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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.

28/10/2020

CASE NO: 10086/2019

 

In the matter between:

ICON EARTHWORKS (PTY) LTD (Registration Number: 2004/027962/07)	Applicant
and
CALIBER 293 (PTY) LTD (Registration Number: 2013/164887/07)	First Respondent
E. L. GOLDSTEIN N.O.	Second Respondent

JUDGMENT

 

AVVAKOUMIDES AJ

 

1.         This is an application to review the award of the second respondent, sitting as arbitrator. The issue to be determined is whether a review can be entertained for reasons advanced by the applicant and if so, whether the arbitrator’s award should be set aside.  

2.         The review is brought in terms of section 33(1) of the Arbitration Act, Act 42 of 1965. The review is limited to procedural irregularities. (See Telcordia Technologies Inc. v Telkom SA Ltd 2007 (3) SA 268 (SCA) para [51]). The statutory grounds listed in the Arbitration Act are narrower than the common law grounds. (See Telcordia p298, footnote 49). The principle of party autonomy in arbitration proceedings is applicable as to the requirement that a court must give due deference to an arbitrator’s award. What this means is where an arbitrator has engaged in the correct inquiry but has erred either on the facts or on the law, such errors do not constitute an irregularity and are not a basis for setting aside an arbitrator’s award. (See Palabora Copper (Pty) Ltd v Motlokwa Transport and Construction (Pty) Ltd 2018 (5) SA 462 (SCA) at 486 (A) and Telcordia para [54] and para [67]).

3.         A review of an arbitrator’s award must thus be measured against the standards aforesaid and where parties choose arbitration, courts endeavour to uphold the decision of the parties. It is not the court’s function in a review application to reinterpret a contract, for example. 

4.         The failure by an arbitrator to deal with facts that go to the merits of a case does not constitute an irregularity and neither does it mean that the arbitrator ignored such facts. The general principle applicable to “gross irregularity” is that it concerns the conduct of the proceedings rather than the merits of the decision made by the arbitrator. It follows that factual findings by an arbitrator become binding upon the parties.

5.         The parties herein concluded two arbitration agreements, one of general application pertaining to the referral of disputes to the arbitrator and the minutes of an arbitration meeting of a specific relevance as it defines that only three issues would be heard by the arbitrator in the proceedings under review.  The three issues were indeed heard.

6.          The minutes of the first arbitration meeting reflect certain agreements between the parties, recorded as follows:

6.1         The arbitrator could deviate from the agreed rules, namely the rules of the High Court; and

6.2         The arbitrator would not be obliged to follow the strict rules of evidence as long as the procedure adopted by him is fair to both parties and conforms with the requirements of natural justice.

7.          There were three issues the arbitrator was called upon to adjudicate:

7.1         What were the contents of the contract between the parties?

7.2         Did a repudiation of the contract occur?

7.3          If there was a repudiation, which party repudiated the contract?

8.           The applicant relies on two grounds of review:

8.1       The arbitrator misconducted himself in relation to his duties as arbitrator; and

8.2       The arbitrator committed a gross irregularity in the conduct of the arbitration proceedings or exceeded his powers. 

9.           The applicant, in amplification, submitted that:

9.1       The finding by the arbitrator regarding the applicability of penalties was wrong.

9.2       The finding by the arbitrator that the applicant had completion dates to achieve in respect of any phases of work was wrong.

9.3       The finding by the arbitrator that the applicant’s refusal to return to the site when called upon to do so constituted a repudiation of the contract between the parties, was wrong.

9.4       The arbitrator did not address or investigate the evidence.

9.5       The arbitrator made findings about a contract not pleaded by the parties and/or did not grant opportunity for argument to the parties. 

10.         The respondent submitted that the grounds of review cannot support the review application for the reasons advanced above and based on the aforementioned authorities relied upon. The respondent argued further that the fact that an arbitrator might be shown to have erred either on the facts or the law or both, is irrelevant when it comes to review proceedings. The respondent submitted that should there be such errors, these are subject matters of appeal proceedings and not review proceedings. 

11.       The respondent submitted further that the ground of review based on the arbitrator not having addressed / investigated the evidence does not have any merit and cannot support a review of the arbitrator’s award for the following reasons:

11.1      Such ground flies in the face of the authorities relied on by the respondent; and 

11.2      This ground ignores the contents of paragraph [23] of the arbitrator’s award; and

11.3      This ground disregards the fact that the whole of the award spells out the evidence which the arbitrator regarded as relevant and sufficient to arrive at a finding. The respondent emphasized that the parties are bound by the arbitrator’s findings of fact, any error of fact or law by the arbitrator are not grounds for review and thus, even if it is illustrated that the arbitrator erred in deciding what was relevant, it does not constitute a ground for reviewing his award.

12.        Paragraph 23 of the arbitrator’s award is critical.  I deem it necessary to quote the contents, which reads as follows:

“I turn to deal with the complaints of both sides about the length of the evidence led before me, both in chief and under cross-examination, of the witness Neary. I have both listened to, and read, that evidence, and given the complexities of the factual matrix in this matter, I am not satisfied that either side can be blamed for unnecessarily prolonging the proceedings.  The views a judge or arbitrator may take of relevance, or the importance of issues, are notoriously unpredictable, and careful and diligent counsel cannot be criticised for trying to cover all reasonably conceivable angles and aspects of a case. I have myself been able to confidently extract what I conceive to be the effective essence of the factual matrix concerned, because I have been greatly assisted by being thoroughly steeped in all the evidence laid before me by both sides”.

13.        The applicant argued its last ground of review, namely that the arbitrator made findings about a contract which was not pleaded, and the parties were not granted an opportunity for argument.  In this regard my attention was drawn to the founding affidavit and paragraph 9 of the opposing affidavit and the replying affidavit, from all of which I cannot see that the applicant is correct in relying on this ground for review. It certainly appears that both parties were afforded opportunity to deal with all issues between them.

14.       The thrust of the respondent’s argument is that, even if I should find the applicant’s grounds of review to be correct, those grounds cannot justify a review of the second respondent’s award. The respondent submitted further that when parties agree to an arbitration and do not expressly agree on an appeal procedure, they accept that the arbitrator’s award shall be final even if there are errors of fact and/or law made by the arbitrator in arriving at his award. 

15.       The applicant submitted that the primary dispute relating to the agreement was the question as to whether the parties had reached agreement regarding the imposition of penalties for late completion.  The applicant further submitted that the arbitrator’s award reveals that he determined the agreement between the parties by having regard exclusively to the external manifestation of their agreement, being the written documentation exchanged between the parties. The arbitrator declined to resolve any of the factual disputes which had arisen between the parties and it is this failure by the arbitrator which, the applicant submits, constitutes a gross irregularity, alternatively misconduct on the part of the arbitrator. 

16.       The applicant further submitted that the arbitrator, having decided not to resolve any disputes of fact, proceeded to analyse the documentation and selected extracts from the evidence to motivate his determination that the contract between the parties provided for penalties for delay of R220.00 per unit per day, and, that the claimant repudiated the contract. 

17.       The applicant lastly submitted that the entire project consisted of various stages and the initial stage of the works comprised mainly of excavation for which the applicant was responsible and not the erection of units, which comprised of the last stage of the works. Thus, the applicant argued that the rate utilised by the arbitrator in determining the penalties was incorrect and was not linked to the first stage of the works and could not be expressed in any amount in money per unit. 

18.       The applicant finally submitted that the arbitrator, in deciding that it was unnecessary to resolve the disputes of fact, avoided his responsibility as an arbitrator and that he was required, as per his mandate, to resolve he disputes. The applicant argued that the disputes set out the factual matrix of the agreement and provided evidence of whether an agreement relating to penalties had in fact been reached. The arbitrator’s failure to assess and determine the evidence constituted a gross irregularity on the part of the arbitrator and warrants the setting aside of his award. 

19.       The first respondent referred to the court to the transcript of the arbitration proceedings where the arbitrator indicated how he would set about deciding the disputes and the applicant appears to have agreed that this was the correct manner to adjudicate the disputes. Thus, to now come and complain that the arbitrator did what he undertook to do, and with which the applicant agreed, constitutes an irregularity / misconduct resulting in an unfair trial, cannot hold water.

20.       The first respondent referred to paragraph 2 of the award which appears in the application papers at CaseLines pp002-41 from which it is apparent that the arbitrator proceeded to do what he had undertaken to do and that the applicant had agreed with the manner of resolving the disputes. The first respondent relied on Telcordia, at paragraph 125 thereof, and the case of Doyle v Schenker 1915 AD 233 at 238 in which the Appellate Division held that the magistrate had not committed an irregularity justifying a review, where the magistrate failed to deal with the merits because he considered the release document to be conclusive for his decision. This, the first respondent argued, is precisely what the second respondent in this case did.

21.       Given that the arbitrator was charged with determining only whether there was a repudiation of the agreement, which party was responsible for the repudiation and what the penalties payable were, and, on the basis of Neary’s evidence (the applicant’s witness) admitting that he had erred in redacting the JBCC contract in which the penalties had been deleted before signing and returning this to the respondent, and, having considered the evidence before me, I cannot align myself with the argument that the arbitrator either misconducted himself in relation to his duties, or committed any gross irregularities in respect thereof, or exceeded his powers.

22.       In my view, the arbitrator engaged in the correct inquiry and, even if he erred on the facts or the law, which I do not find to be the case, such errors would not constitute an irregularity thus forming the basis for setting aside his award. In this regard I consider myself bound to the decision in Palabora Copper (supra).

23.        Having considered all of the documents filed, the respective heads of argument together with supplementary heads of argument, I make the following order:

23.1     The application is dismissed.

23.2     The applicant shall pay the first respondent’s costs, which costs shall include the costs of employment of senior counsel.

 

 

 

G.T. AVVAKOUMIDES

ACTING JUDGE OF THE HIGH COURT

GAUTENG DIVISION, PRETORIA

 

 

 

Representation for parties:

 

For applicant:                                             N. Redman SC

 

Instructed by:                                             C. De Villiers Attorneys

 

For first respondent:                                 T.A.L.L. Potgieter SC

 

Instructed by:                                             Roelf Nel Inc.

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