) under the new
Act.
It is so that in our law silence can
amount to a misrepresentation. There is, however, no general rule
that all material facts
must be disclosed and that any
non-disclosure therefore amounts to misrepresentation by silence.
1
The underlying rationale for this
approach was explained in
ABSA
Bank Ltd v Fouche
2
in the following words:
That accords with the
general rule that where conduct takes the form of an omission, such
conduct is
prima facie
lawful (
BOE Bank Ltd v Ries
2002
(2) SA 39
(SCA) at 46G - H). A party is expected to speak when the
information he has to impart falls within his exclusive knowledge (so
that in a practical business sense the other party has him as his
only source) and the information, moreover, is such that the right
to
have it communicated to him 'would be mutually recognised by honest
men in the circumstances' (
Pretorius and Another v Natal South Sea
Investment Trust Ltd (under Judicial Management)
1965 (3) SA 410
(W) at 418E - F).
The court went on, in relation to
actionable misrepresentations, to say the following:
3
Having established a duty
on the defendant to speak, a plaintiff must prove the further
elements for an actionable misrepresentation,
that is, that the
representation was material and induced the defendant to enter into
the contract. In the case of a fraudulent
misrepresentation, that
must have been the result intended by the defendant (
Ex parte
Lebowa Development Corporation Ltd
1989 (3) SA 71
(T) at 103F -
J).
In relation to the non-disclosure
contended for in the present matter, therefore, the following is the
position. First, the applicant
must have been under a duty to the
respondents to disclose that Management Rule 28 had not been
invoked. Put another way, the
respondents must have been in a
position where they had perforce to rely on the applicant in order
to obtain knowledge of this
fact. But the irresistible inference is
that the respondents must have been aware of this, as I have
explained. Secondly, this
non-disclosure must have been material.
Thirdly, it must have been this which induced the respondent to
consent to Morgan conducting
the arbitration.
The respondents have not said that,
if they had known the true position, they would not have consented
to Morgan conducting the
arbitration. It was only after the
arbitration had been conducted and the award awaited that the
respondents’ attorneys,
by letter dated 12 December 2008,
alleged to Morgan that his appointment “was not lawful”
since Management Rule 28
required the arbitrator to be “a
practising senior advocate at the Durban Bar”. It is also
noteworthy that, despite
this having been communicated, the
respondents said that they had “complied with all the issues
raised at the meeting save
for three” and went on to say that
the only reason they had not constructed the stairs was that the
applicant had not produced
the plans timeously. They were prepared
to give effect to at least part of the award in an attempt to forge
a more peaceful co-existence
with the applicant. There is nothing to
show that this motivation would have changed with a disclosure that
a different Management
Rule had been invoked.
The facts show that there was no duty
on the applicant to tell the respondents that Management Rule 28 had
not been invoked. She
had received a letter written by the
respondents from which it became apparent that they knew the content
of that Rule and, in
the light of the communication by Morgan that
he had been appointed by the registrar of deeds, the respondents
would have known
this fact. They were also not in a position of
involuntary reliance on the applicant since they could have made a
simple enquiry.
In addition, the fact that it had not been invoked
could not have been material to the respondents’ agreement to
Morgan
as explained above.
I find, accordingly, that the
respondents confirmed the appointment of Morgan as arbitrator
without any actionable non-disclosure
on the part of the applicant
having induced their consent. They are thus bound by this consent
since the Management Rules under
both Acts provide for agreement by
the parties to an arbitrator.
The applicant submitted that s 60A(8)
of the new Act makes Rule 71 of the Management Rules promulgated
under that Act applicable
since it is inconsistent with Management
Rule 28 registered by the scheme under the old Act. In those
circumstances, the Management
Rules under the new Act prevail. In
the light of my finding above, it is not necessary to determine the
question of consistency
or otherwise of the two sets of Management
Rules.
This accordingly means that the
respondents are bound by the award unless there are any other bases
for reviewing and setting
aside that award. No other such bases have
been suggested and nor has any such application been made by the
respondents. They
have contented themselves with submitting that the
arbitrator was not correctly appointed and that the arbitration
proceedings
are therefore a nullity. I do not agree.
In the result, the following order is
granted:
The respondents are to construct, at
their cost, an access stairway from the garage of the applicant to
the central walkway including
the installation of a door and frame
into the side of the garage. The design shall be in keeping with the
existing architecture
and acceptable to the applicant.
The respondents are directed to pay
one half of the costs of the arbitration.
The respondents are directed to pay
the costs of this application.
_______________________
GORVEN J
DATE OF HEARING : 21 February 2011
DATE OF JUDGMENT : 3 March 2011
FOR THE APPLICANTS : Adv Z Oliver,
instructed by
Henwood Britter & Caney Attorneys
FOR THE RESPONDENTS: Adv P Schumann,
instructed by
Chamberlain’s Attorneys
1
Speight
v Glass
& another
1961 (1) SA 778
(D) at 781H
2
2003
(1) SA 176
(SCA) para 5
3
Para
6