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# South Africa: South Gauteng High Court, Johannesburg
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[2025] ZAGPJHC 71
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## Fore St Holding (Pty) Ltd and Another v Meyer NO and Others (2023/01338)
[2025] ZAGPJHC 71 (5 February 2025)
Fore St Holding (Pty) Ltd and Another v Meyer NO and Others (2023/01338)
[2025] ZAGPJHC 71 (5 February 2025)
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sino date 5 February 2025
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
JOHANNESBURG
Case Number: 2023-01338
(1)
REPORTABLE: YES/NO
(2)
OF INTEREST TO OTHER JUDGES:
YES/NO
(3)
REVISED.
5
February 2025
In the matter between:
FORE
ST HOLDING (PTY) LTD
First Applicant
BIG
FIVE PROPERTY DEVELOPMENTS (PTY) LTD
Second Applicant
and
LEOLA
SHARON MEYER N.O.
First Respondent
PAUL
KOSKI
N.O.
Second Respondent
HELEEN
JEANNE MEYER N.O.
Third Respondent
LIEZEL
ELIZABETH LATEGAN N.O.
Fourth Respondent
ANYA
MÖLLER
N.O.
Fifth Respondent
JG
MEYER BOERDERY (PTY) LTD
Sixth Respondent
J.R.
GAUTSCHI
SC
Seventh Respondent
JUDGMENT
WINDELL,
J:
Introduction
[1]
This
is a review in terms of
section 33(1)
of the
Arbitration Act, 42 of
1965
as amended (the Act) of an award made by the seventh respondent
(the arbitrator). The applicants, Fore St Holding (Pty) Ltd (Fore)
and Big Five Developments (Pty) Ltd (Big Five), who were the
claimants in the arbitration proceedings, contend that the arbitrator
exceeded his powers as arbitrator and that he acted grossly
negligently in failing to consider material and undisputed evidence
advanced on behalf of the applicants.
[1]
Additionally, it is submitted that the arbitrator brought out an
award with materially contradictory findings rendering the award
confusing and unenforceable in material respects, constituting a
gross irregularity. As a result, the applicants seek an order
setting
aside paragraphs 143.1, 143.3 and 143.4 of the award.
[2]
The first to sixth respondents
oppose the application and seek an order dismissing the application
with costs on a punitive scale.
They also brought a
counterapplication that the arbitration award be made an order of
court, together with costs.
Background facts
[3]
On 23 November 2011 a joint venture
agreement (JVA) was concluded between Big Five, a property
development company, and two trusts,
the Klipriviersberg Trust and
the JGM Trust, (hereinafter referred to as ‘the Trusts’)
as well as the sixth respondent,
JG Meyer Boerdery (Pty) (Ltd) (JGM
Boerdery),
a private company that conducts farming operations
on the
immovable properties (the properties)
owned by the Trusts
. The first, second, third,
fourth, fifth and sixth respondents are trustees of the Trusts
involved and include a representative
of JGM Boerdery.
[4]
Pursuant to the conclusion of the
JVA, Big Five ceded certain rights and obligations contained in the
JVA to Fore. It is for this
reason that Fore is also a party to these
proceedings and was a party to the arbitration proceedings.
[5]
The
JVA was established with the objective of enhancing the value of the
properties through the rezoning of residential and commercial
areas.
[2]
Residential,
commercial, hospitality, medical facilities, offices, and a
substantial retail component were all intended to be integrated
into
a high-density mixed-use residential project. In order to facilitate
the realisation of this vision, a team of experts was
recruited to
assist in the development of the area and the rezoning of the
properties from agricultural to mixed-use.
[3]
The
JVA did not include an agreement of sale between the applicants and
the Trusts.
[4]
Any
possible sale could only take place in the future to the ‘realisation
company’ and thereafter the ‘development
company’.
In terms of the JVA the Trusts gave the applicants the exclusive
right to rezone and on-sell the properties to
the development company
on the terms and conditions contained in the JVA. In terms of clause
3.5 of the JVA the purchase price
for the properties would be shared
equally between the parties.
[6]
Between
2013 to 2019 the parties became engaged in litigious proceedings,
which culminated in a judgment of the Supreme Court of
Appeal in
2018.
[5]
During November 2021,
further disputes between the parties led to the respondents issuing a
breach notice to the applicants on
17 January 2022 (‘the breach
notice’). The applicants were informed, among other things,
that they were in breach of
the JVA in that they did not comply with
their realisation performance obligations, specifically to attend to
the rezoning of the
properties (clause 3.2), establishing an SPV or
more than one SPV for the purpose provided (clause 3.4); concluding
an agreement
of sale for the purpose of taking transfer of the
properties (such agreement to include the purchase price for each
portion of
the properties held by each trust); and to comply with the
obligations of Big Five to JGM Boerdery provided for in clause 4.
[7]
The applicants’ attorney
responded to the breach notice. They denied that they were in breach
and stated that the respondents
were aware that the rezoning and/or
proclamation of the properties as envisaged in terms of clause 3 of
the JVA can only be performed
by Fore once the approval to establish
a township has been granted by the requisite authority. To apply for
the establishment of
a township on the properties, Fore required a
competent power of attorney from the Trusts as landowners of the
properties. This
power of attorney had not been forthcoming from the
Trusts and since the conclusion of the protracted litigation between
them in
March 2019, the applicants have been trying to obtain signed
powers of attorney from the trustees of the Trusts authorising Fore
to submit the application for the establishment of a township.
[8]
The letter continued to state that
despite not having been provided with the signed powers of attorney,
and in anticipation of receiving
same, Fore and the appointed
professional team have proceeded to, inter alia, prepare the
application to establish a township,
commence the public
participation proceedings in respect of the Environmental Impact
Assessment and held numerous meetings with
the Ekurhuleni City
Planning Department. They informed the respondents that as the
township approval had not been obtained yet,
it was premature,
alternatively, impossible for Fore to perform its obligations in
terms of clause 3 of the JVA.
[9]
On 3 March 2022 the respondents sent
a letter of cancellation of the JVA (‘the cancellation
letter’). In terms of the
JVA the disputes between the parties
were referred for arbitration. In the arbitration proceedings the
applicants sought: (1) a
declaratory award that would render the
respondents’ cancellation of the JVA invalid, and (2) specific
performance of the
JVA by the respondents, specifically the provision
of powers of attorney to the applicants to facilitate the process of
zoning
and development applications in respect of the Trusts’
immovable properties. The respondents counterclaimed for awards,
declaring
their cancellation of the JVA for alleged breaches by the
applicants as valid/lawful, and compensating JGM Boerdery for breach
of a maintenance provision by the applicants.
The arbitration
proceedings
[10]
On 12 April 2022 a written reference
(‘the Reference’) was sent to the arbitrator. The
relevant part of the Reference
reads as follows:
‘
4.
Disputes exist between the parties in relation to the purported
cancellation of the joint venture agreement on 3 March 2022 concluded
between the parties on 23 November 2011 and its implementation.
5. The disputes
between the parties shall be further defined by the pleadings to be
exchanged in the arbitration.
6.2. The powers of the
arbitrator shall include, without limitation, the powers enumerated
in Rule 11 of the AFSA Commercial Rules.
6.3.
As agreed between the parties in the Joint Venture Agreement, clause
9.5, Rule 22 of the Commercial Rules of AFSA in respect
of appeals
shall be applicable.
27.
This agreed recordal, read together with the dispute clause contained
in the joint venture agreement, shall serve as the terms
of reference
for the arbitration.’
[11]
The applicants filed their statement
of claim on 21 April 2022. It is the applicants’ case that they
confined the issues and
the remedies sought to only two matters: the
lawfulness of the respondents' purported cancellation on 3 March 2022
for the reasons
set out in the breach notice and that the respondents
should provide such powers of attorney required to implement the JVA.
[12]
The respondents filed their
statement of defence on 11 May 2022. They pleaded that the defendants
had validly cancelled the JVA
on 3 March 2022 after the applicants
had failed to comply with the breach notice which they contended
constituted both an
interpellatio
(
a demand)
and a notice in terms of the
lex
commissoria
(cancellation clause) in
terms of clause 10 of the JVA.
[13]
The
statement of defence referred at the outset, among other things, to
the obligation of the developer responsible for designing
the
properties to co-operate with the landowners.
Alternatively
to their right to cancel under the cancellation letter, the
respondents pleaded that the failure to reach an agreement
on the
terms of the shareholders' agreement, cooperation in the rezoning
process, and the contents of the powers of attorney rendered
the
pactum
de contrahendo
[6]
unenforceable, thereby entitling the respondents to withdraw from the
JVA.
The
arbitrator observed that those assertions were made without any
formal alternative prayer in their statement of defence or
counterclaim.
[14]
The respondents also filed a
counterclaim for contractual damages. In the counterclaim the
respondents raised matters concerning
the applicants' maintenance
obligation in respect of JG Boerdery. These matters were addressed by
way of correspondence and meetings
and negotiation prior to the
breach notice. The arbitrator's conclusions regarding the
counterclaim are not contested.
The
respondents' first amendment
[15]
The respondents gave notice of their
intention to amend their statement of defence on 22 July 2022 to
include the so-called ‘became
impossible’ defence or
‘ancillary contracts’ defence. The basis of this defence
is an implied, alternatively,
a tacit term of the JVA, that further
ancillary contracts would be concluded to, among other things, give
the JVA business efficacy.
The respondents pleaded that failure to
conclude the ancillary contracts would render the JVA incapable of
being performed. The
proposed amendment provided for the following:
"17A.1. The JVA
is a long-term relational contract which envisages a cooperative
endeavour to achieve its main purpose, namely
the ‘Development’
as defined in clause 1.2.2.7 thereof, which consists of the re-zoning
and realisation of the property
to the development company.
17A.2. The JVA is
ambiguous and has to be interpreted, inter alia, against the
background of the law and practice with regard to
property
development and trusts.
17A.3.
It is an
implied, alternatively a tacit term of the JVA that further ancillary
contracts would be concluded between the parties
thereto to regulate
inter alia the following, or so much thereof as would give the JVA
business efficacy:
17A.3.1 Details of the
subdivision and/or consolidation of all three portions of the
'property' defined in clause 1.2.2.4 of the
JVA (as rectified).
17A.3.2 The rezoning
of the property and the establishment of a township or townships
thereon and the details thereof including
the timing or phasing
thereof taking into account the interests of all the parties to the
agreement.
17A.3.3 The
establishment of one or more ‘realisation company’ in
which the Trust and/or their nominees and Big Five
and/or its
nominees will hold equal shares for the purpose of controlling the
process of rezoning and township establishment and
the transfer of
portions of properties to it from the Trust and the 'on-sale' or
'realization' of these portions of property to
the development
company.
17A.3.4 The terms of
the sale and transfer of the properties from the trusts to the
realisation company/ies including but not limited
to the allocation
of a purchase consideration to each sale and property.
17A.3.5 The rights and
obligations of the parties as shareholders in the realisation company
on the basis of shareholder agreements
between the two trusts
(together holding 50% of the shares) and Big Five holding the other
50% as provided in clause 3.5.
17A.3.6 The indemnity
to the trusts to be provided by Big Five against any loss of
liability following from Big Five's action or
inaction in terms of
clause 3.1 and/or clause 3.2.
17A.3.7 The
‘maintenance’ of the Property and other obligations of
Big Five pending and during the Development as well
as the
recognition of the rights of JGM Boerdery (Pty) Ltd, in terms of
clause 4.
17A.3.10 The financial
feasibility and continued financial feasibility of the project.
17A.3.11 An exit
clause or the terms of termination of the project.
17A.4 Failure to
conclude the ancillary contract(s) to regulate the above aspects,
alternatively so much thereof as would give the
JVA business
efficacy, would render the JVA incapable of being performed to
achieve the ‘Development’ as a collaborative
endeavour.
179A In the
alternative if it be held that for any reason the JVA has not been
validly cancelled the JVA has lapsed for the following
reasons:
179A.1 The defendants
refer to the above and specifically to paragraphs 16.1.1.4,17 A, 51,
52, 58,111 and 135 hereof.
179A.2 The parties
have failed to conclude the ancillary contracts referred to in
paragraph 17 A, or so much thereof as would give
the JVA business
efficacy.
179A.3 The JVA has
become incapable of being implemented as a cooperative endeavour and
has accordingly lapsed.’
(Emphasis added)
[16]
The applicants did not object
to this amendment and the applicants filed the amended pages on 4
August 2022. The applicants consequently
amended their replication to
the respondents’ amended statement of defence. The amendment
was not opposed and was granted
at the commencement of the hearing on
15 August 2022.
[17]
On 1 August 2022, both parties
filed witness statements. The applicants filed witness statements of
Mr Glenn Crick and two experts,
Buser and Dacomb. The respondents
filed witness statements of the first and third respondents, and an
expert Nagy. On 12 August
2022, the applicants filed a supplementary
witness statement of Mr Crick. It was this supplementary witness
statement which later
became the reason for the second amendment and
subject matter of the respondents ‘repudiation defence’
notified on
22 August 2022 (discussed hereunder).
The respondents’
second amendment
[18]
On 22 August 2022, after the
arbitration hearing had concluded, the respondents gave notice of
their intention to amend their statement
of defence and incorporate
the repudiation defence: the applicants had repudiated the JVA
through the evidence provided by Mr Crick
in his supplementary
witness statement, which was subsequently confirmed under
cross-examination.
[19]
An amendment was sought in the
following terms:
‘
17B
In addition to paragraphs 17A.3 to 17A.4 the defendants plead that:
17B.1 If it is a
legally implied term, alternative a tacit term, that each party
should cooperate with the other and not frustrate
the other party in
the exercise of its rights.
17B.2 The import of
the JVA in general and clause 3.2, in particular, is that the
rezoning process will be part of the process of
township
establishment.
17B.3 Township
establishment includes the development of land by way of the
subdivision of selected portions of land, the registration
of
ownership of newly created cadastral portions, the vesting of new use
rights, the installation of services and the transfer
of proclaimed
or unproclaimed portions.
17B.4
Clause 3.2.3 envisages agreement or agreements between the parties to
the JVA about any other aspects concerning the purpose
of the
rezoning.
17B.5 Clause 3.4
envisages a sale agreement or agreements between the Trusts and the
realisation company, including, by implication,
the memorandum of
incorporation and a shareholders' agreement.
17B.6 Clause 7.2
provides as follows:
'Each
party undertakes to do all such things and sign all such documents as
may be necessary and/or incidental to give effect to
the terms,
conditions and import of this Agreement’.
17B.7 On a proper
interpretation of the JVA, in light of the aforegoing, and clause 7.2
in particular, the Claimants are entitled
and obliged to consult,
engage and involve the Trusts in any decision (save those relating to
the day-to-day affairs of the project)
relating to
17B.7.1 the nature and
scope of the envisaged developments;
17B.7.2 the
nomination, appointment of, and terms of engagement relating to any
of the service providers and professional consultants;
17B.7.3 consultations
and meeting held with the various departments of COE, SANRAL and
other government departments relating to
the envisaged development;
17B.7.4 site visits
and meetings;
17B.7.5 the viability
and feasibility studies; and
17B.7.6
general decision-making in respect of the intended development.
17C
In his evidence (contained in his supplementary witness statement)
confirmed as his evidence in chief delivered on the (court)
day
before the hearing in the arbitration, Mr Crick, on behalf of the
Claimants, stated that the Trusts have not been consulted,
engaged
nor involved, in any decisions or matters relating to the aspects
referred to above.
17D Mr Crick further
stated that he has, in his sole discretion, appointed, consulted
and/or arranged site meetings at the properties
with various
professional consultants and/or government departments. He stated
that the 'representatives of the Trusts have never
participated in
these meetings'. Mr Crick also stated in paragraph 46 of his witness
statement: 'Other than providing signed documents
from time to time,
such as the powers of attorney, no further input and/or co-operation
is required from the Trusts’.
17E Mr Crick's
evidence referred to above is a true reflection of the Claimants'
conduct towards the Defendant from the inception
of the
implementation of the JVA in 2011.
17F
The conduct of
Mr Crick and the Claimants, together with the statement in his
witness statement, confirmed in his oral evidence,
constitute a
frustration of the rights of the Trusts and constitute a repudiation
of a fundamental obligation of the Claimants
which entitle the
Defendants to cancel the JVA summarily.
17G
The Defendants hereby accept the repudiation of the JVA.
17H
The Defendants hereby cancel the JVA…..
179
B In the further alternative the Claimants hereby cancel the JVA as
pleaded in paragraphs 17B to 17B.7.6 above.
2B. It is declared
that the Claimants have repudiated the JVA and the defendants have
validly cancelled the JVA.’
(Emphasis added)
[20]
The applicants objected to the
intention to amend on 31 August 2022. Their fundamental argument was
that the arbitrator’s
jurisdiction was being expanded by
extending the scope of the disputes that were referred to him. The
application was argued on
27 September 2022 and on 30 September 2022
the arbitrator allowed the amendment.
[21]
The award was produced by the
arbitrator on 28 February 2023. He concluded in paragraphs 143.1,
143.3, and 143.4 of the award that
the applicants were not in breach
of the JVA at the time of the cancellation letter (17 January 2022)
and that the respondents'
cancellation of the JVA was invalid. He
found that time was not of the essence in the JVA and it did not
specify any time limits
for the various land development steps.
’
Absent an interpellatio placing
the applicants in mora prior to the 17 January 2022 “notice of
breach”, mere prior delay
in taking steps in the process of the
land development did not constitute a breach of the JVA.
’
He further found that:
’
64
The breaches alleged in paragraphs 4.3, 4.4 and 4.5 of the 17 January
2022 letter all related to steps which, in the terminology
of clause
3.4 of the JVA, the parties “anticipated” would
eventually be taken at some future stage. Those steps would
involve
the "anticipated" establishment of one or more companies as
realisation companies to take transfer of "the
relevant portions
of the property" all of which were still uncertain, given that
even the process was not obligatory, but
merely "anticipated"
and could conceivably end up differently depending on what might
occur in future.’
[22]
The arbitrator then continued to
find that:
‘ …
Until
the "relevant portions" of the property could be
established, it seems to me that it would be a pointless and
premature
exercise to commence setting up an uncertain number of
realisation companies and to determine the rights and obligations of
shareholders
in each of those realisation companies before it was
even known which portions of which properties owned by which trust
would form
part of which townships with which rezoning rights. The
defendant's heads of argument in relation to the "became
impossible"
defence highlights the necessity for ancillary
agreements to deal with these uncertainties ….
…
..It
follows that as 22 July 2022 when the defendants filed their notice
to amend to introduce their "became impossible"
defence as
well as at the date of effecting that defence by filing the amended
pages 4 August 2022, the JVA agreement was still
extant.
Consequently, the validity of the defendants' “became
impossible" defence needs to be considered…’
[23]
In conclusion on this issue the
arbitrator then proceeded to make no award on the validity of the
cancellation of the JVA and found
that the applicants were not
entitled to an award for specific performance as the JVA had become
impossible to perform and of no
force and effect (void). Lastly, the
respondents’ counterclaim in respect of the JGM Boerdery
maintenance claim could not
be upheld.
[24]
In other words, the outcome of the
arbitration was that the arbitrator dismissed the applicants’
claims, dismissed the respondents’
maintenance claim and
non-performance defence, upheld the respondents’ became
impossible defence and awarded costs in favour
of the respondents.
What was referred to
the arbitrator?
[25]
There is a dispute between the
parties as to what was referred to the arbitrator. The applicants
aver that it is patently clear
from the Reference (referred to above)
that the parties referred only
existing
disputes
to the arbitration
,
and not
future
disputes.
According to the applicants,
this means that the arbitrator’s jurisdiction was confined to:
One, the validity of the cancellation
of the JVA by the respondents
on 3 March 2022 (which the arbitrator referred to as the
‘cancellation dispute’ and/or
‘non-performance
dispute’) and, two, the ‘implementation dispute’
which concerned the failure/refusal of
the respondents to provide the
applicants with the required power/s of attorney.
[26]
More specifically the
applicants assert that there were no disputes between the parties in
existence as of 12 April 2022 (the date
of the Reference) regarding
the purported repudiation of the JVA by the applicants or a dispute
as to whether the JVA had become
impossible to perform. It follows
that the arbitrator had no jurisdiction to deal with these defences.
Yet, so it is argued, the
arbitrator, in error, pronounced on these
matters in his award.
[27]
The applicants further submit that
the parties also did not refer disputes as
defined
or specified in pleadings
to the
arbitrator and pleadings played no role other than further defining
the actual disputes referred. In other words, the pleadings
did not
serve to articulate or delineate the disputes. Their objective was
secondary; specifically, to refine the disputes, rather
than to
establish or broaden the scope of the disputes. It is argued that the
arbitrator failed to recognise this distinction and,
as a result,
assumed jurisdiction over disputes that were not included in the
Reference, thereby exceeding his powers.
[28]
To prove their point, the applicants
referred the court to the arbitrator’s finding on the
cancellation dispute. The arbitrator
held, after considering the
evidence, that the applicants were not in breach of any obligations
in terms of the JVA as at the date
of the cancellation letter and
that the respondents’ non-performance defence cannot succeed.
He however did not make any
award and held that the validity of the
respondents’ ‘became impossible’ defence needed to
be considered, which
was introduced by the respondents during their
first amendment on 22 July 2022.
[29]
The arbitrator’s reasoning for
considering the became impossible defence was the following:
‘
36
In
the present case it
is
clear
that the
applicants
are persisting
in
seeking
an award of specific performance. Consequently,
I
am of the view that,
by
necessary
inference
,
there
are disputes
between the parties as to whether the applicants are entitled
to
such an award
having
regard to the issues
raised
in
the proposed amendments which will require adjudication
in
this arbitration.
37
In the circumstances I conclude that l do have jurisdiction to allow
the amendments now sought.’
[30]
The applicants submit that in
adopting this approach, the arbitrator firstly strayed beyond his
powers. No dispute regarding the
‘… validity of the
respondents’ ‘became impossible’ defence …’
had been referred to
the arbitrator. And secondly, the arbitrator
also exceeded his powers in considering a belatedly introduced
repudiation defence
by the respondents. This defence was allowed by
the arbitrator pursuant to an amendment introduced by the respondents
after the
completion of the hearing, but without the consent of the
applicants.
[31]
The applicants further argue that
the arbitrator misconstrued the point, as the question was not
whether the amendments required
adjudication, but rather whether the
Reference empowered him to determine ‘the issues’ that
the amendments sought to
introduce. Furthermore, the issue was not
whether he had jurisdiction to allow amendments, but whether he had
jurisdiction to decide
the new disputes that the amendments intended
to introduce. These are distinct matters, and the arbitrator
misinterpreted the points.
Additionally, the arbitrator devoted
substantial time in considering the repudiation defence despite
having no powers to do so.
Despite this, and in the end, the
arbitrator made no operative award in respect of the repudiation
defence.
[32]
As a point of departure, reference
must be made to section 1 of the Act. It defines an arbitration
agreement as a ‘written
agreement providing for the reference
to arbitration of
any existing dispute
or
any future dispute
relating
to a matter
specified in the agreement,
whether an
arbitrator is named or designated therein or not (emphasis
provided).’
[33]
Arbitration
can only be referenced in the event that there is a dispute between
the parties involved. The term ‘dispute’
should be
defined in its conventional sense. It does not possess any unique or
distinctive significance that has been bestowed
upon it by
lawyers.
[7]
[34]
By submitting the dispute in writing
in the form of pleadings, the parties are able to provide the
arbitrator with a concise summary
of the issues that must be
resolved. In other words, the pleadings are intended to identify and
define the issues that arise from
the disputes that are referred. The
arbitrator is obligated to render a decision on every issue in
dispute, as the statements of
claim and defence are included in the
arbitrator's terms of reference. The issues delineated in the
pleadings are lawfully before
the arbitrator, provided that they fall
within the disputes that are referred for arbitration. There is no
procedural or other
requirement that the ‘issues’ must
exist when the ‘disputes’ are referred to arbitration. By
definition,
they do not exist at that stage.
[35]
Consequently, the applicants
obfuscate the concepts of ‘disputes’ referred and
‘issues’ arising from the
pleadings. A statement of
defence can raise any issue that arises from the interpretation of
the agreement upon which a statement
of claim is based, provided that
the issue falls within the dispute or disputes referred for
determination by the arbitrator. The
arbitrator ruled on all of the
issues that were raised, including those that were derived from the
amended pleadings, as he was
bound to do. The sole inquiry is whether
those issues are included in the two disputes that were referred.
[36]
Paragraph 4 of the Reference
stated that disputes exist between the parties in relation to (1) the
purported cancellation of the
joint venture agreement on 3 March 2022
concluded between the parties on 23 November 2011
and
(2) the implementation of the JVA.
[37]
The parties delineated the issues
regarding the ‘purported cancellation’ and the
‘implementation’ of the
JVA through the exchange of
pleadings (the statement of claim and the statement of defence). The
arbitrator's power is contingent
upon the determination of whether
the defences, and the resulting issues, fell within the concept of
‘implementation’
of the JVA.
The implementation
issue
[38]
In essence, the central issue
between the parties was the ‘implementation dispute’,
which was the right to regulate
the development of the properties
envisioned in clause 3 of the JVA. In other words, the question was
whether the applicants' decision-making
authority was intended to be
shared with the respondents or was exclusive. It is evident from the
correspondence between the parties
that this issue had been alive for
several years prior to 12 April 2022 and was still present when the
Reference was agreed upon
on that date. It was also present in the
original pleadings and in the subsequent amendments thereof, which
were not objected to.
[39]
The
applicants acknowledged in their founding affidavit that the
implementation dispute ‘concerned the failure/refusal of
the
respondents to provide the applicants with the required powers’.
Despite the absence of these terms in paragraph 4 of
the Reference,
they can be legitimately considered. This is because the Reference
must be interpreted like any other written agreement,
holistically,
which includes taking into account the background context to its
conclusion.
[8]
[40]
According to the arbitrator's
references in paragraphs 129.1, 129.2, and 129.3 of the award to the
correspondence between the parties
since 2019, the implementation
dispute appears to have been centred around the applicants' request
for an unlimited power of attorney
to oversee the development of the
properties. This would have granted them the authority to make all
decisions regarding the development.
The respondents were unwilling
to grant such extensive authority.
[41]
This issue, which is inherent in the
implementation dispute, was incorporated into the pleadings in the
following manner: The applicants,
among other things, claimed an
order compelling the respondents to grant them an unlimited power of
attorney. In other words, the
claim for specific performance was
predicated on the implied sole decision-making power of the
applicants. Although the sole decision-making
power was not alleged
expressly, the wording of the power of attorney suggested it and that
was how the respondents understood
it.
[42]
The claimed sole decision-making
power, disputed since 2019, became an issue on the pleadings. In
paragraph 106 of their statement
of defence, the respondents implored
the parties to collaborate and reach a consensus on the unresolved
matters regarding the realisation
of the development. In paragraph
134.2 of the statement of defence it was pleaded that ‘further
agreement on the Power was
required’. In paragraph 175.2 the
respondents pleaded that the applicants were overreaching by
demanding ‘draconian
PoAs (Power of attorneys)’ to which
they were not entitled and that these demands ‘were made in
March 2019 and September
2020.’
[43]
The applicants did not raise
any objections to the respondents' denial that they were obligated to
grant the applicants unlimited
powers to implement the JVA in the
exchange of pleadings or subsequent proceedings. In other words, it
was acknowledged as a legitimate
concern regarding the implementation
of the JVA. The converse of that denial is that the applicants did
not possess the exclusive
right to make decisions. Consequently, this
matter was a well-established component of the pleadings prior to the
respondents'
amendments.
[44]
The initial statement of defence set
out the issue of consensus in the decision-making in general terms.
However, the respondent's
first amendment, specified the specific
areas of implementation that necessitated consensus, and in the event
that this was not
achieved, the JVA would be unable to be
implemented. This defence and the issues raised flowed directly from
the implementation
dispute.
[45]
The first amendment was predicated
on the interpretation of the JVA, which indicated that it contained a
tacit term which visaged
that ancillary agreements would be entered
into in order to reach consensus on the implementation of the JVA.
The applicants did
not object to the introduction of the ancillary
contract defence and the issue raised, and consequently, the
arbitrator did not
address the objection that is now raised belatedly
in paragraph 23 and 24 of the applicants' heads of argument. The
arbitrator
only addressed the objection to the second amendment,
which introduced the ‘repudiation’ defence. This
objection was
correctly rejected by the arbitrator. The arbitrator
held that ‘implementation’ included the claim for
specific performance
and the defences thereto. The arbitrator was
correct in coming to this conclusion.
[46]
The respondents further
pleaded that the JVA thus became impossible to implement due to the
absence of ancillary agreements. Mr
Crick submitted a supplementary
witness statement on behalf of the applicants in response to the
defence that ancillary agreements
were necessary to ensure the JVA's
business efficacy. In this statement, he emphasised that the
respondents had no role to play
in the development's decision-making
process. It is noteworthy that paragraphs 41 and 42 of Mr Crick's
statement provide this evidence
under the heading "IMPLEMENTING
THE AGREEMENT." His evidence is a complete denial of the
necessity for any form of collaboration
or collaborative
decision-making. On a proper interpretation of the JVA, Mr Crick
repudiated the essence of the JVA in its entirety.
The
‘implementation’ dispute encompasses the repudiation
defence and the issues it raised.
[47]
There is therefore no merit in the
applicants' submission that the pleadings extended the ambit of the
disputes and that the arbitrator
decided disputes not forming part of
the Reference. In formulating the became impossible defence and the
repudiation defence, the
applicants raised issues which had formed
part of the implementation dispute since 2019. The arbitrator was
correct in considering
these defences despite finding that the JVA
was not lawfully cancelled.
[48]
Nevertheless, the refusal to provide
unlimited powers of attorney also formed an issue in the
‘cancellation’ dispute.
In paragraphs 47.1 to 47.4 of the
statement of claim the applicants relied on the respondents' failure
to provide powers of attorney
as an excuse for not performing their
(applicants) obligations.
[49]
Consequently, the arbitrator was
entirely justified in permitting the amendments and considering the
defences. When the arbitrator
refers to the issues arising from the
ancillary agreements defence and the repudiation defence as
‘disputes’ in sub-paragraph
33 (of main paragraph 130) of
the award, it is evident from the paragraph as a whole that he dealt
with them as issues arising
from the pleadings and defences to the
claim for specific performance.
[50]
The ‘became impossible
defence’ and the ‘repudiation defence’, including
the issues flowing from these defences,
thus formed part of the
‘implementation’ dispute as it existed when the Reference
was agreed upon on 12 April 2022.
Contradictory findings
[51]
The applicants contend that the
arbitrator failed to direct his mind to central issues in the matter,
alternatively, to differentiate
between them. To illustrate the point
reference is made to the arbitrator’s finding that ‘
as
the date of effecting that defence by filing the amended pages [on] 4
August 2022
the JVA agreement was
still extant
’
and that the
validity of the respondents’ ‘became impossible’
defence needed to be considered. The arbitrator
then concluded that:
‘
110.
In conclusion therefore, in my view, by the time the amendment was
effected on 4 August 2022, it was not possible
to conclude the
ancillary agreements pleaded and hence the JVA had by then become
impossible as pleaded by the respondents, reinforced
by the stance of
the applicants’ as evidenced by the contents of Mr Crick’s
supplementary witness statement filed just
a week later on 12 August
2022.
111.
Consequently, I am of the view that the respondents have succeeded in
proving their “became impossible”
defence. It also
follows from this that the applicants’ claims for a declarator
and for specific performance cannot succeed.’
[52]
The applicants submit that there are
three aspects to this conclusion: first, that by 4 August 2022 it was
not possible to conclude
the ancillary agreements pleaded; second, by
then (4 August 2022) the JVA had become impossible as pleaded by the
respondents;
and third, that this conclusion was reinforced by the
stance of the applicants as evidenced by the contents of Mr Crick’s
supplementary witness statement filed on 12 August 2022.
[53]
It is contended that this conclusion
was incompetent in light of the arbitrator’s previous
conclusion that the JVA was in
existence as of 4 August 2022, and, as
a result, this finding constituted a gross irregularity. Having
decided that the JVA was
in existence on 4 August 2022, it was no
longer open to the arbitrator to come to a different conclusion. The
result of the arbitrator’s
approach, so it is argued, is that
the applicants were deprived of a fair trial on this issue.
[54]
Out of the applicants' argument, two
issues become apparent that require resolution: Firstly, did the
arbitrator conduct a ‘gross
irregularity’ by issuing
‘contradictory conclusions’ regarding the JVA's continued
existence on 4 August 2022?
Secondly, if so, were the applicants
denied a fair trial?
[55]
In my view, there is no
contradiction. The arbitrator initially determined that the
applicants were not in breach of the JVA as
of the 17 January 2022
breach notice and that the cancellation of the JVA on 3 March 2022 by
the respondents was invalid. Consequently,
the
JVA was still in existence when the amendment was implemented on 4
August 2022,
which introduced the
‘became impossible’ defence. Therefore, because the JVA
was still in extant, the validity of the
appellants' ‘became
impossible’ defence needed to be considered.
[56]
The arbitrator found that by the time the amendment was
made on 4 August 2022—rather than on the date of the
amendment—it
was no longer possible to conclude the ancillary
agreements as pleaded. Consequently, the JVA had, by then, become
impossible,
as asserted by the respondents.
Hence
the failure to conclude the ancillary agreements led to a situation
where (at the latest on 4 August 2022) it had become impossible
to
implement the JVA.
[57]
Consequently, the attack based on
‘contradictory findings’ is baseless and must be
rejected. It is not predicated on
any of the review grounds outlined
in section 33 of the Act.
[58]
But
even if there was a contradiction, section 33(1)(b) of the Act
requires that the gross irregularity must be in the ‘conduct
of
the arbitration’. The contradiction relied upon by the
applicants is unrelated to the conduct of the proceedings. I am
unable to find that the arbitrator misconceived the whole nature of
the enquiry or its duties in connection therewith.
[9]
At most, it forms part of the arbitrator’s findings or
conclusions, rather than the proceedings themselves.
[10]
Consequently, I conclude that the applicants were no deprived of a
fair trial.
The ancillary
contracts/agreements
[59]
In terms of the breach notice
the respondents alleged that the applicants were in breach of the
agreement by failing to comply with
Big Five’s ‘realisation
performance’ obligations in terms of clause 3, in which mention
was made to several agreements
that needed to be concluded. Then, in
their statement of defence, the respondents formally introduced the
ancillary contracts defence.
The applicants allege that if the breach
notice is compared to the amendment to the statement of defence, the
ancillary agreements
pleaded in the amendment overlap those raised in
the breach notice and the matters complained of in the amendment do
not take the
matters complained of in the breach notice further.
[60]
The applicants further argue that
paragraph 17A.4 of the amendment which states that ‘
the
failure to conclude the ancillary contract(s) to regulate the above
aspects, alternatively so much thereof as would give the
JVA business
efficacy, would render the JVA incapable of being performed to
achieve the "Development' as a collaborative endeavour’,
leaves matters ‘both open-ended and vague because it both
qualifies and limits the ancillary agreements contended for to
those
that are supposedly required to give the JVA business efficacy (‘…
so much thereof as would give the JVA business
efficacy …’).’
[61]
It is argued that this is the case because the plea
fails to specify which ancillary agreements are necessary to give the
JVA business
efficacy. Likewise, the arbitrator did not identify in
his award which of the proposed ancillary agreements were necessary
to achieve
this. As a result, the award left the matter vague and
open-ended. Consequently, the arbitrator failed to resolve this issue
(assuming
it fell within his powers), thereby failing to make a
determination on it.
[62]
The applicants were unable to explain how this
constituted misconduct or a gross irregularity in the proceedings. In
any event,
the specific ancillary agreements that might have rendered
the JVA void if left unconcluded are irrelevant, as none were
concluded
at all.
The became impossible
defence
[63]
In a nutshell, the respondents’
became impossible defence was based on the following averments: One,
the conclusion of ancillary
agreements was required to give business
efficacy to the JVA. Two, it was an implied or tacit term of the JVA
that the ancillary
agreements
would
(not should) be concluded by the parties. Three,
the failure to conclude the ancillary agreements, alternatively, ‘…
so much thereof as would give the JVA business efficacy …’,
would render the JVA incapable of being performed.
[64]
The applicants first complaint is
that the respondents did not plead an obligation that the ancillary
agreements
should
be
concluded. This aspect was acknowledged by the arbitrator, and the
respondents were at pains to point out that the ancillary
agreements
did not constitute contractual obligations.
[65]
The applicants contend that this
submission on behalf of the respondents, ‘amounts to a
fundamental disavowal of the legal
efficacy of the respondents’
impossibility defence’. The submission (and plea) is to the
effect that the tacit terms
pleaded for incorporation were not
intended to have any contractual effect. It further raises the
question as to whether it is
at all feasible in law to import a tacit
term which constitutes no obligation (or right) into a contract,
because there would be
no purpose to such an importation. It is
submitted that it cannot be to lend business efficacy to a contract
as it determines no
contractual obligation or right.
[66]
The
applicants further argue that the problem, not recognised by the
arbitrator, is that this approach by the respondents amounted
to a
legal absurdity for the following reasons: Terms are (whether
impliedly or tacitly) imported into a contract only if they
are terms
in the normal sense, namely, they form part of the provisions which
set out the nature and details of the performances
due by the
parties
[11]
(in
other words, their rights, and obligations). If a purported tacit
term is suggested that would not amount to an obligation,
then the
very basis for importation falls away in law. It is only when it is
found that a tacit term (as any other contractual
provision) has
operational effect, fundamental to the ambit of the obligations the
parties undertake, that it can, in law, be imported
as a term of the
contract.
[12]
[67]
The applicants argue that the
arbitrator found compelling reasons to import the tacit terms pleaded
in relation to the ancillary
agreements and that the JVA essentially
constituted a framework that required the conclusion of further
ancillary agreements, despite
the fact that the applicants did not
plead that the ancillary agreements be concluded as obligations and
submitted in argument
that the respondents' case is merely that the
ancillary agreements would (not should) be concluded. The legal
absurdity of incorporating
tacit terms that the parties to a contract
never intended to have contractual force was perpetuated by this
approach. It is submitted
that the arbitrator completely
misinterpreted this central argument.
[68]
Secondly, the respondents’ statement of defence
did not specify which agreements were at issue or allege a specific
date on
which the JVA allegedly became impossible to perform.
It
is argued that supervening impossibility, to the extent applicable,
must both in law, in fact and in logic be capable of determination
as
from a date or event, because how else can the effect of
impossibility be given application.
[69]
Thirdly, it is argued that the
failure to provide a specific date or event is material, as the
contention advanced did not provide
a focal point for a factual
enquiry into the proposition put up, which rendered the proposition
meaningless. It also meant that
the proposition could not find
application as supervening impossibility cannot be determined in a
vacuum. As it turned out, the
respondents’ evidence did not
clear up the vacuum and the applicants’ evidence in point,
namely, that of Mr Crick,
was not considered by the arbitrator in
this regard. The arbitrator thus made such an award without any
factual basis therefor.
[70]
Lastly, the respondents did not
plead that by 4 August 2022 it was or had become impossible to
perform the JVA. The award fails
to provide an explanation or
rationale for the conclusion that the JVA was rendered impossible to
execute by the mere filing of
amended documents on 4 August 2022. In
stark contrast, the arbitrator's initial determination was that the
JVA was still in existence
on 4 August 2022. It is contended that the
assertion that the contract was both void and in existence on the
same date is ‘absurd’.
The attack on the
tacit terms
[71]
The arbitrator found that compelling
reasons existed to import the tacit terms and that the JVA
essentially constituted a framework
which required further ancillary
agreements to be concluded.
The applicants have raised various
criticisms of this conclusion, but these amount to an appeal on the
merits rather than allegations
of misconduct or irregularities as
defined in section 33 of the Act
[72]
Nonetheless, I will address the challenge to the
arbitrator’s finding. As a starting point, it is necessary to
restate the
essence of the tacit terms pleaded. These terms formed
part of the broader issue of implementation by consensus and were
based
on an interpretation of the JVA that envisioned a cooperative
effort to achieve the development.
[73]
As a typical long-term relational contract, the JVA set
out only the broad framework of the enterprise, leaving the
enforceable
details to be negotiated and agreed upon later. While it
was binding in outlining the joint venture and preventing the Trusts
from
granting development rights to another developer, the specific
terms of the development remained subject to future agreement.
[74]
It is undisputed that ancillary agreements were
anticipated. The agreements proposed by the respondents encompass all
aspects of
the development and are detailed in paragraphs 17A.3.1 to
17A.3.11 of the statement of defence, as cited by the arbitrator in
paragraph
68 of the award. The applicants, however, argue that only
two ancillary agreements were necessary—one addressing the
establishment
of the development companies and the transfer of
properties from the Trusts to these companies, and the other being a
shareholders'
agreement.
[75]
I agree with counsel for the
respondents, Mr du Plessis, that this distinction between the
ancillary agreements contended for by
the applicants and those
contended for by the respondents, is of crucial importance for the
proper appreciation of the argument
of the applicants with regard to
the alleged failure of the arbitrator to consider the evidence of Mr
Crick.
[76]
The respondents did not argue that the ancillary
agreements had become impossible to conclude but rather that they had
not been
concluded, rendering the JVA impossible to implement. The
fundamental issue was that the method of implementation had not been
agreed upon, which was a direct consequence of the nature of the
ancillary agreements.
[77]
The applicants contend that because
the respondents plead that it was a tacit term of the JVA that
ancillary agreements
would
be
concluded and not
should,
the
term did not create an obligation and was therefore invalid. The
contention is that a term that does not create an obligation
‘cannot
lend business efficacy to a contract as it determines no contractual
obligation or right’.
[78]
There
is no legal foundation for this assertion. Numerous categories of
terms in the law of contract do not establish obligations
that must
be fulfilled by a party. Suppositions are one such category.
Conditions are an additional category. The respondents may
plead the
tacit term in either of those categories.
[13]
[79]
In this case, the terms were pleaded as implied or,
alternatively, tacit, with the understanding that further ancillary
agreements
would be concluded. In other words, the parties
anticipated that these agreements would be finalized—if they
were, the JVA
could be implemented; if not, implementation would be
impossible. The term was legally valid, and there is no legal or
logical
absurdity in the respondents' approach, as alleged by the
applicants. Even if the arbitrator's reasoning amounted to an error
of
law, it would not warrant review or setting aside under section 33
of the Act.
[80]
An additional criticism of the tacit
terms pertains to the absence of a specified date for the conclusion
of the ancillary agreements.
The criticism is however unwarranted, as
the absence of a date is not an issue because the applicants claimed
specific performance.
This claim would be successful only if the JVA
could support it.
[81]
The respondents pleaded the result
of the failure to conclude the ancillary agreements in paragraph
179A.3 of the statement of defence:
‘
The
JVA has become incapable of being implemented as a cooperative
endeavour and has accordingly lapsed.’
No ancillary agreements had been concluded by the time the amended
pages were lodged on 4 August 2022.
In reality, no ancillary
agreements were ever going to be concluded because, according to Mr
Crick's evidence, he believed that
the applicants had sole
decision-making authority over the development. It was in this
context that the arbitrator found the conclusion
of the ancillary
agreements to be impossible
(to be distinguished
from the doctrine of supervening impossibility defence (impossibility
of performance). There is thus no merit
in the argument that no date
was set for the conclusion of the ancillary agreements.
Evidence of Mr
Crick not considered
[82]
Mr Crick, the primary witness for
the applicants (on the merits and the facts), summarised his evidence
during the arbitration in
the following manner:
’
48.The
effect of my evidence was that the time for the conclusion of
ancillary agreements, to the extent necessary, had not arrived.
Those
agreements would be triggered, to the extent necessary, only once the
development rights in respect of the properties had
been granted. It
is grossly negligent of the arbitrator not to have considered my
evidence and to have taken the view that the
non-conclusion of
ancillary agreements had already caused the demise of the JVA. I am
advised and state that the arbitrator’s
failure to consider my
evidence is not only grossly negligent but also constitutes a gross
irregularity, if not misconduct. My
evidence was not contested and
should have formed a cornerstone of the arbitrator’s award. The
arbitrator’s failure
to consider my evidence does not
constitute an error. The only reasonable conclusion I reach is that
the exclusion of my evidence
was deliberate. I maintain that if he
had considered my evidence, he would have found that the JVA was
extant at all material times
and that the necessary ancillary
agreements would be concluded in future.’
[83]
The applicants assert that the very
centre of the respondents’ became impossible defence
necessitated a thorough examination
of the conclusion (or lack
thereof) of the suggested required ancillary agreements. It is argued
that Mr Crick’s evidence,
which was not disputed, was not only
vital, but entirely destructive of the respondents’
propositions. The applicants contend
that the arbitrator failed to
consider Mr Crick’s evidence, which failure was, ‘
at
the very least, grossly negligent (suggestive of partiality) and
constituted misconduct, alternatively, a gross irregularity.’
This conduct by the arbitrator, in turn, led to an unfair
hearing, as he failed to give proper consideration to this essential
and
critical issue. As a result, the applicants were deprived of a
full and fair determination of their case.
[84]
This is a serious but baseless attack on the
arbitrator’s conduct. The mere absence of a reference to
certain evidence in
the award does not mean it was not considered. It
was the applicants' responsibility to demonstrate the relevance of
Mr. Crick's
evidence, which they failed to do. Mr Crick himself
testified that the time for concluding the ancillary agreements had
not yet
arrived. Notably, he was referring only to a limited set of
ancillary agreements—specifically, those concerning the
establishment
of the development companies and the pricing of the
properties.
[85]
Considering the evidence as a whole, Mr Crick's
testimony had effectively become irrelevant. This is explained in
detail in paragraphs
17 to 22 of the respondents' answering
affidavit. Once the arbitrator found compelling reasons to import the
tacit terms and concluded
that the ancillary agreements had become
impossible, Mr Crick’s claim that he alone had the authority to
determine all aspects
of the township development rendered the timing
of his ancillary agreements entirely irrelevant. In other words, his
own additional
evidence—asserting his sole decision-making
power—superseded any relevance his testimony on the timing of
the ancillary
agreements might have had, as those agreements were
never going to be concluded.
Analysis of the
operative awards
[86]
The arbitrator dismissed claim 1,
which concerned an order declaring the respondents’
cancellation of the JVA on 3 March 2022
as invalid. The applicants
submit that the dismissal is entirely incompatible with the
arbitrator finding that as at both 22 July
2022 and 4 August 2022 the
JVA agreement was still extant (in existence) and the applicants were
thus not in breach of any of their
obligations in terms of their
obligations in terms of breach letter and that the respondents’
‘non-performance defence’
could not succeed.
[87]
It is submitted that the arbitrator should have upheld
claim 1 rather than dismissing it. And the dismissal was entirely
inconsistent
with the arbitrator’s own analysis of the matter.
As a result, the arbitrator was not competent to make such an award,
rendering
the operative award grossly irregular. Accordingly, the
dismissal of claim 1 constituted, at the very least, a gross
irregularity
and should be set aside.
[88]
I disagree. In claim 1, the applicants sought a
declaratory order that the respondents’ cancellation of the JVA
was invalid,
while in claim 2, they sought specific performance of
the JVA. When considering the arbitrator’s factual findings on
claim
2, the order on claim 1 is not inconsistent. The arbitrator
essentially found that specific performance could not be granted
because
the JVA had become ineffective and was, in any event,
repudiated and cancelled
.
[89]
In
this context, a finding that the cancellation on 3 March 2022 was
invalid would have no substantive effect. Issuing a declaratory
order
to that effect would not alter the parties' rights in any way. Courts
and arbitrators do not grant declaratory orders that
serve only to
resolve abstract, academic, or hypothetical questions without
producing any concrete or tangible legal consequences.
[14]
[90]
For the foregoing reasons the
application for review and setting aside of the arbitrator's award
[paragraphs 143.1, 143.3 and 143.4]
is dismissed and the
counterapplication granted.
Costs
[91]
The respondents seek a punitive
costs order against the applicants. In their heads of argument and
during the hearing, the applicants
described various sections of the
arbitrator's award as ‘misconduct’ and ‘gross
irregularity’. It must
be assumed that the terminology was
intended to carry the meaning which the words have in the section 33
of the Act.
[92]
In
Johan
Louw Konstruksie (Edms) Bpk v Mitchell NO & Another
[15]
it was held that ‘misconduct’ has the connotation of
moral turpitude in the sense of dishonesty, partiality or bad
faith.
In
Sidumo
& Another v Rustenburg Platinum Mines Ltd & Others
[16]
the court found that ‘gross irregularity’ relates to the
conduct of the proceedings and must be such that it prevented
a fair
trial of the issue.
The
applicants further allege that the arbitrator deliberately excluded
evidence, denied them a fair trial, perpetuated a legal
absurdity
advanced by the respondents, and acted with gross negligence in a
manner suggestive of partiality.
[93]
In
Hyperchemicals
International v Maybaker Agrichem
.
[17]
Preiss J granted a punitive costs order against the applicants on
similar grounds. He held as follows:
‘
In
deciding upon an appropriate scale I do not lose sight of the fact
that arbitrators, especially when they sit in matters of commercial
confrontation where allegations of fraudulent misrepresentations are
made, must anticipate robust and frank arguments. On the other
hand,
arbitrators are entitled to the protection of the Court where
intemperate and unfounded allegations are made against them.
I
have decided that the applicants should be ordered to pay attorney
and client costs and my reasons are the following: (a) Although
the
applicants indicated that dishonesty was not to be imputed to the
arbitrator, they used language which was calculated to impute
incompetence of a serious character. The language was extravagant
and, as I have found, constituted a basis for review which is
unfounded in law. Phrases abound such as 'a departure from a judicial
frame of mind', 'a total want of judicial capacity amounting
to legal
misconduct', no fair-minded man applying his mind judicially could
have come to the conclusion indicated by the award',
and 'gross
carelessness'. These are vexatious accusations.’
[94]
In the present matter the ‘facts’ relied
upon by the applicants fall well short of establishing either
misconduct or
gross irregularity. Their allegations of incompetence
and dishonesty against the arbitrator are vexatious. Furthermore, the
applicants—who
have had legal representation throughout—knew
or ought to have known that their review of the arbitration award had
no reasonable
prospects of success. In the absence of credible
evidence supporting any of the grounds for review under section 33,
including
misconduct, gross irregularities in the proceedings, or a
lack of authority on the part of the arbitrator, their claims are
unfounded.
[95]
The review also delayed the enforcement of a valid
award in favour of the trustees of Trusts with limited financial
resources to
cover legal expenses. The applicants further delayed the
matter by engaging in dilatory tactics, further evidenced by their
failure
to prosecute the review in a timely manner, only filing heads
of argument, practice notes, and chronology when compelled by court
order. For these additional reasons, the review application was
frivolous and pursued in bad faith. In the circumstances, the
respondents are entitled to full indemnification for their legal
costs, justifying a punitive costs order on an attorney and client
scale.
[96]
In the result the following order is made:
1.
The application to review and set aside the
award is dismissed.
2.
Costs of the application to be paid by the
applicants on an attorney client scale, jointly and severally, the
one absolving the
other, including the costs of two counsel where so
employed.
3.
The counterapplication to enforce the award
is granted.
4.
The arbitration award published by the
seventh respondent on 28 February 2023, at paragraph 143 of the
award, is made an order of
court.
5.
The costs of the counterapplication to be
paid by the first and second respondents jointly and severally, the
one absolving the
other, including the costs of two counsel where so
employed.
L.
WINDELL
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
(
Electronically
submitted therefore unsigned)
Delivered:
This judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation
to the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines. The
date for
hand-down is deemed to be 5 February 2025.
APPEARANCES
Counsel
for the applicants:
Advocate M.v.R Potgieter SC
Instructed
by:
Senekal Simmonds Inc
Counsel
for the respondents: Advocate SJ du Plessis
SC
Advocate
JP Snijders
Instructed
by:
Klopper Jonker Attorneys
Date
of hearing:
19 August 2024
Date
of judgment:
5 February 2025
[1]
As provided for in
section 33(1)(a)
and (b) of the
Arbitration Act,
42 of 1965
.
[2]
Meyer
NO and Others v Big Five Developments (Pty) Ltd and Another
(1017/17)
[2018] ZASCA 136
(28 September 2018) para 17.
[3]
Ibid.
para 4.
[4]
Ibid.
para 17.
[5]
Meyer
NO and Others v Big Five Developments (Pty) Ltd and Another
(1017/17)
[2018] ZASCA 136
(28 September 2018). Leave to appeal to
the Constitutional Court was refused in March 2019.
[6]
A "pactum de contrahendo" in South African law refers to a
contract that is designed to create the obligation to enter
into
another contract in the future. See
Hirschowitz
v Moolman and Others
1985
(3) SA 739
(A) at 765I-J.
[7]
Ramsden, "The Law of Arbitration" p 49-50.
[8]
Framatome
v Eskom Holdings SOC Ltd
2022
(2) SA 395
(SCA) at [30].
[9]
Goldfields
Investment Ltd v City Council of Johannesburg
1938
TPD 551
;
Telcordia
Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007
(3) SA 266
(SCA) paras 69 - 85.
[10]
Ellis
v Morgan
[Ellis
v Morgan, Ellis v Dessan
1909
TS 576
]
;
Goldfields
Investment Ltd v City Council of Johannesburg
1938
TPD 551.
[11]
LAWSA, Volume 9, Third Edition, para 352.
[12]
Absa
Bank Ltd v Swanepoel NO
,
2004 (6) SA 178
(SCA) para 7.
[13]
Van
Rooyen Steel Pty Ltd v Smith and Another
2002
(4) SA 264
(SCA) at para [8].
[14]
Preston
v Vredendal Co-operative Winery Ltd & Another
2001 (1) SA 244
(E), at 249 B-E;
Myburgh
Park Langebaan (Pty) Ltd v Langebaan Municipality & Others
2001 (4) SA 1144
(C), at 1151A - 1154.
[15]
Johan
Louw Konstruksie (Edms) Bpk v Mitchell NO & Another
2002 (3) SA 171
(C), p 182, par 3[46].
[16]
Sidumo
& Another v Rustenburg Platinum Mines Ltd & Others
2008 (2) SA 24
(CC), p 112, par [265].
[17]
1992 (1) SA 89
(W) 100 8 —E.
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