Chetty v Hart NO

• Jurisdiction: South Africa
• Judge: Nzimande AJ
• Judgment Date: 25 March 2014
• Docket Number: 12559/2012
• Hearing Date: 25 October 2013
• Court: KwaZulu-Natal High Court, Durban

Nzimande A J:

[1]

The applicant seeks an order in the following terms:

[1.1]

setting aside an award made by the first respondent in the arbitration proceedings between the applicant and TBP Building & Civils (Pty) Limited, the plaintiff and defendant respectively in those proceedings and

[1.2]

costs against the first respondent alternatively against both respondents, jointly and severally.

2014 JDR 0585 p2

Nzimande A J

[2]

The first respondent abides by the decision of the court in respect of the relief sought against him.

The common cause facts

[3]

The defendant in the arbitration (now in liquidation and represented by the second respondent) applied for business rescue under Section 129 of the Companies Act No. 71 of 2008 (the Act) on 05 October 2012, being a date prior to completion of the arbitration. In terms of Section 132 of the Act the business rescue proceedings began when the defendant filed the resolution, which was on 05 October 2012, according to Annexure A to the founding affidavit.

[4]

Business rescue was registered on 11 October 2012. Argument was delivered on 12 October 2012 at a time when the business rescue proceedings had begun and had not yet terminated i.e. in the language of Section 133 of the Act "during business rescue proceedings".

[5]

The award was signed and published on 23 October 2012, also during business rescue proceedings. A written consent was not given and the Court did not grant leave for the proceedings to continue as envisaged in the relevant section.

2014 JDR 0585 p3

Nzimande A J

Argument

[6]

The applicant argued that in the circumstances the award is defective and falls to be reviewed and set aside. The defendant raises the following defence:

[6.1]

that the business rescue practitioner would have provided his written consent if he had been asked to do so;

[6.2]

that Section 133 of the Act only hit the applicant's claim against the defendant but not the defendant's counter-claim so the proceedings could lawfully proceed in part.

[6.3]

that the applicant's claim would have been set off against the counter-claim and so Section 133 (c) of the Act applied as an exception to the prohibition.

[7]

The applicant and the second respondent agree that it is convenient for the legal argument on the one issue (the business rescue argument), in respect of which there are no factual questions to be argued separately from the alternative basis for the review. However, the first respondent was not party to this agreement.

The parties subsequently agree that a decision on the above issue will be decisive of the matter.

[8]

What is sought therefore is an order setting aside the entire award of the first respondent, in effect declaring the award in the circumstances

2014 JDR 0585 p4

Nzimande A J

of this case to be null and void on the following grounds:

[8.1]

the award was improperly obtained in that it was issued at a time when the defendant in the arbitration was under business rescue, which the defendant failed to disclose; and

[8.2]

the continuation of the...