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[2025] ZAMPMBHC 19
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CSG Security (Pty) Ltd v Elawini Luxury Residential Estate Homeowners Association NPC (4313/2024) [2025] ZAMPMBHC 19 (5 March 2025)
IN THE HIGH COURT OF
SOUTH AFRICA
MPUMALANGA DIVISION,
MBOMBELA
CASE NO: 4313/2024
REPORTABLE:
YES
OF
INTEREST TO OTHER JUDGES: YES
REVISED:
NO
DATE
5/03/25
SIGNATURE
In
the matter between:
CSG
SECURITY (PTY) LTD
PLAINTIFF/APPLICANT
and
THE
ELAWINI LUXURY RESIDENTIAL ESTATE
HOMEOWNERS
ASSOCIATION NPC
DEFENDANT/RESPONDENT
JUDGMENT
Managa AJ
Introduction
[1]
This is an
application for summary judgment in terms of which the plaintiff
seeks a judgment in the amount of
R2 357 580
plus interest at the rate of prime plus 2% per annum, calculated from
1 July 2023 to the date of payment and cost of the application
on scale C.
[2]
As a background, the
plaintiff
issued summons against the
defendant
for the breach of the Security Service Agreement (“the
agreement”)
.
The
summons comprises two claims.
[3]
The first claim
relates to the supply and installation of the parameter surveillance
system at the pr
operty owned by the
defendant. The plaintiff rendered an invoice in the amount of
R2 357 580. The defendant refused and/or
failed to pay the
invoice for reasons which will be addressed in the later paragraphs.
[4]
The second
claim relates to the defendant
’
s
decision to
terminat
e
the provision of the
asset protection service component.
The
claim is in the amount
of
R494 813.15 being the loss of the nett profit that the plaintiff
would have earned on a profit margin of 10% for the balance
of the
initial period of the agreement.
[5]
The application for summary judgment is
only in relation to claim 1. Claim 2 is deferred to trial. It was
also repeated in argument
by the applicant’s counsel, Mr
Fürstenburg. He correctly pointed out that claim 2 is a damages’
claim and therefore
requires leading of evidence.
[6]
On 9 September
2024, the defendant filed a notice of intention to defend the action.
[7]
On 18 October
2024, the defendant filed a plea to the
plaintiff
’s
particulars of claim.
The plea set
out the grounds upon which the plaintiff’s action is defended.
These grounds are also incorporated in the resisting
affidavit filed
on behalf of the defendant.
[8]
For the purpose of this application, it is
important to note that the defendant signed two agreements. The first
one is the agreement
referenced above and the second is the credit
rental agreement with Sunlyn for the financing of the services which
were rendered
by the plaintiff. The relationship between the two
agreements is that the agreement is subject to the approval of the
credit rental
agreement.
The
legal principles relating to Rule 32 of the
Uniform Rules of the High Court
[9]
Rule 32 of the
Uniform Rules of Court
affords the
plaintiff a right to launch an application for summary judgment. Rule
32(1) provides that the application for summary
judgment can only be
brought under the following claims: claim based on liquid document,
claim for liquidated amount of money,
claim for delivery of specific
movable property and/or ejectment.
[10]
Rule 32(3)(b)
provides that a defendant who wishes to oppose a summary judgment
application on the merits, shall:
“
satisfy
the court by affidavit (which shall be delivered five days before the
day on which the application is to be heard), or with
the leave of
the court by oral evidence of such defendant or of any other person
who can swear positively to the fact that the
defendant has a bona
fide defence to the action; such affidavit or evidence shall disclose
fully the nature and grounds of the
defence and the material facts
relied upon therefor.”
[11]
In
Maharaj
v Barclays National Bank Ltd,
[1]
Corbett J held that there should be sufficient disclosure of facts by
the defendant on the nature and grounds of the defence, and
the
defence disclosed must be
bona
fide
and
good in law.
“
Accordingly,
one of the ways in which a defendant may successfully oppose a claim
for summary judgment is by satisfying the Court
by affidavit that he
has a bona fide defence to the claim.
Where the defence is based upon facts, in the sense that material
facts alleged by the plaintiff in his summons, or combined summons,
are disputed or new facts are alleged constituting a defence, the
Court does not attempt to decide these issues or to determine
whether
or not there is a balance of probabilities in favour of the one party
or the other. All that the Court enquires into is:
(a) whether the
defendant has ‘fully’ disclosed the nature and grounds of
his defence and the material facts upon which
it is founded, and (b)
whether on the facts so disclosed the defendant appears to have, as
to either the whole or part of the claim,
a defence which is both
bona fide and good in law. If satisfied on these matters the Court
must refuse summary judgment, either
wholly or in part, as the case
may be.”
[2]
(My
emphasis.)
[12]
The
court in
Gulf
Steel
(
Pty
)
Ltd
v Rack-Rite Bop
(
Pty
)
Ltd
and another
[3]
made
a finding with regard to the state of the plaintiff in an opposed
summary judgment and held that:
“
In
view of the nature of the remedy
the
Court must be satisfied that a plaintiff who seeks summary judgment
has established its claim clearly on the papers and the
defendants
have failed to set up a bona fide defence as
required
in terms of the Rules of this Court. There are accordingly two basic
requirements that the plaintiff must meet, namely
a clear claim and
pleadings which are technically correct before the Court.
If
either of these requirements is not met, the Court is obliged to
refuse summary judgment. In fact, before even considering whether
the
defendant has established a bona fide defence, it is necessary for
the Court to be satisfied that the plaintiffs claim has
been clearly
established and its pleadings are technically in order.”
[4]
(My emphasis.)
[13]
The
purpose of a summary judgment was laid down in
Joob
Joob Investments
(
Pty
)
Ltd
v Stocks Mavundla Zek Joint Venture
[5]
and
the court held that:
“
[T]he
summary judgment procedure was not intended to ‘shut (a
defendant) out from defending’, unless it was very clear
indeed
that he had no case in the action.
It was intended to prevent sham defences from defeating the rights of
parties by delay, and at the same time causing great loss
to
plaintiffs who were endeavouring to enforce their rights.”
[6]
(My emphasis.)
The verifying
affidavit
[14]
The plaintiff’s Director, Ms Charlene
Zeelie, deposed to a verifying affidavit and confirmed the content of
the particulars
of claim. She confirmed that she is the director of
the plaintiff and has under her control all the plaintiff’s
records,
accounts and other documents relating to the agreement.
[15]
She confirmed that the defendant is
indebted to the plaintiff in the amount of R2 357 580 plus
interest and costs on scale
C as set out in the particulars of claim.
[16]
Finally, she confirmed that claim 1 is an
easily ascertainable amount which falls within Rule 32 and that the
defendant has no
bona fide
defence to the claim. I now turn to the defences raised by the
defendant in opposition to the summary judgment application.
The
defendant’s submissions
[17]
The defendant
raised four grounds to resist the application for summary judgment.
The first ground is that the plaintiff has failed
to join Sunlyn to
the action. The second ground is that the rental credit application
was made
without
a
special resolution by the board members of the defendant
and therefore the
agreement is invalid. The third ground is that the representative of
the defendant, Ms Casey, did not have authority
to make the rental
credit application or conclude the agreement. The fourth ground is
that the court lacks jurisdiction because
there is an arbitration
clause in the
agreement
.
[18]
It is not necessary to deal with all the
grounds raised by the defendant as the dispute can be decided on the
question of jurisdiction.
The
court lacks jurisdiction because there is an arbitration clause
[19]
The arbitration
clause reads as follows:
“
14.
DISPUTE RESOLUTION
14.1
The following procedures shall govern the resolution of any
controversy, dispute, or claim between the parties
arising out of or
in interpretation, performance, breach or alleged breach of this
Agreement.
14.1.1
Negotiations
The
Parties shall promptly attempt to resolve any disputes by negotiation
in the normal course of business. If after good faith
efforts, the
dispute is not resolve, either Party may request in writing that the
dispute be resolve via Executive Consultation
as set out in clause
14.1.2 below.
14.1.2
Executive Consultation
For
disputes submitted to Executive Consultation, each party shall
designate a senior company official with authority and responsibility
for attempting to resolve the matter. The party initiating the claim
shall provide, in addition to documents supporting the claim,
a brief
summary of the claim, its perception of the position of the Parties
and any perceived barriers to settlement of the dispute.
The summary
may be submitted directly to the designated senior company official.
Within 30 (thirty) days after delivery of the
claim summary, the
parties shall meet and attempt to resolve the dispute. If the dispute
is not received within 45 (forty five)
days from submission of the
claim summary, or such other time as agreed between the parties, the
claiming party may proceed as
set out in clause 13.1.3. below.
14.1.3
Arbitration
Any
dispute between the Parties arising out of or relating to the
Agreement that has not been resolved by Executive Consultation
shall
be finally resolved in accordance with the rules of the Arbitration
Foundation of Southern Africa (“AFSA”), by
an arbitrator
agreed to between the parties. Failing such agreement by an
arbitrator appointed by AFSA, provided that there shall
be an appeal
to a panel of 3 (three) arbitrators appointed in the same manner as
the arbitrator.
The
arbitration shall be held in Johannesburg, unless otherwise agreed
between the parties. The decision of the initial arbitrator,
in the
event that no appeal is timeously lodged against such decision or the
award by the appeal panel, shall be final and binding
on the
arbitration, thereafter will be litigated at the competent court of
law having jurisdiction.
This
clause shall not preclude any party from obtaining interim relief on
a urgent basis from a court of competent jurisdiction.”
(My
emphasis.)
[20]
It
is common cause between the parties that the agreement contains the
arbitration clause. The only point of
divergence
is whether there is a dispute as envisaged in the agreement. Mr
Fürstenburg referred me to two judgments. The first one is
Withinshaw
Properties (Pty) Ltd v Dura Construction Co (SA) (Pty) Ltd.
[7]
He argues that without a dispute having been crystallised by way of
evidence or factual basis, there is nothing to refer
to
arbitration. The relevant excerpt of the judgment reads as
follows:
[8]
“
It
does not appear, however, that there
crystalised
‘a dispute of difference
....
between the employer or the architect on his behalf, and the
contractor’ within the meaning of clause 26 [arbitration
clause] …
There
was no evidence
that
the architects gave a ‘decision’ or that Withinshaw or
Dura at any stage requested the architects to give a decision
in
writing in terms of clause 26.
The
factual basis for the third submission was accordingly absent
,
and this defence fails like the others.” (My emphasis.)
[21]
The
second judgment is
Amalgamated
Clothing and Textile Workers Union of South Africa v Veldspun (Pty)
Ltd
,
[9]
Mr
Fürstenburg argues that it is
only
upon a
bona
fide
dispute
existing, being notified or declared and then referred to
arbitration, are the parties bound to arbitrate as opposed to
litigate in a court.
[22]
He
argued that the defendant only raised the defence for the first time
in the resisting affidavit and therefore there was no crystallized
dispute. The question is whether failure to pay the invoice by the
defendant constitutes a bona fide dispute as envisaged in the
agreement. The Supreme Court of Appeal in The
Minister
of International Relations and Co-operation NO and Another v Neo
Thando/Elliot Mobility (Pty) Ltd and Another
(“
Neo
Thando
”),
[10]
stated the following:
“
It
is trite that where there is a demand by one of the parties for
performance or damages, the demand must have been rejected or
there
must be clear evidence that the other party, having received the
demand, then ‘allowed an unreasonable time to lapse
without
dealing with it properly’, such that it can be inferred on a
balance of probabilities that the other party ‘intended’
to reject the demand.
In this matter, it is uncontroverted that Neo Thando did not allow
DIRCO any time to deal with what it believed was ‘a difference
or dispute’ between the parties. The delay of 17 September to 2
November 2017, a month and a few days can hardly qualify
as an
unreasonable time particularly when the letter of demand stated that
if DIRCO did not respond within thirty days, Neo Thando
would issue
summons; not force DIRCO to arbitrate.”
[11]
(My emphasis.)
[23]
In this case, the plaintiff sent a letter
of demand on 7 December 2023, affording the defendant an opportunity
to make payment of
R 2 357 580.00 within 7 (seven) days
from the date of receipt of the letter. The defendant failed and/or
refused to make
payment of the invoice. The plaintiff issued summons
on 23 August 2024, 9 (nine) months after the letter of demand was
served on
the defendant. Unlike in
Neo
Thando,
the delay is unreasonable
enough to infer that the defendant intended to reject the demand for
payment of invoice. Therefore, the
defendant’s failure to pay
the invoice constitutes a
bona fide
dispute which is arbitrable. The fact that the plaintiff is of the
opinion that it has a prospect of success against the defendant
is
not a compelling reason for the court to bypass the arbitration
clause in the agreement.
[24]
The second question is whether the court
can exercise its inherent powers to hear the application despite the
arbitration clause?
I deal with the legal principle in the subsequent
paragraphs.
[25]
The
principle is set out in LAWSA,
[12]
which reads as follows:
“
Extent
of court’s discretion not to enforce the arbitration agreement
The
onus on the party wishing to avoid arbitration of showing good cause
is not easily discharged. Moreover, the discretion of the
court to
bypass the arbitration clause must be judicially exercised and there
should be compelling reasons for refusing to hold
a party to its
agreement to refer disputes to arbitration. In effect, this
discretion is seldom exercised. Instances in which it
has been
exercised include allegations of fraud, where the arbitrator is not
to be trusted or is incapable of giving a decision,
and where there
has been misconduct on the part of the arbitrator.
If
a party to an arbitration agreement agrees that a resident engineer
employed by one of the parties is to act as arbitrator, then,
even
though that resident engineer is virtually a judge in his or her own
cause, the court will give effect to the provision in
the contract.
Generally speaking, however, it is quite foreign to the concept of
arbitration that one of the parties to a dispute
should be the
arbiter of the dispute.
The court may
also exercise its discretion against arbitration where all the
parties to the dispute or with an interest in the dispute
are not
parties to the arbitration agreement, with the result that
arbitration may lead to a multiplicity of proceedings with the
danger
of conflicting decisions and increased costs. A court may also
exercise its discretion in refusing to refer a matter to
arbitration
where the issue between the parties is exclusively a question of law
.
However, the mere fact that an arbitrator would be required to decide
a question of law and that the arbitrator would have no
authority to
grant an interdict is no reason for refusing to refer the matter to
arbitration. Furthermore, where a party contends
that impending
arbitration proceedings will be invalid, it may be unrealistic and
inconvenience to expect such a party to take
part in the proceedings
under protest, or otherwise to await the conclusion and then, if the
result is against him or her, to oppose
the award being made an order
of court. Every consideration of convenience and justice points to
the desirability of allowing such
a party to seek an order preventing
the allegedly futile proceedings before they are commenced.
The court may however be
inclined to grant a stay in order to avoid adjudicating a doctrinal
dispute between members of a religious
denomination or becoming
entangled in doctrinal issues.” (My emphasis.)
[26]
In
Metallurgical
and Commercial Consultants (Pty) Ltd v Metal Sales Co (Pty) Ltd
,
Colman J explained that the onus to show good cause is not easily
discharged. He stated that:
[13]
“
There
are certain advantages, such as finality, which a claimant in an
arbitration enjoys over one who has to pursue his rights
in the
Courts; and one who has contracted to allow his opponent those
advantages will not readily be absolved from his undertaking.
In
Rhodesian Railways v Mackintosh
,
1932 AD 359
, WESSELS, A.C.J. (as he then was),
held
that the discretion of the Court to refuse arbitration under a
submission was to be exercised judicially, and only when a ‘very
strong case’ for its exercise had been made out
(see p. 375). The Court was there acting under a different statute
from the one before me. But the observation of WESSELS, A.C.J.,
is
none the less apposite here, because it was based upon general
principles. Similarly, in
Halifax
Overseas Freighters, Ltd. v Rasno Export; Technoprominport and
Polskie Linie Oceaniczne PPW.
(“
The
Pine Hill
”), 1958 (2) Lloyds List
Law Reports 146, McNAIR, J.,
held that
there should be ‘compelling reasons’ for refusing to hold
a party to his contract to have a dispute resolved
by arbitration.
JESSEL, M.R., in Russel v Russel,
(1880) 14 Ch. D. 411
, said that the
cases in which the discretion against arbitration should be exercised
were ‘few and exceptional’
.”
(My emphasis.)
[27]
In
Rawstorne
and Another v Hodgen and Another
,
[14]
the court held that the discretion to order that “any
particular dispute referred to in the arbitration agreement shall not
be referred to arbitration” is limited. An applicant seeking to
avoid an agreement to resolve a dispute by arbitration should
show
compelling reasons for the matter to be heard in court. In
Transvaal
Alloys (Pty) Ltd v Polysius (Pty) Ltd
,
[15]
the court held that an applicant must make out a “very strong
case” for the granting of an order in terms of
section 3(2)(b)
of the
Arbitration Act 42 of 1965
.
[28]
The
constitutional court in
Crompton
Street Motors CC v Bright Idea Projects 66 (Pty) Ltd
[16]
explained
the application of
section 6(2)
of the
Arbitration Act in
the
following terms:
“
[41]
Section 6(2)
of the
Arbitration Act allows
a court to stay
proceedings ‘if [upon application in terms of
s 6(1)]
the court
is satisfied that there is no sufficient reason why the dispute
should not be referred to arbitration in accordance with
the
agreement’.
The language of
s 6(2)
directs a court acting under that section to stay proceedings where
such an application is made unless sufficient countervailing
reasons
exist for the dispute not to be referred to arbitration. The words
‘no sufficient reason why the dispute should not
be referred to
arbitration’ denote that the standard position is that a stay
should be granted upon request. The onus of
satisfying the court that
the matter should not be referred to arbitration and instead heard by
the High Court is on the party
who instituted the legal proceedings
.
In
Universiteit
van Stellenbosch
the
then Appellate Division held that, when a court is faced with a stay
application, the discretion to refuse arbitration in the
circumstances should be exercised judicially, and only when a ‘very
strong case’ has been made out.
This high threshold for refusal is
because the party who does not want the matter referred to
arbitration ‘is seeking to deprive
the other party of the
advantage of arbitration to which the latter is entitled’.”
(My emphasis.)
[29]
Mr Fürstenburg argued that a claim for
payment for the services rendered does not amount to a dispute and
therefore the matter
should be heard by the court. I do not agree
with the legal proposition because failure to pay for services
rendered (either by
express or implied rejection) constitutes a
breach of the agreement which is arbitrable. The fact that the
plaintiff has a prospect
of success in the arbitrable dispute is not
the basis for the court to suspend the arbitration clause. There must
be a
very strong case
for
the court to suspend the arbitration clause and hear the matter. The
very strong case
does
not relate to the prospect of success in the merits. It relates to
reasons such as the ones referenced in paragraph 25 above.
[30]
The threshold for the court to exercise the
discretion to suspend the arbitration clause is very high and it is
seldom exercised.
There must be compelling reasons lest it undermines
the integrity of the entire contractual regime which is important to
both the
private and public sector.
The
onus is on the party
. Apart from the
lack of
bona fide
defence, there are no other valid reasons advanced for the court to
bypass the arbitration clause.
[31]
Lastly, the
plaintiff’s argument that there was no dispute between the
parties because it was not referred to arbitration
is not correct.
Clause 14 of the agreement refers to the claiming party. In other
words, the innocent party who seeks to enforce
its contractual
obligation. The claiming party is the plaintiff and should have
therefore referred the dispute to arbitration.
The fact that the
plaintiff or defendant did not refer the dispute to arbitration does
not mean that there is no
bona
fide
dispute between the parties.
[32]
In conclusion, I find that the plaintiff
should have referred the dispute to arbitration.
[33]
I therefore make the following orders:
1
The action proceedings against the
plaintiff is stayed;
2
The plaintiff is ordered to refer the
dispute to arbitration as provided in Clause 14 of the agreement;
3
The plaintiff is ordered to pay the costs
of the defendant on scale C
P
MANAGA
ACTING
JUDGE OF THE HIGH COURT
MPUMALANGA
DIVISION, MBOMBELA
Appearances
For the
Applicant/Plaintiff:
Advocate
Fürstenburg
Instructed by ______
For the
Respondent/Defendant:
Advocate Ngwenya T
Instructed
by ______
[1]
Maharaj
v Barclays National Bank Ltd
1976 (1) SA 418
(A).
[2]
Ibid
at
462A-C.
[3]
Gulf
Steel
(
Pty
)
Ltd
v Rack-Rite Bop
(
Pty
)
Ltd
and another
1998 (1) SA 679 (O).
[4]
Ibid
at 683H-J and 684A.
[5]
Joob
Joob Investments
(
Pty
)
Ltd
v Stocks Mavundla Zek Joint Venture
[2009] ZASCA 23; 2009 (5) SA 1 (SCA).
[6]
Ibid
para
31-33.
[7]
Withinshaw
Properties (Pty) Ltd v Dura Construction Co (SA) (Pty) Ltd
1989 (4) SA 1073 (A).
[8]
Ibid
at
1079D-G.
[9]
Amalgamated
Clothing and Textile Workers Union of South Africa v Veldspun (Pty)
Ltd
[1993] ZASCA 158
;
1994
(1) SA 162
(A) at 169F-G.
[10]
The
Minister
of International Relations and Co-operation NO and Another v Neo
Thando/Elliot Mobility (Pty) Ltd and Another
[2025]
1 All SA 31
(SCA).
[11]
Ibid
at
30.
[12]
Butler
“Arbitration” in LAWSA 3 ed (2015) Vol 2 para 95-96.
[13]
Metallurgical
and Commercial Consultants (Pty) Ltd V Metal Sales Co (Pty) Ltd
1971 (2) SA 388
(W) at 391E-H.
[14]
Rawstorne
and Another v Hodgen and Another
2002 (3) SA 433
(W) para 13-14.
[15]
Transvaal
Alloys (Pty) Ltd v Polysius (Pty) Ltd
1983 (2) SA 630
(T) at 656D-E.
[16]
Crompton
Street Motors CC t/a Wallers Garage Service Station v Bright Idea
Projects 66 (Pty) Ltd t/a All Fuels
2022
(1) SA 317
(CC) in para 41.