Kadoma City Council v Peter Morris (NO) and Bernard Musarurwa (NO) and Alan Young and Aloe Enterprises (Pvt) Ltd

### Preamble
1
HH 578-18
HC 10711/17
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KADOMA CITY COUNCIL

versus

PETER MORRIS (NO)

and

BERNARD MUSARURWA (NO)

and

ALAN YOUNG

and

ALOE ENTERPRISES (PVT) LTD

HIGH COURT OF ZIMBABWE

MABHIKWA J

HARARE 17 MAY 2018 AND 3 OCTOBER 2018

Opposed Matter

T Mpofu for the applicant

S Mubvuma for the respondent

MABHIKWA J:	Applicant made an application to this honourable court in terms of article 34 (2) (b) (ii) of the Model Law on International Commercial Arbitration – 1985 as amended and as incorporated in terms of the Arbitration Act [Chapter 7:15].

The application was opposed by the 4th respondent.  The 1st to 3rd respondents, perhaps because of the very nature of their offices decided not to file any papers and abide by any decision of the court.

Brief background facts

Applicant is an urban council authority which administers the jurisdiction of the City of Kadoma.  1st to 3rd respondents, herein referred to as “the arbitral tribunal”, are members of an arbitral tribunal in arbitration proceedings involving the applicant on the one hand and 4th respondent on the other.  The applicant and the 4th respondent are involved in a dispute which was referred to the 1st to 3rd respondents for arbitration.  4th respondent filed a statement of claim which in these proceeding was filed as annexure ‘B’.  On 16 May 2017 the now applicant filed Special Pleas in response to the statement of claim.  The Special Pleas were taken on the grounds of

a)	Res judicata

b)	Jurisdiction

c)	Prescription

This judgment will not repeat the details of the Special Pleas set out at pages 113-116 of the application.  Surfices to note that at the very onset the applicant (then respondent) stated thus.

“Further take notice that the Special Pleas taken being trial causes, respondent reserves its right to lead evidence before the Tribunal.  To that end, respondent will not set out the heads of legal arguments upon which it places reliance.”

It appears to me from the above that applicant (then respondent) anticipated a hearing and determination on the special pleas first before the parties proceed to the merits of the applicant’s claim if need be.  That is probably why the applicant (then respondent) did not even go into the merits in responding to the statement of claim.

The import of the special pleas, in brief, was that in 2014, the 4th respondent had brought a claim similar to the present one (the one in the statement of claim), and that the said claim had been dismissed by another arbitrator (Ms Susan Mutangadura) on 28 April 2015. Ms S Mutangadura made an award dismissing the claim.  She also ordered that 4th respondent (then claimant should pay the 100% fee charge by the Arbitrator as well as the costs of the proceedings on an attorney and client scale.  She further ordered that the award be registered as an order of the High Court executable at the instance of the respondent.

On the special pleas therefore, applicant was in effect specially pleading that before delving going into the merits, the claim be dismissed on the grounds that following arbitrator S Mutangadura’s decision on 28 April 2015, the matter was res judicata, and further that the matter being res judicata, the three member arbitral tribunal had in fact lost jurisdiction.  Applicant also specially pled that in any event, the matter had prescribed as the cause of action arose in 2011 and more than 3 years had elapsed.

In response to the current application, 4th respondent raised its own preliminary point to the effect that a court has no jurisdiction under article 34 to set aside a decision of an arbitral tribunal on preliminary issues in instances where the final outcome of the proceedings is still open, such as in the present case – 4th respondent contended that an arbitration award can only be subject to setting aside if it was a decision on the merits of the matter, not when it was interlocutory in nature.

The Law

Article 34 of the Model Law on International Commercial Law Arbitration relates to an application for setting aside as exclusive recourse against an arbitral award.  It states as follows;

Article 31 (i) 	“Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article.”

Article 34 (2) (b) (ii)	“An arbitral award may be set aside by the court specified in article 6 only if:

(b)	The court finds that:

(ii) 	“The award is in conflict with the public policy of the state.”

The application was premised on the above stated article of the Model Law on International Arbitration, and was filed before the expiry of the 3 month period stipulated in article 34 (3) of the Model Law.

I understand the applicant to argue throughout the application that the above article 34 (2) (b) (ii) should be read and understood together with one’s constitutional right to a fair hearing obviously referring to section 69 (2) of the constitution of Zimbabwe amendment (No. 20) Act of 2013 as well as the Common Law tenets of Natural justice, in particular, the audi alteram partem rule.  This fundamental tenet of Natural justice dictates that every person, natural or corporate, has a right to be heard or at least be afforded an opportunity to make representations and be heard before a decision is taken that might impunge on his rights or interests.

After the filing of the special pleas, there does not appear from the proceedings, to be much or anything procedural that the tribunal directed the parties to do.  In particular, there appears to be no specific deadlines or specific papers that the parties were directed to meet or file.

I therefore find not much of an argument in 4th respondent’s submission that applicant did nothing from May to September when the tribunal made a decision and advised the parties to raise and pay for legal counsel and guidance obtained from retired Justice Smith.  I find so because from paragraph 19 to 20 of his own opposing affidavit, counsel for the 4th respondent states at page 142 of the application, that;

“19.	Having heard the parties at the parties pre-arbitration meeting, the tribunal determined that the proper course to follow was for the fourth respondent, being the claimant; to file its statement of claim ----.  It was agreed that the fourth respondent would have a right to respond to any points in limine raised.

20.	As such, after the fourth respondent filed a statement of claim, the applicant filed certain points in limine relating to res judicata and prescription.  The applicant did not respond to the merits of the claim, and only confined the response to what they called “special pleas.”  A response to the “special pleas” was filed by the fourth respondent as agreed by the parties.  The tribunal indicated at this stage that they were seeking legal counsel to guide them in their decision that they would soon render.”

It cannot surely be said that it was the intention of the applicant or the parties and the tribunal that once the applicant had decided to file special pleas only, without going into the merits and after 4th respondent’s response to those special pleas, the tribunal could then seek legal advise, and make a determination dismissing the special pleas and then make an arbitral award on the merits of 4th respondent’s claim itself without a hearing or representations or legal arguments on the special pleas.  Moreso, one cannot fathom that applicant had wanted the tribunal to make a determination on the main matter without its response on the merits.  It is clear the intention was to deal with the special pleas first before proceeding to the merits.

That expectation appears to me to have been reasonable in the circumstances if one considers the nature of the special pleas.  Applicant contended in the special pleas that the matter was res judicata in that it had long been decided by another arbitrator (Mrs S. Mutangadura on 28 April 2015) and that for that reason the new arbitral tribunal had no jurisdiction to hear the matter.  S Mutangadura’s arbitral award has been attached to this application as annexure ‘E’.

The argument by 4th respondent’s counsel insinuates that applicant should have also responded to the merits and then made a request for a hearing so that the tribunal would then deal with both the special pleas and merits before making a final determination and award on both.  This argument appears skewed to me in that it is tantamount to asking a court or tribunal to try a matter only to rule in the ultimate judgment that the court or tribunal had tried a case that had long been decided and that it had no jurisdiction to try the case in the first place.  It was clear that two (2) of the three special pleas were the kind that needed to be argued and determined first before even considering dealing with the merits.  Applicant therefore had a legitimate expectation that the parties would be afforded an opportunity to deal with the special pleas first.

A reading of the matter including paragraphs 19-20 of the 4th respondent’s opposing affidavit quoted above shows there was no agreement, neither did the tribunal direct how the matter would proceed.

In fact annexure ‘G’ at page 130 to 132 shows that on 28 March 2017, the parties appeared before the tribunal for a pre-arbitration meeting and recorded the minutes of that meeting.  The panel comprised of the 1st to 3rd respondents.  It is clear from a reading of item 10 on the agenda of the meeting, styled “Terms of Reference” that there was no agreement as to what course the arbitration should take. In fact, what is recorded under item 10 is that 4th respondent (then claimant) made a proposal of the terms of reference for the arbitration.  The minutes then record as follows:

“The respondent’s representative objected to the claimant’s proposed terms of reference and stated that he wished to make an application on jurisdiction as the points raised in the proposed terms of reference are covered by the previous arbitration.

The panel informed the claimant’s and respondent’s representatives that it will take advise and inform them how the matter will proceed.”  (The underlining is mine)

It is clear therefore from the above that there was no agreement on the course to follow.  This court will note also that paragraphs 19-20 quoted above in an affidavit by counsel for the 4th respondent referred to this pre-arbitration meeting but was written in a very misleading manner.  Unless there was another pre-arbitration meeting whose minutes were not filed, the facts stated by Simbarashe Mubvuma were never discussed in the pre-arbitration meeting of 28 March 2015, let alone agreed upon.  From the reading of the meeting’s minutes, the tribunal would seek advice and then in turn advise the parties on the course the arbitration process would follow not rendering the actual arbitral award.

The court also notes that just as in the above stated meeting, the parties in court disagreed on almost every point or issue.  It would therefore not be safe to rely on any alleged written agreement which is not filed and yet disputed by the other party.  A fortiori, this court will not rely on an alleged oral agreement.

Fourth respondent also argues that applicant “did not specifically request an oral hearing on the special pleas as required by article 24 (1) of the Model Law.”  I do not think that article 24 (1) means that an arbitration hearing can only be held if specifically requested by a party.  It appears to me that there are instances when a request can specifically be made.  In casu, and as already shown above, the parties should have been waiting for the arbitration panel on the course to follow.  In any event, this court cannot be persuaded to believe that certain articles of the Model Law on International Commercial arbitration take away the constitutional right to a fair hearing or the common law tenets of natural justice.

In the case of Rwodzi v Chegutu Municipality 2003 (1) ZLR 601 (H) the court, per MAVANGIRA J at page 603 quoted with approval G Feltoe in Guide to Administrative Law at page 23 that:

“The audi alteram partem principle requires that the party or parties involved in the matter should be given a proper opportunity to present their cases before the administrative decision-maker decides the case.”

The court went on to quote Riekert’s Basic Employment Law, 2nd ed. that;

“The rules of natural justice require no more than that a domestic tribunal act according to the common sense precepts of fairness.  Of the rules of natural justice, the most important is enshrined in the maxim audi alteram partem.  The requirements of which include that the hearing must precede the decision.   This is meant to ensure that the employee has an opportunity to lead evidence in rebuttal of the charge, and to challenge the assertions of his accusers before an adverse decision is taken against him.”

In Taylor v Minister of High Education and Another 1996 (2) ZLR 772 per GUBBAY CJ (as he then was), the court dealt extensively with the application of the legitimate expectation doctrine.  In that case, section 11 (2) of the Public Service (General) Regulations 1992 (S1 125 of 1992) provided that the head of Ministry may transfer a person at any time without his consent from the post he presently occupies to any other post of the same grade.  Acting in terms of this section, the Ministry of Higher Education notified a senior lecturer in Mechanical Engineering at the Bulawayo Polytechnic that he was to be laterally transferred to a senior post at the Harare Polytechnic.  The lecturer applied to have the decision to transfer him set aside by the High Court on review.  One of the grounds for the application was that he had a legitimate expectation that he would not be transferred without first being given the opportunity to make representations about the transfer.

The High Court judge decided that the phrase “without his consent” in the relevant provision of the regulations was a clear indication that it was the intention of the law-maker to deny the person being transferred any right to be heard before he was transferred.”  The lecturer appealed to the Supreme Court.

The Supreme Court held that the High Court judge’s interpretation of the regulations was erroneous.  It held that rather, the phrase “without his consent” does not mean “without a hearing.”  The court held that the first phrase simply meant that under the employment contract, the employee did not necessarily need to consent to the transfer for it to take effect.  The second phrase is a matter of procedural justice.

It is true that the maxim audi alteram partem express a flexible tenet of natural justice that has resounded through the ages.  The principle applies both were a person’s existing rights are adversely affected and where he has a legitimate expectation that he would be heard before a decision that affects some substantive benefit, advantage or privilege which he hopes to acquire or retain.

Fourth respondent also argued that applicant should be deemed to have waived his right to object as contemplated by article 4 of the Model Law.  My finding is that article 4 does not apply to this case.  This is so because in the circumstances of this case particularly annexure “G” referred to extensively above, there was no arbitration process beyond the pre-arbitration meeting.  It cannot therefore be said that application knew that there was derogation or non-compliance “and yet proceeded with the arbitration without stating its objection to such non-compliance without undue delay.” (The emphasis is mine).

Fourth respondent also argues that after receiving the arbitral award dated 25 September 2017, which decision literally dismissed the special pleas as part of the way forward and then went on to require each party to pay $5000-00 (total) $10 000-00) against the fees and expenses to be incurred by the tribunal, applicant should not have paid but protested that there had been non-compliance with provisions of the law.

Surely that would be contemptuous of the tribunal.  In legal matters, once a decision has been made by a competent court or tribunal, one cannot be expected to protest in the manner insinuated by 4th respondent.  One complies and thereafter takes relevant and appropriate steps to prove his point, be it an appeal application for review or whatever.  For example in Techniquip (Pvt) Ltd v Alan Cameron Eng (Pvt) Ltd 1994 (1) ZLR 246 (S).  Where a judge preparing for matters on the opposed roll, noticed that an answering affidavit was missing from the file.  He instructed his clerk to obtain a copy from the legal practitioner of record.  The legal practitioner, Mr Aitkem responded that he had filed the said document with the registrar’s office.  It apparently later became common cause that the document had indeed been filed but got misplaced or misfiled in the registrar’s office.  Nonetheless, the judge wanted Mr Aitkem to assist and provide another copy.  When contacted for the second time, Mr Aitkem re-iterated  that he had filed the document but went on to amplify that he had instructed senior counsel, Mr Colegrave who was out of town until a day before the hearing and that the file was probably in the senior counsel’s chambers.  The judge apparently was incensed by Mr Aitkem’s response which he viewed as unco-operative and inappropriate as it amounted to saying “if the judge wants a copy of answering affidavit before advocate Colegrave gets back on the afternoon of 31 March, he should get it himself.”

On the day of the hearing (1 April), the judge found an envelope pushed under his door containing the answering affidavit.  Apparently it had been collected from Mr Colegrave soon after his arrival the previous day.  It had been received at the High Court at around 1600 hours before he knocked off but somehow had not been brought to his attention.

Nonetheless, the judge went into court and soon after advocate Colegrave had introduced himself, the judge post-poned the matter and ordered that Mr Aitkem pays the days wasted costs de bonis propiis.   Mr Colegrave simply bowed and said “As your Lordship pleases” and sat down.   When the matter went to the Supreme Court the court pointed out that;

“The learned judge has sought to reason ex post facto that Mr Colegrave’s failure to protest the ruling and “his whole tone and department” in resuming his seat after voicing the traditional courtesy- “As Your Lordship pleases” signifies acquience in and approval of the order made.”

The court held that the reality of the matter is that counsel should have been afforded the opportunity of addressing the court before the order was made.  Counsel, no doubt would have sought an adjournment in order to obtain full instructions as to what had happened over the previous few days.  But instead, counsel was criticized for not protesting or otherwise showing dissent.  It held also that having been told of the judge’s decision, counsel was, at that point in time, entitled to assume that the matter was a fait accompli, and to endeavour to overcome the procedural irregularity by seeking to place reliance upon Mr Colegrave’s silence was wholly unpersuasive.

In casu, there was absolutely no way the applicant could have cured the procedural irregularity by protesting.  After all, the decision of the tribunal involving the procedural irregularity was received by the parties in the form of a written document not handed down in an open court scenario.  Surely, I agree with the sentiments in Techniquip (Pvt) Ltd (supra), that   counsel cannot be expected to behave like a football player in the playing field who rushes to the referred to question his decision when he blows the whistle.  Protesting or otherwise showing dissent in that fashion is not for counsel to do.  As far as the decisions of the courts and tribunals are concerned, counsel should strive to take the rough with the smooth.

I am therefore convinced that the three member arbitral tribunal in this case did not only violate the provisions of articles 18 and 24 (1) of the Model Law but also the audi alteram partem rule.  In my view, the tribunal’s decision indicates a blatant disregard of natural justice principles, which permeates the whole matter with the irresistible consequence that the relief sought in the application should be granted in favour of the applicant.

In the result, it is ordered as follows:

1)	That the arbitral award handed down by the 1st, 2nd and 3rd respondents dated the 25th September 2017 be and is hereby set aside and rescinded.

2)	That the matter resumes before a different arbitral tribunal.

3)	That the fourth respondent pays costs of suit of this application

Mawere and Sibanda, applicant’s legal practitioners

Mtetwa and Nyambira, respondent’s legal practitioners