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South Africa Judgment

Eastern Cape High Court, Grahamstown

KW Plant Hire CC and Another v Ahier and Another (2672/2008) [2009] ZAECGHC 41 (30 June 2009)

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Source document

01

Holding and result

The court found that the applicants failed to establish misconduct or gross irregularity on the part of the arbitrator. The record showed that the applicants had full opportunity to present their case, including arguments on the applicability of Clause 51 of the contract. The arbitrator provided adequate reasons for his award, and the applicants' dissatisfaction stemmed from the outcome rather than any procedural unfairness. The court held that the review application was, in substance, a disguised appeal, which is not permissible under the Arbitration Act. The arbitrator's failure to file an opposing affidavit did not warrant an adverse inference, as he had furnished sufficient reasons for his decision. Accordingly, the application to set aside the arbitral award was dismissed.

Court disposition

Application dismissed with costs, including the costs of two counsel.

Orders

  • The application is dismissed with costs, such costs to include the costs of two counsel.

02

Material facts

Parties

KW Plant Hire CC

Applicant Counsel: Adv H.P Jeffreys SC

Inkonka Contruction CC

Applicant Counsel: Adv H.P Jeffreys SC

T B C Ahier

Respondent Counsel: Adv R.G Buchanan SC

Member of the Executive Council of the Department of Roads and Transport (Eastern Cape Province)

Respondent Counsel: Adv G.H Bloem

Amounts and remedies

  • Total Amount Awarded in Arbitral Award (capital, Escalation, Interest): ZAR 1,473,516
  • Arbitrator's Cost to Be Refunded (less Interim Award Costs): ZAR 219,864.49

03

Procedural history

  1. Posture

    Review Application / Judgment

04

Questions and positions

Legal issues

Party arguments

Applicant
The applicants argued that the arbitrator's conduct was high-handed and arrogant, ignoring material evidence and imposing his own views without proper regard to the evidence or legal principles. They contended that the arbitrator failed to understand the fundamental issues, raised and decided issues not addressed by the parties, and did not provide the applicants an opportunity to address those issues. The applicants further alleged that the arbitrator failed to apply his mind to their arguments and expert evidence, and did not provide adequate reasons for his award. They submitted that these failures amounted to misconduct and gross irregularity under section 33 of the Arbitration Act, justifying the setting aside of the award.
Respondent
The respondents maintained that the applicants' complaints were unfounded and amounted to dissatisfaction with the outcome rather than procedural unfairness or misconduct. They argued that the applicants had ample opportunity to present their case during the arbitration, including addressing the applicability of Clause 51 of the contract. The respondents asserted that the arbitrator provided sufficient reasons for his award and that the review application was, in reality, a disguised appeal. They further contended that no adverse inference should be drawn from the arbitrator's decision not to file an opposing affidavit, as he had furnished adequate reasons for his findings.

05

Court’s reasoning

  1. 01

    Clark v African Guarantee and Indemnity Co Ltd 1915 C.P.D 68

    Courts are reluctant to interfere with arbitral awards; parties elect arbitration for finality and sacrifice the right to appeal, except in cases of misconduct or gross irregularity.

  2. 02

    Dickenson & Brown v Fishers Executors 1915 A.D. 166

    An arbitrator's award is final and conclusive; errors of fact or law do not justify setting aside the award unless misconduct or gross irregularity is proven.

  3. 03

    Ellis v Morgan; Ellis v Desai 1902 T.S. 571

    Only gross error amounting to misconduct justifies setting aside an arbitral award under section 33 of the Arbitration Act.

  4. 04

    Johan Louw Konstruksie (Edms) Bpk v Mitchell N.O and Another 2002 (3) SA 171 (C)

    No adverse inference can be drawn against an arbitrator for not opposing a review application or filing an affidavit if adequate reasons for the award are provided.

  5. 05

    Lufuno Mphaphuli and Associates (Pty) Ltd v Andrews 2009 (6) BCLR 527 (CC)

    Fairness in arbitration does not equate to court procedures; courts should respect parties' procedural choices and the purpose of private arbitration.

06

Ratio, limits and disposition

Ratio decidendi

The court found that the applicants failed to establish misconduct or gross irregularity on the part of the arbitrator. The record showed that the applicants had full opportunity to present their case, including arguments on the applicability of Clause 51 of the contract. The arbitrator provided adequate reasons for his award, and the applicants' dissatisfaction stemmed from the outcome rather than any procedural unfairness. The court held that the review application was, in substance, a disguised appeal, which is not permissible under the Arbitration Act. The arbitrator's failure to file an opposing affidavit did not warrant an adverse inference, as he had furnished sufficient reasons for his decision. Accordingly, the application to set aside the arbitral award was dismissed.

Obiter and limits

  • The court noted that parties who elect arbitration accept the finality of the process and cannot seek to overturn awards simply because they disagree with the outcome.
  • It was emphasized that courts should not be quick to find fault with arbitration procedures, as this undermines the purpose of private arbitration.
  • The applicants' attempt to rely on the interim award to challenge the final award was described as opportunistic and disingenuous.

Court disposition

Application dismissed with costs, including the costs of two counsel.

  • The application is dismissed with costs, such costs to include the costs of two counsel.

Source and reliance status

Eastern Cape High Court, Grahamstown

This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.

Judgment reading view

Judgment text

The complete available source text.

Source document

Eastern Cape High Court, Grahamstown

Judgment

[2009] ZAECGHC 41

FORM A

FILING SHEET FOR EASTERN CAPE HIGH COURT, GRAHAMSTOWN

PARTIES:

Case Number: 2672/2008

High Court: Port Elizabeth

DATE HEARD: 18 June 2009

DATE DELIVERED: 30 June 2009

JUDGE(S): D. Chetty

LEGAL REPRESENTATIVES –

Appearances:

for the Applicant(s): Adv H.P Jeffreys SC

for the Respondent(s): Adv R.G Buchanan SC/ Adv G.H Bloem

Instructing attorneys:

Applicant(s): Mr O Huxtable(Wheeldon Rushmere & Cole)

Respondent(s):

Mr Wolmarans (N N Dullabh & Co)

CASE INFORMATION -

Nature of proceedings: Application

Topic:

Key Words: Arbitration – Arbitration Act 42 of 1965 – Private arbitration – Award sought to be set aside in terms of the provisions of s 33 of Act – Arbitrator - Misconduct – Gross irregularity – Applicants contending that ex facie arbitrator’s reasons inference could validly be drawn that he failed to consider material evidence – such failure amounted to misconduct – Arbitrator not filing opposing affidavit – Whether adverse inference may legitimately be drawn therefrom – No such inference may be drawn - Review in reality a disguised appeal - Application dismissed

REPORTABLE

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE – GRAHAMSTOWN)

Case No: 2672/2008

In the matter between:

K W PLANT HIRE CC First Applicant

INKONKA CONTRUCTION CC Second Applicant

and

T B C AHIER First Respondent

MEMBER OF THE EXECUTIVE COUNCIL OF

THE

DEPARTMENT OF ROADS AND TRANSPORT

(EASTERN CAPE PROVINCE) Second Respondent

______________

Coram: Chetty, J

Date Heard: 18 June 2009

Date Delivered: 30 June 2009

Summary: Arbitration – Arbitration Act 42 of 1965 – Private arbitration – Award sought to be set aside in terms of the provisions of s 33 of Act – Arbitrator - Misconduct – Gross irregularity – Applicants contending that ex facie arbitrator’s reasons inference could validly be drawn that he failed to consider material evidence – such failure amounted to misconduct – Arbitrator not filing opposing affidavit – Whether adverse inference may legitimately be drawn therefrom – No such inference may be drawn - Review in reality a disguised appeal - Application dismissed

JUDGMENT

CHETTY, J

[1] The applicants seek orders framed in the notice of motion as (only those relevant reproduced) –

“1. call(ing) upon the First and Second Respondents to show cause, upon a date to be determined by this Court, why a Final Award, delivered by the First Respondent on the 10th November 2008 and delivered to the Applicants on the 11th November 2008, in the arbitration proceedings held in East London over the period extending from 11 February 2008 to 15 August 2008, in the above matter, should not be reviewed and corrected, alternatively set aside and submitted for arbitration to a new arbitration tribunal constituted in a manner directed by the court, in the further alternative remitted to the First Respondent, together with such directions as appropriate; and

3. . . . seek(ing) an order that the costs of this application be costs in the arbitration proceedings, save in the event of opposition by either the First or Second Respondent, in which event, the costs be paid by that, or those Respondents opposing the application.”

The salient facts

[2] The applicants and the second respondent concluded an agreement in terms of which they were required to do routine road maintenance work in the Mnquma local municipal area in the province of the Eastern Cape. During the tenure of the agreement a dispute arose between them

concerning money. The dispute was referred to arbitration but prior to the commencement thereof, the applicants successfully sought the removal of the arbitrator on the basis that he had predetermined the issues and demonstrated a bias towards the applicants. The first respondent was by agreement between the parties appointed as the new arbitrator. The arbitration hearing endured for several weeks generating thousands of pages of viva voce and documentary evidence during which no complaints relating to the first respondent’s conduct or competence were raised by either of the parties. On 10 November 2008, the first respondent published his arbitral award in effect dismissing the bulk of the applicants’ claim against the second respondent. That award has given rise to these proceedings. The application is opposed by the second respondent, the first respondent merely signalling his intention to abide the decision of this court. The latter’s stance has however elicited strident criticism, totally unwarranted, to which I shall in due course revert.

[3] The review is predicated on the provisions of s 33 of the Arbitration Act 1 (the Act), viz. - that the first respondent misconducted himself, committed a gross irregularity in the conduct of the proceedings and

exceeded his powers.

[4] The applicants further complain they were denied fair administrative justice in as much as –

“20.1 the First Respondent’s conduct in the course of the hearing was high handed and arrogant to the extent that he blatantly ignored the evidence and imposed his views on the nature of the dispute without proper regard to the evidence or the legal principles;

20.2 the First Respondent failed to understand, or to have due regard to, the fundamental issues between the parties;

20.3 the First Respondent raised and based his award on issues which were not addressed by the parties, which he was not entitled to do, and furthermore failed to provide the Applicants any opportunity of addressing them;

20.4 the First Respondent failed to apply his mind, at all, to the Applicants’ argument at the conclusion of the case;

20.5 the First Respondent failed to apply his mind properly or at all to the evidence of the experts as to the nature of the work carried out by the Applicants and the rates which should be applied in relation thereto;

20.6 the First Respondent failed to provide reasonably acceptable reasons for his award.”

[5] In the founding affidavit, the deponent thereto, a member of the applicants, thereafter subjects the arbitral award to an overly critical analysis before concluding that the first respondent “acted irrationally”, “committed a series of material errors so fundamental that he misconceived the nature of his enquiry and his duties”; “the mistakes the first respondent made were so gross and manifest that they could not have been made without some degree of misconduct or partiality” and “the high handed, arrogant and mistaken action of the first respondent prevented the applicants from having their case fully and fairly determined”.

[6] The applicants’ heads of argument filed of record and the supplementary heads handed up from the bar at the hearing before me adopted an approach in the conformity with the aforementioned. During the course of Mr Jeffreys’ submissions however, the emphasis shifted. The thrust of the submissions now advanced before me was that ex facie the reasoning encapsulated in the final award it was evident that “there was very little the arbitrator applied his mind to, to give a reasoned judgment”. Ergo, so it was contended, the matter fell squarely within the parameters of s 33 of the Act and the application should accordingly meet with success.

[7] As adumbrated hereinbefore the grounds upon which the review is sought is predicated upon the provisions of s 33 of the Arbitration Act. Allied thereto is the contention that the applicants were denied the right to a fair hearing by reason of certain alleged serious irregularities

committed by the first respondent. The legal principles applicable to arbitrations have crystallised over many decades but before I consider these, it is perhaps apposite to commence by acknowledging that the applicants’ claim to fair administrative justice in our constitutional democracy is not misplaced. In Lufuno Mphaphuli and Associates (Pty) Ltd v Andrews2, O’Regan, ADCJ, writing for the majority said the following hereanent –

“[236] The final question that arises is what the approach of a court should be to the question of fairness. First, we must recognise that fairness in arbitration proceedings should not be equated with the process established in the Uniform rules of Court for the conduct of proceedings before our courts. Secondly, there is no reason why an investigative procedure should not be pursued as long as it is pursued fairly. The international conventions make clear that the manner of proceeding in arbitration is to be determined by agreement between the parties and, in default of that, by the arbitrator. Thirdly, the process to be followed should be discerned in the first place from the terms of the arbitration agreement itself. Courts should be respectful of the intentions of the parties in relation to procedure. In so doing, they should bear in mind the purposes of private arbitration which include the fast and cost-effective resolution of disputes. If courts are too quick to find fault with the manner in which an arbitration has been conducted, and too willing to conclude that the faulty procedure is unfair or constitutes a gross irregularity within the meaning of section 33(1), the goals of private arbitration may well be defeated.”

[8] There is a long line of decisions which emphasize that a party’s right to have an arbitral award set aside is severely limited. In Clark v African Guarantee and Indemnity Co Ltd3 Gardiner J stated the legal position thus4 -

“The Court will always be most reluctant to interfere with the award of an arbitrator. The parties have chosen to go to arbitration instead of resorting to the Courts of the land, they have specially selected the personnel of their tribunal and they have agreed that the award of that tribunal shall be final and binding. As Halsbury, L.C., said in Holmes Oil Co. v Pumpherston Oil Co. (Court of Sess., R. 18, p. 53) "One of the advantages which people are supposed to get by a reference to arbitration is the finality of the proceeding when the arbitrator has once stated his determination. They sacrifice something for that advantage --- they sacrifice the power to appeal. If, in their judgment, the particular judge whom they have selected has gone wrong in point of law or in point of fact, they have no longer the same wide power to appeal which an ordinary citizen prosecuting his remedy in the courts of law possesses, but they sacrifice that advantage in order to obtain a final decision between the parties. It is well-settled law, therefore, that when they have agreed to refer their difficulties to arbitration, as they have here, you cannot set aside the award simply because you think it wrong. The parties have agreed that it shall not be subject to the ordinary modes of appeal and that it shall be final; and that is, in nine cases out of ten, the very object which they mean to

attain by submitting their difficulties to arbitration." It is true that the arbitrators must carry out their duties in a judicial manner. I do not mean that they must necessarily observe the precision and forms of a court of law, but they must proceed in such a manner as to insure a fair administration of justice between the parties. If, therefore, an arbitrator has misconducted himself, has been corrupt, has heard one party and refused to hear the other, the Court will interfere and will set aside his award.”

In similar vein Solomon J, in Dickenson & Brown v Fishers Executors5 described the position as follows6

“Now it is not, I think, open to question that as a general rule where parties have referred their disputes to an arbitrator, his award is final and conclusive and no appeal lies from his decision. In the case of Caledonian Railway Co. v Turcan (1898, A.C. 256), which is referred to in the judgment of the court below, the English law is thus stated by LORD HALSBURY: "The parties have selected the arbitrator as judge both of fact and law, and if he be ever so erroneous in the decision at which he has arrived it is conclusive upon the parties.; his award is final, and whether it be right or wrong in point of law, it is a matter with which I am not entitled to deal." And in the same case LORD HERSCHELL said: "The arbitrator whether he has decided rightly or wrongly is supreme. There is no power to review his decision, whether he has made a mistake in law or whether he has made a mistake in fact." And that the law of Natal on this subject is to the same effect is, I think, quite clear. For that law we have to look now not to the principles of our common law but to the statute law as it is set forth in the Arbitration Act, 1898.”

[9] With that prelude I turn to consider whether the applicants have made out a proper case for the relief which they seek. The essence of the applicants’ complaint on the papers is not that the procedure adopted during the arbitration denied them the fair opportunity to present their case. Their case was rooted in the provisions of s 33 of the Act. The legal position is trite – only in the case of gross error, so gross as to amount to misconduct will a court be justified in setting aside an award - Ellis v Morgan; Ellis v Desai 7; Goldfields Investments Ltd and Another v City Council of Johannesburg and Another 8.

[10] The record of the proceedings demonstrate quite unequivocally that at no stage during the arbitration hearing was there even a suggestion that the first respondent had either misconducted himself or committed a gross irregularity. The first outward manifestation of any unhappiness appears to have been triggered by certain remarks made by the first respondent during the parties’ closing argument. Perturbed thereby the applicants’ attorney expressed his reservations in an e-mail to counsel the following day concluding – “I am gravely concerned that our client will not get a fair judgment in light of the above factors and ask that you provide an opinion on the implications for this in the event that our client receives an adverse award.”9

[11] The subsequent publication of the award engendered the review wherein the applicants publicly embraced the notion that the first respondent had misconducted himself. In argument applicants’ counsel sought to persuade me that it was apparent ex facie the award, that the first respondent’s failure to address what counsel contended were material issues, ineluctably compelled the conclusion that he had misconducted himself. The submission is in my view untenable.

[12] After the adduction of evidence, a document, styled arbitration notes, (“VV2”) originally numbering some 57 pages was provided to the first respondent together with the applicants’ heads of argument. In essence it contained copious references to the evidence adduced, submissions thereanent relating not only to its cogency but to the acceptance or rejection of evidence and the credibility of the various witnesses. All of this evidence concerned the state of the roads, its maintenance, the nature of the envisaged work, the proper determination of a rate and payment for work performed, the conditional terms, prejudice suffered as a result of non payment and culminates with a lengthy critical examination of the second respondent’s consultant engineer, Mr C.R Flanagan’s (Flanagan) evidence. In argument before me a replica of “VV2” now embellished by further rubrics and attracting end commentary ranging

from “evidence ignored” to “quality of evidence ignored” was handed up from the bar ostensibly in support of counsels principle submission that the first respondent’s misconduct was

self evident therefrom.

[13] Ordinarily, where a decision of a lower tribunal is sought to be assailed on the basis that its factual findings are wrong, the correct procedure would be to note an appeal against such decision. That course was however not open to the applicants. Prior to the commencement of the arbitration proceedings agreement had been reached that the first respondent’s award may in principle be subject to an appeal but that consensus needed to be reached on the procedure thereanent. A plethora of correspondence was exchanged and various proposals tabled by the second respondent’s attorneys. Throughout this exchange, which endured for almost a week, the applicants’ attorneys prevaricated and eventually an agreement, incorporating the applicants’ amendments to the second respondent’s proposed appeal procedure, was handed to the applicants’ counsel for approval by those instructing him. The end result of this concerted effort was a communication from the applicants that they had no interest in any appeal or its procedure. The end salvo communicated to the second respondent was that they would regard the first respondent’s award as final. Implicit herein was the election by the applicants that the first respondent would be the sole arbiter of all the issues raised before him.

[14] It is axiomatic that by their election at that early stage they were quite content that the matter be adjudicated by the first respondent. The record of the proceedings demonstrates unequivocally that at no stage during the hearing was there even a suggestion that the first respondent was incompetent, biased or otherwise disqualified from hearing the matter. The preliminary skirmishes concerning an amendment sought by the applicants culminated in an interim award in their favour. The final award however brought about a complete volte face on the part of the applicants. Their express earlier rejection of a consensual appeal dictated an alternative course of action and their only recourse was this review. Consequently it was submitted by Mr Jeffreys that examination of the synopsis of the evidence adduced (“VV2”) indisputably showed not that the first respondent’s factual

findings were ­­­­­­­­­­­­­­­­­­­wrong but that ex facie the award the first respondent failed to apply his mind to the issues before him.

[15] The viva voce evidence adduced at the arbitration comprised over 1,500 pages and the documentary evidence, in excess of that. As adumbrated hereinbefore the core submission advanced by Mr Jeffreys was that ex facie the final award it was evident that the first respondent either ignored or paid scant regard to the evidential material placed before him. Ergo, so it was contended, the first respondent failed to apply his mind to the issues he was called upon to determine. In that respect Mr Jeffreys submitted the first respondent’s award is reviewable. I disagree. Whilst there may be some validity in the criticism of the paucity of the reasoning vis-à-vis the first respondent’s evaluation and appraisement of the evidence adduced, it is speculative in the extreme to suggest that in making his award the first respondent ignored the evidence adduced before him.

[16] The first respondent’s final award was published on 10 November 2008 and an addendum thereto clarifying the value added tax considerations furnished on 28 November 2008. The final award comprises 12 pages. It commences with a preamble detailing the historical background to the arbitration; a reference to his ruling on the separation of issues and rejoinder applications and a summary of the various written submissions provided to him on conclusion of the evidence; his interim award and the reasons underlying it; details of various meetings and the dates of the hearing.

[17] He then proceeded to extrapolate the parties’ cases from the pleadings and succinctly summarised it. In paragraph 3, the first respondent

calculated the capital amount which he concluded the applicant was entitled to and prefaced those calculations by stating “after careful consideration of all submissions, documents, evidence and arguments, my final award is ­­­­­­­­as

follows:-

“3.1 Capital amount

3.1.1 Claims from 1 June 2003 to the 10 December 2005 for Wet grading are time barred in terms of Clause 51 of Colto GCC.

3.1.2 Claims from 10 December 2005 to30 June 2006 for wet grading are awarded as follows:-

a) For roads with less than 100mm of gravel and greater than 30mm of potholes etc

7m wide 245,9km x R1 199 = R294 834

6m wide 436,4km x R1 142=R498 369

R793 203

For roads with greater than 100mm of gravel but potholes etc greater than 30mm

7m & 6m wide 340,5km x R800 = R272 400

The total amount awarded to Claimant is

R793 203 + R272 400, 00 = R1 065 603

3.2 Escalation

Escalation using Exhibit “P” for factors from January 2005 to June 2007 as calculated in 4.9.1 below is R142 610. Total capital and escalation is R1 065 603 + R142 610 = R1 208 213

3.3 Interest

3.3.1 Interest on the outstanding amount of R1 208 213 from July 2007 to the end of November 2008 @ 15.5% p.a. is R1 208 213 x 0,155 x 17 ÷12 = R265 303

Total Amount

3.4.1 The total amount for the Final Award with capital, escalation and interest is R1 065 603 + R142 610 + R265 303 = R1 473 516

3.4.2 Payment after 30 November 2008 shall bear interest ay 15, 5% p.a.

Costs

The Claimant is awarded costs on a party and party basis for experts, attorney and counsel at the High Court Scale for the Final Award less the previous costs awarded to Defendant for the Interim Award. The Defendant to refund the Claimant the Arbitrator’s cost less the costs for the Interim Award. i.e. R238 104,49 – R18 240,00 = R219 864,49.”

[18] Paragraph 4 of the award encapsulates the first respondent’s reasons therefor. It comprises several subparagraphs, each of which was subjected to a barrage of criticism by applicants’ counsel. The first respondent found that the applicants’ claim up to the 10th December 2005 was time barred in terms of Clause 51 of the general conditions of the contract (Colto). That finding virtually extinguished the applicants claim. It is not surprising therefor that the reviewability of the first respondent’s award commenced with the imputation that the first respondent had, of his own accord, and without affording the parties the opportunity to be heard on the applicability of Clause 51 of Colto to the dispute, determined that it was.

[19] The applicants contend that it is apparent from the reasons furnished by the first respondent for the interim award that he was firmly of the view that the applicants’ entire claim was based either upon re-measurement or a variation. I interpolate to state that during argument before me, applicants’ counsel decried any reliance on a variation basing the applicants claim entirely on re-measurement. It was submitted that the first respondent’s finding in the interim award that Clause 51 did not apply to variation orders precluded the first respondent from subsequently finding that the time barring provisions of Clause 51 of Colto was of application to the dispute between the parties. The submission is in my view fallacious. The interim award related to an opposed amendment of the applicants statement of claim on the second day of the hearing. The applicants’ claim was sought to be increased to include the period of 1 September 2005 to 30 June 2006. The first respondent allowed the amendment but penalised the applicants by making an adverse costs order against it for not only the dilatoriness in bringing the application but the omission to have included it in the original statement of claim. In paragraph 4 of his written reasons, under the rubric “Time – Barring” 10 the first respondent stated as follows –

“4.4 Time Barring

4.4.1 The Engineer stated that he was not interested in claims for the past two years obviously implying that they would be time barred by Clause 51.

4.4.2 At the meeting on 29 November 2005 Mr Tskiki agreed with the Engineer on this point and although the Contractor was told to make a claim for work done this certainly did not mean that he was going to be paid for such work. The claim would have to be assessed by the Engineer in terms of the Contract and upon his ruling the Contractor paid or the claim rejected. This is exactly what happened and the Engineer rejected the claim as he had been doing each time the Wet grading issue was raised. The dispute procedures of Clauses 60 & 61 were then followed.

4.4.3 The Engineer cannot make terms of the Contract for the parties except in the limited instances provided for in the contract such as the VO Clauses 39 & 40. Therefore the Engineer does not have the power to waive any provisions of the contract as the contract does not give him such power as the Claimant alleges. Similarly the Defendant did not waive the time bar as he agreed that the Engineer assess the claim in terms of Clause 51 and agreed with the 2 year aspect. To waive this, the Defendant would have had to tell the Engineer to ignore the time bar.

4.4.4 Similarly the meeting on the 29 November 2005 did not give rise to misrepresentations by the Engineer or the Employer which is required for a defence of estoppel to apply. The terms of the agreement alleged by Claimant are rejected. The case quoted by Claimant dealt with insurance and has no application to construction strict time bars.

4.4.5 Claimants’ assertion of ignorance of the claims procedure is futile as ignorance of the law or the contract is no valid excuse.

4.4.6 The matter is quite clear that all the claims made up to 10 December 2005 are time barred as ruled by the Engineer and confirmed by my Final Award.”

[20] The applicants’ attempt to find succour in the interim award as corroboration that Clause 51 was not only of no application but that even if it was the applicants “were not given an opportunity to address the first respondent on this issue” 11is not only opportunistic but disingenuous. In the arbitration notes (“VV2”) handed up at the inception of argument together with the heads of argument, there is copious reference to the evidence adduced during the arbitration, both viva voce and documentary. It appears therefrom12 that the first respondent was referred to various letters exchanged between the applicants and Flanagan concerning the applicability of Clause 51 to the dispute which had arisen between the parties.

[21] The submission that the applicants were not afforded an opportunity to address the first respondent on the applicability of Clause 51 is therefor, on its own version clearly wrong. In similar vein, the submission made during argument before me that the reference to Clause 51 in the applicants’ consultant’s letter to Flanagan 13 was in effect an aberration on the part of the applicants’ consultant and not part of the applicants’ case is not supported by the record of the proceedings. The various witnesses were referred to the provisions of Clause 51 and cross-examination followed on its application to the dispute which had arisen. It is furthermore apparent from the heads of argument 14 filed on behalf of the second respondent at the arbitration hearing that the first respondent’s attention was moreover specifically

directed to the provisions of Clause 51 of Colto. To contend therefore, as the applicants have done, that the first respondent of his own accord considered the applicability of Clause 51 without affording the applicants the opportunity to address him on the issue is, as adumbrated hereinbefore, disingenuous.

[22] The further submission that the first respondent was bound by the reasoning encapsulated in paragraph 4 of the interim award and was therefor precluded from considering the applicability of Clause 51 of Colto in determining the issues before him is likewise untenable and the reliance on s 28 of the Act entirely misplaced.

[23] In disallowing the applicants’ claim from 1 June 2003 to 10 December 2005 on the basis that these were time barred pursuant to the

provisions of Clause 51 of Colto, the first respondent provided a number of reasons for his decision. Those reasons elicited trenchant

criticism, the essence of which, in reality, is nothing more than a contention that the first respondent’s conclusion is wrong. Close scrutiny of the applicants’ allegations in the founding and replying affidavits and the submissions advanced demonstrate, quite unequivocally, that the review is nothing more than a disguised appeal. In my judgment this is clearly not the type of case in which a review may be countenanced.

[24] Reverting to the contention that the failure on the part of the first respondent to file an affidavit refuting the serious allegations of misconduct levelled against him warranted the drawing of an adverse inference. I need only refer to the judgment of Van Zyl, J in Johan Louw Konstruksie (Edms) Bpk v Mitchell N.O and Another15 where the learned judge, with reference to authority in both this country and abroad, held that no adverse inference can be drawn from the failure by an arbitrator not to respond in circumstances contended for by applicants’ counsel. The correct exposition of the law is expressed thus 16-

“[37] It follows that no negative inference can be drawn against the first respondent in the present matter for not opposing the application or filing an affidavit in rebuttal of the serious allegations made against him. It was clearly not necessary for him to do so, inasmuch as he furnished adequate and sufficiently full reasons for his findings and award. If he had wished to, he could, for the assistance of the Court, have filed an affidavit or memorandum amplifying such reasons or dealing with the aforesaid allegations. His failure to do so, however, does not warrant any inference that he has accepted or conceded such allegations.”

[25] In the result the following order will issue:-

1. The application is dismissed with costs, such costs to include the costs of two counsel.

_______

D. CHETTY

JUDGE OF THE HIGH COURT

Obo the Applicants: Adv H.P Jeffreys SC

Instructed by Messrs Wheeldon Rushmere & Cole

119 High Street

Grahamstown

(Ref: O Huxtable/Michelle)

Obo the Respondents: Adv R.G Buchanan SC / Adv G.H Bloem

Instructed by N.N Dullabh & Co

5 Bertram Street

(Ref: Mr Wolmarans)

1 Act No 42 of 1965

2 2009 (6) BCLR 527 (CC)

3 1915 C.P.D 68

4 At p 77

5 1915 A.D. 166

6 At p 174-175

7 1902 T.S. 571 at 581

8 1938 TPD 551 at 560-561

9 Although the e-mail is a privileged communication, it was annexed to the applicants’ founding affidavit as annexure “VV1”.

10 Interim award para 6.4.1 at p 61

11 Applicants founding affidavit 21.6; 21.7

12 Paragraphs 201 to 209 (pp 212 – 213) of “VV2”

13 Documentary evidence, volume 2 at p 636 et seq.

14 Application papers “VV3” at p 235

15 2002 (3) SA 171 (C)

16 At para 37

Source wording is retained. Consult the source document for its original formatting and pagination.

Authorities

Authorities used by the court

Cases, legislation, regulations, and constitutional provisions identified in the available record.

Lufuno Mphaphuli and Associates (Pty) Ltd v Andrews 2009 (6) BCLR 527 (CC)

Case cited

Clark v African Guarantee and Indemnity Co Ltd 1915 C.P.D 68

Case cited

Dickenson & Brown v Fishers Executors 1915 A.D. 166

Case cited

Ellis v Morgan; Ellis v Desai 1902 T.S. 571

Case cited

Goldfields Investments Ltd and Another v City Council of Johannesburg and Another 1938 TPD 551

Case cited

Johan Louw Konstruksie (Edms) Bpk v Mitchell N.O and Another 2002 (3) SA 171 (C)

Case cited

Arbitration Act 42 of 1965

Legislation

Legislation referenced in the available case record.

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