Coetzee v Paltex 1995 (PTY) limited (9764/2001) [2002] ZAWCHC 26; 2003 (1) SA 78 (C) (8 May 2002)

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[2002] ZAWCHC 26
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Coetzee v Paltex 1995 (PTY) limited (9764/2001) [2002] ZAWCHC 26; 2003 (1) SA 78 (C) (8 May 2002)

IN
THE HIGH COURT OF SOUTH AFRICA
(Cape of
Good Hope Provincial Division)
Case
No. 9764/2001
In the matter
between:
CLIVE
ERIC COETZEE
Applicant
and
PALTEX 1995 (PTY) LIMITED
Respondent
JUDGMENT DELIVERED : 8 MAY 2002
DAVIS
J
INTRODUCTION:
On 14 November 2001 applicant instituted
proceedings to have two arbitration awards made orders of court. The
background to these
arbitration awards are to be found in a sale
agreement entered into between applicant and respondent in terms of
which the former
sold his business Ex Modatex to respondent for R1 m.
in December 1998. In February 1999 respondent repudiated the
agreement. Applicant
then placed his business on the market and
eventually sold it to one Gavern Kay for R300 000, which was the
highest price applicant
could then obtain.
Applicant subsequently sued respondent for R700
000, being the difference between the contract price and the price
which Kay had paid.
The matter was eventually referred to
arbitration in terms of a written arbitration agreement which made
provision for an appeal.
This arbitration was held in Cape Town
during January 2001 before the Honourable Ms Justice van den Heever
(‘the arbitrator’).
In March 2001 the arbitrator made an award
in favour of applicant and directed respondents to pay damages to
applicant in the amount
of R700 000. Respondent exercised his right
of appeal in terms of the arbitration agreement. This appeal was duly
heard before the
Honourable Messrs Justice Corbett and Grosskopf
(‘the appeal arbitrators’) in Cape Town in October 2001. On 2
November 2001
the appeal arbitrators upheld the award of the
arbitrator in the first instance and dismissed the appeal with costs.
When applicant applied to have the arbitration
awards made orders of court on 14 November 2001, respondent gave
notice on 28 November
2001 that, it was intent on opposing the
application. Respondent did not file its answering affidavits
timeously and applicant therefore
set the matter down for hearing on
8 January 2002. On that day respondent handed up from the bar a
preliminary answering statement
which was unsworn in which its
attorney stated that the application has been opposed because certain
weighty new evidence had become
available to it, which would
corroborate the testimony which respondent had placed before the
arbitrators.
On 10 January 2002 the affidavits were filed by
respondent including an affidavit deposed to by Mr Dean Mackness.
The matter was then postponed by order of court
for hearing to 11 April 2002, in terms of which order, the further
conduct of the
matter was regulated. On 11 February 2002 respondent
filed further answering papers in the application and also brought a
counter
application.
In its counter application of 11 February 2002
respondent applied for an order in terms of which the arbitration
awards be set aside
and the dispute between the parties be submitted
in terms of section 33(4) of the Arbitration Act 42 of 1965 (‘the
Act’) to a
new arbitration tribunal constituted in a manner
directed by the Court or alternatively to the arbitrator for a
re-hearing.
On 5 April 2002 respondent sought to amend its
notice of motion in respect of the counter application. Apart from
seeking to set aside
the arbitration award of the arbitrator of 9
March 2001 and the arbitration of 31 October 2001, respondent sought
an order in terms
of which the dispute between the parties be
submitted ‘to Madam Justice L van den Heever, the Arbitrator who
presided at the initial
arbitration,
alternatively
that the
dispute be submitted to a new Arbitration Tribunal …..for the
necessary re-hearing in respect of the evidence of Dean Mackness
contained in his Affidavits 11 February 2002 at pages 125 to 133 of
the Record and of 11 March 2002 at pages 232 and 233 of the Record,
relating to an alleged agreement between the applicant and van Der
Poel that the former pay a secret profit to the latter should
the
latter influence Mr Brin, a director of the Respondent, to be in
favour of a purchase of certain machinery from the Applicant,
which
purchase by the Respondent did materialise; the Arbitrator to make an
appropriate award arising thereout’.
Furthermore in terms of the amended notice of
motion, respondent sought ‘an extension of time in terms of section
38 of the Act
so, that Respondent’s counter application (served on
7 and 11 February 2001 and lodged with the Registrar of the above
Honourable
Court on 12 February 2002) is deemed to have been brought
timeously for purposes of compliance with the period prescribed by
section
33(2) of the Act,
alternatively
section 32(2) of the
Act.’
Applicant has opposed this counter application,
essentially on the basis that the arbitration awards cannot be set
aside in terms
the common law but only in terms of the Act and
further that the counter application has become time barred.
Applicant also avers
that the affidavits filed in support of the
calling of fresh evidence are devoid of allegations necessary to
sustain a finding that
the arbitrators were guilty of
misconduct in relation to her/their duties
‘any irregularity not to mention a gross
irregularity’, and
either award was improperly obtained.
The Question of the Application being
Time-barred.
Mr
Tredoux, who appeared on behalf of applicant, submitted that
respondents had not complied with the prescribed time limits in terms
of section 32 and 33 of the Act. In terms of section 32 the parties
to a reference may, within six weeks after the publication of
the
award to them, by writing signed by them, revert any matter which was
referred to arbitration to the arbitration tribunal for
reconsideration and for the making of a further award or a fresh
award or for such other purpose as the parties may specify in the
said writing.
In terms of
section 32(2) the court may, on application of any party to the
reference and after due notice to the other party or
parties made
within six weeks after the publication of the award to the parties,
on good cause shown, remit any matter which is referred
to
arbitration, to the arbitration tribunal for reconsideration and for
the making of a further award or a fresh award or such other
purpose
as the court may direct.
In terms of
section 33 (1), where
any
member of an arbitration tribunal has misconducted himself in
relation to his duties as arbitrator or umpire; or
an
arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration proceedings or has exceeded
its
power; or
an
award has been improperly obtained,
the court
may, on the application of any party to the reference after due
notice to the other party or parties, make an order setting
the award
aside.
Section 33(2)
provides that an application pursuant to this section shall be made
within six weeks after the publication of the award
to the parties:
provided that when the setting aside of the award is requested on the
grounds of corruption, such application should
be made within six
weeks after discovery of the corruption and in any case not later
than three years after the date on which the
award was so published.
Mr Tredoux
submitted that, although the time periods may be extended in terms of
section 38 of the Act, such extension must be brought
by way of a
formal application and on the basis of good cause shown. The
publication of the award to the parties occurred on Friday
2 November
2001. Mr Tredoux submitted that the six week period expired on Friday
14 December 2001, if calculated from the date of
the award. On
respondent’s latest version, the new evidence came to the attention
of its directors on 21 November 2001. The six
week period thus
expired on Wednesday 2 January 2002 if calculated from the date on
which the new evidence was allegedly discovered.
It followed that,
on any interpretation, respondent should have sought an extension of
time in terms of section 38 of the Act,
which it only did by way of
its amended notice of motion of 5 April 2002.
Mr Tredoux
contended that respondent could not invoke section 33(2) of the Act,
namely the setting aside of the award was based
on the ground of
corruption. He submitted that the impropriety which would justify
the setting an award aside in terms of s33(1)(c)
of the Act read with
s33(2) related to improper conduct on the part of the arbitrator.
There was nothing untoward nor improper in
the manner in which the
award was obtained from the arbitrator. He submitted further that
there was no evidence on the papers which
revealed that applicants’
conduct in the context employed in these sections was improper.
Accordingly it could not be contended
that the arbitration award was
improperly obtained so as to justify a three year time bar from the
publication of the award; being
2 November 2001. The three year
period would end on 1 November 2004.
Mr Wulfsohn,
who appeared on behalf of respondent, submitted that section 33(2)
was applicable to the present case. The ‘corruption’
had been
discovered on 21 November 2001. In respect of the application of
this section to the present dispute, Mr Wulfsohn submitted
that the
falsification of evidence by a party or a witness without the
arbitrator being aware thereof could amount to the award having
been
improperly obtained. In other words, the concept of corruption did
not relate exclusively to the conduct of the arbitrator
but extended
to the conduct of a party such as applicant so that in terms of
33(1)(c) the award had been improperly obtained. Support
for the
submission that the award of an arbitrator can be set aside on the
ground that false evidence had been given to the arbitrator,
where
that evidence was material so that it influenced the arbitrator in
his decision, can be found in
Van Schalkwyk v Vlok
1914 CPD
999
and
Butler and Finsen Arbitration in South Africa. Law and
Practice
at 294 – 295.
On the basis
of this authority, it was contended that, were respondent to show
that the award was based on false evidence given by
applicant, that
such evidence was material and that such evidence influenced the
arbitrator in his or her decision, respondent’s
case would not
amount to misconduct by the arbitrator but the award would still have
been improperly obtained in terms of section
33(1)(c).
Mackness’
evidence was directed towards the contention that van der Poel had
been bribed in order to influence the conclusion of
the contract. If
admitted such evidence would fall within section 33(1)(c) and
accordingly the six week time bar would not apply.
In the
alternative Mr Wulfsohn contended that, in terms of section 38 of the
Act, good cause had been shown by respondent as to why
the
application had been launched after the prescribed period of six
weeks from publication of the award had lapsed. He submitted
that
the material facts relating to the fresh evidence were not known to
respondent until after the arbitration appeal had been
completed.
The issues in the arbitration, the evidence led and the award did not
cover the new issue involved in the affidavit of
Mackness which
evidence was with relevant and ‘weighty’. No criticism could
fairly be levelled at respondent for not having
produced an affidavit
from van der Poel in support of Mackness’ affidavit. No
‘reasonable diligence’ could have unearthed
the facts set out in
Mackness’ affidavit during the course of the arbitration hearing.
Furthermore Mr Wulfsohn submitted that applicant
should not be
permitted to retain the benefit of the award if fresh evidence could
show that a secret profit had been made in fraudulent
circumstances,
a result which was clearly contrary to public policy and morality.
To return to
the chronology, on 10 January 2002 respondent filed an affidavit in
which the ‘new testimony’ was canvassed in some
detail and to
which an affidavit deposed to by Mackness was included. In his
affidavit of 10 January 2002 Mackness stated ‘[t]here
may have been
a wilful misrepresentation to Mr Moti Brin of his (Van der Poel’s)
state of mind and intention amounting possibly
to fraud and/or a
collusion on his part and/or that of the Applicant, ultimately to the
detriment of Respondent’.
There is no
reason proffered in the affidavit of Mr Swart filed on behalf of
respondent on 5 April 2002 as to why two affidavits were
filed by
respondent on 10 January 2002 including an initial affidavit of
Mackness, but the substantive application by respondent
was still
delayed to 11 February 2002. There is, however, a considerable
explanation provided for the further delay until 5 April
2002 when
the amended counter application was brought.
Given that
the very nature of arbitration is designed to be expeditious and
final, the time limits prescribed by the Act are of
importance for
they guarantee a major advantage of arbitration, namely that an
arbitrator’s award (in this case after the appeal
arbitrators had
decided) is final. See Butler and Finsen at 22. In order to apply
successfully for condonation when a party is
out of time by some six
weeks (as at 11 February 2002) a rather more comprehensive
explanation is required, particularly of the delay
between 10 January
2002 and 11 February 2002 than that which was set out in respondent’s
papers.
The question
of a time bar depends on whether good cause has been shown (s38) or
whetheer the evidence relates to corruption.
Thus the
question as to whether the counter application is time-barred depends
upon an analysis of the evidence of Mr Mackness and
in particular the
weight and materiality thereof. Further, the analysis will reveal
whether the evidence relates to corruption and
accordingly whether
the three year expiry rule applies.
Remittal
for Hearing of further evidence.
In order to succeed in an application for the
remittal for the hearing of further evidence respondent will be
required to persuade
the court to exercise its discretion in the
latter’s favour by showing –
that
it could not by the exercise of reasonable diligence have adduced
the evidence in time;
the
evidence must be material weighty and practically conclusive;
the
prejudice to the other party must be considered. As
Wessels CJ
said in
Colman v Dunbar
1933 AD 141
at 162 ‘If the
conditions have so changed that the fresh evidence will prejudice
the opposite party, the Court will not grant
the application….Thus
if the witnesses of the opposite party have been scattered and
cannot be brought back to refute the fresh
evidence, or to explain
their own evidence in the light of the fresh evidence, the Court
will not grant the application’.
In
considering such an application, the Court will take account of the
principle of finality
Wessels CJ
said in
Colman v Dunbar,
supra at 161 set it out thus: ‘It is essential that there
should be finality to a trial and therefore if the suitor elects to
stand
by the evidence which he adduces, he should not be allowed to
adduce further evidence except in exceptional circumstances. To
allow
fresh evidence on the point which calls in question evidence
already led would necessitate a re-hearing of the witnesses whose
evidence
is questioned, so as to give them an opportunity of
answering the fresh evidence. This means that the case will be
largely re-opened
which militates against finality’. See also
Butler and Finsen 287-289.
In order to
apply these tests to the present dispute it is necessary to examine,
albeit briefly, the essential features of the dispute
as they were
decided by the arbitrator. Applicant’s case essential turned on
the contention that a valid and binding agreement
of sale had been
entered into by the parties in terms of which, respondent had agreed
to buy applicant’s business. It appears
that applicant had
acquired a business which had been owned by a company named Modatex
(Pty) Ltd which was liquidated in September
1998. In October 1998
applicant bought the plant and equipment from the liquidator and
resuscitated the business, which he called
Ex Modatex.
Fundamental
to the applicant’s cause of action was that on 7 December 1998
respondent made a written offer to buy the business (Ex
Modatex) from
applicant. The offer stipulated that applicant had to accept the
offer in writing which he duly did on 9 December
1998. At all times
during the negotiations applicant acted personally whereas respondent
was represented by one Moti Brin. Brin
in turn was represented by
Terry van der Poel. Van der Poel, assisted by his wife, operated a
business under the name Palcape, being
a sales agent for more than
one concern involved in the textile industry. The material term of
the contract was that respondent
would purchase the business for R1
m. The payment of the price and transfer of the business would be
effected on 1 February 1999.
Respondent failed to pay or take
delivery of the business by 1 February. On 10 February 1999 Brin
informed applicant that respondent
would only pay R500 000 for the
business. Applicant alleged that respondent had repudiated or
breached the terms of the agreement,
which repudiation or breach he
accepted. Thus, applicant elected to cancel the contract. When
applicant finally sold the business
to Mr Kay for R300 000 he sought
to recover damages in the amount of R700 000 from respondent.
One of the
key issues which vexed the arbitrator concerned the question as to
whether a valid and binding agreement of sale had been
entered into
upon the terms alleged by applicant. In the hearing the role of van
der Poel, who acted on behalf of respondent, was
of great importance.
A reading of the arbitration proceedings reveals that respondent’s
defence changed from its initial stance.
The differences in the
stance of respondent notwithstanding it is common cause that Brin
conversed on the telephone with van der
Poel on 26 November 1996
during which conversation the issue of a purchase price of R1 m (as
opposed to the opening figure of R1.6
m) was discussed. An offer of
R1 m was made by van der Poel to Coetzee which the latter accepted.
This formed the basis of the contract.
According to Brin his
instruction to van der Poel was that this offer would represent no
more than “the intention to do business.”
The role of
van der Poel was important to the finding of the arbitrator and the
appeal arbitrators.. In the appeal arbitration, the
issue of what
occurred on 26 November 1998 is discussed thus: ‘If Brin’s
version on what happened on 26 November 1998 were to
be accepted as
being correct, it would necessarily mean that van der Poel, and
probably also Coetzee, perpetrated a blatant fraud
on Brin and
Paltex. There is really no room for an honest misunderstanding.
Indeed in evidence Brin suggested that Coetzee and van
der Poel had
tried to ‘set him up’. There is no basis for such a finding.
Apart from the consideration that the court does not
easily conclude
that a party or person has been guilty of fraud, it seems so unlikely
that van der Poel or Coetzee could have thought
that in all the
circumstances they could get away with such a fraud. It is true that
Coetzee and van der Poel were long standing
friends and that they
both stood to gain from a deal being struck from the sale of Modatex,
but van der Poel could only benefit if
the sale of Modatex was a
genuine one. He could hardly expect Brin to honour a so-called deal
which was conceived in order to defraud
him (Brin). Moreover van der
Poel was an agent for Paltex and, as the letter of 17 November 1998
indicates, harboured a sense of
allegiance towards Paltex.’
Mackness’
affidavits must now be read within this context. In his first
affidavit on 10 January 2002 he states as follows:
‘4. Given what was related to me by van der Poel from time to time,
it was clear to me that what he conveyed to me as being the
nature
and substance of his negotiations with the Applicant did not accord
with his actions and with what had actually transpired
nor for that
matter with the factual findings of the arbitration of which I am
aware.
In
this regard and more particularly, I point out firstly the
submission of the alleged written offer by Van der Poel to the
Applicant
on Respondent’s alleged behalf, and secondly without any
reference to an inspection of the relevant plan and machinery,
infers
in the light of what he had told me earlier that there may
have been a willful misrepresentation to Mr Moti Brin of his state
of
mind and intention amounting possibly to fraud and/or a collusion
on his part and/or that of the Applicant, ultimately to the
detriment
of the Respondent.
Such
inference is furthermore possible when one considers that, having
regard to what Van der Poel had told me, on the Applicant’s
version that Van der Poel had at all material times acted as the
Respondent’s agent as aforesaid, Van der Poel’s conduct may
well
have amounted to both the making of a secret profit by him and he
and the Applicant profiting financially from the purported
conclusion of an agreement between Applicant and Respondent’.
On 11
February 2002 Mackness deposed to a further affidavit in which he
stated that he had joined respondent in July 1998 as the marketing
manager with responsibility for the overseeing of the marketing and
sales of the company. He first met Van der Poel in August 1998
at
which time Van der Poel was a sales agent and representative of
respondent in Cape Town. They struck up a friendship.
Mackness then
describes the following series of conversations which he had with Van
der Poel:
‘5. In the latter part of 1998 Van der Poel told me that he had
spoken to Moti Brin …..regarding the possibility of looking at
a
joint venture in a printing business. He said that Moti Brin had
expressed an interest in doing so because it would enable Paltex
to
have the option of selling printed fabric to the market place albeit
a separate entity entirely and with Van der Poel’s knowledge
and
experience of commission printing to the local market sounded quite
interesting.
Van
der Poel previously told me that he was concerned that Ital Print
would not survive due to being under-financed and management
problems and that he needed to secure his future with something more
stable….
7,2 In about November 1998 Van der Poel told me that his friend Clive
Coetzee ….. had recently purchased a printing company and
that he
may be open to offers as printing was not his expertise. He said
that Coetzee had approached him to see if he was interested
in
running the sales side for him, but he said that Coetzee was a close
friend of his for over 20 years and it wasn’t the right
thing to
do…..
A few
days later Van der Poel told me that he had spoken to Coetzee and
that he was open to offers. Van der Poel gave me an indication
that
a possible price would be around R1,800,000…He said that he had
spoken to Moti Brin about the two possibilities and Moti
Brin had
asked van der Poel to produce some information…..
He
told me later that he had submitted the information to Moti Brin
that had been requested and Van der Poel said that Moti Brin
was
very keen….
At
the time he told me in confidence “as a friend” that he was
going to make a substantial sum of money out of the sale of Modatex.
He explained that Coetzee had purchased the plant and business and
bought a stenter and the whole deal stood him at around R300
000.
He added that he agreed with Coetzee that they would split any
profit over and above the initial purchase price 50/50.
Therefore
if they agreed a final purchase price with Moti Brin of a R1,000,000
or R1,200,000 van der Poel stood to profit out
of the deal in the
region of R350,000 or R450,000. In effect his 20% stake in the new
venture will be for free and it would leave
him with additional cash
in the region of R150,000 or R210,000.
I
spoke to van der Poel again in early December 1998 and he said
that he was going to push Moti Brin to make a decision otherwise
he
would miss out on the opportunity. He later confirmed to me that he
spoken to Moti Brin telephonically in the presence of Coetzee
and
negotiated an offer over the phone and agreed to pay a purchase
price of R1,000,000 I asked van der Poel how he could get
Moti Brin
to make an offer at a figure of R1,000,000 for a plant in a business
which he had never seen. Van der Poel said that
the offer was
subject to a plant and machinery inspection by Moti Brin’s
engineer that would take place in January 1999. Van
der Poel was
delighted that he had concluded the deal…..
At a
later stage van der Poel told me that he had received feed-back from
Moti Brin and that the engineer’s report was not good
and that he
stated that there would be a large amount of money to be spent to
bring the plant and machinery up to scratch.”
Mackness then explained why it took him
so long to come forward with this information:
18 ‘I was
aware of legal proceedings that were taking place in Coetzee’s
case. I was not involved in the case at any time. I
was not a
witness in the case, nor was I expected to be but with the
information that van der Poel had given me, I was sure that
van der
Poel’s case was no good. I do not know if my friendship with van
der Poel was known to the Respondent.
At
about the beginning of December 2001 during his visit to Cape Town
Moti Brin happened to mention to me that Coetzee had won the
case.
I expressed surprise and during the ensuing discussion told him of
my conversations with van der Poel. In the course thereof
I told him
that according to van der Poel he had stood to obtain from Coetzee
50% of the latter profit on the sale, by agreement
between them.
Moti Brin expressed shock to me in his discovery that van der Poel
had stood to make a profit at the expense of
the respondent and that
van der Poel had a profit sharing agreement with Coetzee. Moti Brin
then requested me to convey this information
to respondent’s legal
representatives which I subsequently did do.
At
the time of my discussion with van der Poel I did not reflect upon
the propriety of any of his conduct as he described to me
and it did
not occur to me that I ought to convey any of this information to
Moti Brin or the respondent. I assumed that it was
known to them
and it did not occur to me that van der Poel and/or the applicant
would not reveal this to them or in the proceedings.
22 It was only when Moti Brin had been told of the loss of the case
that I realised the necessity for me to reveal what van der Poel
had
communicated to me, as set out above in this affidavit of mine.’
Mr Wulfsohn
submitted that this evidence, if properly proved, would be
practically conclusive of the case. The promise by applicant
to van
der Poel, as agent of respondent, and the applicant’s non
disclosure thereof to respondent as well as the intention of van
der
Poel to ‘push’ Brin into negotiation would constitute material
facts pertaining to the dispute. On this version, the purpose
of
the bribe would have been to influence the agent van der Poel who
would in turn have influenced his principal, being respondent.
The
result would then be that respondent would have been entitled to
cancel the contract.
In
Extel
Industrial (Pty) Ltd and Another v Crown Mills (Pty) Ltd
[1998] ZASCA 67
;
1999 (2)
SA 719
(SCA) at 729 – 730, the court distinguished between three
contractual situations with regard to bribery, namely
the
agreement of bribery itself which is void, ab intio
the
particular transaction contemplated by the bribery agreement and
which is concluded as a direct and immediate result thereof,
and
the
contractual relationship which is established as a direct result of
the bribery and which engenders further agreements, one
or more of
which become the subject matter of the suit.’
Were
Mackness’ evidence to be proved correct, the transaction in the
present dispute would fall into the third category. Respondent
as
the innocent principal would have an election on the basis of the
contract, if it tenders ‘to restore which he has received
under
the contract or, if it is unable to do so through no fault of its
own, if it tenders compensation in lieu thereof’.
Extel
,
supra at 730 I – 731 A.
Mr Wulfsohn
then proceeded to deal with the problem that Mr Mackness’ evidence
was hearsay evidence which, as a general rule, would
not be
admissible. He sought to argue that such evidence fell under the
exception in terms of section 3(1)(c) of the Law of Evidence
Amendment Act 45 of 1998 which provides that, subject to the
provisions of any other law, hearsay evidence shall not be admitted
as evidence at a criminal or civil proceedings, unless the court
having regard to –
the
nature of the proceedings;
the
nature of the evidence;
the
purpose for which the evidence is tendered;
the
probative value of the evidence;
the
reason why the evidence is not given by the person upon whose
credibility the probative value of such evidence depends;
any
prejudice to a party which the admission of such evidence might
entail;
any
other factor which should, in the opinion of the court be taken into
account
is of the
opinion that such evidence should be admitted in the interest of
justice.
Mr Wulfsohn
submitted that the reason why no evidence had been given by van der
Poel was that the latter would be unlikely to wish
to incriminate
himself. He contended that Mackness’ evidence would have
considerable probative value in that decisions made by
Brin were
adopted on the strength of van der Poel’s ‘information’. Thus
the context in which the contracts were entered into
read together
with Mackness’ evidence would provide a clear background as to the
way in which van der Poel improperly and illegally
used his influence
to persuade Brin to contract with applicant.
Mr Wulfsohn
submitted that respondent had made a
prima facie
case
entitling it to the benefit of an oral hearing on the admissibility
of such hearsay evidence which, if admitted, would be weighty
because
it would enable respondent to cancel the whole of the sale agreement,
in which case respondent would not be obliged to pay
any damages to
applicant.
Regarding the
question of reasonable diligence on the part of respondent, Mr
Wulfsohn submitted that it would have been unreasonable
to expect
respondent to have searched for unknown facts of an unknown issue
from an unknown witness at an unknown place or time.
Respondent could
not reasonably have thought of looking for possible evidence of an
agreement of a bribe when, the very purpose of
the bribe was to
ensure that the person purporting to act on behalf of the respondent,
had effectively acted as ‘a double agent’.
Relying on
dicta
in
Oosthuizen v Stanley
1938 AD 332
at 333 and
Colman v
Dunbar
, supra at 162 Mr Wulfsohn submitted
that the
evidence sought to be admitted must be ‘weighty in the sense that
if the evidence is tendered and presumably was believed,
it would be
practically conclusive of the case. Mackness’ evidence would
reveal in particular that van der Poel and applicant
had entered into
a contract of bribery’ in order to ensure that the contract of sale
between applicant and respondent was concluded.
Mr Tredoux
submitted that there was no display of reasonable diligence on the
part of respondent. In analysing the two Mackness
affidavits he
submitted that it was highly unlikely that the issues raised by
Mackness had not been canvassed earlier with Brin and
other members
of respondent. Mackness occupied a senior managerial position with
respondent in Cape Town. The arbitration had run
for a week. It
required the presence of two directors of respondent and even the
technician Mr Pandelli had attended. Hence had
Mackness followed the
matter he would know something about the case. Indeed, on his own
version, he was aware of these legal proceedings.
He had ventured
the opinion that ‘I was sure that van der Poel’s case was no
good’. Notwithstanding Mackness’ position
in plaintiff’s
organisation and his knowledge of the arbitration proceedings, he had
not mentioned anything of his conversations
with van der Poel to any
member of respondent until well after the appeal arbitration had been
decided against respondent. Mr Tredoux
submitted that on the basis
of this evidence, the fact that Mackness did not at an earlier date
take his employers into his confidence
was support for the argument
that the entire affidavit was no more than a fabrication.
Mr Tredoux
submitted that this evidence was neither weighty nor material. He
attacked the two versions of events which had been
set out by
Mackness in his two affidavits of 10 January and 11 February. On 10
January Mackness contented himself with the allegation
that ‘van
der Poel’s conduct may well have amounted to both the making of a
secret profit by him
and he and the applicant profited
financially from the purported inclusion of an agreement between
applicant and respondent’. Less
than three months later Mackness
was more confident and alleged now that a secret profit had been made
by van der Poel which amounted
to 50% of the entire profit enjoyed
by applicant from the content with respondent. Respondent also
raised questions about why van
der Poel, were he to have entered into
these nefarious activities with applicant, would have wanted to
confide in someone who was a senior employee in the very
organisation
which van der Poel had sought to defraud.
In examining
the evidence of Mackness, Mr Tredoux raised a number of troubling
aspects with regard to this testimony. According to
the affidavit of
11 February, Mackness alleges that ‘I spoke to van der Poel again
in early December 1998 and he said that he was
going to push Moti
Brin to make a decision otherwise he would miss out on the
opportunity. He later confirmed to me that he had
spoken to Moti
Brin telephonically in the presence of Coetzee and negotiated an
offer over the phone and agreed to pay a purchase
price of
R1,000,000’. On evidence which remained uncontested during the
arbitration proceedings, Moti Brin’s last day at respondent’s
offices was 26 November 1998 before he flew to Tel Aviv and
thereafter to the United States of America. According to Mackness’
version further conversations took place between van der Poel and
Brin with regard to concluding the transaction in early December
1998. In his evidence before the arbitration tribunal Brin testified
to the effect that an oral agreement had been concluded on
26
November 1998 in which van der Poel had played a role.
According to
Mr Tredoux the dates employed by Mackness were contradicted by the
objective facts placed before the arbitrator. Mr
Tredoux sought to
explain this discrepancy by referring to annexures PC 1 and PC 2 to
the particulars of claim. PC 1 constituted
a letter written by van
der Poel to applicant confirming the offer to purchase. This letter
was written on 7 December
1998. PC 2
consisted of a letter written
by applicant to van der Poel accepting the offer as at 9 December
1998. In short, the conversations
which Mackness alleged to have
conducted with van der Poel concerning the latter ‘pushing’ Moti
Brin to make a decision and
then finally negotiating a R1,000,000
offer with Brin subject to an inspection accorded with the written
correspondence. The evidence
which was accepted in the Tribunal was
that an agreement had been concluded on 26 November 1998, albeit in
an oral form. The dates
mentioned in Mackness’ affidavit appeared
to overlook the fact that the agreement had been concluded before the
dates reflected
upon the correspondence in PC 1 and PC 2. This
raised further doubts as to the veracity of the account set out by
Mackness in his
affidavits.
Mr Wulfsohn
sought to explain Mackness’ inadequate recollection of dates by
suggesting that when the conversations took place between
van der
Poel and himself, the latter could not have been expected to have
recalled the exact date of each of the meetings. Mackness
had not
expected litigation to arise at that stage. Hence he would have no
particular reason to recollect the specific dates of each
of the
conversations between himself and van der Poel. When Mackness refers
to ‘early December 1998’, he did not base this date
on a diarised
note. He simply relied on memory when he set out these dates in his
affidavit. Accordingly, the conversations mentioned
by Mackness
could have taken place in November 1998 which is close enough to fall
within the objective evidence placed before the
arbitrator.
In assessing
whether the evidence sought to be placed before an arbitrator in
terms of such an application should be heard, the test
cannot simply
be reduced to a conclusion that the evidence is material, weighty and
practically conclusive by a cursory examination
of the supporting
affidavits. The court is required to examine the content of the
evidence which respondent seeks to have heard
by the arbitrator. In
balancing the need for finality against fairness to the losing
litigant who wishes to appeal, the court is
entitled to examine the
content of such evidence as described in the affidavits placed before
it to see whether such evidence presumably
could be believed. In
other words, as
Holmes JA
held in
S v De Jager
1965(2)
SA 612(A) at 613 D ‘There should be a
prima facie
likelihood
of the truth of the evidence’. In the assessment of evidence upon
affidavit,
Colman J
said in
Metallurgical & Commercial
Consultants (Pty) Ltd v Metal Sales (Pty) Ltd
1971(2) SA 388(W)
at 390 F-G ‘[a]n assertion or a denial which seems very probable
or improbable on a reading of a set of affidavits
often takes on a
different colour when the veracity of the person who has made it is
tested by cross-examination’.
In this case,
the assessment does not concern a denial or an assertion but a
detailed account of conduct. Were the only difficulty
in Mr Mackness’
accounts to be that of alleged mistakes regarding the dates of
conversations which he conducted with Mr van der
Poel, then
respondents may well have been justified in their contention that not
too much weight must be given to an inability to
specifically recall
an event which occurred over three years ago. However there are
significant additional difficulties with regard
to the version placed
before this Court in the two affidavits to which Mr Mackness deposed.
The first
affidavit deposed to by Mackness contains a tentative suggestion that
van der Poel’s conduct may have amounted to the
making of a secret
profit by him, notwithstanding that, at this stage Mackness must
have known of the entire sequence of events
surrounding van der Poel.
However without any subsequent explanation, he then provided but a
skeletal account of his knowledge of
van der Poel’s conduct. Mr
Tredoux observed that on the basis of this affidavit alone,
respondents could never have succeeded
in an application for remittal
of evidence. Only in his affidavit of 11 February does Mr Mackness
set out an account which, were
it proved to be correct, could
constitute the kind of material and weighty evidence which could be
practically conclusive of the
case. Mr Wulfsohn attempted to explain
Mackness’ first affidavit by suggesting that both he and
respondent’s attorney Mr Karp
were extremely cautious at this
point in the formulation of these allegations that van der Poel or
applicant had committed any crime.
No explanation is given as to how
this hesitant conduct transmogrified into the confidence of the
version as set out in the affidavit
of 11 February.
Mackness was
a senior employee of respondent. If his evidence as contained in his
second affidavit is to be believed, it meant that
he would have said
nothing of his conversations with van der Poel, notwithstanding that
he had known of the importance of the arbitration
and that he held
firm views as to the nature of the case. On his version he said
nothing about these conversations, even after his
employer lost the
arbitration hearing. He said nothing after respondent lost its appeal
in before the appeal arbitrators. His evidence
that van der Poel was
his friend and was prepared to tell him ‘in confidence’ that he
was engaged in criminal activity to the
detriment of Mackness’
employer stretches credibility. On this version Mr van der Poel must
have had immense confidence in Mackness
to reveal such a damning
secret to a senior employee of the very entity which had suffered
the consequences of van der Poel’s
nefarious act.
Mr Wulfsohn
urged that these difficulties could be dealt with under cross
examination before the arbitrator. Were that to be a complete
answer
to the problem, a court would have to accept affidavit evidence on
face value, grant each application for a hearing for
further evidence
where the applicant was sufficiently astute to construct an affidavit
to fall within the scope of being material,
weighty and practically
conclusive. By contrast, it is incumbent on the court to examine the
affidavits which support such an application
in order to satisfy
itself that there was a
prima facie
likelihood of the truth of
such evidence.
The
difficulties inherent in the evidence proffered by Mackness are
compounded by the arbitrator’s negative credibility findings
of
all the respondent’s witnesses. For example, Mr Brin was described
by the arbitrators in the following devastating terms:
‘Cross
examination was hardly necessary to discredit Brin’. In the case
of Mr Pandelli she said ‘I have no doubt that he lied
in claiming
to have inspected the under blanket of the Zimmer’.
In summary, I
find that the requirements to justify an exercise of a discretion to
order that the award be remitted so that additional
evidence should
be heard have not been met. When the affidavits of Mackness are
examined within the context of the evidence placed
before the
arbitrators as well as the history and nature of the production of
these affidavits, respondent has not shown that they
contain
evidence, which is material, weighty and practically conclusive. To
allow such evidence would cause prejudice to an applicant
who has
been forced to an arbitration hearing and an appeal hearing and
notwithstanding two victories, still face considerable
delay in
attempting to obtain its just deserts, namely that the award be
executed.
In the
context of the analysis undertaken of Mackness’ evidence, it is now
possible to return to the question of the time barring
of
respondent’s application. In my view Mackness’ evidence does not
support a case on the basis of corruption. Corruption is
defined in
the
Shorter Oxford English Dictionary, inteer alia,
as
‘perversion of integrity by bribery or favour’. In the context
of s33(2) of the Act the word ‘corruption’ must be taken
to
refer to the manner in which the award was obtained; that is by
‘perversion of integrity and by bribery or favour’ of the
person
giving the award. Were the concept to extend to evidence given by a
witness which proved to be false, a vast range of challenges
would
fall within the three year period where manifestly the extended
period was intended for a restrictive class of cases. In my
view
that class of behaviour relates to the manner in which the award was
procured rather than to evidence given to an arbitrator
who has acted
with the highest standard of integrity.
The question
therefore arises to whether an application of s38 of the Act is
appropriate to extend the six week time period. The
exercise of this
power depends upon good cause being shown by respondent. Even if the
evidence is weighty and material, respondent
has not provided a
complete account as to the delays; for much of the delay there is, as
I noted above, simply no explanation. Thus
even if I am wrong on the
principle finding, an extension should not be granted and the
counter-application is thus time barred.
For these reasons the following order is made:
1. The
counter application of respondent is dismissed.
The
award handed down by the Hon. Ms Justice Van den Heever on 9 March
2001 and the award made on the arbitration appeal by the
Hon. Messrs
Justice Corbett and Grosskopf on 31 October 2001 are made orders of
this Court.
Respondent
is ordered to pay the costs of the application as well as the costs
incurred by applicant in respect of his opposition
to the
counter-application.
_______________
DAVIS
J