Interciti Property Referrals CC v Sage Computing (Pty) Ltd and Another

• Jurisdiction: South Africa
• Judge: Zulman J
• Judgment Date: 10 October 1993
• Docket Number: 24344/92
• Court: Witwatersrand Local Division
• Hearing Date: 03 February 1993
• Citation: 1995 (3) SA 723 (W)

D Zulman J:

The delay in delivering this judgment is very much regretted. Shortly after the matter was argued my clerk inadvertently failed to note on the Court cover that judgment had been reserved and returned the Court file to the general office of the Registrar, assuming, erroneously, that the matter had been dealt with. The Court file was then filed in the E Registrar's office in the ordinary course. The matter was only brought to my attention very recently when, on investigation, it was discovered that a judgment had in fact not been given.

In June 1988 the applicant and the first respondent concluded a written agreement in terms whereof the first respondent undertook to provide an F on-line computer system for the applicant. In terms of clause 2.19 of the agreement provision is made for an arbitration to take place in respect of 'any dispute or difference that may arise' out of the 'interpretation or implementation' of the agreement. It is furthermore provided in clause 2.19.2.1 that the arbitrator shall be, 'if the matters in issue are primarily of a computing or technical nature, the President for the time G being of the Computer Society of South Africa or some independent person appointed by him'. A dispute arose between the applicant and the first respondent. It was then agreed that such dispute be referred to arbitration. This agreement is embodied in a document headed 'Submission to Arbitration'. The material portion of that document, namely clause 1.2, provides as follows:

H '(A) dispute has arisen between the parties with regard to the question of whether or not the system was ready, in accordance with the functional requirements specification dated 1 June 1988 (annexure ''C''), by no later than the date on which the defendant commenced billing a minimum monthly processing charge of R7 200 per month in terms of the agreement, ie 1 I August 1989, and whether the defendant was entitled to claim, and the claimant obliged to pay, that minimum monthly processing charge from 1 August 1989. . . .'

The arbitrator agreed upon by the parties was the second respondent, who at the time was the President of the Computer Society of South Africa. I will refer to the second respondent hereinafter as the arbitrator.

Representations were made by the applicant and the first respondent to the J arbitrator. On 10 November 1990 the arbitrator issued to the

Zulman J

A parties a document which is annexure 'E' to the applicant's founding affidavit. It is headed 'Arbitration Report'.

Paragraph 6 of the report reads as follows:

'6. Decision

My decision is that, taking all relevant aspects into account, the specification and the system itself does not conform to what can be B expected from a professional software designer.

As any functional requirement specification presupposes a good working system resulting from the specifications, I am satisfied that the tested system does not conform to the functional requirement specifications supplied to me.

I therefore agree with the standpoint of Interciti Property Referrals.'

The aforementioned 'decisions' of the arbitrator represent the award made C by him in the matter.

After the effluxion of a considerable period of time (approximately 15 months) and the exchange of correspondence between the attorneys for the parties, the arbitrator addressed a letter (obviously erroneously dated 27 February 1992, the correct date of the letter being in all likelihood 27 D March 1992, since the letter in its body refers to a letter dated 23 March 1992), wherein the following is stated, inter alia:

'I refer to your fax dated 23 March 1992 concerning the arbitration between Interciti and Sage Computing.

As set out in my original report in October 1990, a straightforward answer E to the two questions restated in the abovementioned fax is not as easy as it seems. In my report I tried to explain why. Nevertheless in my report I reported as follows:

''. . . I am satisfied that the tested system does not conform to the functional requirements supplied to me.''

F I thought that this statement answers the two relevant questions. Clearly you do not think so, otherwise you would not have approached me again.

To make it quite clear therefore, I will answer more directly.

Question 1:	No, I do not think the system was ready in accordance with the functional requirement specifications dated 1 July 1988 (annexure C to the submission to arbitration) by no later than the date, a date on which the defendant commenced G billing a minimum monthly processing charge of R7 200 per month in terms of the agreement, ie 1 August 1989.
Question 2:	No, I do not think Sage Computing was entitled to claim and Interciti Property Proposals CC obliged to pay that minimum monthly processing charge from 1 August 1989.

I stress the fact that, from my original report, and specifically from the H quote referred to above, it should be clear that the answers given above do not represent any new arbitration, but is directly in line with what I (tried) to say in that original report.

I fully stand by my original report, and then also by the two answers given above, which follows directly from that report.'

(The letter is annexure 'U' to the applicant's founding affidavit.)

I In a notice of motion dated 21 August 1992 the applicant applied to this Court for the following relief:

'(a)

Declaring that in terms of annexure ''E'' to the applicant's founding affidavit, alternatively ''E'' thereto, read with annexure ''U'' thereto, the second respondent as arbitrator made an award valid and binding as between the applicant and the first respondent in terms of which he found that:

(i)

J the system was not ready, in accordance with the functional

Zulman J

A requirements specification dated 1 June 1988 (annexure ''C'') by no later than the date on which the first respondent commenced billing a minimal monthly processing charge of R7 200...