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[1991] ZASCA 139
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Atteridgeville Town Council and Another v Costa Livanos t/a Livanos Brothers Electrical (50/91) [1991] ZASCA 139; 1992 (1) SA 296 (AD); [1992] 1 All SA 274 (A) (27 September 1991)
50/91 N v H
ATTERIDGEVILLE TOWN COUNCIL AND
ANOTHER
versus
COSTA LIVANOS t/a LIVANOS BROTHERS
ELECTRICAL
SMALBERGER, JA :-
50/91 N v H
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the matter between:
ATTERIDGEVILLE
TOWN COUNCIL
First Appellant
PRETORIA REGIONAL SERVICES COUNCIL
Second Appellant
and
COSTA LIVANOS t/a
LIVANOS BROTHERS ELECTRICAL
Respondent
CORAM
: BOTHA, SMALBERGER, NESTADT,
FH GROSSKOPF, JJA, et VAN DEN HEEVER, AJA
HEARD
: 2 SEPTEMBER 1991
DELIVERED
: 27 SEPTEMBER 1991
JUDGMENT
SMALBERGER, JA :-
In March 1988 the respondent, Costa Livanos ("Livanos"), an electrical
contractor carrying on business under the name of Livanos Brothers
Electrical,
2/
2
entered into a written contract ("the contract") with the first appellant,
the Atteridgeville Town Council ("the Council"). The contract
provided for the
supply, delivery and installation of materials necessary for the rewiring of 6
500 houses belonging to the Council.
The project was to be financed by the
second appellant, the Pretoria Regional Services Council ("the RSC"). Clause 49
of the contract
provided for the reference to arbitration of disputes between
the parties arising from the execution of the works in terms of the
contract.
From the outset numerous disputes arose (the details of which are
not germane to the present appeal). The upshot thereof was that
the Council
evicted Livanos from the site of the works in August 1988. This led to an urgent
application by Livanos in which he sought
to have possession of the site
3/
3
restored to him. Before the matter was heard an interim settlement was
reached. One of the terms thereof was that the disputes between
the parties
would be referred to arbitration as soon as possible. However, negotiations took
place between Livanos, the Council and
the RSC in an attempt to resolve their
differences. The negotiations culminated in a written agreement ("the
agreement") being concluded
between them on 10 February 1989. In terms thereof
the contract between Livanos and the Council was to remain in force. The
engineer
originally appointed under the contract had since been replaced, and it
was recorded in clause 2 of the agreement "that the firm
of WEYERS, BOTHA &
HUBeE has been appointed as Engineers to the contract and that Mr J D WEYERS has
been appointed as the Engineer's
representative." Clause 16.1 of the agreement
contained an arbitration clause ("the
4/
4
arbitration clause") in the following terms:-
"It is agreed that any existing claims and/or disputes, the subject matter of
the pending litigation or otherwise, or claims which
may arise which the
CONTRACTOR or the EMPLOYER may have against each other of whatever nature will
be submitted to the decision of
J D WEYERS ('the Arbitrator'), whose decision in
regard to such claims and disputes shall be
final."
(The references to "the Contractor" and "the
Employer"
are to Livanos and the Council respectively; clauses
16.2 and 16.3 dealt with procedural matters and clause
16.4 with the non-appealability of the arbitrator's
decision.)
Livanos continued with the execution of the
works. Further disputes arose between the parties.
It was agreed that these would be referred to
arbitration in terms of the arbitration clause.
Arbitration proceedings duly commenced on 13 July 1989,
but various issues were left unresolved. The disputes
5/
5
multiplied. In about October 1989 the Council
called for tenders for the
upgrading of the existing
low tension reticulation in Atteridgeville. The work
called for related in
the main to the replacement of
overhead service connections. Livanos was of
the view
that practically all the work involved had already been
awarded to him in
terms of the contract. On
11 October 1989 his attorney wrote a letter to the RSC
on his behalf
stating,
inter alia
:
"In calling for tenders for the upgrading of the existing low tension
reticulation in
Atteridgeville our client contends that
there has been a repudiation by the Employer of the contract entered into
between our client and the Employer.
We have been instructed by our client to place on record that this repudiation
has been accepted by our client."
(Although the
letter was addressed to the RSC it
appears to be common cause that it also served as
notice to the Council of the acceptance by Livanos of
6/
6
the Council's alleged repudiation of the contract.)
The Council and the RSC responded by means of
a telefax from their attorney dated 13 October 1989.
The relevant portion thereof reads:
"The City Council emphatically denies that there was any wrongful repudiation on
their part and in fact states that your client has
now wrongfully repudiated the
original contract by instructing the project manager on site, Mr Kuhn, to cease
all operations and
to abandon the site as indicated in your letter addressed to
Mr Kuhn in this regard on the llth instant. The City Council hereby
accepts your
client's repudiation of the contract and reserves its rights in this connection
to claim damages from your client as
a result of such wrongful
repudiation."
The letter of 11 October
1989, to which I
have referred, also raised the question of the recusal
of Weyers as
arbitrator. The allegation was made
that he had by his conduct disqualified
himself as
such. It was suggested that Mr S A Cilliers SC be
appointed as
arbitrator in his place. He was to
7/
7 arbitrate on whether or not there had been a repudiation by
the Council, as alleged. In their initial response the Council and the
RSC
agreed to this suggestion; the RSC later sought to attach a condition to its
acceptance. Livanos refused to agree to such condition.
An ancillary dispute
then arose as to whether or not Weyers had agreed to withdraw as arbitrator.
Weyers denied this to be the case.
On 1 November 1989 Livanos's attorney
addressed a facsimile to Weyers in which reasons were advanced why he should
recuse himself
as arbitrator. Weyers through his attorney (the same attorney who
was acting for the Council and the RSC) refused to accede to the
request that he
recuse himself. The request, when later repeated, met with a like response. On 6
March 1990 Livanos launched an application
in the Transvaal Provincial Division.
He
8/
8
cited the Council and the RSC as the first and second
respondents, Weyers
as the third respondent and the
firm of Weyers, Botha and Hubee ("the firm")
as the
fourth respondent. In the notice of motion the
following order
(apart from costs) was sought:
"1. Declaring that each of the claims described in Paragraph 58 of the Founding
Affidavit is arbitrable in terms of the provisions
of Clause 16 of the Agreement
of 10 February, 1989 concluded between the Applicant, the First Respondent and
the Second Respondent,
Annexure 'CL1e' to the Founding Affidavit.
2. Setting aside the appoihtment of the Third Respondent as arbitrator in terms
of the provisions of the said Clause 16.
3. Appointing Advocate A CHASKALSON SC as arbitrator in the place of the Third
Respondent."
(One of the issues
referred to in paragraph 58 related to whether the contract and agreement had
been repudiated by the Council or
by Livanos; the
9/
9
appointment of Chaskalson SC was asked for as Cilliers
SC had in the
meantime declined to accept an
appointment as arbitrator.)
Lengthy answering affidavits were filed on
2 May
1990 on behalf of the four respondents a
quo
.
In addition the Council
filed a counter-application in
which it sought the following relief:
"1. 'n Bevel wat verklaar dat klousules 16.1, 16.2, 16.3 en 16.4 van die
ooreenkoms tussen die Eerste Respondent, die Applikant en
die Tweede Respondent,
aanhangsel CL1(e) van die funderende verklaring, nie die beëindiging van
die gemelde kontrak oorleef
het nie en by beëindiging van die gemelde
kontrak verval het.
2. Dat die koste van die teenaansoek aan die Eerste Respondent toegeken
word."
The Council took up the attitude
that the arbitration
clause did not survive the cancellation of the contract
and the agreement. It also intimated its opposition
(on technical grounds) to the appointment of Chaskalson
.....10/
10
SC as arbitrator. In his supporting affidavit
Weyers gave notice of his
withdrawal as arbitrator in
the following terms:
"Sonder om enige verpligting in verband
daarmee te erken, onttrek ek hiermee
as
arbiter na aanleiding van aanstelling luidens
paragraaf 16 van die
ooreenkoms van 10
Februarie 1989 "
On 7 May 1990
Weyers and the firm filed Notices of
Withdrawal intimating that they abided
the decision of
the Court and tendering to pay any wasted costs arising
from their Notice of Opposition.
In due course Livanos filed his replying
affidavit (dated 13 July 1990). In it he gave notice
of his intention to
amend prayer 3 and to seek an
order:
"3. Directing that any senior counsel whom the applicant, the first respondent
and the second respondent mutually agree to appoint,
act as arbitrator in the
place of the third respondent and, failing such agreement, directing that
the
11/
11
Chairman of the Johannesburg Bar Council appoint as an arbitrator a senior
counsel in practice at the Johannesburg or Pretoria
Bars."
The amendment had been
foreshadowed in a letter written
on 12 July 1990 by Livanos's attorney to the
Council's
attorney. In the letter the names of four senior
counsel were
submitted as prospective arbitrators.
The letter thereafter proceeded:
"If your clients are not agreeable to any one of the four being appointed as
Arbitrator, would you please submit a list of names
to us and we will then
consider the names that are submitted by you.
Should we not be able to agree, then the Court will be asked that the Chairman
of the Johannesburg Bar Council appoint as Arbitrator,
a Senior Counsel in
practice at the Johannesburg or Pretoria Bars."
The
eventual response from the Council's attorneys on 20 July 1990 was one of
disdain and displayed a complete lack of co-operation,
an attitude which had
12/
12 characterised previous correspondence.
The matter was
heard by Van Zyl, J. The amendment foreshadowed in Livanos's answering affidavit
was never sought. Prayer 3 was, however,
amended at Livanos's instance during
the course of argument to provide for the nomination by the Council and the RSC
of any retired
Judge, or of any senior counsel practising at a Bar in the
Republic to perform the function of arbitrator. On 16 November 1990 the
learned
Judge a
quo
made the following order:
"1. It is declared that the disputes and claims described in paragraph 58 of the
applicant's founding affidavit are arbitrable in
terms of the provisions of
clause 16 of the agreement of 10 February 1989 concluded between the applicant,
the first respondent and
the second respondent (annexure 'CL1e' to the founding
affidavit).
2. The first and second respondents are ordered to appoint an arbitrator being a
retired judge of the Supreme Court or
a
13/
13
senior advocate practising at a Bar in South Africa, within fourteen days from
the date of
judgment.
3. The counter-application is
dismissed.
4. The first and second respondents are ordered, jointly and severally, to pay
the costs of the application and counter-application,
including the costs of two
counsel, but excluding all costs previously reserved in this matter, which costs
shall, by agreement between
the parties, be costs in the
cause."
Leave to appeal to this Court
was subsequently granted
by the Judge a
quo
.
It will be convenient, in what follows, to refer to the Council and the RSC
collectively as "the appellants". Likewise the contract
and the agreement, taken
together, will be referred to simply as "the agreements". It is hoped thereby to
avoid undue prolixity without
sacrificing clarity.
Against the background sketched above I now
14/
14 turn to consider the arguments that were advanced on
appeal by Mr Zeiss for the appellants. They were, broadly speaking: (1) that
the
arbitration clause did not survive the termination of the agreements; (2) that
even if it did, the parties were not free to appoint
another arbitrator to fill
the vacancy created by Weyer's withdrawal; and (3) that in any event Livanos
failed to comply with the
requirements of
section 12(1)(e)
and (2) of the
Arbitration Act 42 of 1965
("the
Act") when
seeking the appointment of a
substitute arbitrator. I shall deal with each of these in turn.
Did the arbitration clause survive the termination of the
agreements
?
Livanos claims that the appellants repudiated the agreements by calling for
tenders for work already
.....15/
15 allocated to him in terms thereof. The appellants in turn claim that
Livanos repudiated the agreements by ceasing operations and
abandoning the site.
Each claims to have accepted the other's repudiation, thereby resiling from the
agreements. Arising from this
situation, Mr Zeiss contended that irrespective of
which party had justifiably repudiated, the parties were ad
idem
that the
agreements had come to an end. The legal relationship between them had
accordingly been dissolved, and the arbitration clause
had fallen away. The
resulting situation, so it was argued, is analogous to one where a contract
containing an agreement to arbitrate
is terminated by mutual consent. It is
common to speak of the termination of a contract by one party's acceptance of
the other's
repudiation thereof. One needs, however, to define with greater
precision what, juristically, this
16/
16 encompasses. By repudiation, in the sense in which the
word is used in the present matter, is meant the evincing of a clear intention
by one party, by his acts or conduct, not to perform his obligations under a
contract acknowledged to be binding. (
Culverwell and Another v Brown
1990(1) SA 7 (A) at 14 B - E.) Such conduct constitutes a breach of contract in
anticipando
. This leaves the opposite party with the choice of keeping
such contract alive and enforcing it, or of cancelling it by "accepting"
the
repudiation. If he chooses the latter course, he manifests an intention not to
accept further performance under the contract
in question from the party in
default. At the same time he manifests an intention not to further perform his
own obligations under
that contract, thereby resiling from it. By so doing he
puts an end (in the case of a contract that is executory) to the
17/
17
primary obligations of the parties to perform in
terms
of their contract. Certain secondary
obligations, e.g., the duty to
compensate for damages arising from wrongful repudiation, however, remain. (See
generally in this regard
Kerr:
The Principles of the Law of Contract
:
4th Edition : pp 549/50;
Nash v Golden Dumps (Pty) Ltd
1985(3) SA 1 (A)
at 22 D - G.) Any further reference herein to "repudiation" and "acceptance"
thereof must be construed in the above
sense.
Where a contract is dissolved
or cancelled by mutual consent, any submission to arbitration contained in the
contract must, generally
speaking, also be taken to have been dissolved or
cancelled (
Turkstra and Another v Massyn
1958(1) SA 623 (T) at 625 G;
Nochinowitz v Weinrich
1921 EDL 119
;
Rogers v Mathews
1926 TPD
21).
This is in keeping with the principle
18/
18
enunciated in
Heyman and Another v Darwins, Ltd
[1942]
1 ALL ER 337
(HL) at 346 A (per Lord MacMillan):
"It is clear, too, that the parties to a contract may agree to bring it to an
end to all intents and purposes and to treat it as
if it had never existed. In
such a case, if there be an arbitration clause in the contract, it perishes with
the contract. If the
parties substitute a new contract for the contract which
they have abrogated, the arbitration clause in the abrogated contract cannot
be
invoked for the determination of questions under the new
agreement."
The reason for this is that mutual
agreement to cancel
a contract (or consensual cancellation) is a
contract
whereby another contract is terminated (
Van
Streepen
and Germs (Pty) Ltd v Transvaal
Provincial
Administration
1987(4) SA 569(A) at 588 I).
This
brings to an end the rights and obligations of both
parties to the
earlier contract, and there is no longer
any debt or right of action in
existence. Neither is
left with any claim against the other arising from the
19/
19
earlier contract (cf
Van Rensburg and Another v Conradie NO and
Another
1918 AD 122
at 128/9).
The above situation is a far cry from the
present. Here each party accepts that the opposite party no longer has a duty to
perform
his or their primary obligations under the agreements. To that extent
they are ad
idem
. At the same time each seeks to claim damages from the
other arising from an alleged unlawful repudiation. There can be no guestion
of
consensual cancellation, or anything akin to it. The two situations differ
toto caelo
. That the parties to a contract individually hold the same
view as to the consequences that will flow from a repudiation, cannot
be equated
with the meeting of their minds necessary for consensual cancellation. The mere
stating of the proposition highlights
its untenability.
20/
20
The present matter is in principle on
all
fours with the case of
Scriven Bros v Rhodesian Hides
and
Produce Co Ltd and Others
1943 AD 393
, where it was
held that the
repudiation of a contract does not
destroy the efficacy of an arbitration
clause in such
contract. In this regard the remarks of TINDALL, JA
at p
401 are apposite, where he said:
"But the heads of argument of Mr
de Villiers
, who appeared for Scrivens
in this Court, make the point that the company repudiated the contract in
toto
and was therefore not entitled to avail itself of the arbitration
clause, the claim and the counterclaim going to the root of the
contráct.
The fallacy underlying this contention is the assumption that a repudiation of a
contract (in the sense of a refusal
to continue performance under it) by one
party puts the whole contract out of existence. It is true that a repudiation of
a contract
by one party may relieve the other party of the obligation to carry
out the other terms of the contract after the date of repudiation,
but the
repudiation does not destroy the efficacy of the arbitration clause. The real
object of that clause is to provide suitable
machinery for the settlement of
disputes arising out of
21/
21
or in relation to the contract, and as that is its object it is reasonable to
infer that both parties to the contract intended that
the clause should operate
even after the performance of the contract is at an end. If, for example, this
contract had come to an
end on a date stipulated for its termination, I do not
think that it could have been contended successfully that the arbitration
clause
was no longer operative. So, too, it seems to me that when the contract is
prematurely terminated by repudiation by one of
the parties, the arbitration
clause is still operative."
(See too
Heyman and
Another v Darwins Ltd
(
supra
) at
343 G - H;
De Goede v
Venter
1959(3) SA 959 (0)).
Mr Zeiss sought to distinguish
Scriven's
case
from the present on the facts. He argued that in
Scriven's
case,
whether or not there had been a
repudiation which had been accepted was in
issue
unlike the position here. Conseguently the remarks
quoted were
obiter
. I do not agree. It is quite
clear from the judgment (p 400)
that the whole matter
was dealt with on the assumption "that the action
can
22/
22
be regarded as a claim for an order rescinding the contract on the ground
that the company repudiated the contract and that Scriven
accepted such
repudiation". The principles stated in the extract from the judgment which I
quoted earlier related to that situation.
As such they form the
ratio
of
the judgment. Moreover, in my view, they correctly reflect the law. There can be
no doubt that had the facts in
Scriven's
case been identical to the
present the same conclusion would have been reached with regard to the continued
efficacy of the arbitration
clause. This is because of the legal consequences
that flow from repudiation.
What has been said above is subject to any
manifestation of a contrary intention in the arbitration clause. No such
contrary intention
is apparent. The arbitration clause must be interpreted, like
any other contractual provision, with a view to
23/
23
ascertaining the intention of the parties thereto having due regard to the
words used in their proper contextual setting,,and to any
admissible surrounding
circumstances (
Cinema City (Pty) Ltd v Morgenstern Family Estates (Pty) Ltd
and Another
1980(1) SA 796 (A) at 804 A- 806 A). The arbitration clause is
couched in wide and general terms. It is sufficiently wide to cover
disputes
relating to breaches of contract and whether or not there has been a justifiable
repudiation. It would stultify the whole
purpose of the arbitration clause if it
were otherwise. To paraphrase what was said in the quotation from
Scriven's
case (
supra
) at p 401, the real object of the
arbitration clause was to provide suitable machinery for the settlement of
disputes between Livanos
and the Council arising from the agreements, and it is
reasonable to infer that all the parties intended its
24/
24
provisions to operate even after their primary obligations to perform had
come to an end. The arbitration clause consequently survived
the repudiation of
the agreements.
Were the parties free to appoint another arbitrator to fill the vacancy
created by Weyer's withdrawal
?
The appellants contended that on a proper
construction of the arbitration clause the parties agreed that Weyers, and
Weyers alone,
was to arbitrate in respect of anydispute betweeh them arising
under the agreements. As the person of the arbitrator formed the basis
of the
agreement to arbitrate, it was not competent for the parties to appoint anyone
else in Weyers's place in terms of the
Act.
>There is no substance in this contention.
Section 10(1)
of the
Act provides
that:
25/
25
"Where an appointed arbitrator refuses to
act ,
and a contrary intention is not
expressed in the arbitration agreement
, the party or parties who
appointed him may appoint another arbitrator in his place." (My
underlining.)
The procedure to be followed to secure
the appointment
of a substitute arbitrator where an appointed
arbitrator
refuses to act is set out in section
12(1)(e) and (2) of the
Act.
The
arbitration clause in effect provides
that claims and disputes, of whatever nature, "will be
submitted to the
decision of J D Weyers ('the
arbitrator') whose decision in regard to such
claims
and disputes shall be final". There is nothing in
the express
wording of the arbitration clause, read in
the context of the agreement as a
whole (of which it
forms part) indicative of an intention on the part of
the parties to
confine any arbitration between them to
Weyers alone. No limiting or
qualifying words are
26/
26
used which reflect an intention on their part that the arbitration clause, in
the event of Weyers's refusal or inability to act as
arbitrator, would cease to
be effective, or would preclude the appointment of another arbitrator in his
stead. Nor can any such intention
be inferred by necessary implication. As no
contrary intention is expressed in the arbitration clause, it was open to the
parties
to appoint a substitute arbitrator in terms of the
Act. The
appellants'
argument in this respect therefore also fails.
Did Livanos comply with the requirements of the
Act when
seeking the
appointment of a substitute arbitrator
?
The appellants' third submission is premised on the alleged non-compliance by
Livanos with what are claimed to be certain peremptory
provisions of the
Act.
27/
27
A statutory requirement construed as peremptory usually needs exact
compliance for it to have the stipulated legal consequence, and
any purported
compliance falling short of that is a nullity. On the other hand, a directory
statutory requirement, to the extent
that it needs to be complied with at all,
requires no more than substantial compliance for it to have full legal effect
(
Nkisimane and Others v Santam Insurance Co Ltd
1978(2) SA 430 (A) at 434
B - E). Before adverting to the appellants' arguments on this issue, it will be
convenient to quote the
relevant provisions of those sections of the
Act which
have a bearing thereon.
Section 12(1)(l)(e)
and (2)
:
"(1) Where -
(a)
(b)
(c)
(d)
28/
28
(e) an appointed arbitrator
refuses to act or is
removed from office
and
the party or parties
to the
reference are at
liberty
to appoint
another arbitrator
to fill the vacancy and
do not appoint him in any case where such appointment is necessary for the
decision of the matters in dispute or the due conduct
of the
arbitration
(f)
any party to the reference may serve the
other party or parties with a written
notice requiring him or them to
appoint or if
agreement be necessary, to agree in the
appointment of an
arbitrator
(2) If the appointment ref erred to in the notice served under sub-section
(1) is not made or agreed to, as the case may be, within
seven days after the
service of the notice, the party who gave the notice, may upon
notice to the
other party or parties
as the case may be, apply to the court to
make
the necessary appointment, and thereupon
the court may appoint an arbitrator
"
29/
29
Section 12(4)
:
"(4) Where a sole arbitrator who
has
entered on the reference is
removed by the court, or his
appointment is set aside by
the court and the arbitration agreement does not provide otherwise, the court
may, on the application of any party to the reference,
either
-
(a) appoint an arbitrator to
act
in the place of the arbitrator ....
so removed ;
(b)
(c) "
Section 13(2)(a)
r
"(2) (a) The court may at any time on the application of any party to the
reference, on good cause shown, set aside the appointment
of an
arbitrator or remove him from
office."
The arguments advanced by Mr Zeiss, as I.
understood them, were to the following effect: It was not competent to couple
prayer 3 of the Notice of Motion with prayers 1 and
2 thereof; prayer 3 for the
appointment of a substitute arbitrator was premature as
30/
30
the provisions of
section 12(1)(e)
and (2) of the
Act had
not been complied
with; the provisions of
section 12(1)(e)
and (2) are peremptory and failure to
comply therewith invalidated the application in respect of prayer 3; the
appellants were prejudiced
as they were not given an opportunity to appoint an
engineer as the substitute arbitrator.
The application was brought in terms
of
section 13(2)(a)
of the
Act. It
was necessitated by Weyers's refusal to
recuse himself as arbitrator. At that stage it was not possible to couch the
application
as one in terms of
section 12(1)
(e) read with
section 12(2)
of the
Act, as
none of the events giving rise to the operation of those sub-sections
had yet occurred. The application could conceivably have been
brought in terms
of
section 12(4).
That section, however, only applies where an arbitrator who
has "entered on the
31/
31 reference" ("wat begin het om op die verwysing in te
gaan") is removed, or his appointment is set aside, by the Court. It is a
moot
point whether Weyers, despite his earlier attempts at arbitration in relation to
certain issues, had "entered on the reference"
within the meaning of that phrase
in
section 12(4).
The matter, although alluded to in argument, was neither
specifically raised nor fully and properly addressed on the papers. It would
be
invidious to have to make a finding in regard thereto. Fortunately the need to
do so is obviated by the conclusion to which I
have come on the main
argument.
It may well be, as argued on behalf of the appellants, that Livanos
could initially have limited the relief claimed to prayers 1 and
2 of the Notice
of Motion. Then, if successful in having the appointment of Weyers set aside, he
could have set in
32/
32
motion the events envisaged by
section 12(1)(e)
and (2) of the
Act. However
,
Livanos's decision to ask simultaneously in prayer 3 for the appointment of a
substitute arbitrator must be seen against the historical
background to the
application. The appellants had consistently taken up the attitude (a) that the
arbitration clause had terminated,
and (b) that, in any event, the arbitration
was personal to Weyers; accordingly there was no legal basis for the appointment
of a
substitute arbitrator. The prospects of obtaining the appellants' agreement
to the appointment of another arbitrator were therefore
to all intents and
purposes non-existent at that stage. In asking for prayer 3, Livanos was
anticipating the probable need to seek
such relief at some time in the future.
Why not therefore do so in the same application, thereby obviating the need for
a probable
33/
33
second application and the unnecessary duplication of time and cost
associated therewith? To the extent that it was premature, it
was (a) occasioned
by the situation then existing; (b) remedied by the events thereafter (as will
appear more fully below); and (c)
not in any way prejudicial to the
appellants.
As has been pointed out, the first intimation to Livanos of
Weyers's withdrawal (and therefore refusal to act) as arbitrator was when
the
appellants' answering affidavits were filed in May 1990.
Section 12(1)(e)
of the
Act does
not prescribe any time within which, orice a vacancy in terms of that
section exists, the written notice to agree to the appointment
of a substitute
arbitrator must be served by one party on the other or others as the case may
be. The letter of 12 July 1990, written
by Livanos's attorney to the appellants
attorney, to which I have previously
34/
34
referred, called upon the appellants to agree to the appointment of one of
four named senior counsel, or to nominate senior counsel
of their choice from
which Livanos could select one. Following as it did upon the refusal by Weyers
to act it constituted written
notice as required by
section 12(1)(e)
of the
Act.
That
much was conceded by Mr Zeiss.
The letter written by Livanos's attorney
on 12 July 1990 met with a totally negative response from the appellants. No
agreement was
reached on the appointment of a substitute for Weyers, either
within the 7 day period laid down in
section 12(2)
, or subsequently. The next
step required by
section 12(2)
was an application by Livanos, upon notice to the
appellants, for the necessary appointment. No time is prescribed within which
such
notice must be given. The purpose of such notice is presumably to ensure
that
35/
35
the intention of one party to apply to court for the appointment of an
arbitrator is brought to the attention of the other party or
parties. It is
common cause that no formal notice was given by Livanos. But the applicants were
fully aware of his intention because
of prayer 3 in the pending application - in
respect of which a Notice to Amend had been given as recently as 13 July 1990.
That prayer
in effect served as a continuing notice of Livanos's intention to
apply for the appointment of a substitute arbitrator. The appellants
would have
been in no better position than they were had a formal notice been given to them
after the 7 day period had lapsed. The
absence of such notice did not prejudice
them. It would have been futile in the circumstances to have served any further
notice upon
the appellants. To insist upon such a notice would smack of
unwarranted
36/
36 formalism. We are not here dealing with the type of case
where notice is an essential prerequisite to the institution of an action,
and
the failure to give such notice is fatal. The Legislature could not have
intended that a failure to give notice under
section 12(2)
would
per se
render the subsequent proceedings a nullity. The very facts of this case show
the absurdity that would result if it were otherwise.
In the circumstances the
provisions of
section 12(2)
are not peremptory and strict compliance with regard
to the giving of notice is not required; substantial compliance will suffice.
On
the facts of the present matter, as outlined above, substantial compliance was
clearly established.
The appellants cannot claim to have been prejudiced by the failure of the
Court a
quo
to consider the appointment of a professional engineer as
37/
37
replacement for Weyers. It was always open to the appellants, by way of an
alternative prayer to their counter-application, to ask
for such an appointment
(cf
Dipenta Africa Construction (Pty) Ltd v Cape Provincial
Administration
1973(1) SA 666 (C) ). They never did so. The Court a
quo
was therefore not called upon to consider such an appointment. The
third ground of appeal accordingly also fails.
Mr Zeiss indicated that if his
submissions failed he did not wish to challenge the correctness of the order
made by the Judge a
quo
. It was argued, however, that he should have made
a special order disallowing portion of the costs of Livanos's replying
affidavit.
This is a matter to which the Judge gave due consideration before
concluding that no special order was called for. I am unpersuaded
that he
did
38/
38 not exercise a proper discretion in arriving at his
conclusion. There is accordingly no room for interfering with the costs' order
made.
In the result the appeal is dismissed with costs, such costs to include
the costs of two counsel.
J W SMALBERGER JUDGE OF APPEAL
BOTHA, JA )
NESTADT, JA ) concur
FH GROSSKOPF, JA )
VAN DEN
HEEVER, AJA)