Clarke and Others v Semenya NO and Others

• Jurisdiction: South Africa
• Judge: Van Oosten J
• Judgment Date: 05 December 2008
• Citation: 2009 (5) SA 522 (W)
• Docket Number: 24286/08
• Hearing Date: 20 November 2008
• Counsel: PJ van Blerk SC (with BM Gilbert) for the applicants. No appearance for the first respondent. N Singh SC (with M Naidoo) for the second and third respondents.
• Court: Witwatersrand Local Division

Van Oosten J:

[1] This is an application for the review of a costs award by the first respondent as arbitrator (the arbitrator) on 24 June 2008 in arbitration J

Van Oosten J

A proceedings between the applicants (as respondents) and the second and third respondents (as claimants). In terms of the costs award the second, third, fourth (the trustees of the Wright Family Trust) and fifth applicants were ordered to pay the costs (including the costs of two counsel) of the arbitration proceedings. The arbitrator did not make an B award for the costs of the first applicant, although he found that the second and third respondents (the respondents) had failed to prove their case against him. I will revert to this aspect later in the judgment. It is further common cause between the parties that the arbitrator, although asked to do so, and having heard full argument on this aspect, omitted to make an award concerning the costs of an urgent application brought C in this court by the applicants against the respondents (the urgent application), which was settled on the basis of the disputes between the parties being referred to arbitration, which are the proceedings we are now concerned with.

[2] The arbitrator's award on the merits has not been challenged. The D disputes which became the subject-matter of the arbitration concerned the shareholding in the third respondent (Kwezi Mining). Amongst the shareholders of Kwezi Mining were the applicants and the second respondent. Their relationship was regulated by a shareholders agreement. Relevant for present purposes are the provisions relating to a E forced-sale mechanism to come into effect in the event of a material breach by any shareholder. In the event of such a breach, an option to purchase the shareholder's shares was deemed to have come into existence, which, if duly accepted, resulted in the purchase of the shares. The respondents relied on an irremediable breach of the shareholders F agreement and the due acceptance of the resultant deemed offer. When the second respondent attempted to perfect the purchase of the shares an urgent application to forestall the perfection was launched by the applicants in this court, which, as I have mentioned, resulted in an agreed reference of the disputes to arbitration. The costs of the urgent application were by agreement reserved for determination by the arbitrator. G

[3] Having heard evidence and arguments on behalf of the parties the arbitrator made the following award:

'(a)

It is declared that the Wright Family Trust and the fifth respondent committed a irremediable breach of the shareholders agreement, H as contemplated in clause 20 read with 15.1 thereof.

(b)

It is declared that the Wright Family Trust and the fifth respondent are deemed to have offered all their shares in Kwezi Mining as contemplated in the agreement, but that the deemed shares offered for sale has lapsed.

(c)

The Wright Family Trust and the fifth respondent are ordered to I pay the costs of these proceedings, including the costs consequent upon the employment of two counsel.'

The reason for awarding costs in favour of the respondents, the arbitrator held, was 'that the claimants have been substantially successful in these proceedings and are entitled to the costs of these proceedings'. J As regards the costs of the first applicant the arbitrator held:

Van Oosten J

'The evidence did not establish a breach of the shareholders agreement A against the first respondent. The first respondent would ordinarily be entitled to his costs. I am not aware that the costs incurred by the first respondent in these proceedings are severable from those that have been incurred by Wright and Abel (ie the representatives of the trust and the fifth applicant respectively). The three respondents have used one set of attorneys and one legal team.' B

To complete the picture on the costs award, the arbitrator, as I have mentioned, omitted to make an award on the costs of the urgent application. The reason for the omission has not been disclosed. The parties in any event are agreed that this aspect should be remitted to the arbitrator for his award. A remittal of the matter for this purpose, of C course, was not strictly necessary: surely a simple request to correct the omission would have been sufficient.

[4] In the present application the applicants seek a review by this court of, firstly, the arbitrator's costs award in favour of the respondents and, secondly, his decision not to make an award as to the first applicant's D costs.

[5] The main relief sought is for the reviewing and setting-aside of the arbitrator's costs award and for the substitution thereof by this court of costs orders in their favour (the main relief). In the alternative the applicants seek a remittal order in terms of s 32(2) of the Arbitration Act E 42 of 1965 (the Act). The basis relied upon by the applicants for the relief sought appears in the following passage in the founding affidavit:

'12.

The applicants seek to set aside the costs award on the basis that the award is vitiated by irregularity or misdirection, or is disquietingly inappropriate, alternatively and additionally that the arbitrator F committed a gross irregularity in making the costs award and more particularly in failing to furnish the applicants an opportunity for their case in respect of costs to be fully and fairly determined in circumstances where no submissions were made in relation to such a costs order and where there was no indication that such a costs order was being contemplated and where no such order was sought by any of the parties to the arbitration.' G

As for the main relief sought, counsel for the respondents convincingly argued, with reliance on the recent judgment of the Supreme Court of Appeal in Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) (2007 (5) BCLR 503; [2007] 2 All SA 243), that the grounds H relied upon by the applicants are directed at the result of the...