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

• Jurisdiction: South Africa

Interciti Property Referrals CC v Sage Computing (Pty) Ltd and Another
1995 (3) SA 723 (W)

1995 (3) SA p723

Citation	1995 (3) SA 723 (W)
Case No	24344/92
Court	Witwatersrand Local Division
Judge	Zulman J
Heard	February 3, 1993
Judgment	October 10, 1993

Flynote : Sleutelwoorde B

Arbitration — The award — Application for order declaring award valid and binding — Arbitrator's 'report' on issues submitted to arbitration giving rise to controversy between parties — Arbitrator thereafter, in a letter, C clarifying award — Respondent contending that award unenforceable and beyond arbitrator's jurisdiction — Where more than one interpretation of award possible, interpretation resulting in award being effective to be preferred to one rendering award meaningless — On proper interpretation of D award, arbitrator had not gone beyond his jurisdiction and had answered issues submitted — In any event, if possible ambiguity arising from simple reading of report, perfectly permissible to have regard to arbitrator's letter — Letter entitled to full evidential weight — Award declared valid and binding.

Headnote : Kopnota

E The applicant and the first respondent had submitted to second respondent as arbitrator the following two questions: whether the first respondent had provided the applicant with an on-line computer system which was 'ready, in accordance with the functional requirements specification dated 1 June 1988, by no later than the date on which the defendant (first respondent) commenced billing a minimum monthly processing charge of R7 200 per month in terms of the agreement, ie 1 August 1989, and whether the F defendant was entitled to claim, and the claimant (the applicant) was obliged to pay, that minimum monthly processing charge from 1 August 1989'.

On 10 November 1990 the second respondent issued to the parties his award contained in a document headed 'Arbitration Report', para 6 of which read as follows: 'My decision is that, taking all relevant aspects into G account, the specification and the system itself does not conform to what can be expected from a professional software designer. As any functional requirement specification pre-supposes 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 report gave rise to controversy between the applicant and the first respondent and in a letter written in 1992 the second respondent, after H stating that he thought his original report had answered the two questions submitted, continued: 'To make it quite clear, therefore, I will answer more directly.

Question 1: No, I do not think the system was ready. . . .

Question 2: No, I do not think Sage Computing was entitled to claim and Interciti obliged to pay that minimum monthly processing charge from 1 August 1989.'

In opposing an application for an order declaring that the award was valid and binding, the respondent contended that the award was unenforceable and I beyond second respondent's jurisdiction and that, in any event, the award did not relate to the issues submitted for arbitration.

Held, that, where more than one interpretation was possible, the one which resulted in an award being effective was to be preferred to one which rendered it meaningless. (At 727I-728A, paraphrased.)

Held, further, that, on a proper construction of the award, the arbitrator had not gone beyond his jurisdiction and he had answered the two questions J submitted. (At 727E-F/G, paraphrased.)

1995 (3) SA p724

A Held, further, that, in any event, if there were a possible ambiguity which might arise from a simple reading of the award, it would be perfectly proper to have regard to the letter written by the second respondent in 1992, which was entitled to be given full evidential weight and which made it clear that the award had dealt with the questions submitted. (At 728F and 729B-B/C.)

An order was granted declaring that the arbitration report of 10 November 1990 read with the second respondent's letter of 1992 constituted a valid B and binding award. (At 730E.)

Case Information

Application for an order declaring an arbitrator's award valid and binding. The facts appear from the reasons for judgment.

C M Eloff for the applicant.

K J Trisk for the first respondent. C

No appearance for the second respondent.

Cur adv vult.

Postea (13 October 1993).

Judgment

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

1995 (3) SA p725

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...