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2009
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[2009] ZAGPJHC 91
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Morlite Industries CC and Another v Van Der Nest NO and Others (8160/07) [2009] ZAGPJHC 91 (10 December 2009)
IN
THE HIGH COURT OF SOUTH AFRICA
SOUTH GAUTENG HIGH COURT
JOHANNESBURG
REPORTABLE
CASE No.
8160/07
DATE:10/12/2009
In the matter
between:
MORLITE
INDUSTRIES CC
…......................................
First
Applicant
ZUNAID
AZIZ MOTI
....................................................
Second
Applicant
and
MICHAEL VAN DER
NEST N.O.
…............................
First
Respondent
SASOL CHEMICAL
INDUSTRIES LIMITED
.......
..
.
Second Respondent
SASOL WAX (SA)
(PTY) LIMITED
..............................
Third
Respondent
___________________________________________________________
_
JUDGMENT
WILLIS J:
[1]
This is an application, brought in terms of section 33(1) (b) of the
Arbitration Act, No 42 of 1965 (‘the
Arbitration Act&rdquo
;),
to review and set aside an award by an arbitrator on the grounds that
he lacked jurisdiction to make the award which he did
on 27 January
2009. The parties have, in various different proceedings, been
referred to as plaintiff, defendants, claimants, applicants
and
respondents. In some of these proceedings, the present applicants
have been the respondents. In order to avoid confusion, I
shall
adopt, with slight modifications, the terms used by counsel during
argument. I shall refer to the applicants in this application
collectively as “the alleged debtors”, the first
respondent as “the arbitrator”, the second respondent
as
“Sasol Chemicals” and the third respondent as “Sasol
Wax”.
[2]
Sasol
Wax, as plaintiff, instituted an action against the applicants, as
first and second defendants, under case number 19482/2005
in this
court on 30 August 2005. The claim for some R6 million is based on
large quantities of metric tonnes of both solid and
liquid wax
allegedly ordered by one of the alleged debtors. The other debtor,
Zunaid Moti, allegedly is liable as surety for this
debt. The trial
was set down for hearing on 9 October 2007. On or shortly before 1
October 2007, Sasol Wax and the alleged debtors
entered into an
agreement to refer the dispute which formed the subject-matter of the
High Court action to arbitration. The agreement
is contained in two
documents dated 28 September 2007 and 1 October 2008 respectively.
The first letter contains,
inter
alia
,
a list of four senior counsel whom Webber Wentzel Bowens, Sasol Wax’s
attorneys proposed to Stuart Harris Attorneys, the
alleged debtors’
attorneys as arbitrators. Among those names is that of the arbitrator
in the matter. The second letter,
also sent from Sasol Wax’s
attorneys to the attorneys acting for the alleged debtors refers
pertinently to the aforesaid
action instituted in the then
Witwatersrand Local Division and confirms the agreement to refer that
dispute to arbitration. It
is common cause that a valid and binding
arbitration agreement between Sasol Wax and the alleged debtors came
into existence by
reason of these two letters, even though neither
document was signed on behalf of the alleged debtors. Counsel for
both sides
relied on
Fassler, Kamstra & Holmes v Stallion Group of Companies (Pty)
Ltd
1
and
Mervis
Brothers v Interior Acoustics and Another
2
to support this contention. In the
Mervis
Brothers
case Leveson J, delivering the unanimous judgment of the full bench
said:
In
terms of s 1 of the Arbitration Act 42 of 1965, an agreement
providing for reference of a dispute to arbitration is required
to be
in writing. Generally such a provision postulates signature by both
parties. However, a document may constitute an agreement
in writing
even though it is signed by only one party. That the signature of one
party is lacking does not matter, depending on
the circumstances of
the case. The test is whether the parties have deliberately intended
to record their agreement in writing
and have shown that the document
so produced constitutes the agreement between them.
3
I
t
is common cause that in terms of this arbitration agreement, Sasol
Wax undertook to “remove the matter from the Witwatersrand
Local Division’s trial roll” “on or before 4
October 2007”.
[3]
A “pre-arbitration meeting” took place 25 January 2008.
The meeting was attended by the arbitrator.
A minute of that meeting was signed by the attorneys acting for “the
claimant” and the attorneys acting for “the
defendants”.
This minute records that the meeting was also attended,
inter
alia
,
by Mr René Jordaan, as “Legal Adviser: Sasol Chemical
Industries Limited” (i.e. he was there as a representative
of
Sasol Chemicals and not of Sasol Wax). The minute records that “Mr
Jordaan explained that the Claimant, formerly known
as Sasol Wax
(Pty) Limited, is now Sasol Wax, a Division of Sasol Chemical
Industries Limited”. Elsewhere, toward the very
end, the minute
records that:
It
was agreed that the parties would formalise the arbitration agreement
into a single document incorporating the two letters from
Webber
Wentzel Bowens to Stuart Harris Attorneys dated 28 September and 1
October 2007 as well as any other terms agreed at the
meeting, and
including the timetable in an annexure.
It
is common cause that no such “formalising” of the
arbitration agreement was ever done.
It is not even apparent, from the papers before me, that the alleged
debtors confirmed in writing , as they were required to do,
in terms
of the arbitration agreement between Sasol Wax and the alleged
debtors their choice of the arbitrator as arbitrator. The
case turns
on whether the minute of the “pre-arbitration meeting”
constitutes a legally enforceable agreement to substitute
Sasol
Chemicals for Sasol Wax as the claimant in the otherwise identical
claim against the alleged debtors.
[4]
Notwithstanding the failure to follow up on the pre-arbitration
minute by “formalising” the arbitration agreement,
there
was an exchange of “pleadings”. There was a statement of
claim by the claimant and a statement of defence by
the alleged
debtors. The claimant was cited as Sasol Chemicals and not Sasol Wax.
[5]
Subsequently, the alleged debtors amended their statement of defence
in order to plead that Sasol
Chemicals
had no right to claim payment from them, since Sasol Wax’s
claim against the first applicant could not have been
ceded to Sasol
Chemicals without the first applicant’s written consent, which
consent had not been provided. To meet this
difficulty, Sasol
Chemicals sought to amend its statement of claim by introducing Sasol
Wax as a second claimant. The alleged
debtors objected to the
proposed amendment. The critical aspect of the objection by the
alleged debtors was that Sasol Wax was
not a party to the arbitration
agreement now in existence, and that the alleged debtors had not
consented to Sasol Wax’s
inclusion as such a claimant.
[6]
It is common cause that the arbitrator
has
been placed in an invidious position. His integrity remains
unquestioned.
The
arbitrator recognized in his award that any ruling he made on the
ambit of his jurisdiction would not create jurisdiction in
circumstances where none existed, and that an aggrieved party was
entitled to challenge such a finding in the High Court. The
arbitrator stated in his award:
I
am therefore required to make a finding regarding jurisdiction that
is expressly provisional. It is a finding that neither creates
nor
destroys jurisdiction. The appropriate remedy available to all
parties is to approach the High Court for an appropriate order.
He
granted “Sasol Wax’s application to amend the statement
of claim”. It is this order which the alleged debtors
now seek
to review. The arbitrator has agreed to abide the decision of this
court. He has, however, addressed a letter to the parties,
which he
requested be brought to the attention of the court in which he has
pointed out, correctly, that whether the court sets
aside his award
or dismisses the application will not solve his considerable
difficulties which include the question of whether
Sasol
Chemicals
is
properly before him as a party to the arbitration. The problem indeed
cannot be resolved in binary code.
[7] One might well
ask why it is that the parties have not sensibly agreed to avoid this
skirmish through the simple expedient of
drawing up a formal
agreement to regularise the position. The reason lies in the fact
that the alleged debtors have disclosed that
they intend to raise a
defence that Sasol Wax’s claim against them, having arisen in
2005 has now prescribed. Their reasoning
appears to be the following:
(i)
The arbitration agreement entered into between Sasol Wax and them in
October 2007 was in substitution of the
igh
Court action H
High
Court action – therefore the High Court action, having been
superseded, no longer exists;
(ii)
There was a legally binding arbitration agreement entered into
between Sasol
Chemicals
and
them at the “pre-arbitration meeting” held on 25 January
2008 which was in substitution of the agreement between
Sasol Wax and
them – therefore there is no arbitration agreement in existence
between Sasol Wax and them;
(iii)
As there is no High Court action or continuing arbitration agreement
in existence between Sasol Wax and the alleged debtors
and no valid
claim against them by Sasol
Chemicals
and the claim arose in 2005, it has now prescribed.
Among
the questions that arise is this: were Sasol
Chemicals
and
Sasol Wax, having taken a dip in arbitration proceedings, caught
bathing without their swimsuits on when the tide went out?
4
[8]
Mr
Robinson
who, together with Mr
Wilson
,
appears for the alleged debtors, has emphasised the well-known words
of Selikowitz J in
Goodwin
Stable Trust v Duohex (Pty) Limited and Another
5
1998
(4) SA 606 (C) at 616A-B, “the arbitrator cannot determine
his/her own jurisdiction”. He also referred to
Gu
tsche
Family Investments (Pty) Limited and Others v Mettle Equity Group
(Pty) Limited and Others
6
decided in the Supreme Court of South Africa (“the SCA”).
He also submitted that i
t
is trite that if an arbitrator decides to investigate his own
jurisdiction and incorrectly determines that he has jurisdiction
and
thereafter make an award, he thereby exceeds his powers as envisaged
in terms of section 33(1)(b) of the Arbitration Act and
his award
falls to be set aside on that basis alone.
He
also referred to
Allied
Mineral Development Corporation (Pty) Ltd v Gemsbok Vlei Kwartsiet
(Edms) Bpk
7
and
Johannesburg
Municipality v Transvaal Cold Storage Ltd
8
.
Mr
Robinson
submitted that t
he
review in this case is the third type of review identified in the
case of
Johannesburg
Consolidated Investment Co v Johannesburg Town Council
9
where the court can:
enter
upon and decide the matter
de
novo
.
It possesses not only the powers of a court of review in the legal
sense, but it has the functions of a Court of appeal with additional
privileges of being able, after setting aside the decision arrived
at . . . to deal with the matter upon fresh evidence.
As
was said in the
Goodwin
Stable Trust
case:
Jurisdiction
either exists or it does not. Jurisdiction cannot arise simply
because applicant fails to prove that the jurisdictional
requirements
are absent. . . .
The
position regarding the incidence of the onus in an application such
as the present one is analogous to that which is applied
when an
application is made to set aside an order which was obtained ex
parte. In cases such as the present, the claimant commences
arbitration proceedings. The respondent in those proceedings contends
that there is no arbitration agreement or that there is arbitrable
issue. The arbitrator cannot determine his/her own jurisdiction
(citations omitted). The respondent in the arbitration is thus
compelled to approach the Court to set aside the arbitration
proceedings. This he does by launching an application on notice. The
respondent in the application before the Court cannot, in my view,
merely by having launched arbitration proceedings, secure a
more
advantageous position than it would have had if the applicant had
been able to deny the arbitrator's jurisdiction in response
to the
claimant's statement of claim asserting that the arbitrator has
jurisdiction to decide the issue.
10
Accordingly,
the alleged debtors contend that the arbitrator does not have
jurisdiction to reintroduce Sasol Wax as a claimant in
the
arbitration proceedings, which, so they submitted is what the
amendment application sought to do.
[9]
Mr
Fagan
,
who appeared for both Sasol
Chemicals
and
Sasol Wax, had no real answer to this “jurisdiction point”.
He contended that the arbitrator did have jurisdiction
over Sasol Wax
(because, so he argued, the arbitration agreement entered into
between Sasol Wax and the alleged debtors had not
been superseded)
but did not have jurisdiction over Sasol
Chemicals
(because
the “pre-arbitration meeting” did not, in his submission,
result in a legally enforceable arbitration agreement
substituting
Sasol
Chemicals
for
Sasol Wax as the party who would be claimant against the alleged
debtors). The fact of the matter is that for quite some time
the
legal representatives of Sasol
Chemicals
and
the alleged debtors and indeed the arbitrator himself thought they
were engaged in an arbitration between Sasol
Chemicals
and
the alleged debtors and not between Sasol Wax and the alleged
debtors. The alleged debtors contend that this remains the true
position. My firm view is that if indeed the arbitration was between
Sasol
Chemicals
and
the alleged debtors, Mr
Robinson
is correct, on the basis of clear and well-established authority,
that the arbitrator had no jurisdiction to add Sasol Wax as a
party,
precisely because he could only acquire such jurisdiction if all the
affected parties agreed thereto. This, of course, did
not happen. The
critical question is therefore, as I have said above, whether
the
minute of the “pre-arbitration meeting” constitutes a
legally enforceable agreement to substitute Sasol Chemicals
for Sasol
Wax as the claimant in an otherwise identical claim against the
alleged debtors. I shall now consider this aspect.
[10]
Mr
Robinson
has submitted that “the only reasonable inference to be drawn”
is that Sasol Chemicals “was, at the pre-arbitration
meeting
substituted for Sasol Wax as the claimant and as the counter-party to
the arbitration agreement with the applicants (i.e.
the alleged
debtors).”
The following
observations need to be made:
(i)
Implicit in this submission (i.e. that the substitution of Sasol
Chemicals for Sasol Wax as claimant is one of inference),
is the
recognition that it does not appear from a plain reading of the
minute of the “pre-arbitration meeting” that
Sasol
Chemicals was indeed by written agreement between the parties
substituted for Sasol Wax as a party;
(ii) The actual
substitution of Sasol Chemicals or Sasol Wax as the claimant does not
appear from this minute, although the intention
ultimately so to do
to do may well have been apparent;
(iii)
The agreement to “formalise the arbitration agreement”
later indicates clearly, in my view, that the minute was
an agreement
as to process only and not as to any substantive aspects pertaining
to the arbitration (and whether it was Sasol Chemicals
or Sasol Wax
which had the claim against the alleged debtors would,
par
excellence
,
be a matter of substantive importance – indeed, the alleged
debtors application in this matter is premised upon such a
supposition);
(iv) Even if I am
wrong in concluding that the minute constituted an agreement as to
process only, any agreement relating to the
substitution of Sasol
Chemicals for Sasol Wax was merely provisional, pending the
formalising of the arbitration agreement;
(v) Sasol Wax
was not represented at the “pre-arbitration meeting” and
therefore could not, in the minute upon which
the alleged debtors now
rely, have agreed to abandon its claim against them.
Section 3(1)
of
the
Arbitration Act reads
as follows:
Unless
the agreement otherwise provided, an arbit
ration
agreement shall not be capable of being terminated except by consent
of all the parties thereto.
I
agree with Mr
Fagan
that
this section together with the definition of an “arbitration
agreement” in
section 1
of the
Arbitration Act requires
that,
in order for Sasol Wax to have abandoned its claim in the arbitration
in favour of Sasol Chemicals, this would have to have
been recorded
in writing. This was not done.
As
has been noted above,
section 1
of the
Arbitration Act requires
that
an arbitration agreement be a “written agreement”. A
substitution of a party necessarily brings a new party into
the
arbitration. It seems axiomatic that this entails a new and
different agreement at least in respect of who the parties to
it are,
precisely because the parties are different. Accordingly, to
constitute an arbitration agreement as between these different
parties, that agreement, too, must be a written one in order to
qualify as an arbitration agreement in terms of the
Arbitration Act.
Accordingly
, the arbitration agreement between Sasol Wax and the
alleged debtors still stands. The minute of the “pre-arbitration
meeting”
does not constitute a legally enforceable agreement to
substitute Sasol Chemicals for Sasol Wax as the claimant in the claim
against
the alleged debtors.
[11]
Mr
Robinson
went further. He submitted that where a written arbitration agreement
complies with the provisions of section 1 of the Act, there
is no
need for a separate written agreement to reflect a substitution of
parties therein, and that none has ever been required
in the various
cases on substitution in arbitration agreements. He relied on the
following cases:
Oakland
Metal Co Ltd v D. Benaim & Co. Ltd
;
11
Unisys
v Eastern Counties
;
12
SEB
Trygg Liv Holding Aktiebolag v Manches and Others
;
13
Harper
Versicherungs AG v Indemnity Marine Assurance Co Ltd and Others
.
14
There is no reported South African case that supports this
submission. This is hardly surprising in view of what I have said in
immediately preceding paragraph. The cases to which Mr
Robinson
referred
to advance this submission are drawn from the law reports of England.
During the course of argument, I expressed my astonishment
that it
could be true that, in England, substitution of the parties requires
no written agreement to this effect. Arbitration
has grown
exponentially around the globe in recent decades. London is one of
the leading centres for arbitration in the world.
Not infrequently,
many millions of British pounds sterling are at stake in a single
arbitration. London’s status as a much
favoured financial and
arbitration centre is attributable, at least in part, to its
hard–earned reputation for reliability,
predictability and
probity. It hardly makes sense to put this reputation at risk when it
can be avoided by the simple expedient
of requiring all substantive
variations to an arbitration agreement to be recorded in writing. I
have perused these cases from
England carefully. I am unable to find
any support for the intriguing contention by Mr
Robinson
that where an arbitration agreement complies with the provisions of
section 1 of the Arbitration Act, there is no need for a separate
written agreement to reflect a substitution of the parties therein
and that none has ever been required in the various cases on
substitution in arbitration agreements. The
Harper
Versicherungs
and
the
SEB
Trygg Liv Holding
case
bear some superficial resemblance to this one but both those cases
deal with a misnomer. In the
Harper
Versicherungs
case Tomlinson J followed the decision in the
SEB
Trygg Liv Holding
case,
which was a Court of Appeal decision in which it was held that where
there has been “simply an error in naming”
a party to
arbitration proceedings, “the proceedings were not a nullity
and the error can, inappropriate circumstances, be
corrected”.
It is certainly not the case of the alleged debtors in this matter
that the claimant was simply an error in
naming the claimant. On the
contrary, they allege that Sasol
Chemicals
is a different party from Sasol Wax and that the liabilities, if any,
of the alleged debtors to Sasol
Chemicals
,
on the one hand and Sasol Wax, on the other, stand on a completely
different footing from each other. Substitution of one party
for
another is an entirely different matter from substituting one name
for another in respect of the same party. I have already
expressed
the view that the provisions of the Arbitration Act are clear enough
as to the requirement that the substitution of one
party for another
in arbitration proceedings requires the written consent of all the
parties affected thereby. Even if the Act
is not clear, the case law
upon which Mr
Robinson
has relies to contend that “
there
is no need for a separate written agreement to reflect a substitution
of parties therein” seems to suggest the very
opposite.
[12] There is yet
another difficulty with the proposition that the parties could have
entered into a binding oral agreement to substitute
Sasol Chemicals
for Sasol Wax in the arbitration. In the founding affidavit to the
present application the alleged debtors aver
as follows:
15
A pre-arbitration meeting was held before the arbitrator on 25
January 2008. However, no representative from Sasol Wax attended
the
meeting. Instead, the meeting was attended by a Mr René
Jordaan, who described himself as a legal adviser to SCI (“Sasol
Chemicals”), and who indicated that the claimant in the
arbitration proceedings was no longer Sasol Wax but rather the Sasol
Wax division of SCI. This is reflected in paragraphs 3 and 5.2 of the
minute of the pre-arbitration meeting, a copy of which is
attached
hereto marked “
FA4
”.
16
It followed from this that the legal representatives representing the
claimant at the pre-arbitration meeting were representing
SCI (“Sasol
Chemicals”) and not Sasol Wax, and they did nothing to suggest
the contrary. I refer again in this regard
to the confirmatory
affidavit of Mr Harris attached hereto.
17
The applicants had no knowledge at that stage of the nature of the
alleged transaction between Sasol Wax and SCI (“Sasol
Chemicals”), or whether Sasol Wax’s alleged claims
against the applicants had been validly transferred to SCI. The
applicants however understood and accepted that SCI had been
substituted for Sasol Wax as the counterparty to the arbitration
agreement and that the arbitration proceedings would continue on that
basis.
Mr
Shawn Van der Meulen, an attorney practising at Weber Wentzel Bowens,
who attended this “pre-arbitration meeting”,
has deposed
to the answering affidavit filed in this application on behalf of
both Sasol
Chemicals
and Sasol Wax. In response to paragraph 17 of the alleged debtor’s
affidavit immediately above, Mr Van Der Meulen says as
follows:
Ad
paragraph 17
20.1
I cannot speak to the knowledge of Mr Moti, but do not dispute this
for the purposes of these proceedings.
20.2
I deny that there was a substitution of SCI for Sasol Wax as the
counterparty to the arbitration agreement with the applicants.
The
answer of Sasol
Chemicals
and
Sasol Wax to the alleged debtors’ averments in paragraph 17 of
their founding affidavit is reasonably capable only of
the following
understanding: Sasol
Chemicals
and
Sasol Wax do not dispute the first sentence of the alleged debtors’
allegation,
viz
.
that they may have been unaware of the restructuring within the Sasol
Group but
deny
that there was a substitution of Sasol Chemicals for Sasol Wax as the
counterparty to the arbitration agreement with the alleged
debtors
at the pre-arbitration meeting. It seems to me that the alleged
debtors are confronted with a “
Plascon-Evans
situation”. They are seeking relief which, if successful, will
be final in effect. They are seeking relief in motion proceedings.
Insofar as disputes of fact are concerned, the time-honoured rules
set out in
Stellenbosch
Farmers’ Winery Ltd v Stellenvale Winery (Pty) Ltd
15
and as qualified in
Plascon-Evans Paints (Pty) Ltd v Van Riebeeck Paints (Pty) Ltd
16
are to be followed.
T
hese
are that where an applicant in motion proceedings seeks final relief,
and there is no referral to oral evidence, it is the
facts as stated
by the respondent together with the admitted or undenied facts in the
applicants’ founding affidavit which
provide the factual basis
for the determination, unless the dispute is not real or genuine or
the denials in the respondent’s
version are
of bald or uncreditworthy, or the respondent’s version raises
fictitious disputes of fact, or is palpably implausible, or
far-fetched or so clearly untenable that the court is justified in
rejecting that version on the basis
that
it obviously stands to be rejected.
These
rules have been re-affirmed in innumerable cases. A recent example of
some prominence was the case of
National Director of Public Prosecutions v Zuma
17
.
The denial by Sasol Wax and Sasol Chemicals
that there was a substitution of Sasol Chemicals for Sasol Wax as the
counterparty to the arbitration agreement with the alleged
debtors
at the pre-arbitration meeting cannot, merely on the papers before
me, be rejected and must stand as the factual basis upon which
this
application is to be determined.
[13]
In
terms of
section 33(2)
of the
Arbitration Act, an
application in
terms of
section 33(1)
thereof is required to be made “within
six weeks after the publication of the award to the parties . . .”.
In terms
of
section 38
of the
Arbitration Act, the
court may,
however, extend any period of time fixed by or under the Act, whether
or not such period has expired, “on good
cause shown”.
The time periods referred to in section 38 include the six-week
period referred to in section 33(2) of the
Act.
18
In this case, the award in question was handed down on 27 January
2009. The review application should therefore, in terms of section
33(2) of the Act, have been instituted by 10 March 2009. It was,
however, launched some five weeks thereafter, on 14 April 2009.
The
alleged debtors have applied for an order extending the time period
for the filing of the review application to 14 April 2009.
Sasol
Chemicals and Sasol Wax have, very sensibly, agreed that it would be
in the interests of the parties that the court should
focus on the
substantive merits of the application rather than on whether to
condone the fact that the application is “out
of time”.
The application for an extension of time within which to bring the
application is granted.
[14]
Section 3(2)
of the
Arbitration Act confers
upon the court a
discretion, on the application of a party to an arbitration
agreement, to intervene in the arbitration proceedings,
on good cause
shown. At common law a court also has such a discretion.
19
This discretion is to be exercised sparingly and only when there is
a “very strong case”.
20
Nowadays, we would probably be inclined to use the words “compelling
reasons”. In view of the
cri
de Coeur
by the arbitrator that the parties approach this court “for an
appropriate order”, it seems that a proper exercise
of the
court’s discretion would be to make an order that sets out the
position for the parties with clarity. It seems to
me that, against
the background of facts in this case there are compelling reasons to
do so. All parties are seeking an “appropriate
order” in
this case. Mr
Fagan
submitted
that would indeed be most welcome if the court were to provide some
guidance. In view of the history of the matter, this
guidance will be
concretized in a court order.
[15] In view of
the fact that the court will make what it considers to be an
“appropriate order”, I consider it proper
to deal, very
briefly, with the question of prescription raised by the alleged
debtors. It should be noted that, in the letter
from Sasol Wax’s
attorneys to the attorneys acting for the alleged debtors dated 1
October 2007, Sasol Wax undertook to “procure”
that the
trial action be “removed from the trial roll” rather than
to withdraw the action. This was wise indeed. Although
the trial
action may have become dormant as a result of the agreement to refer
the dispute to arbitration, it did not become entirely
extinguished.
In any event, the court’s finding that the minute of the
pre-arbitration meeting did not result in the substitution
of Sasol
Chemicals for Sasol Wax as the counterparty to the arbitration
agreement also has the consequence that the claim of Sasol
Wax
against the alleged debtors has not become prescribed.
[16] Insofar as
costs are concerned, both parties bear some of the blame for the fact
that this debacle has played out as it has
in this matter: had the
terms of the arbitration agreement been formalised, as the parties
had mutually agreed to do, the present
difficulties would not, in all
probability, have arisen. Both sides have enjoyed a measure of
success. Neither side has been entirely
successful. The arbitration
has still to run its course. A proper exercise of the court’s
discretion in regard to costs,
is, it seems to me, to make the costs
of this application costs in the arbitration.
[17] In the view
to which I have come in this matter, the arbitration proceedings
between Sasol Chemicals and the alleged debtors
were a nullity.
Therefore, technically, references to this arbitration and perhaps
even to the arbitrator should therefore be within
inverted commas. It
would seem unduly pedantic to do so in this judgment.
[18] The following
is the order of the court:
The award made by
the arbitrator (the first respondent) on 27 January 2009 is reviewed
and set aside;
There
is no arbitration agreement in existence between Sasol
Chemicals
(the
second respondent) and the alleged debtors (the first and second
applicants);
There is, and
remains until its consensual cancellation, a valid arbitration
agreement entered into between Sasol Wax (the third
respondent) and
the alleged debtors (the first and second applicants) on or about 1
October 2007;
Unless the
alleged debtors (the applicants) gave a written indication to Sasol
Wax (the third respondent) of its choice or arbitrator,
there has
been no valid appointment of the arbitrator (the first respondent)
in the arbitration dispute between the alleged
debtors (the
applicants) and Sasol Wax (the third respondent);
In the event that
the alleged debtors (the applicants) gave no written indication to
Sasol Wax (the third respondent) of its choice
or arbitrator, they
the alleged debtors (i.e. the applicants in this application) may
appoint as arbitrator any of the persons
listed as acceptable
arbitrators (including the first respondent) in the letter sent by
the attorneys acting for Sasol Wax (the
third respondent) to the
attorneys acting for the alleged debtors (the applicants) on 28
September 2007;
In the event that
the alleged debtors (the applicants) fail to agree on any of the
persons referred to in the aforesaid letter
of 28 September 2007 to
act as arbitrator, the parties (i.e. the alleged debtors and Sasol
Wax) are given until 15 January 2010
to agree among themselves as to
who else the arbitrator should be;
In
the event that the alleged debtors (the applicants) and Sasol Wax
(the third respondent) fail to agree by 15 January 2010
as to who
the arbitrator should be, the arbitrator shall be appointed by the
Chairperson of the Johannesburg Bar Council upon
the written request
of either the alleged debtors (the applicants) or Sasol Wax (the
third respondent), to be made by 20 January
2010 and the appointment
of an arbitrator by the Chairperson of the Johannesburg Bar Council
shall be final and binding upon
shall be final and binding upon the
alleged debtors (the applicants) and Sasol Wax (the third
respondent).
The aforesaid
written request for the appointment of an arbitrator should be
submitted by either the alleged debtors (the applicants)
or Sasol
Wax (the third respondent) to the Chairperson of the Johannesburg
Bar Council by no later than 20 January 2010.
The claim of
Sasol Wax (the third respondent) against the alleged debtors (the
applicants) appearing in case number 19482/2005
in this court has
not prescribed.
The
costs in this application, which shall include the costs of two
counsel, are to be costs in the arbitration to which the alleged
debtors (the applicants) and Sasol Wax (the third respondent) agreed
on or about 1 October 2007.
DATED
AT JOHANNESBURG THIS 10
th
DAY OF DECEMBER, 2009
N.P. WILLIS
JUDGE OF THE
HIGH COURT
Counsel
for the Applicants:
P.G.
Robinson SC
(with
him,
J.
Wilson
)
Counsel
for the Second and Third Respondents:
E.
Fagan
SC
Attorneys
for the Applicants: Stuart Harris
Attorneys
for the Second and Third Respondents: Webber Wentzel Bowens
Date
of hearing: 1 December 2009
Date
of judgment: 10 December 2009
1
1992
(3) SA 825
(W) at 828B-H
2
1999
(3) SA 607
(W) at 610D-G
3
At 610D-F
.
4
The imagery has been shamelessly cribbed and adapted from Benjamin
Disraeli’s speech in the House of Commons on 28 February
1845
in which he said “The right honourable gentleman (Sir Robert
Peel) caught the Whigs bathing and walked away with their
clothes”.
5
1998 (4) SA 606
(C) at 616A-B
6
2007 (5) SA
491
(SCA) at paras 13-14
.
7
1968 (1) SA 7
(C) at
13G and 14B–F
8
1904
TS 722 at 732
9
1903 TS 111
10
At
615E to 616B
11
[1953]
2 QB 261
at 262-63
12
[1991] 1 Lloyds LR 539
at 560-62
13
[2005] 2 All ER (Comm) 38
at paras [50]-[55]
14
[2006] 2 All ER (Comm)
225
at paras 39-47
15
1957 (4) SA 234
(C) at
235E-G
16
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at
634H-635C.
17
(573/08
)
[2009] ZASCA 1
(12 Jan 2009) at para [26].
18
See,
Coetzee v
Paltex 1995 (Pty) Ltd
2003 (1) SA 78
(C) at 92J;
Kroon
Meule CC v Wittstock t/a J D Distributors
1999 (3) SA 866
(E) at 874H.
19
See,
The
Rhodesian Railways Ltd v Mackintosh
1932
AD 359
at 375;
Kathmer
Investments (Pty) Ltd v Woolworths (Pty) Ltd
1970 (2) SA 498
(A) at 504H;
Universiteit
van Stellenbosch v J A Louw
1983
(4) SA 321
(A) at 333G
20
The
Rhodesian Railways Ltd v Mackintosh
(
supra
)
at 375;
Universiteit
van Stellenbosch v J A Louw
(supra) at 334A