About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2013
>>
[2013] ZAWCHC 83
|
|
Petersen and Another v Sizwentsaluba VSP (24218/2012) [2013] ZAWCHC 83 (5 June 2013)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPEHIGH COURT, CAPE TOWN)
Case No: 24218/2012
Before: The Hon. Mr Justice Binns-Ward
In the matter between:
BAREND PETERSEN
................................................................................................
First
Applicant
ANDREW MARALACK
............................................................................................
Second
Applicant
and
SIZWENTSALUBA VSP
...........................................................................................
Respondent
JUDGMENT: DELIVERED: 5 JUNE 2013
BINNS-WARD J:
[1] It is convenient in this case to first describe the relevant
factual and legal context before turning to address whether the
applicants are entitled to obtain in this forum that which they seek,
which is orders directing the rendering by the respondent
of a
corrected or improved account. The account which they contend is
incorrect or insufficient was rendered in purported compliance
with
an award made by an arbitrator in the course of as yet uncompleted
arbitration proceedings for (a) the rendering of an
account,
(b) its debatement, and (c) the payment by the respondent
of what might be ascertained thereby to be due by
it to the
applicants.
[2] On 9 October 2012, at the commencement of proceedings on the
second day of the arbitration, the arbitrator acceded to
a request by
the parties to make an award by agreement in the following terms:
By agreement between the claimants and the respondent
the following award is made:
1. The final determination of claims 1 and 2 of the
statement of claim in respect of Barend Petersen, the counterclaim of
the respondent
and the latter’s defence of rectification shall
stand over pending the final determination of paragraph 2 hereunder.
2. In respect of both the claimants respondent is
directed to:
2.1. cause the valuation contemplated by clause 17.2
read with clause 17.3.3.4 of the partnership agreement to be
performed;
2.2. cause the termination financial statements
contemplated by clause 17.3.1 of the partnership agreement to be
completed;
2.3. render a full account, supported by vouchers in
respect of both the aforesaid valuation and the termination financial
statements;
2.4. debate such valuation and such termination
financial statements with the claimants; and
2.5. thereafter pay forthwith to the claimants
respectively whatever amounts are found to be due to them upon such
debate in accordance
with clause 17.3 of the partnership agreement.
3. Save for cost awards already made, the costs of this
arbitration, including the costs of the arbitrator, shall stand over
for
later determination.
4. Pending such determination, the arbitrator’s
fees, the costs of the venue of the arbitration and the costs of the
transcription
shall be paid equally by the claimants and the
respondent respectively.
5. 5.1 The respondent shall furnish the claimants with
the valuation and financial termination statements within four weeks
hereof;
and
5.2 The claimants and the respondent’s
representatives shall meet within three weeks thereafter to debate
such valuation and
termination financial statements.
6. The award may be made an order of court.
On its face the award was plainly an interim one.
1
It did not represent the conclusion of the arbitration.
[3] Thereafter, and pursuant to an application made to an acting
judge in chambers - apparently without notice to the respondent
- the
applicants obtained an order in terms of
s 31(3)
of the
Arbitration Act 42 of 1965
in the following terms:
‘
That the arbitration award
dated 9 October 2012 annexed to the Order as Annexure “A”
is made an Order of Court
pursuant to Paragraph 6 of the arbitration
award and
section 21
of the
Arbitration Act No. 42 of 1965
’
.
The aforementioned interim award was annexure ‘A’ to the
order. (The application should not have been sought through
the
chamber book.
2
It should also, in any event, have been made on notice to the other
party.
3
However,
nothing turns on those irregularities for present purposes.
Furthermore, the reference in the court order to ‘
section 21
’
is an evident typographical error.)
[4] The subject matter of the arbitration concerned a claim by the
applicants for the ascertainment and payment of the amounts
due to
them consequent upon their resignation from the respondent
partnership. Clause 17 of the partnership agreement regulated
the
financial consequences of the retirement or resignation of a partner.
Technically, of course, the partnership terminated upon
such an
event, but in the current case - unexceptionally in the context of a
going business or professional practice conducted
by a partnership -
there was a provision in the partnership agreement for the immediate
reconstitution of the partnership by the
remaining partners.
[5] As always with matters of interpretation, clause 17 falls to be
construed together with the other provisions of the partnership
contract read as a whole. When the clause is read contextually it
becomes apparent that the partnership agreement contemplated
that
each partner would have two capital accounts. This followed from the
manner in which the partnership was originally established
upon the
amalgamation of what had been separate Cape Town and Johannesburg
partnerships (‘the prior partnerships’).
The partnership
agreement records that the respondent partnership had purchased the
prior partnerships at given values. Clause
5.2 of the partnership
agreement provided that the purchase prices of the ‘prior
partnerships’ would be discharged
by crediting the total amount
thereof to the capital accounts of the prior partners in the books of
the new partnership proportionately
to the partners’ respective
interests in the new partnership. In this respect the agreement made
the following provision:
‘
The amount credited for each
partner shall comprise 2 accounts (i) the capital account
relating to the net asset value of the
purchase price (basic capital
account) and (ii) the capital account relating to the goodwill
of the purchase price (goodwill
capital account).
’ The
further provisions of the partnership agreement indicated that the
amount falling to be credited to the aforementioned
‘basic
capital account’ fell to be computed with reference to the
difference between the total of the written down
values of the assets
of the prior partnerships and their liabilities. A partner’s
capital account relating to the goodwill
fell to be determined with
reference to the difference between the amount credited to the
partner’s basic capital count and
that partner’s share of
the total purchase price of the prior partnerships determined
pro
rata
the partner’s percentage interest in the new
partnership.
[6] Clause 17.1 to clause 17.3 of the partnership agreement provided
as follows:
17.
SUCCESSION
17.1. Upon termination of the partnership, the remaining
partners shall succeed to the retiring partner’s share of the
assets
and liabilities of the partnership in proportion to their
partners’ interests or in such other proportions as they may
agree,
subject to the provisions of clause 6.4;
17.2. Upon termination of the partnership, the
management committee shall forthwith appoint a firm of chartered
accountants to effect
a valuation of the partnership as at date of
termination, such valuation to be completed within 60 (sixty) days of
termination
of the partnership, provided that if the partnership has,
within the previous 12 (twelve) months:
17.2.1 obtained a valuation of the partnership; or
17.2.2. agreed the value of the partnership, which value
has been recorded in the minutes of the partnership,
That value shall be deemed to be the value of the
partnership as at date of termination.
17.3. The remaining partners shall pay the retiring
partner (or his successor, executor or assign), except in the case of
resignation,
in consideration of his share, the aggregate of:
17.3.1. the amount, if any, standing to the credit of
his basic capital account as at date of termination of the
partnership. As
reflected in the termination financial statements;
and
17.3.2. his proportionate share according to his
partner’s interest in the partnership of the value referred to
in 17.2 above
17.3.3. Notwithstanding anything to the contrary
contained in this agreement, in the event of a partner resigning the
goodwill portion
relating to the value of the practise of such
resigning partner will be dealt with as follows:
17.3.3.1. the goodwill portion of the value of the
practice of such partner or the goodwill capital account of such
resigning partner
shall be credited to a special loan account that is
due to the resigning partner.
17.3.3.2. The special loan account shall be repaid as
and when any part of the partnership is sold and/or new partners are
admitted
and/or as and when any partner acquire an increased interest
as contemplated in paragraph 6.4.
17.3.3.3. The proceeds of such acquisition above will be
applied to redeem the loan account of the former partner and to pay
the
existing partners in the ration of the interest of the partners
prior to the resignation of the former partner.
17.3.3.4. Such acquisition should be effected at the
values determined by the valuation referred to in 17.2 of the
agreement unless
otherwise agreed to by all current and former
partners.
17.3.3.5. No dividends, profits, voting, rights or
losses will accrue to the former partner as a result of any
outstanding balance
due on the special loan account.
17.3.3.6. The former partner will be provided annually
with the financial statements of the partnership until such time as
the special
loan account due to the former partner is redeemed.
17.4 …..
17.5 …..
17.6 …..
17.7 …..
(The context makes it clear that the term ‘
retiring partner
’
in clause 17.1 and the introduction to clause 17.3 falls to be read
to include a partner who has resigned, as provided for
in clause
17.3.3.)
[7] It follows plainly, I think, on the basis of what has been
described thus far, that the resignations of the applicants from
the
partnership, with effect from 10 January 2007 and 31 March
2008, respectively, triggered an obligation on the remaining
partners
- if the applicable valuations had not already previously been agreed
and recorded in the minutes of the partnership as
contemplated in the
proviso to clause 17.2 - to obtain a valuation from a firm of
chartered accountants and to draw up ‘termination
financial
statements’. The evident object of the latter exercise is to
allow the amount standing to be reflected in the retiring
or
resigning partner’s ‘basic capital account’ to be
updated as at the effective date of retirement or resignation
and for
the difference between that amount and the partner’s interest
in the value of the partnership as a going concern
to be treated as
standing to the credit of the partner’s ‘goodwill capital
account’. A retiring partner is entitled
to immediate payment
of the amounts in his capital accounts computed according to this
methodology. A resigning partner, like both
of the applicants, is
entitled to the immediate payment of his ‘basic capital
account’, but the amount in his ‘goodwill
capital
account’ falls to be transferred to a special loan account and
paid, as further provided in terms of clause 17.3.3,
only as and when
any part of the partnership is thereafter sold, or new partners
admitted, or when any remaining partner acquires
an increased
interest in the reconstituted partnership.
[8] It is evident that the arbitration proceedings were instituted
because the remaining partners of the respondent had failed
to
discharge their obligations in terms of sub-clauses 17.2 and 3
of the partnership agreement, or had failed to do so to
the
satisfaction of the applicants. The matter was submitted to
arbitration because the partnership agreement contained a provision
that ‘[a]
ny dispute arising from or in connection with
[the]
contract shall be finally resolved in accordance with the
Rules of the Arbitration Foundation of Southern Africa by an
arbitrator
or arbitrators appointed by the Foundation
’. As
mentioned at the outset, it is also evident from the terms of the
award that the arbitration has not been concluded.
One of the issues
that have been stood over for later determination in the arbitration
is that of claim by the respondent for the
rectification of the
partnership contract.
[9] In their founding affidavit the applicants described the
rectification claim as follows: ‘
In the arbitration the
respondent sought to rectify the partnership agreement to reflect
that the actual agreement amongst the partners
was that the special
loan account there referred to, would only be repaid when the
partnership was sold
’. Although the averment was cast in
the past tense, it is manifest
ex facie
the terms of the
interim award, that the rectification claim is still a live issue in
the uncompleted arbitration proceedings.
Its determination is bound
up in the matters that will in all likelihood fall to be debated and
decided in the debatement contemplated
by the arbitral award, and the
outcome of the rectification claim will inevitably inform the amount
of any payments that the respondent
may be required to make to the
applicants at the conclusion of the arbitration proceedings.
[10] It is plain therefore that the debatement and payment provisions
in the arbitration award set out above are merely procedural
directions given to regulate the consequences of an implied
concession by the respondent that the applicants are entitled to an
accounting. It is clear that what the award does is to prescribe a
three stage process: (i) a rendering of an account, (ii) a
debate of that account and (iii) payment of what appears upon
such debatement to be due. In order to properly understand the
interim award and the consequent order one has to have an
appreciation of what is necessarily entailed in the process they
prescribe
towards the final determination of the applicants’
arbitration claim.
[11] The object of the applicants’ arbitration claim is to
obtain payment of what they contend is due to them. An ultimately
final award determining that amount in a liquidated amount should be
the culmination of the process prescribed in the interim award.
At
the end of the prescribed process the applicants will need to have
the final award made an order of court in terms of
s 31(3)
of
the
Arbitration Act in
order to render it exigible against the
respondent. The path to the final award that the applicants seek in
the arbitration claims
entails, by its nature, a progression of
measures that can each give rise to or identify disputes between the
litigants that will
require intermediate determinations for the
process to be kept moving. Thus after a determination has been made
that the claimants
are entitled to an accounting, the question of the
sufficiency of the accounting consequently rendered may arise. That
may require
a declaration as to the adequacy or degree of
insufficiency of the account rendered and the giving of directions
for the correction
or amplification of the account.
[12] It is only after that stage has been determined and any
directions given in relation to it have been complied with that a
meaningful debate between the parties, as contemplated in para 2.4
of the interim award, can occur. A debatement of account
frequently
does not result in the determination of the amount of the claim. As
often as not it serves only to crystallise various
questions that are
in dispute and require adjudication before any obligation to make
payment in an ascertained amount can be confirmed.
The issues in
dispute thus identified then fall to be submitted for adjudication to
the court or tribunal seized of the claim.
[13] As observed, it is the culmination of the aforegoing process
that results in an order or award that can give rise to the
enforcement of a payment. The following description of the applicable
practices and procedures in matters of this nature by Holmes JA
in
Doyle and Another v Fleet Motors PE (Pty) Ltd
1971 (3) SA
760
(A), at 762F-D, has long been accepted as the authoritative
exposition of the position in South African law:
What then should be the practice, for example, as to
what either side must prove, what degree of accounting is required,
and whether
the debate of an ordered account must in the first
instance take place between the parties? In the absence of Rules, the
following
general observations might be helpful:
1. The plaintiff should aver -
(a) his right to receive an account, and the basis of
such right, whether by contract or by fiduciary relationship or
otherwise;
(b) any contractual terms or circumstances having a
bearing on the account sought;
(c) the defendant's failure to render an account.
2. On proof of the foregoing, ordinarily the Court would
in the first instance order only the rendering of an account within a
specified
time. The degree or amplitude of the account to be rendered
would depend on the circumstances of each case. In some cases it
might
be appropriate that vouchers or explanations be included. As to
books or records, it may well be sufficient, depending on the
circumstances,
that they be made available for inspection by the
plaintiff. The Court may define the nature of the account.
3. The Court might find it convenient to prescribe the
time andprocedure of the debate, with leave to the parties to
approach if
for further directions if need be. Ordinarily the parties
should first debate the account between themselves. If they are
unable
to agree upon the outcome, they should, whether by pre-trial
conference or otherwise, formulate a list of disputed items and
issues.
These could be set down for debate in Court. Judgment would
be according to the Court's finding on the facts.
4. ….
5. If it appears from the pleadings that the plaintiff
has already received an account which he avers is insufficient, the
Court
may enquire into and determine the issue of sufficiency, in
order to decide whether to order the rendering of a proper account.
6. Where the issue of sufficiency and the element of
debate appear to be correlated, the Court might, in an appropriate
case, find
it convenient to undertake both enquiries at one hearing,
and to order payment of the amount due (if any).
7. In general the Court should not be bound to a rigid
procedure, but should enjoy such measure of flexibility as practical
justice
may require.
(In a matter like the current one, in which the claim has been
referred to arbitration, the references to ‘
the Court
’
in the passage cited from
Doyle’s
case should be read as
referring to the arbitration tribunal and the reference to ‘
judgment
’
as one to an award.)
[14] I have sought in the aforegoing discussion to illuminate the
extent to which the interim award did no more, in effect, than
to
confirm that an accounting was due by the respondent to the
applicants and to delineate the procedures to be followed thereafter
towards a determination of the applicants’ claim for a final
award sounding in money. I have also sought to demonstrate,
by
highlighting the interim nature of the award described in the
introduction to this judgment, the uncompleted task of the
arbitration
tribunal thus far and the continuing role for it that is
inherent in the process prescribed in terms of the interim award.
[15] Against that background it is time to address the application
currently before the court. The respondent has purported to
comply
with its obligation to render an account by furnishing a valuation
prepared by Ngubane Inc, a firm of chartered accountants.
The
valuation was premised on the net value of the assets of the
partnership, excluding goodwill. It is clear from the valuation
report that the partnership was not valued as a going concern. This
was an obviously misconceived basis to have undertaken the
valuation
because it does not provide a valuation undertaken on the basis that
clause 17.2 requires, that is a valuation of the
partnership as a
going concern. Mr
Sibeko
SC, who appeared for the
respondent, conceded as much, advisedly so in my view. The question
that arises is whether the identified
flaw in the account rendered is
a matter to be confirmed by the court, with directions to be given by
it as to how and by when
the shortcomings are to be remedied, or
whether thoseare matters for the arbitration tribunal.
[16] The valuation report also contains a statement that the valuer
had been informed by the respondent that it was not possible
to
prepare termination financial statements as required in terms of
clause 17.3 of the partnership agreement. That seems an implausible
assertion by the respondent, but whether it is actually correct or
not requires a factual enquiry. The applicants’ counsel
sought
to contend it was a baseless statement because what had purported to
be termination financial statements had in fact been
produced by the
respondent at the first stage of the arbitration hearing. (Copies of
these were annexed to the applicants’
replying affidavit.) It
is apparent, however, that what had been produced had not been
acceptable to the applicants as termination
financial statements, so
the applicants’ argument does not take them anywhere for
present purposes. It is evident that that
the respondent’s
assertion is going to have to be investigated and its validity, or
otherwise, determined. The question is
by whom, a judge or the
arbitrator?
[17] In paragraphs 2-4 of their notice of motion in the current
application the applicants seek orders:
2.
Directing respondent forthwith to comply with
paragraph 2.1 and 2.2 of the order of this Honourable Court dated 12
November 2012
[this is an evident reference to para 2.1 and
2.2 of the interim arbitration award that was incorporated in the
court order]
by providing a full account to applicant in
terms of paragraph 17.2 read with 17.3.1 and 17.3.3.4 of the
partnership agreement,
annexure BP1 to the founding affidavit of
Barend Petersen.
3. Directing respondent, in furnishing such account, to
make provision therein for the valuation of the applicants’
goodwill
capital account in accordance with paragraph 17.3.3 of the
aforesaid partnership agreement.
4. Alternatively, directing respondent in accounting to
applicants in respect of their respective capital accounts to base
such
accounting on the partnership valuation of R46 million of March
2006 in respect of first applicant and that of R47,5 million of
September 2007 in respect of second applicant.
[18] The respondent contends in its papers that the application is an
abuse of process because the applicants seek no more than
what has
already been provided for in terms of order made in terms of the
arbitral award. If regard is had to paragraphs 2 and
3 of the notice
of motion taken at face value there would appear to be some merit in
the argument. The content of the supporting
affidavits, however,
makes it evident that what the applicants are in fact seeking is
directions from the court for the production
by the respondent of an
improved or corrected valuation account. (In respect of the
termination financial statements, the relief
sought is indeed nothing
more, in effect, than a reiteration of the already given order.) If
it were contended that the respondent
by failing to produce such
statements was being wilfully non-compliant, rather than unable to do
so, as it contends, the proper
course would have been for the
applicants to apply for a committal of the remaining partners for
contempt of court.
[19] The respondent has emphasised the uncompleted state of the
arbitration proceedings and contended in its answering affidavit
that
the ‘
merits of the issues
’ - which I have
understood to mean the adequacy of the account that has been rendered
and whether it was indeed impossible,
for the reasons reported in
Ngubane Inc’s valuation letter, to produce termination
financial statements - are the very subject
matter of those
proceedings. The deponent states ‘
The arbitrator is yet to
hear and make an award on whether any of the Applicants have
established a claim against the Respondent
on the issues pleaded;
whether the rectification that which the Respondent claims should
stand, will be established and all the
ancillary issues between the
parties
’.
[20] Mr
Fitzgerald
SC, who appeared for the applicants
assisted by Mr
Dewrance
, conceded that the wording of
paragraphs 2 and 3 of the notice of motion could have been improved
to express more pertinently the
nature of the relief being asked for
by the applicants, but moved to meet the opposition based on the
notion that any difficulties
with the account that had been rendered
were a matter to be dealt with at the arbitration, not in this forum,
by arguing that the
relief sought arose out of inadequate compliance
by the respondent with an order of this court. He submitted that they
thus fell
to be dealt with in the remit of the court and not in the
arbitration. He also contended that by agreeing to the interim award,
and in particular paragraph 6 thereof, the respondent had
consented to the court disposing of the issue of the sufficiency
of
the account rendered.
[21] I am not persuaded by the arguments advanced on behalf of the
applicants. They amount to this: Because the court has endorsed
a
provision in the arbitral award directing the respondent to render an
account, it is seized of dealing with the adequacy of the
account.
Taken to its logical conclusion the argument would also have to hold
that because the court had furthermore endorsed the
provision in the
award that the account should be debated, it should also become
seized of adjudicating any issues identified for
determination in the
course of that debate, and because it had ordered that payment should
be made at the conclusion of the debatement
process (one which takes
place initially between the parties and thereafter in respect of
unresolved matters before the adjudicating
forum) it should, having
determined the debatement, give a judgment sounding in money in
favour or dismiss their arbitration claim,
as the case may be. This
plainly cannot be so.
[22] The effect of the interim arbitral award, properly construed in
the context described above, was to do no more than confirm
the
applicants’ entitlement to an accounting as directed and to
identify the steps to be followed thereafter. The court’s
order
in terms of
s 31(3)
of the
Arbitration Act added
nothing to the
effect of the interim award other than to render the respondent
liable to contempt proceedings should it wilfully
and contemptuously
fail to comply with the duty to render the account. Paragraph 6 of
the award merely acknowledged the susceptibility
of the award to this
mechanism of state assisted enforcement. It was not directed at the
introduction of a parallel means of determining
any issues that are
res integra
in the arbitration proceedings.
[23] The sufficiency of any account rendered in purported compliance
with the order is a matter to be determined in the arbitration.
It is
a matter that arises in the process for the further determination of
the arbitration set out in the interim award and the
subsequent court
order. As observed in the passage from the judgment in
Doyle’s
case quoted earlier, issues of the sufficiency of an account
rendered and those arising in the context of debatement can sometimes
be correlated, and the forum seized of them might find it appropriate
to deal with them together. The current matter may or may
not present
such a case, but the fact that it is the forum seized of the case
that in
its
discretion determines whether it is convenient to
deal with the resulting issues in a particular way merely underscores
the inappropriateness
of this court accepting the invitation of the
applicants’ counsel to deal with issues that trench on those
falling to be
dealt with by the arbitration tribunal.
[24] Mr
Fitzgerald
argued that the respondent had not
contested the court’s jurisdiction to deal with the relief
sought in the application.
I do not think that submission is
supported on a proper reading of the answering papers. Although the
point might have been more
lucidly expressed, it is nevertheless
sufficiently clear, in my view, that the respondent has contended
that the issue of the sufficiency
of the account is a matter to be
dealt with in the arbitration; correctly so.
[25] In any event, even if the respondent had not expressly contested
the court’s jurisdiction, its failure to have done
so would
have been of no moment. Irrespective of any position adopted by the
respondent, there are pertinent legal principles and
important policy
considerations that militate against the propriety of the court
entertaining the application. When parties agree
privately that a
dispute between them be resolved through arbitration in terms of the
Arbitration Act, they
thereby impliedly exclude any right to an
appellate process through the court system and they limit
interference by courts in the
determination of the dispute to the
grounds set out in
s 33(1)
of the
Arbitration Act.
4
They
cannot thereafter purport by agreement to impose jurisdiction on
the court which their reference to arbitration has impliedly
excluded;
cf.
Telcordia Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA)
(2007 (5) BCLR 503
;
[2007] 2 All SA 243)
, at
para 51.
[26] As I have sought to demonstrate, the issues that the applicants
would have this court determine are integral to the processes
inherent in the claims submitted to arbitration. It would be
unwholesome and contrary to sound principle that the determination
of
some of them be amenable to appeal in terms of court system because
of a misdirected assumption of jurisdiction by the court,
and others
not so, because they happen to be properly decided within the
arbitration process to which the applicants’ claims
remain
subject.
[27] By acceding to making the order in terms of
s 31(3)
of the
Arbitration Act, the
court did not - and indeed could not competently
- ascribe to itself a jurisdiction which the very act of referral by
the parties
of the claims to arbitration had excluded. The purpose of
an order in terms of
s 31(3)
is to lend force to an arbitral
determination in the form of end-results; it is not to serve as a
platform to transfer to the court
for determination unresolved issues
that fall within the scope of the arbitration. The fact that the
order might pertain to an
interim, rather than a final, award does
not derogate from this principle. Assuming that no issue as to its
legality or enforceability
on grounds of public policy arises,
5
a court that makes an order in terms of
s 31(3)
does not go into
the merits of the matter giving rise to the arbitral award. As
already mentioned, the purpose of the order is
only to assist in the
enforcement of the award by the ordinary processes and procedures of
the court quite unrelated to the merits
of the matter.
6
It is a form of assistance to which any party who obtains relief in
terms of an arbitral award is entitled. Dealing with the merits
of an
arbitration claim is a matter which,subject only to the provisions of
the
Arbitration Act,
7
falls
exclusively within the jurisdiction of the arbitration
tribunal.
[28] The applicants have thus misconstrued the import and effect of
the order they obtained in terms of
s 31(3)
of the
Arbitration
Act. The
application was consequently misconceived.
[29] The application is therefore dismissed with costs, including the
costs reserved by Rogers AJ in the postponementorder made
on
22 January 2013.
A.G. BINNS-WARD
Judge of the High Court
JUDGMENT :
The Honourable Justice A.G. Binns-Ward
FOR THE APPLICANT :
Adv. M.J. Fitzgerald SC
Adv. M. Dewrance
INSTRUCTED BY :
Bowman Gilfillan Inc.
Cape Town
FOR THE RESPONDENT :
Adv. L.T. Sibeko SC
INSTRUCTED BY :
MabuzaHewuInc
Johannesburg
DATE OF HEARING :
30 May 2013
DATE OF JUDGMENT :
5 June 2013
1
The
definition of ‘award’ in the
Arbitration Act includes
an
interim award; so the interim nature of the award did not constitute
any impediment to its terms being made an order of court
in terms of
s 31(3)
of the Act.
2
An
application in terms of
s 31
of the
Arbitration Act is
not one
of the types of matter on the list of matters in respect of which
applications through the Chamber Book are authorised
in terms of
Practice Note 37 of the Consolidated Practice Notes of the Western
Cape High Court, Cape Town.
3
Notice
to the other party is expressly required in terms of
s 31(1)
of
the
Arbitration Act.
4
Section
33(1) of the
Arbitration Act provides
:
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
powers; 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.
5
Cf.
Hubbard v Cool Ideas 1186 CC
[2013] ZASCA 71
(28 May
2013).
6
As
pointed out in the minority judgment of Kroon AJ in the
Constitutional Court in
Lufuno Mphaphuli & Associates
(Pty) Ltd v Andrews and Another
2009 (4) SA 529
(CC)
(2009 (6)
BCLR 527)
, at para 25,
arbitrators have no powers
to enforce their awards and the effectiveness of the private process
therefore rests on the binding,
even coercive, powers that the state
entrusts to its courts.
Arbitration awards made orders of
court may be enforced in the same manner as any judgment or order to
the same effect, including
execution by state mechanisms, which
constitutes an integral part of the resolution of disputes between
parties and,being antithetical
to self-help, is an important facet
of the rule of law
. (The majority judgment of
O’Regan J did not derogate from Kroon AJ’s exposition in
this respect.)
7
See,
for example,
ss 3(2)
,
6
,
7
,
20
,
21
,
32
(2) and
33
of the
Arbitration Act.