IN
THE HIGH COURT OF SWAZILAND
HELD
AT MBABANE CASE NO. 2651/03
In
the matter between:
A
& B INVESTMENTS (PTY) LIMITED APPLICANT
VERSUS
V
& M INVESTMENTS (PTY) LIMITED RESPONDENT
CORAM
SHABANGU AJ
FOR
APPLICANT MR P. FLYNN
FOR
RESPONDENT MR L.R. MAMBA
Ruling
on Application to stay
Proceedings
pending determination
Of
dispute to Arbitration
27th
May, 2004
The
parties in this judgement will be referred to as in the main
application. The applicant a company described as A and B Investments
(Pty) Ltd has instituted proceedings before this court seeking an
order that "(1) the Deputy - Sherrif be and is hereby authorised
and directed to seize the equipment, fixtures and fittings and
machinery of the respondent situated at the Ritz Cafe, Lot 53 Gwamile
Street, Mbabane and deliver the equipment to the Applicant 2. That
the Respondent be ordered to pay the costs of this application."
2
The
respondent has in response to the main application filed what is
headed an described as an "Notice of Application in terms of
section 6 of Act No. 24/1904." In the latter application the
respondent seeks an order "(a) staying proceedings under case
no: 2651/03 pending reference of the matter to arbitration, b.
Awarding costs of this application against Simon Torgeman de bonis
propriis." In support of the present application to stay the
main proceedings pending reference of the matter to arbitration the
respondent avers in the affidavit filed in support of the
application, that,
"3
In the said application the applicant seeks an order effectively
cancelling the agreement of sale annexed to the application and
annexed marked "ST4" as a result of a dispute having arisen
between the parties arising from an alleged failure to pay the
rentals in respect of certain equipment, fixtures, fittings and
machinery.
4.
It is noteworthy that the respondent in the main matter does not list
the goods claimed, but merely refers to all equipment, fixtures and
fittings and machinery situated at lot No. 53 Gwamile Street,
Mbabane.
5.
Certain correspondence has been exchanged between the parties on a
without prejudice basis and it is clear from that correspondence that
there is dispute as to the identity of the goods which are the
subject matter of the agreement 'ST4'.
6.
Clause 13 of the agreement relied upon makes extensive provisions
regarding the resolution of disputes. It is my humble submission that
there is clearly a dispute between the parties in this matter as
evidenced by the very institution of proceedings by the respondent
against the applicant.
7.
There is no reason why the matter should not be resolved in terms of
the very agreement upon which the respondent relies.
8.
At the time the application was filed the present applicant was ready
and willing and still remains ready and willing to do all things
necessary for the proper conduct of the arbitration."
It
is clear therefore that the basis upon which the respondent seeks to
support its application is the alleged existence of a dispute between
the parties which dispute according to the respondent needs to be
resolved by arbitration as provided for in the agreement which is the
basis of the main application. The agreement which is annexure 'ST4'
of the main application contains an arbitration clause, which at
clause 13 provides the following, in so far as may be relevant and
material to the present application:-
"Dispute
Resolution-
13.1
Subject to the provisions of clause 13.8 below, in the event of any
dispute or difference arising between the parties hereto relating to
or arising out of this agreement, including the implementation,
execution, interpretation, rectification,
3
termination
or cancellation of this agreement, either of the parties shall be
entitled to declare a dispute provided the terms thereof are notified
in writing to the other parties hereto, whereupon the parties shall
forthwith attempt to settle such dispute or difference and failing
such settlement within a period of 14 (fourteen) days after the
delivery or the written details of such dispute, such dispute or
difference may be submitted to arbitration in accordance with the
provisions set out below by any party hereto."
The
subsequent sub-paragraph in clause thirteen makes provision in
relation to the appointment of the arbitrator and other ancillary
matters.
A
respondent who raises an arbitration clause must allege and prove the
following (a) the existence of the arbitration clause or agreement
(b) that the arbitration clause or agreement is applicable to the
dispute between the parties (see KATHEMER INVESTMENTS (PTY) LTD V.
WOOL WORTHS PTY LTD 1970 (2) SA 498(A), UNIVERSITEIT VAN STELLENBOSCH
V J.A. LOUW (EDMS) BPK 1983 (4) SA 321 (A) (c) that there exists a
dispute between the parties. The dispute must be clearly defined in
the special plea or application under section six of the arbitration
Act (see PAREKH V. SHAH JEHAN CINEMAS (PTY) LTD & OTHERS 1980 (1)
SA 301(D) (d) that all the preconditions contained in the agreement
for the arbitration have been complied with. (see RICHTOWN
CONSTRUCTION CO (PTY) LTD V. WITBANK TOWN COUNCIL & ANOTHER 1983
(2) SA 409 (T).
Mr
Flynn's main submission on behalf of the applicant is that the
respondent's application should fail because there is no dispute
declared and notified in writing to the applicant by the respondent
in accordance with the provisions of the arbitration clause. Mr Flynn
went on to contend that such dispute is not shown to exist even in
the application. The relief claimed in the notice of motion that "the
Deputy Sherrif be authorised and directed to seize the equipment,
fixtures and fittings and machinery of the Respondent situated at the
Ritz Cafe, Lot 53 Gwamile street, Mbabane and deliver the equipment
to the Applicant" appears to be based on the alleged non-payment
of rental by the respondent. Mr Flynn's submission is that there is
no dispute on the allegation that the rental was not paid as from
July, 2003. Even though in paragraph three of the affidavit filed by
the respondent in support of the application the deponent to that
4
affidavit
makes reference to a dispute which has allegedly "arisen between
the parties arising from an alleged failure to pay rentals," the
exact nature, extent and terms of the alleged dispute is not
described with any degree of detail and particularity for me to say
that there is indeed a dispute relating to the "alleged failure
to pay rentals" which ought to be submitted to arbitration in
terms of the arbitration clause. I am unable to come to the
conclusion that there is indeed a dispute shown in paragraph three of
the affidavit filed in support of the respondents' application,
regarding an alleged failure to pay the rentals.
Secondly,
the other paragraph in the respondents' affidavit which could
possibly be relied upon as revealing a dispute which ought to be
referred to arbitration between the parties is paragraph five. That
paragraph also does not state with any degree of precision the nature
of the dispute and terms, for me to be able to conclude that there is
indeed a dispute in existence and that the arbitration clause is
applicable to same. I am in agreement with Mr Flynn that it is not
sufficient for the respondent to simple state as it has done in its
affidavit that "certain correspondence has been exchanged
between the parties on a without prejudice basis" and "that
it is clear from that correspondence that there is a dispute as to
the identity of the goods which are the subject matter of the
agreement."
Lastly
the respondent contends at paragraph six of the affidavit filed in
support of the application, that "there is clearly a dispute
between the parties in this matter as evidenced by the very
institution of proceedings" by the applicant against the
respondent. I do not think the mere institution of proceedings by a
party to an arbitration agreement, is evidence of the existence of a
dispute. The other party who wishes to have the matter referred to
arbitration in terms of the arbitration clause is required to file a
special plea or an application in terms of section 6 of the
Arbitration Act 24 of 1904 wherein the dispute is clearly dermacated.
See PAREK's case supra at page 306. There is a further reason why the
application should fail and this is because the respondent has not
declared a dispute and notified the applicant of the terms and
details of the dispute, as required by clause 13(1) of the
arbitration clause. Furthermore, there is no evidence that the
parties have after the declaration and notification of the dispute
attempted to settle such declared
5
dispute
as contemplated by clause 13(1) of their agreement. As already
observed earlier, if the respondent is to succeed it must further
show that all the preconditions contained in the agreement for the
arbitration have been complied with. See RICHTOWN CONSTRUCTION CO.
(PTY) LTD V. WITBANK TOWN COUNCIL & ANOTHER 1983 (2) SA 409(T).
In the circumstances the respondents application that the main
proceedings under case No. 2651/03 be stayed pending reference of the
matter to arbitration is dismissed with costs.
ALEX
S. SHABANSGU
ACTING
JUDGE
