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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

(1)           REPORTABLE: YES / NO

(2)           OF INTEREST TO OTHER JUDGES: YES/NO

(3)           REVISED.

CASE NO: 72746/2019 

               

In the matter between:

 

BUSAMED HEALTH CARE (PTY) LTD & 2 OTHERS                                      Applicants 

 

and

 

M DU PLESSIS VAN DER NEST SC N.O & 7 OTHERS                                    Respondents

 

JUDGMENT

 

NKOSI AJ

1.            This is an application by the Second Applicant to review and set aside the Arbitration Award by the 1^st Respondent following a hearing involving the first, second and third Applicants with the 2^nd Respondent to the 8^th Respondent.

2.            The Applicant was part of the arbitration proceedings where the 1^st Respondent subsequent to such arbitration ordered compliance as to all participants had to abide.

3.            It is common cause that there was a settlement agreement which guided the implementation of the arbitration award as ordered by the 1^st Respondent.

4.            One should note that subsequent to the aforesaid arbitration award the Applicant participated (partially) to the Arbitration award like all other parties to it:

(a)  The order at the end of the Arbitration award made by the First Respondent “the Arbitration” on 7 August 2019 “Arbitration Award “ stated that:

(i)                  the 1^st Defendant (GPH) needs to comply with the consultancy services agreement between GPH, Veraison, Tropical Paradise, Amoricare and Dingaan (the  CSA),

(ii)                the matter is referred to the Second Respondent “Mazaars” under clause 4.1.2.3.2 on the settlement concluded on the 13 December 2017 between inter alia the 1^st Applicant “Busamed Health care”, the 3^rd Applicant “Busamed “ and GPH, as well as Tropical Paradise, Veraison, Amoricare and Dingaan (the settlement agreement ) and,

(iii)              GPH must pay the cost of the Arbitration.

5.            The Applicants instituted an application set to challenge the arbitration award by review to set it aside and to declare:

(a)  The management services agreement between GPH and JT Ross (Pty) Ltd (JT Ross) “the MSA” was terminated with effect from 29 May 2018,

(b)  The CSA automatically terminated when the MSA was terminated, and

(c)  For the purpose of valuation of the CA in terms of the settlement Agreement, Mazaars “shall take into account the fact that the management services agreement and the consultancy services agreement were terminated with effect from 29 May 2018.

6.            In the alternative of the relief at the notice of motion if the Arbitration Award is not reviewed and set aside, various additional declaratory prayers are sought that:

-       Busamed and Busamed Healthcare are not bound by the Arbitration Award in certain respects

-       Busamed and Busamed Healthcare would also not be “ bound by Mazaars” determination of the value of the consultancy services agreement pursuant to the arbitration award and

-       “there was no valid referral of “the natter” to Mazaars as required by  clause 4.1.2.3.2 of the settlement agreement and that Mazaars is not  duly empowered to conduct the valuation of the consultancy services agreement”

7.            The Applicants base their challenge to the Arbitration Award under subsection 33(1)(b) of the Arbitration Act which provides that an award may be set aside where “an arbitration tribunal has committed any gross irregularity in the conduct of the arbitration proceedings of has exceeded its powers” and this could only be done within a period of 6 weeks before the expiry of three years, after the publication of the award.

8.            The prescribed period in terms of Section 33(2) of the Arbitration Act states that “shall be made within six weeks after the publication of the award to the parties. In this matter the arbitration award was handed down on the 7^th of August 2019 and the six week period expired on 17 September 2019. It was time barred.

9.            Any challenge or application to set the arbitration award had to be accompanied by application on good cause. This is a further prescribed procedure in terms of Section 33 of the Arbitration Act after due notice to the other party or parties. It must clearly spelt out that Busamed Healthcare and Busamed were not parties to the arbitration proceedings and that they lacked legal standing to challenge the arbitration award.

10.         In the present case, the Applicants contends that the Arbitrator allegedly committed “gross irregularities” by making “findings” which were prejudicial to Busamed and Busamed Healthcare without being parties to the arbitration proceedings or being afforded an opportunity to make representations. No suggestion was made that they were deprived an opportunity to present their case.

11.         The applicants alleges in certain instances that the Arbitrator did not have powers to make a finding or order that he did record on pages 35-36 and page 102 paragraph 133.2 of the award. This allegation was not substantiated at all.

12.         The complaint that the Arbitrator found or assumed, that the MSA was still in force as the GPH Applicant did not plead in the arbitration that MSA was no longer in for ( or enduring ) and it was argued that it was never required of the Arbitrator to consider any argument or allegation that the MSA had terminated. He was alleged to have went beyond his mandate.

13.         It was denied that there were “gross irregularities” arising from non-participation of Busamed and Busamed Healthcare in the arbitration or the findings made by the Arbitrator in those proceedings which could have a bearing on those companies:

-The establishing of Mazaars valuation process and the legitimacy of its   referral. The court accept this submission.

14.         The Applicant’s main complaint is an allegation that the Arbitrator purportedly exceeded his powers when - after finding that GPH needs to comply with the CSA –he stated that “the matter is referred to Mazaars under clause 4.1.2.3.2 of the Settlement Agreement.

15.         The Applicant’s complain that the Arbitrator himself referred the matter to Mazaars when it was supposedly the parties’ prerogative to do so.

“That the valuation process had to be initiated by a referral from all “the parties (as defined in the Settlement Agreement and that Busamed and Busamed Healthcare should therefore have been party to the referral, but were not”.

16.         The Respondents argued that these were not a basis for a review and      setting aside of an award. The court accepted this response as the parties had to conclude the process without further delay.

17.         The arbitrator had made an order in paragraph 133.1 that “GPH needs to comply with the CSA” and further stated in paragraph 133.2, that “the matter is referred to Mazaars under clause 4.1.3.2 of the Settlement Agreement. This was the reflection of the parties Settlement Agreement.

18.         The parties, on 22 August 2019, signed an engagement letter appointing Mazaars to perform an independent valuation for the purposes of Settlement Agreement. This constituted the formal referral to the matter to Mazaars for its independent valuation of the CSA.

The above negates the assertion that the Arbitrator referred the matter himself. The question of gross irregularity could not be taken any further.

19.         What is noted is that the Applicant’s prayer 1.4 sought are at variance with the agreed process in the Settlement Agreement. The Applicants therefore cannot both seek to set aside the Arbitration Award as claimed in prayers 1.1 of the Notice of Motion and seek to direct what should be taken into account in Mazaars’ evaluation of the value of the CSA in prayer 1.4

20.      The subsequent declaratory reliefs sought have no basis when considering the basis of Applicant’s participation in accordance with the CSA and ultimately claim a justification on basis of the doctrine of peremption. At Common Law, the doctrine of peremption states that a party must make-up its mind: it cannot equivocate by acquiescing in a judgment or decision in a judgment and later on appeal.

21.      Applicant bears the responsibility to persuade the court into accepting the challenge on a balance of probability and for the court to dismiss Respondent’s submission. The court could not be persuaded by the Applicant.

22.      The relief sought in paragraph 1.5.3 of the Notice of Motion ( that “ there was no valid  referral of the matter” to Mazaars as stated in clause 4.1.2.3.2 of the settlement agreement on their contention that the referral purportedly had to be made all parties to the Settlement Agreement did not occur.

23.      In the case of Venmop 275 (Pty) Ltd & Another vs Cleveland Projects (Pty) Ltd and Another (reportable) 20104/14286, Venmop had to make a good cause for an application to set aside an arbitration award outside the six weeks period prescribed by the Arbitration Act, No 42 of 1965 where the Arbitration Respondent offered to settle in accordance with the award:

 

The requirements (i) show a good cause for the delay

                             (ii) show prospect of success

Acquiescence of the award is an indication allowing the Arbitration Respondent to reserve his right to challenge the effects of the award at

the right time. This court had to be fully persuaded into accepting a clear submission that Applicant was unduly prejudiced by the Arbitration award. The court must weigh all options and consider the process of finality and the speedy process. The unreported case of Hartely Roegshaan & Hartely Safiya vs First National Bank & Mantsobane Maroka case no: 27612/2010 is a case in print where a Respondent challenges a default judgment where itself failed to file a plea after it had served a Notice to Defend being aware of the process which unfolded after the Notice to Defend. The court dismissed a subsequent argument of an irregular service for the purpose of a rescission application. It was opposed on the basis that it had no bona fide merits of success.

24.         In this matter parties had presented their respective cases. Applicant partially participated in the decision of the arbitrator with the acquiescence reserving its rights:

 

The Doctrine of Peremption:

According to Common Law a party who acquiesces to a judgment cannot subsequently seek to challenge the judgment which he has acquiesced or to blow hot and cold. The old case of Sendral Kooparative Graanmaantskooper vs Shiften & Others & Taxing Master 1964(1) SA 162 (0) and the case of Hlatshwayo vs Mare & Decs 1912 AD 242  where Lord De Villiers held that “ where a man has two courses of action open to him and he unequivocally takes one he cannot afterwards turn back and take the other”.

 

Similarly in Donbunet vs South Africa Railways & Harbours Innes CJ 1920 AD 583 at 594-5 stated:

“The rule with regard to peremption is well settled, and has been enunciated on several occasions in the Appellate Division. If the conduct of an unsuccessful litigant is such as to point indubitably and necessarily to the conclusion that he does not intend to attack the judgment (the award in this case in point), he is held to have acquiesced in it. But the conduct relied upon must be unequivocal and must be inconsistent with any intention to appeal. And the onus of establishing that position is upon the party alleging it. In doubtful cases acquiescence, like waiver must be held non-proven”.

-       Coming back to this matter and applying the same doctrine of peremption to the facts of this case, it is incontrovertible that the Applicant by his own conduct acquiesced to the Arbitration Award obtained against him by partial participation with the award/order. It is therefore on this ground that the court accepts that acquiescence will be fatal to any attempt to set the award aside.

 

-       I therefore accept this view objectively analysed. Applicant disputed that it acted with approbate and reprobate in this kind of a situation and stated that he merely sounded a warning to test the waters. Having weighed the submissions taking into account the relevant principle the Applicant’s case stands to fall.

 

-       By partially participating to the dictates of the award can only be accepted as compliance and acceptance by acquiescence. The period of having to be quiet for more than 6 (six) weeks is clear for this court that Appellant accepted the Arbitration Award and therefore cannot u-turn now to the contrary.     

 

25.         It is my view that the Applicant did not succeed to making an answer to its partial participation to the decision of the Arbitrator. However the second hurdle to pass was to make out a case against its opponents. This could not succeed and therefore the court came to the conclusion that Applicant’s Notice of Motion and its prayers could also not stand.

26.         The court will not come to the rescue of a party who initially participated in terms of the award by showing an intention to abide by the original finding of the arbitrator and suddenly changes its mind. A party must make up its mind whether it was to abide or appeal. It all has to be done within a prescribed period as stipulated in the Arbitration Act unless a good cause is shown to the court hearing the application for condonation.

27.         The court compared with the approbate and reprobate principle which almost confuses the doctrine of acquiescence or presumption. The fact that the prospects of success are in favour of the Applicant unless the court is satisfied that this will be the finality of the dispute. The Applicant should have appealed within the correct period on receipt of the Arbitration Award and therefore my view is that there are no merits in the challenge of the Arbitration Award. 

 28.  The purpose of the Arbitration was meant to allow the parties to   participate in a forum chosen by them and to abide by its decision:

        28.1 This court could not find that the arbitrator had acted irregularly or in conflict with this principle when this award was made;

28.2 Section 32(2) of the Arbitration Act applied where the award made required reconsideration in which the award was said to be deficient;

28.3 The Applicant had not made a case for extending the period of time referred to in Section 32(2) because it had not put forward “compelling reasons” that the court had to consider as good cause shown to allow the Award to be not binding and effective to all parties to the Arbitration process; and

28.4. This court, having listened to all parties and considered all the submissions and looked at the relative prejudice that will be caused if this matter is not concluded at this level the court  finds that the Applicant’s  challenge have no merit and stands to be dismissed.

29. (1) Consequently the court concludes that Applicant’s case is         dismissed

     (2) The Arbitration Award by the Arbitrator is made an order of the court    as applied for

   (3) Applicant to pay the costs involving two counsel

 

 

VRSN NKOSI (AJ)

ACTING JUDGE OF THE HIGH COURT

OF SOUTH AFRICA, GAUTENG

DIVISION, PRETORIA

 

 

Heard on:  25 May 2020

Judgment delivered:  ___26 June 2020____

 

Appearances:

For the Applicants:            Adv K Tsatsawane SC

Instructed by:                    Cliffe Dekker Hofmeyr Inc

 

For the Respondents:      Adv A G South SC

                                           Adv T Pillay  

 

Instructed by:                  Edward Nathan Sonnenbergs Inc            

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