Howick Retirement Villages (Pty) Ltd v Lafarge Industries South Africa (Pty) Ltd (AR 493/09) [2010] ZAKZPHC 7 (11 March 2010)

Howick Retirement Villages (Pty) Ltd v Lafarge Industries South Africa (Pty) Ltd (AR 493/09) [2010] ZAKZPHC 7 (11 March 2010)

The court held that the respondent was required to exercise its election under Clause 18.3 within a reasonable time after the procedural steps in Clauses 18.1 and 18.2 had been completed. The respondent's failure to do so, particularly after issuing summons, resulted in the loss of its right to refer the dispute to arbitration. The special plea did not constitute a valid election to arbitrate, as it was based on an erroneous assertion that the appellant was obliged to refer the dispute to arbitration. The court found that the intention of the parties was to resolve technical disputes expeditiously, and allowing the respondent to refrain from making an election would defeat this purpose....

Citation
[2010] ZAKZPHC 7
Parties
Appellant: Howick Retirement Villages (Pty) Limited; Respondent: Lafarge Industries South Africa (Pty) Limited
Court
Kwazulu-Natal High Court, Pietermaritzburg
Jurisdiction
South Africa
Judgment Date
11 March 2010
Case Number
AR 493/09
Procedural Posture
Civil Appeal / Appeal From Judgment Upholding Special Plea (stay Pending Arbitration)
Outcome
Appeal upheld; special plea dismissed; costs awarded to appellant.
Judges
Swain, Murugasen, Nicholson
Legal Topics
Arbitration Clause Interpretation, Stay of Proceedings, Contractual Election, Technical Dispute Resolution
Commercial and Corporate Civil Procedure Arbitration Clause Interpretation Stay of Proceedings Contractual Election Technical Dispute Resolution

Case Brief

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Parties

Howick Retirement Villages (Pty) Limited

Appellant

Lafarge Industries South Africa (Pty) Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Judgment Upholding Special Plea (stay Pending Arbitration)

Legal Issues

  1. 1 Whether the respondent was obliged to exercise its election under Clause 18.3 within a reasonable time.
  2. 2 Whether the special plea for a stay pending arbitration was validly raised and constituted an election to arbitrate.
  3. 3 Whether the appellant was required to demand that the respondent exercise its election before proceeding to court.

Ratio Decidendi

The court held that the respondent was required to exercise its election under Clause 18.3 within a reasonable time after the procedural steps in Clauses 18.1 and 18.2 had been completed. The respondent's failure to do so, particularly after issuing summons, resulted in the loss of its right to refer the dispute to arbitration. The special plea did not constitute a valid election to arbitrate, as it was based on an erroneous assertion that the appellant was obliged to refer the dispute to arbitration. The court found that the intention of the parties was to resolve technical disputes expeditiously, and allowing the respondent to refrain from making an election would defeat this purpose....

Court Disposition

Appeal upheld; special plea dismissed; costs awarded to appellant.

Orders

  • The appeal succeeds, the judgment of the court a quo is set aside and replaced with: 'The special plea of the plaintiff is dismissed and the plaintiff is ordered to pay the costs of the defendant, occasioned by the special plea, including the costs of the hearing of the opposed motion.'
  • The respondent is ordered to pay the appellant’s costs of the appeal, including costs of the application for leave to appeal, such costs to include the costs of two counsel.