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[2018] ZASCA 27
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Brompton Court Body Corporate v Khumalo (398/2017) [2018] ZASCA 27; 2018 (3) SA 347 (SCA) (23 March 2018)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 398/2017
In
the matter between:
BROMPTON
COURT BODY CORPORATE SS119/2006
APPELLANT
and
CHRISTINA
FUNDISWA KHUMALO
RESPONDENT
Neutral
citation:
Brompton
Court Body Corporate v Khumalo
(398/2017)
[2018] ZASCA 27
(23 March 2018)
Coram:
Ponnan,
Van der Merwe and Mocumie JJA and Pillay and Makgoka AJJA
Heard:
1
March 2018
Delivered:
23
March 2018
Summary:
Prescription
– an arbitration award generally does not create a new debt for
purposes of the Prescription Act 68 of 1969 (the
Act) – a claim
to make an arbitration award an order of court in terms of
s 31
of
the
Arbitration Act 42 of 1965
is not a ‘debt’ in terms
of the Act.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Johannesburg (Mokose AJ sitting as court
of first instance):
1 The appeal is upheld
with costs.
2 The order of the court
a quo is set aside and replaced with the following:
‘
Prayers 1, 2 and 3
of the notice of motion are granted, with costs.’
JUDGMENT
Van
der Merwe JA (
Ponnan
and Mocumie JJA and Pillay and Makgoka AJJA
concurring)
[1]
The appellant is the body corporate of the Brompton Court sectional
title scheme. At all relevant times the respondent, Ms Christina
Fundiswa Khumalo, owned a sectional title unit in the scheme.
Disputes arose between the parties, which, by agreement, were
referred
to arbitration.
[2]
The respondent was the claimant in the arbitration. She claimed that
her account with the appellant be credited with various
amounts in
respect of levies, other charges and interest that I find unnecessary
to particularize. She also claimed: (a) the costs
of repairs to the
structure of the unit, for which she asserted the appellant was
responsible; (b) damages on the basis that as
a result of the conduct
of the appellant, she was unable to rent out the unit for a period of
three months; and (c) damages for
defamation. The appellant
counter-claimed for payment of the outstanding balance owed to it by
the respondent in respect of ordinary
levies, special levies, a
security levy, consumption of electricity and interest.
[3]
The arbitrator published his award on 21 December 2012. He allowed
the claims for the costs of repairs (in the amount of R20 000.00)
and for loss of rental income (in the amount of R27 750.00) but
dismissed all of the respondent’s other claims. The
arbitrator
found that the respondent owed the amount of R135 099.48 in
respect of the counter-claim. He subtracted the aforesaid
amounts of
R20 000.00 and R27 750.00 from this amount and made an
award in favour of the appellant for payment of the
balance of
R87 349.48, interest thereon and costs of the arbitration.
[4]
Per notice of motion issued on 26 March 2014, the appellant applied
in terms of
s 31
of the
Arbitration Act 42 of 1965
to the Gauteng
Local Division of the High Court, Johannesburg that the arbitration
award be made an order of court. The respondent
opposed the
application in effect only on the basis that the debt in question had
prescribed in terms of the Prescription
Act 68 of 1969 (the Act). (In
the absence of an application to review the arbitration award, the
allegations in the answering affidavit
that the arbitrator was biased
or exceeded his authority, did not constitute a defence to the
application.) The court a quo (Mokose
AJ) upheld the defence of
prescription and dismissed the application with costs. She refused
leave to appeal but the appellant
was subsequently granted leave to
appeal by this court. The issue in the appeal is whether the defence
of prescription was correctly
upheld.
[5]
Counsel for the appellant submitted that the arbitration award
constituted a new debt and that the three year period of prescription
only commenced to run on the date of publication of the award, that
is 21 December 2012. As the application was launched on 26
March
2014, so it was contended, the respondent’s reliance on
prescription was misplaced. In this regard reference was made
to John
Saner SC
Prescription in South African Law,
(1996) at p 3-160,
where it is firstly stated, without qualification, that when a
binding arbitral award is made, a new debt arises
and secondly, that
if an arbitral award is not made an order of court within three years
of its granting, the right to do so (being
a ‘debt’ in
terms of the Act) prescribes. Similar views were expressed in
Primavera Construction SA v Government of Northwest Province &
another
2003 (3) SA 579
(BPD) p 604 paras 13 and 14 and
Prime
Fund Managers (Pty) Ltd v Rowan Angel (Pty) Ltd & another
[2014] ZAGPPHC 81;
[2014] 2 All SA 227
(GNP) paras 44 and 45. The
correctness of each of those statements will be considered in turn.
As
to the first:
[6]
The first statement cannot be accepted as a principle of general
application. The converse will generally be true. Even a judgment
of
a court of law generally does not create a new debt. It serves to
affirm and/or liquidate an existing debt which was disputed.
What the
judgment does in relation to prescription of a debt, is to give rise
to a new period of prescription of 30 years in terms
of s 11
(a)
(ii)
of the Act. The same must generally apply to an arbitration award,
save that it does not attract a new prescriptive period
in terms of s
11 of the Act.
[7]
The conclusion that an arbitration award generally does not give rise
to a new debt, is supported by the provisions of s 13(1)
(f)
of
the Act, which provides:
‘
(1)
If —
(f)
the debt is the
object of a dispute subjected to arbitration;’
and
‘
(i)
the
relevant period of prescription would, but for the provisions of this
subsection, be completed before or on, or within one year
after, the
day on which the relevant impediment referred to in paragraph
(a),
(b), (c), (d), (e), (f), (g)
or
(h)
has ceased to exist,
the
period of prescription shall not be completed before a year has
elapsed after the day referred to in paragraph
(i).
’
[8]
Should the alleged debt that was subject to arbitration be rejected
by the arbitrator, no question of delay of the completion
of
prescription arises. It follows that save in exceptional
circumstances, such as abandonment of the arbitration proceedings
before completion thereof, the ‘impediment’ of pending
arbitration proceedings will cease to exist on affirmation of
an
existing debt by an arbitration award. If the arbitration award
constituted a new debt, it would make no sense to provide for
the
delay of the completion of prescription of the original underlying
debt after the award and s 13(1)
(f)
would
in most cases be rendered superfluous. In my judgment the sensible
and logical approach is that the delay of completion of
prescription
in terms of s 13(1)
(f)
is intended to enable a creditor to apply to make the arbitration
award an order of court in terms of
s 31
of the
Arbitration Act,
before
the debt on which it is based prescribes.
[9]
It should be mentioned that different considerations apply to
arbitrations under the Labour Relations Act 66 of 1995 (the LRA).
This is illustrated by the judgments in
Myathaza
v Johannesburg Metropolitan Bus Service (SOC) Limited t/a Metrobus &
others
[2016]
ZACC 49
;
2018 (1) SA 38
(CC). There Mr Myathaza obtained an
arbitration award reinstating him to his employment. When he
approached the Labour Court some
four years later to have the
arbitration award made an order of court, the employer relied on
prescription. Four Justices of the
Constitutional Court held that the
Act was inconsistent with the LRA and did not apply to the LRA and
that even if it did, a reinstatement
arbitration award under the LRA
did not constitute a ‘debt’ in terms of the Act. The
other four held that the Act was
applicable to proceedings under the
LRA and that a claim for unfair dismissal under the LRA was a ‘debt’
in terms of
the Act, but that referral of the dispute to the CCMA
interrupted prescription in terms of s 15(1) of the Act. See also
Mogaila
v Coca Cola Fortune (Pty) Limited
[2017]
ZACC 6
;
2018 (1) SA 82
(CC).
[10]
In conclusion on this point, reference should be made to the decision
in
Blaas v Athanassiou
1991 (1) SA 723
(W). The arbitration
agreement in that matter provided that the award of the arbitrator ‘.
. . shall be deemed to be and
shall be treated as if a judgment
delivered by a Judge in the Supreme Court of South Africa’.
The
court held, no doubt correctly, that
inter
partes
the award had the status of an order of court. The judgment has been
understood to hold that the prescription period of 30 years
applicable to a judgment debt in terms of the Act, applied to the
arbitration award in that matter. See M M Loubser
Extinctive
Prescription
(1996)
,
pp
41 and 120, J C Saner above pp 3-160 and
Primavera
above
para 12. But that is not what Hartzenberg J said in
Blaas
.
What he said (at 725H-I), was that the effect of the agreement was
that for a 30 year period ‘. . . the two parties contracted
themselves out of a right to rely against the other on the defence of
prescription.’ Thus the judgment was based on a waiver
of
rights and not on an application of the 30 year prescription period
in terms of the Act to an arbitration award.
As
to the second:
[11]
I am also unable to agree with the second statement, namely that the
claim to make an arbitration award an order of court is
a debt that
prescribes after three years. A claim that an arbitration award be
made an order of court is not a ‘debt’
in terms of the
Act. In this regard the Constitutional Court has clearly endorsed the
decision of this court in
Electricity
Supply Commission v Stewarts & Lloyds of SA (Pty) Ltd
1981
(3) SA 340
(A) at 344E-G, namely that a debt in terms of the Act is
an obligation to pay money, deliver goods or render services. See
both
the majority judgment (paras 85-93) and the minority judgment
(paras 187-187 and 195) in
Makate
v Vodacom Ltd
[2016]
ZACC 13
;
2016 (4) SA 121
(CC). See also
Off-Beat
Holiday Club and another v Sanbonani Holiday Spa Shareblock Limited
and others
[2017] ZACC 15
;
2017 (5) SA 9
(CC) paras 44 and 48. The appellant’s
claim to make the arbitration award an order of court did not require
the respondent
to perform any obligation at all, let alone one to pay
money, deliver goods or render services. The appellant merely
employed a
statutory remedy available to it. This is not entirely
dissimilar to a claim for rectification of a contract, which this
court
has held not to constitute a ‘debt’ in terms of the
Act. See
Boundary
Financing Limited v Protea Property Holdings (Pty) Limited
[2008]
ZASCA 139
;
2009 (3) SA 447
(SCA) paras 12-14.
[12]
It follows that to the extent that
contrary
views have been expressed in
the
judgments of
Primavera
and
Prime
Fund Managers
,
they should not be followed.
[13]
As there is no basis for holding that the arbitration award in this
matter created a new debt and prescription did not commence
running
on date thereof, the appellant cannot succeed on this point. There
is, however, another reason why the court a quo erred
in upholding
the defence of prescription.
[14]
The respondent raised prescription in the following terms:
‘
1.
The matter between parties has since been prescribed in terms of
Section 13(1)(f) of
the prescription Act 68 of 1969, which provides
that the completion of prescription will be delayed until one year
after the Arbitration
proceedings came to an end, for the Applicant
to make an arbitration award an order of court in terms of Section 31
of the Arbitration
Act, 42 of 1965. The Applicant has failed to do so
in time.
2.
The arbitration process took place on the 25
th
of
September 2012 and the
award
was published on the 21
st
of December 2012.
3.
The period of [o]ne year has lapsed since the date of publication, to
make the
award an order of court in terms of
Section 31
of the
Arbitration Act, 42 of 1965
.’
[15]
It is immediately apparent that prescription was raised as if s
13(1)
(f)
of the Act provided for a one year period of prescription in respect
of an arbitration award. This proposition formed the basis
of the
judgment of the court a quo. The proposition is of course clearly
wrong. Section 13(1)
(f)
provides nothing of the sort. It deals with the delay in the
completion of the running of prescription. The requisite periods of
extinctive prescription in terms of the Act are to be found in s 11
thereof. Applied to the facts of this case, s 13(1)
(f)
provides
that if the relevant period of prescription in respect of a debt
would, but for the provisions of the subsection, have
been completed
before or on within one year of the date of publication of the award
on 21 December 2012, the completion of the
period of prescription in
respect of such debt would be delayed for one year after 21 December
2012.
[16]
As I have said, the appellant’s counter-claim related to
ordinary levies, special levies, a security levy and consumption
of
electricity. It can be accepted that the counter-claim encompassed a
variety of separate debts. It follows that for the respondent
to
succeed she had to prove that one or more of these separate debts
would have prescribed before or on or within a year of the
arbitration award. This entailed proof of the date on which each debt
became due. See
Gericke
v Sack
1978
(1) SA 821
(A) at 827H-828A.
[17]
The respondent made no attempt to satisfy this onus. The various
debts clearly became due on different dates and at least some
of them
would have become due from month to month. The respondent presented
no evidence as to when any of these debts became due.
The uncertainty
is compounded by the fact that it is not possible on the evidence to
make any appropriation of the substantial
payments that the
respondent made to the appellant prior to the arbitration.
[18]
It follows that the defence of prescription had to fail. Counsel for
the respondent properly conceded that in such event, the
order of the
court a quo must be replaced with an order granting the appellant’s
application with costs.
[19]
The following order is issued:
1
The appeal is upheld with costs.
2
The order of the court a quo is set aside and replaced with the
following:
‘
Prayers
1, 2 and 3 of the notice of motion are granted, with costs.’
_________________________
C
H G van der Merwe
Judge
of Appeal
APPEARANCES
For
Appellant:
A Granova
Instructed
by:
Jordaan & Wolberg
Attorneys, Johannesburg
Rossouws Attorneys,
Bloemfontein
For
Respondent:
M C Ntshangase
Instructed by:
Khumalo Attorneys &
Associates, Randburg
Maduba Attorneys,
Bloemfontein