---

IN THE GAUTENG DIVISION HIGH COURT, PRETORIA

(REPUBLIC OF SOUTH AFRICA)

Case Number: 31412 /2013

Coram: Molefe J

Heard: 05 June 2014

Delivered: 01 July 2014

In the matter between:

ROSSGRO CHICKENS (PTY) LTD................................................................................APPLICANT

and

DUST-A-SIDE PARTNERSHIP........................................................................FIRST RESPONDENT

ADVOCATE T. A. L. L. POTGIETER.......................................................SECOND RESPONDENT

JUDGMENT

MOLEFE, J:

[1] This is an application for the review and setting aside of certain rulings made by the arbitrator (Second Respondent) on 9 April 2012 in an arbitration between the Applicant and First Respondent (the Respondent and Claimant respectively in the arbitration) on the basis that the arbitrator exceeded his powers.

[2] The First Respondent opposes the application and contends that the application cannot succeed in that the court lacks the powers to set aside the second Respondent’s ruling as same was neither an interim nor a final award and therefore falls outside of the ambit of Section 33 of the Arbitration Act 41 of 1965 (“the Act”).  The second Respondent does not oppose the application.

Background

[3] The First Respondent launched a substantive application dated 25 February 2013 before the Second Respondent for the following relief:

“1. That the evidence of the expert witness, Mr. H C Thompson, at lines 20-23 on page 1329 of the record of these proceedings be struck out;

2. That Mr. Thompson be precluded from giving any of the evidence foreshadowed in paragraphs 2.9.2, 2.9.3, 2.9.4, 2.9.5, 2.11, 3, 4 and 5 of the Defendant’s Rule 36 (9) (b) notice dated 11 January 2013;

3. That the Defendant be ordered to pay the costs of this application”.

[4] The relevant relief granted by the Second Respondent in the application was as follows:

4.1 Striking out certain portions of the evidence of the Applicant’s expert’s witness, Mr. H C Thompson;

4.2 Precluding the said Thompson from giving any evidence foreshadowed in paragraphs 2.9.2, 2.9.3, 2.9.4, 2.9.5, 2.11, 3, 4 and 5 of the summary of Thompson’s evidence delivered by the Defendant; and

4.3 Awarding costs against the Applicant (as per prayers 1, 2 and 3 of the Respondent’s Notice of Motion dated 25 February 2013).

[5] The basis upon which the Applicant seeks the review stated in paragraph 8 of the Applicant’s founding affidavit is that the Second Respondent exceeded his powers, alternatively attempted at exercising powers that he did not have in as much as the parties did not confer such powers upon the Arbitrator (Second Respondent) when submitting the matter to arbitration.  Furthermore, neither the Uniform Rules of Court nor the Law of Evidence affords the Arbitration such powers and that the awards/rulings which form the subject matter of this application, are at odds with the functus officio doctrine.

[6] Applicant’s counsel[1] submits that the exceeding of powers by an Arbitrator does not go to the merit but to the jurisdiction.  He referred the court to Telcordia Technologies Inc. v Telkom SA Ltd 2007 vol. 3 SA 266 (SCA) at 293 E-F.  Counsel contends that the arbitrator derives his power/jurisdiction from the submission concluded by the parties and in this regard relied on Hos + Med Medical Aid Scheme v Thebe ya Bophela Healthcare [2007] ZASCA 163; 2008 (2) SA 608 (SCA) at 616 G-H and 616 J and 617 C.

[7] Counsel for the applicant contends that the award under attack is to be reviewed for the following reasons:

7.1 It was not a simple “ruling” made consequent upon an objection, but instead the First Respondent launched a substantive application for an order for the following relief:

7.1.1 The striking out of some evidence which found its way onto the record pursuant to the questioning by the arbitrator;

7.1.2 The prohibition of the Applicant to tender certain evidence; and

7.1.3 Costs of the substantive application.

7.2 The arbitrator granted the relief sought including the cost order and the order have the effect of a final relief.

[8] It is therefore, counsel for the Applicant’s submission that the Second Respondent’s award is an interim award, in the alternative and in the event of the court finding that the award was purely procedural, then in such event, counsel submits that the Second Respondent’s exceeding of powers was so far reaching as to render the matter an extraordinary one to the extent that same should be entertained at this juncture despite it not having disposed of the merits of the dispute, either in part or otherwise.  (See Tuesday Industries (Pty) Ltd v Condor Industries (Pty) Ltd and Another 1978 (4) SA 379 TPD at 382 B-383 D).

[9] The reasons submitted by the Applicant’s counsel that the Second Respondent had exceeded his powers are that in terms of the Law of Evidence:

9.1 The Arbitrator is not afforded the right to after the event, expunge evidence from the record which evidence found its way onto the record in pursuance of questioning of witnesses by the Arbitrator himself; and while no objection was at the time made either to the questioning or the answers; and

9.2 The Arbitrator is not afforded the power to, by an order akin to interdictory relief, in antissipando issue an order that certain evidence may not be led, as same is to prejudge matters and as such is exceeding of powers.

[10] Applicant’s Counsel further argued that the Second Respondent, after he had ruled on the application for the abridgement of the time limits pertaining to the expert notice filed in respect of the witness, Thompson, was functus officio as to how the parties should go about dealing with that witnesses’ evidence, as is the case with the evidence of Thompson being struck out.

[11] First Respondent’s counsel[2] also relied on the Telcordia case Supra and submits that the court’s powers are circumscribed by section 33(1) of the Act, which is only applicable to interim awards and not to procedural ruling.  Counsel contends that common law review grounds are not available to parties to arbitration and a court accordingly does not have the power to interfere with procedural rulings at all.

[12] Counsel for the First Respondent argued that the rule that procedural rulings made in arbitrations should not be interfered with by courts of law is a salutary one.  It is counsel’s contention that not only would such interference infringe the principle of party autonomy, but it would defeat the very purpose of arbitration as an expeditious and inexpensive dispute resolution process.  It is counsel’s argument that if every procedural ruling made by the arbitrator, including ones pertaining to the admissibility of evidence, were subject to interference by the courts, arbitrations would become interminable and subject to abuse by litigants intent on delaying the expeditious determination of their disputes, which they agreed to by submitting same to arbitration.

[13] First Respondent’s counsel pointed out that the question is not whether the Second Respondent’s rulings were right or wrong, since an arbitrator “has the right to be wrong” (See Telcordia, Supra paras (85) and (86).  It is counsel’s contention that the Applicant can only succeed if it is able to demonstrate that the arbitrator did not have the power to consider the First Respondent’s application at all.

[14] First Respondent’s counsel agrees with the applicant’s submission that the Second Respondent only has the powers conferred upon him by the parties to the reference and that the principal source of those powers is the arbitration agreement between them.  He however argues that the correct approach to be followed in cases of this nature was explained by Wallis JA in Dexgroup (Pty) Ltd v Trustco Group International (Pty) Ltd[3], and further where it was held that unless the relevant arbitration agreement provides otherwise, the arbitrator is not obliged to follow strict rules of evidence provided the procedure adopted is fair to both parties and conforms to the requirements of natural justice.  In paragraph (20) of the judgment the learned Judge proceeded as follows:

“Arbitrators should be free to adopt such procedures as they regard as appropriate for the resolution of the dispute before them, unless the arbitral agreement precludes them from doing so. They may therefore receive evidence in such form and subject to such restrictions as they may think appropriate to ensure, as the arbitrator in this case was required to do, the ‘just, expeditious, economical and final’ determination of the dispute”.

[15] It is clear to me that in the argument before the Second Respondent and in the Applicant’s founding affidavit, the Applicant characterized the main relief claimed by the First Respondent in the application before the Second Respondent as being in the nature of an interdict.  The Applicant’s principal contention is that the Second Respondent lacked the power to grant interdictory relief and that he would therefore exceed his powers by purporting to grant the relief sought by the First Respondent.  What the Second Respondent was in essence called upon to do was to rule upon the admissibility of evidence already tendered by the Applicant’s expert witness Mr. Thompson, as well as evidence which Mr. Thompson was about to give, as foreshadowed in his expert summary.

[16] In my view, the principle issues the court is required to determine are:

a) whether the Second Respondent’s ruling amounts to an ”award” as contemplated in Section 33(1) of the Act; and

b) if so, whether the Second Respondent had the power to rule upon the admissibility of evidence tendered by parties to the arbitration.

[17] Section 33(1) of the Act provides as follows:

“Setting aside of award

1) Where –

a) any member of an arbitration tribunal has misconducted himself in relation to his duties as arbitrator or umpire; or

b) an arbitration tribunal has committed any gross irregularity in the conduct of the arbitration proceedings or has exceeded its powers; or

c) 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 on parties, make an order setting the award aside”.

[18] Harms JA in Telcordia Supra at paragraph 51 stated:

“by agreeing to arbitration the parties limit interference by courts to the ground of procedural irregularities set out in Section 33(1) of the Act. By necessary implication, they waive the right to rely on any further ground of review, ‘common law’ or otherwise”.

[19] The arbitrators’ statutory power to make an interim award must be distinguished from his power to make a procedural ruling in the course of the hearing.  An interim award deals with an issue involving the merits of the dispute and is final in respect of the issue thus decided[4].  A procedural ruling concerns the arbitral process to be followed in determining the dispute.  Procedural rulings deals with matters like inter alia, the admissibility of evidence (as in this application); the amendment of pleadings, an application for postponement, the interpretation of the rules of procedure applying to the proceedings by virtue of the arbitration agreement and an application by one party that the arbitrator refer a question of law to the court for an opinion.  (See Arbitration in South Africa: Law and Practice by Butter and Finsen at page 174-175).

[20] A court will only interfere with a procedural ruling by an arbitrator during the course of the reference in exceptional circumstances.  In Tuesday Industries case Supra, at par 383 F-384 E, the court declined to interfere with an arbitrator’s refusal to grant a postponement.

[21] The Applicant’s contention that the Second Respondent’s rulings amounted to interim awards is in my view, incorrect and falls to be rejected.  The rulings were procedural rulings made about the admissibility of evidence.  Not every ruling made by an arbitrator in the course of an arbitration amounts to an interim award in terms of Section 33(1) of the Act.

It is one of the naturalia of an arbitration agreement that the arbitrator shall be entitled to regulate the proceedings before him and to make procedural rulings in the course thereof, inclusive of what evidence to allow or disallow, as in casu.

In the present instance, the arbitration agreement does not limit the Second Respondent’s aforesaid powers in any way, except to the extent that it imposed an obligation on him to apply the rules of evidence applicable to civil trials in the High Court.

It is therefore my view that the Second Respondent’s ruling does not amount to an “award” as contemplated in Section 33(1) of the Act.

The Functus Officio Doctrine

[22] The functus officio doctrine is one of the mechanisms by means of which the law gives the expression to the principle of finality.  According to this doctrine, a person who is rested with adjudicative or decision-making powers may, as a general rule, exercise those powers only once in relation to the same matter.  This rule applies with particular force, but only in circumstances where the exercise of such adjudicative or decision-making powers has the effect of determining a person’s legal rights or of conferring rights or benefits of a legally cognizable nature on a person.  The result is that once such a decision has been given, it is (subject to any right of appeal to a superior body or functionary) final and conclusive.

[23] The Applicant’s argument that the Second Respondent was functus officio in relation to the relief claimed by the First Respondent in its application is in my view, incorrect.  From the relevant portion of the record, it is evident that the First Respondent initially objected to the expert evidence of Mr. Thompson being led at all due to the Applicant’s failure to comply with the requirements of rule 36(9) of the Uniform Rules of Court.  The Second Respondent dismissed this objection.  Furthermore, the Second Respondent’s function is to determine the disputes before him as delineated in the pleadings.  This has not been done, therefore he will only after fulfillment of his function become functus officio.  The Applicant’s argument in this regard is in my view, premature.

[24] The First Respondent submitted that the application be dismissed with costs on the attorney-and-client scale.  I see no reason for not applying the normal rule that the costs should favour the result on a party and party scale.  The court is reluctant to make an award of costs on the very punitive attorney-and-own-client scale, except on special cases.

[25] In the circumstances, I make the following order:

1. The application for review is dismissed with costs.

______________________

D S MOLEFE

JUDGE OF THE HIGH COURT

APPEARANCES:

Counsel on behalf of Applicants : Adv. LW de Koning SC

Instructed by : WWB Botha Attorneys

Counsel on behalf of 1^st Respondent: Adv. JA van der Westhuizen

Instructed by: Weavind & Weavind Inc.

---

---