Houston-McMillan and Another v Groenewald and Another [2004] ZAFSHC 173; [2004] ZAFSHC 70 (24 June 2004)

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[2004] ZAFSHC 173
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Houston-McMillan and Another v Groenewald and Another [2004] ZAFSHC 173; [2004] ZAFSHC 70 (24 June 2004)
IN THE HIGH
COURT OF SOUTH AFRICA
(ORANGE
FREE STATE PROVINCIAL DIVISION)
Case
No.: 1586/2004
In the
matter between:
BRUCE
BARON HOUSTON-McMILLAN
First Applicant
SANDY
LEE GROENEWALD
Second Applicant
and
EUGENE
GROENEWALD
First Respondent
P.H.
HERBST
Second Respondent
___________________________________________________________
CORAM:
EBRAHIM,
J
___________________________________________________________
HEARD
ON:
17 JUNE 2004
___________________________________________________________
DELIVERED
ON:
24 JUNE 2004
___________________________________________________________
[1] This is an application for the remittal of an award which was
made by the second respondent on 15 December 2003 in his capacity
as
arbitrator pursuant to an arbitration held to determine the asset
values of two close corporations, namely Megafoam and New Base.
[2] In terms of the award the applicants became indebted to the first
respondent and registered various complaints regarding the
valuation
of Megafoam with the second respondent. The second respondent,
however, refused to alter the award. Repeated requests
for
compliance with the award were ignored by the applicants and on 19
April 2004 the first respondent filed an application in this
Court
under Case No. 1105/2004 to enforce compliance with the award. Some
20 weeks thereafter on 24 May 2004, the applicants launched
the
present urgent application. This application is based upon the
provisions of
section 32(2)
of the
Arbitration Act No. 42 of 1965
,
which essentially provides that on good cause shown a matter can be
remitted to an arbitrator for further attention.
[3] A rule
nisi
in the following terms was granted:
“
2. ‘n
Bevel
nisi
uitgevaardig word
wat respondente oproep om redes te verskryf, indien enige, op 17
Junie 2004 om 09h30, waarom die vlgende bevele
nie finaal gemaak moet
word nie:
2.1 dat die beregting van aansoeknommer 1105/04, soos uitgereik deur
die eerste respondent op 19 April 2004 in bogemelde Agbare
Hof, sal
oorstaan vir beregting na afhandelng van hierdie aansoek en indien
bekragtig, tot na afhandeling van ‘n verdere en/of
nuwe toekenning
van 2de respondent.
2.2 dat
die toekenning gemaak in arbitrasieverrigtinge, deur tweede
respondent, terug verwys word na tweede respondent vir heroorweging
met inagneming van sodanige verdere inligting as wat die arbiter
benodig, ooreenkomstig die bepalings van artikel 32(2) van die Wet
op
Arbitrasie 2 van 1965.
2.3 dat
vir doeleindes van bede 2.2. hierbo, kondonasie aan die applikante
verleen word vir die nie-voldoening aan die tydsbepaling
soos
uiteengesit in artikel 32(2) van die voormelde Wet, ooreenkomstig die
bepalings van artikel 38 van die Wet op Arbitrasie, Wet
42 van 1965.”
[4] It is alleged by the applicants that the award of the second
respondent is fundamentally flawed by reason of the fact that the
valuation upon which the award is based is incorrect. In support of
its contention the applicants referred me to Annexure “O”
to the
papers which is a letter addressed by the second respondent to the
applicants’ attorneys of record relating to the calculations
of the
asset values of the two close corporations in question. While it is
clear from Annexure “O” that there is a discrepancy
in the
calculation of the debtors value of one of the close corporations,
namely New Base Consultant CC, in my view it is not necessary
to go
into the merits of why such a discrepancy occurs and what the effect
of the discrepancy is on the final award made by the second
respondent. More pertinent to the issues in this matter is the fact
that there was an omission of the lease obligations on certain
vehicles owned by the said close corporation from the calculations of
the second respondent prior to him making his award. On the
papers
it is quite clear and it was conceded by Mr Williams, who appeared on
behalf of the first respondent, that these values which
ought to have
been included had been omitted from the calculation of the total
asset value of the said close corporation and that
consequently it
did not form part of the valuation which was the basis of the final
award. It was common cause that the second respondent
had made a
mistake in omitting the figures and this omission impacted on the
nature of the final award he had made.
That being so, it follows that the award was defective and in the
circumstances the question is whether such a defect would suffice
as
good cause entitling this Court to remit the matter to the arbitrator
for reconsideration.
[5] I am of the view that this omission was a material omission and
the elements of justice and equity dictate that these values
must be
taken into account in the final calculation of the asset value of the
said close corporation. I am also of the view that
the test for
remittal has been satisfied and that good cause has been shown by the
applicants.
[6] In the
circumstances I make the following order:
1. The
application is granted.
2. The
rule
nisi
granted on 28 May 2004 is confirmed.
3. The costs of this application is to be borne by the first
respondent.
______________
S.
EBRAHIM, J
On
behalf of Applicants:
Adv. P. Zietsman
Instructed
by
E.G.
Cooper & Sons Inc.
On
behalf of 1
st
Respondent:
Adv. A. Williams
Instructed
by
McIntyre
& Van der Post
/scd