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REPORTABLE

SOUTH GAUTENG HIGH COURT, JOHANNESBURG

CASE NO: 7776/07

DATE:28/06/2012

In the matter between:

ABSA TECHNOLOGY FINANCE SOLUTIONS (PTY) LTD......................Plaintiff

and

MAKWERU DIGITAL SOLUTIONS (PTY) LTD.......................................First Defendant

THEMBEKILE PAKADE.......................................................................Second Defendant

LUVUYO LUBOBO..............................................................................Third Defendant

GEORGE SEBOLELA..........................................................................Fourth Defendant

JUDGMENT

MOKGOATLHENG J

INTRODUCTION

(1) Pursuant to the breach of 7 Master Rental Agreements by the first defendant, the plaintiff instituted action against it as the principal debtor for the sum of R456.457.38. Subsequently, the plaintiff also instituted actions against the second, third and fourth defendants jointly and severally as sureties and co-principal debtors in solidum. The actions were defended and subsequently consolidated.

(2) On 18 May 2006 the plaintiff and defendants concluded a written arbitration agreement in terms whereof their disputes as encapsulated in the pleadings were referred to arbitration before retired judge Plewman JA. Pursuant to the arbitration agreement, the plaintiff withdrew the High Court actions against the defendants.

(3) The pleadings and notices filed by the respective parties in the High Court were deemed to be pleadings and notices filed in the arbitration. The parties adopted the Uniform Rules of the High Court (as modified by the arbitrator). Clause 13 of The Arbitration Agreement regulated the appeal procedure.

(4) On 3 August 2006 after hearing evidence in the arbitration proceedings, despite the fact that the plaintiff had sought judgment against the first defendant as the principal debtor, and against the second, third and fourth defendants in their capacities as sureties, Plewman JA only made an award against the first defendant for the payment of the sum of R456.457.38, interest thereon, and party and party costs, but did not make an award against the second, third and fourth defendants in their capacities as sureties.

(5) In paragraph 9 of the arbitration award Plewman JA stated the following:

“In the claimant’s heads of argument nothing is made of the liability of the persons originally cited as the second, third and fourth defendants. Nor in his oral submissions did the claimant’s counsel refer to the need to make an award against them. “The admissions in the pleadings that they were indeed sureties seems unquestionable but in the light of the uncertainty created by the arguments made to me I would prefer to reserve any order against them in their personal capacities. If the parties or either of them require an order against these defendants the arbitration must be reconvened. I will allow thirty days from the date hereof for such purpose. If not reconvened within that period by an application to me in writing the only award made will be against the original first defendant in the first case as set out at the end of these reasons.” (my emphasis)

(6) The statement by Plewman JA that the plaintiff had not sought an award against the second, third and fourth defendants as sureties is not correct in that:

(a) in his opening address at the arbitration the plaintiff’s counsel made it clear that relief was also claimed against the sureties;

(b) in counsel’s heads of argument he submitted before the award was made by Plewman JA, that the second, third and fourth defendants in the arbitration were liable jointly and severally, as co-principal debtors in solidum in respect of the claim. The point was also made that their liability as sureties was admitted and;

(c) in the arbitration proceeding’s transcript it is recorded that the liability of the second, third and fourth defendants was based on their status as sureties, the conclusion of the deeds of suretyships having been admitted in their pleas.

(7) On 14 August 2006 the first defendant noted an appeal against Plewman JA’s award. The plaintiff thereafter noted a cross-appeal against the costs award, but did not appeal Plewman JA’s decision for not to making and award against the defendants as sureties. On 13 September 2006 the appeal tribunal confirmed Plewman JA’s original award and upheld the plaintiff’s costs cross-appeal. On 18 October 2006 the appeal tribunal’s award was made an order of court in terms of section 31(1) of The Arbitration Act 42 of 1965.

THE PLAINTIFF’S FAILURE TO APPEAL THE AWARD

(8) The plaintiff contends that based on senior counsel’s opinion, it did not appeal Plewman JA’s decision for not having pronounced an award against the sureties because objectively viewed, Plewman JA had reserved judgment against the defendants, consequently, there was in reality therefore, no award to appeal against. Further the plaintiff’s view was, because the merits of its claims against the sureties were not addressed in Plewman JA’s award, the dispute concerning the said claims was as a result not res judicata, consequently, the plaintiff was entitled to institute the present action against the defendants.

THE SPECIAL PLEAS

(9) Subsequent to the defendant’s refusal to be bound by the appeal tribunal’s award (an issue addressed later in the judgment) the plaintiff instituted the present action against. The defendants entered special pleas and invoked waiver, and res judicata as defences against the plaintiff’s claims.

(10) The defendants contend that by the plaintiff’s failure to cross-appeal Plewman JA’s award, by implication it had expressly or tacitly waived its right to any claim it had against the defendants as sureties. Further, the defendants in raising the plea of res judicata, contended that the cause of action predicating the action against them as sureties was the same as the one advanced in the arbitration proceedings, the plaintiff was estopped from instituting the present action.

THE REPLICATION

(11) In its replication, the plaintiff relies on an alleged oral agreement allegedly concluded on 14 August 2006 between its attorney David Kahn and the defendants attorney Marie-Lou Bester, in terms whereof it contends that they allegedly agreed that the appeal tribunal’s award would be applicable to the defendants as sureties, and render them jointly and severally liable to the plaintiff together with the first defendant.

THE ATTORNEYS ALLEGED ORAL AGREEMENT

(12) I turn to address the question of the alleged oral agreement allegedly concluded between the parties attorneys. Marie-Lou Bester testified that on 14 August 2006 after a telephone conversation with David Kahn regarding Plewman JA’s award, she sent David Kahn an email recording their discussion. The email stated:

“Regarding our discussion as to whether or not should (sic) reconvene before Plewman JA, we have suggested that this is by agreement (sic), dealt with by the appeal panel (sic) alternatively, in the event of us not succeeding on our appeal, reconvening before Plewman JA within thirty days of Appeal Award.”

(13) David Kahn testified that On 14 August 2006 he drafted a letter to Plewman JA to reconvene the arbitration in order to enable the plaintiff to obtain an award against the sureties jointly and severally. He did not forward this letter to Plewman JA, because on the 14 August 2006 Marie-Lou Bester gave him an undertaking that should the first defendant’s appeal fail, she would confirm that Plewman JA’s award would be applicable to the defendants as sureties, and would be bound thereby jointly and severally. Consequently, he and Marie-Lou Bester agreed that they would await the appeal tribunal’s award for confirmation of their oral agreement. He however, did not confirm the alleged oral agreement with Marie-Lou Bester in writing.

(14) David Kahn did not respond to Marie-Lou Bester’s recordal of their discussion of the 14 August 2006 instead, on 4 October 2006 he addressed a letter to her recording that:

“4. With regard to the liability in respect of the sureties, kindly let us have your (sic) confirmation that the award will apply to the sureties. When we discussed reconvening the Plewman arbitration to deal with this issue, it was agreed that it would be a waste of time and money and that the matter would be resolved between ourselves. We now need this to be resolved as to their liability.” (my emphasis)

(15) On 2 November 2006, David Kahn addressed a letter to Plewman JA requesting him to reconvene the arbitration for the purposes of making an award against the sureties. In response Plewman JA invited the parties, to make submissions on whether and if so how he could still exercise any jurisdiction in the matter.

(16) Marie-Lou Bester, contended that Plewman JA had no jurisdiction to reconvene the arbitration. David Kahn did not make any submissions, neither did he, request Plewman JA to reconvene the arbitration whereat the issue regarding his jurisdiction and the consequent making of an award against the sureties could have been argued.

(17) On 13 October 2010, David Kahn addressed a letter to Marie-Lou Bester recorded the following:

“3. Notwithstanding the fact that it was agreed between the writer and yourself that the question of the suretyships would be resolved, we note with regret that same has not been confirmed by you. Unless we receive your written confirmation that the award is applicable to the suretyships, our instructions are to immediately proceed to do whatever is necessary and proceed to court to protect our client’s rights herein.” (my emphasis)

(18) On 16 October 2006, Marie-Lou Bester responded to David Kahn’s letter:

“4 ….all that the writer agreed with your Mr Kahn was that it was a waste of money to reconvene before Plewman JA and that the issue of your client’s failure to seek an award against the sureties before Plewman JA would be discussed. (my emphasis)

(19) On 19 October 2006, David Kahn addressed a letter to Marie-Lou Bester wherein he recorded:

“3. In your letter of 16 October 2006 you said that all that you agreed with the writer was that it was a waste of money to reconvene before Plewman JA. The writer however has a different

recollection …………………………………………………………

…………………. The writer understood that what you intended to resolve was that, in the event of the principal debtor being unsuccessful in the appeal, the sureties would agree to their liability in regard to the principal debtor and that this would be made an order of court. It was on your assurance that it would be resolved that the writer did not approach Plewman JA to reconvene the arbitration as we agreed with you that it would constitute a waste of money and time to do so....................................................................

Why else would the writer not have reconvened the arbitration?

(my emphasis added)

(4)……It follows that the sureties by admitting their signatures and raising no special defence in either the application or the arbitration will be liable together with the principal debtor. In this event the sureties are jointly and severally liable together with the principal debtor in regard to whom an award has been made.

5. We respectfully request your clients to agree that the sureties consent to the award and to the making of this award an order of court as was the object of our discussion regarding the recording of Plewman’s arbitration. Should your clients not feel disposed towards this course of action, our client will be left with no alternative but to approach the High Court to declare the sureties liable in regard to the award against the principal debtor already made an order of court.” (my emphasis)

(20) Because of the critical enormity of the mutually divergent and destructive evidence tendered by two senior eminent attorneys and the consequent repercussions a credibility finding would have on their respective reputations, status and careers, it is necessary to record verbatim the core of such evidence.

DAVID KAHN’S EVIDENCE

(21) On 14 August 2006 he and Marie-Lou Bester agreed that because the first defendant had noted an appeal, to reconvene the arbitration proceedings would be a futile waste of time and money, because there was no point in reconvening the arbitration proceedings before the appeal was disposed off. He and Marie-Lou Bester agreed that the appeal tribunal’s award would also be applicable to the defendants as sureties, further that the appeal would be dispositive of the entire matter in that if the first defendant was successful in the appeal, as a consequence, the sureties would be absolved.

(22) If on the other hand the first defendant was unsuccessful in the appeal, the defendants having admitted signing the suretyships, would be bound by the appeal tribunal’s award as sureties and would be jointly and severally liable to the plaintiff together with the first defendant. Because of the oral agreement, the letter David Kahn addressed to Plewman JA requesting him to reconvene the arbitration was not despatched.

(23) On 4 October 2006 he addressed a letter to Marie-Lou Bester regarding the confirmation of the sureties liability because he wanted to make the award together with the oral agreement he had concluded with Marie-Lou Bester on 14 August 2006 an order of court. The response from Marie Lou Bester was that she agreed with him that it would be a waste of money to reconvene before Plewman JA. The issue of his client’s failure to seek an award against the sureties before Plewman JA would be discussed.

(24) He did not know what this response meant because as far as he was concerned the reason he did not proceed with reconvening the arbitration proceedings was because he had an agreement with a colleague, and had received an assurance from a colleague that the appeal would be dispositive of the entire matter either way.

(25) The principle debtor was unable to pay the award judgment debt, consequently, the plaintiff’s intention was to obtain an award and proceed against the sureties. There was no discussion regarding the fact that the defendants were going to dispute their liability as sureties. He decided against reconvening the arbitration proceedings because of the opposition thereto by Marie-Lou Bester whose contention was that Plewman JA no longer had jurisdiction.

(26) There was no award made against the sureties consequently, there was nothing to cross-appeal. He understood Plewman JA to have reserved his order against the sureties until representations with regard thereto were made. After the appeal proceedings were finalised, there was no basis on which the original arbitration could be reconvened. Because the plaintiff was entitled to recover its debt from the sureties, he decided to proceed against the sureties in the High Court to enforce the suretyships.

MARIE-LOU BESTER’S EVIDENCE

(27) On 14 August 2006 she had a discussion with David Kahn. She made a proposal regarding the liability of the sureties, that the parties should reconvene before Plewman JA within 30 days of the appeal tribunal’s award to deal with his failure to make an award against the sureties, alternatively that the issue be dealt with by the appeal tribunal.

(28) David Kahn did not make a counter proposal neither did he indicate up to the time of the appeal tribunal’s award, which of the two proposals he intended to exercise. When David Kahn asked for the plaintiff’s counsel’s opening address at the arbitration, she assumed he was going to cross-appeal Plewman JA’s failure to make an award against the sureties.

(29) On 14 August 2006 she understood that to reconvene the arbitration proceedings before the outcome of the appeal tribunal would have been a waste of time and money, if ultimately the first defendant’s the appeal was successful. She did not conclude an oral agreement with David Kahn binding the defendants as sureties nor did she agree to resolve the issue after the appeal tribunal’s award was made. It is simply not true that she agreed with David Kahn that if the first defendant’s appeal failed, the defendants as sureties would be jointly and severally liable together with the first defendant to the plaintiff.

(30) She was not surprised when David Kahn did not reconvene the arbitration proceedings, but she was when he did not cross-appeal Plewman JA’s award. Because Plewman JA had reserved his order against the defendants as sureties in his award, her view was that the award was appealable. After the plaintiff cross-appealed Plewman JA’s costs order, but did not cross-appeal Plewman JA’s failure to make an award against the sureties, she did not raise the issue regarding the defendants liability with David Kahn neither did he raise it with her. The plaintiff had not obtained an award against the defendants as sureties, and it therefore no longer had a claim against them as sureties consequently, there was nothing further to discuss in that regard with David Kahn.

THE ANALYSIS AND EVALUATION OF THE EVIDENCE

(31) In this matter this court had to endure the unedifying and mortifying spectacle of two senior eminent attorneys tendering mutually divergent and destructive versions regarding (on David Kahn’s version) the conclusion of an oral agreement on 14 August 2006, and (on Marie-Lou Bester’s version) the non existence of such oral agreement.

(32) David Kahn testified that he did not confirm the conclusion of the oral agreement in writing because he relied and trusted the sacrosanct collegial solemnity of the sacred and professional bond of a colleague. Marie-Lou Bester vehemently abjures the nuanced impugnation of her professional integrity and character and states that she only made a proposal, which David Kahn conveniently misinterprets as an agreement yet he consciously elected not to respond to her proposal encapsulated in her email of 14 August 2006.

(33) The parties counsels argument in effect was to urge me to make a credibility finding against either attorney, uphold one version and reject the other. I am constraint to do so. On a balance of probability both versions contain the plausibility of truthfulness, albeit it couched and nuanced by the perspective of each attorney’s version regarding each attorney’s recollection and interpretation of the discussion of 14 August 2006.

(34) In my view a careful analysis of the correspondence and the testimony of both attorneys reveals that both in attempting to protect the interests of their respective clients, were confronted with the deemed ex lege consequences of the undisputed liability of the sureties. David Kahn assumed as a matter of cause that the liability of the sureties was conceded by Marie-Lou Bester, but she in turn despite the plaintiff’s entitlement to judgment against the defendants as sureties, was not prepared to concede liability on behalf of the defendants either because she had no mandate or as a strategic tactical manoeuvre.

(35) In view of the objective impregnable legally assumed notions regarding the ineluctable liability of the sureties, both attorneys were aware that:

(a) Plewman JA had misdirected himself when he held that “In the claimant’s heads of argument and in claimant’s oral submissions “nothing was made of the liability of the defendants, or that the claimant’s counsel did not refer to the need to make an award against them” because the arbitration proceedings record clearly shows the contrary;

(b) the second, third and fourth defendants in their pleas admitted signing the suretyships;

(c) because the first defendant as principal debtor was held liable, legal objectivity decreed that the sureties had no valid defence, should the plaintiff subsequently proceed against them jointly and severally;

(d) the undisputed liability of the defendants as sureties and the consequent inequity of Plewman JA in not making an award against them due to his misdirection that the plaintiff’s counsel only sought an award against the first defendant, rested heavily with both attorneys, consequently both were amenable to Plewman JA’s request to reconvene and address him on the iniquitous omission of his failure to make an award against the defendants as sureties;

(e) alive to the prohibitive costs of reconvening before Plewman JA solely for him to make an award against the defendants as sureties who legally had no valid defence, both attorneys agreed that it would be “a waste of money and time” to reconvene the arbitration, in view of the fact that the first defendant’s appeal would be dispositive of the sureties liability either way;

(f) it was obvious that when on the 14 August 2006, Marie-Lou Bester adviced David Kahn that the first defendant was appealing Plewman JA’s award, what was prominent in both attorneys respective minds was the perceived objective futility to reconvene before Plewman JA’s to obviate the obvious at great financial cost before the appeal tribunal’s award, which would in effect determine the sureties liability either way;

(g) both attorneys surmised logically to pre-empt the financial extravagance in respect of the perceived futility of reconvening the arbitration in view of the sureties obvious lack of a valid defence to the plaintiff’s claim, consequently, both attorneys agreed to await the outcome of the first defendant’s appeal; and

(h) at that stage, logic and common sense dictated that all the outstanding issues should be traversed before the appeal tribunal, by the first defendant in appealing Plewman JA’s award and the plaintiff cross appealing Plewman JA’s award in respect of him having failed to make an award against the defendants as sureties and his cost order.

(36) The dispute concerning whether an oral agreement was concluded, is founded in the recordal of each attorney’s recollection and understanding concerning what was discussed and agreed upon. What was however, consequently, recorded and communicated by each attorney, is coloured by each attorney’s conflation of what was proposed as opposed to what was agreed.

(37) The seed of the genesis of the problem was conceived by David Kahn’s erroneous legal conclusion that since Plewman JA had not traversed the merits of the plaintiff’s claim regarding the sureties, and had consequently, not made a pronouncement in respect thereof, the plaintiff’s claim was not res judicata, and could consequently, despite the arbitration agreement, be pursued in the High Court.

(38) Marie-Lou Bester’s email of the 14 August 2006 indisputably shows that there was an oral agreement regarding the resolution of liability of the liability of the defendants as sureties. The only question was which forum should deal with this issue, which was to be dealt with either before Plewman JA by the plaintiff on reconvening the arbitration, or on appeal by the appeal tribunal. However, as a result of the inelegant and incorrect recordal, Marie-Lou Bester records that the issue regarding Plewman JA’s failure to make an award against the sureties should be dealt with by the appeal tribunal or by reconvening before Plewman JA after the appeal tribunal’s award. This proposal obviously contradicts Plewman JA’s order that such reconvening should be made within 30 days of his award. In any event, the issue could only be dealt with properly by the appeal tribunal on 13 September 2006 if the plaintiff had cross-appealed same.

(39) What is revealing regarding what I consider Marie-Lou Bester’s failure to record with precision the purported oral agreement is demonstrated by the suggestion that “alternatively in the event of us not succeeding in our appeal to reconvening before Plewman JA within thirty days of the appeal award.” After 13 September 2006 (that is after the appeal tribunal’s award’s pronouncement) of course it would not have been possible to reconvene the arbitration before Plewman JA, because 30 days after his award had elapsed, on 3 September 2006, after the plaintiff failed to reconvene the arbitration to address him on the question of the liability of the sureties within the stipulated 30 days period he had become functus officio.

(40) Obviously Marie-Lou Bester’s proposal to reconvene before Plewman JA, contradicts both attorneys oral agreement that it was going to be a waste of time and money to reconvene the arbitration in order to address the issue of Plewman JA’s failure to make an award against the sureties before the appeal tribunal’s award, further it contradicts both attorneys oral agreement that the issue of the sureties liability should be dealt with by the appeal tribunal.

(41) In analysing Marie-Lou Bester’s email it is obvious that both attorneys agreed that the first defendant’s appeal would be dispositive of the matter because they had agreed that it would be a futile waste of money and time to reconvene the arbitration before the appeal tribunal’s award was delivered. Any suggestion to the contrary is intellectually dishonest and legally unsustainable, so too is the notion that the defendants intended to dispute their liability as sureties despite the admission in their pleas that they had signed the suretyships.

(42) In my view, the fatal mistake made by David Kahn was his failure not to cross-appeal Plewman JA’s award in respect of his decision not to make an award against the defendants as sureties. David Kahn’s contention that because Plewman JA did not make an award against the sureties, consequently, that there was nothing to appeal against, is legally unsustainable. Clause 13 of the Arbitration Agreement provides that any party aggrieved by the arbitrator’s award is entitled to appeal the arbitration award.

(43) The decisive question is whether there was a mutual meeting of minds, that should the first defendant’s appeal not succeed, the appeal tribunal’s award would be applicable to the defendants as sureties. An analysis of David Kahn’s recordal of his understanding of this exigency is necessary to determine whether there was an agreement in respect thereof.

(44) In his letter of 13 September 2006 David Kahn records: “with regard to the liability in respect of sureties, kindly let us have your confirmation that the (appeal tribunal’s) award will apply to the sureties”. If there was an oral agreement regarding the applicability of the appeal tribunal’s award to the defendants as sureties, why should there be the need for confirmation in that regard, instead of David Kahn forwarding a written agreement to Marie-Lou Bester for signature by the defendants and the consequent making of the settlement an order of court.

(45) Further David Kahn states that “it was agreed……..…..that the matter would be resolved between ourselves we now need this to be resolved as to their liability.” If the question of liability of the defendants as sureties was agreed upon, why the need for David Kahn to still want the issue to be revisited and be resolved.

(46) David Kahn in his letter dated 13 October 2006 states that “notwithstanding the fact that “it was agreed……………that the question of the suretyships would be resolved…………..same has not been confirmed by you”. illogically David Kahn adds the caveat that “unless we receive written confirmation that the award is applicable to the suretyships…………..our instructions are to proceed………….” If the question of the suretyships as opposed to the liability of the sureties was not resolved despite the agreement to resolve same, objectively viewed how can Marie-Lou Bester confirm that the appeal tribunal’s award would be applicable to the defendants as sureties. In any event, the appeal tribunal was not apprised of the applicability of the oral agreement to the defendants as sureties, and neither was it seized with same, whatever its conflicting terms in view of the attorneys divergent import in regard thereto.

(47) David Kahn in his letter dated 19 October 2006 states that “his recollection was that Marie-Lou Bester agreed that the matter would be resolved between themselves……that the sureties would agree to their liability in regard to the principal debtor and that this would be made an order of court……………” Further David Kahn,” requests the sureties consent to the award and to the making of this award an order of court as was the object of our discussion…….. These statements conflate the essence of the purported oral agreement regarding the applicability of the appeal tribunal’s award to the defendants as sureties on the dismissal of the first defendant’s appeal and the former’s consent to the making of the oral agreement an order of court.”

(48) The object of both attorneys in the discussion of the 14 August 2006, was the question whether to reconvene the arbitration in order to address the question of Plewman’s failure to make an award against the sureties. However, because both attorneys had agreed that would it be a waste of time and money to reconvene before the outcome of the appeal, they decided to await the outcome of the appeal as logically, it would be dispositive of the matter either way.

(49) Consequently, David Kahn cannot cogently and persuasively argue that there was an agreement that the defendants as sureties would consent that the appeal tribunal’s award would be applicable to them in the face of the denial by Marie-Lou Bester of such oral agreement if he did not confirm the said oral agreement in writing. Such are the vagaries of robust ligation, at times in the robust hurly burly of litigation, time honoured principles regarding sacrosanct collegiality and the sacredness of an attorney’s word as a bond become compromised and blurred and indeed at times, amount and count for nothing, if what would have amounted to what appears to have been an obvious arrangement between colleagues, is not cast in writing.

(50) David Kahn’s testimony that once the appeal was finalised the details and methodology of making the oral agreement an order of court, would be discussed and resolved is irreconcilable with the notion of requesting Plewman JA to reconvene the arbitration, to address his failure to make an award against the sureties, and also contradicts the oral agreement allegedly concluded on 14 August 2006 as alluded to by David Kahn.

(51) It is a contradiction for David Kahn to argue that he did not accept that Plewman JA’s jurisdiction was over to revisit the issue of the liability of the sureties, but that he just decided to go on an alternative route, when he consciously and deliberately decided not reconvene the arbitration before Plewman JA pursuant to the terms of his award, and also when he did not to cross-appeal Plewman JA’s failure to make an award against the sureties.

(52) In my view an analysis is of the correspondence and evidence shows that there was no meeting of minds between David Kahn and Marie-Lou Bester regarding the applicability of the appeal tribunal’s award being applicable to the sureties, and resulting in their consequent liability jointly and severally with the first defendant to the plaintiff consequently, there was no oral agreement concluded by both attorneys on 14 August 2006.

THE PLEA OF WAIVER

(53) I now turn to consider whether the plaintiff by its failure to appeal Plewman JA’s award regarding his decision not to make an award against the sureties, has waived its claims against the defendants, or whether the existence of such claims cannot survive a plea of res judicata.

(54) There is a factual presumption against a waiver. The test to determine the intention to waive is objective, and it is adjudged having regard to the outward manifestations of the person who is said to have waived from the perspective of a reasonable man. The defendants bear the onus to disprove a waiver. The defendants must allege and prove a decision by the plaintiff to abandon its claim and that such decision was conveyed to them. See Le Roux v Odendaal 1954 (4) SA 432 at 441E. A waiver by conduct must leave no reasonable doubt as to the intention of surrendering the right in issue. See Hepner v Roodepoort-Maraisburg Town Council 1962 (4) SA 772 (A) at 778D-E.

(55) “Waiver is first and foremost a matter of intention; the test to determine intention to waive is objective, the alleged intention being judged by its outward manifestations adjudicated from the perspective of the other party, as a reasonable person”. See Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA). “Our courts take cognisance of the fact that persons do not as a rule lightly abandon their rights”. See Financial Mail (Pty) Ltd and Others v Sage Holdings Ltd and Another [1993] ZASCA 3; 1993 (2) SA 451 (A). “Waiver is not presumed; it must be alleged and proved; not only must the acts allegedly constituting the waiver be shown to have occurred, but it must also appear clearly and unequivocally from those facts or otherwise that there was an intention to waive”. See Pretorius v Greyling 1947 (1) SA 171 (W). “The onus is strictly on the party asserting waiver; it must be shown that the other party with full knowledge of the right decided to abandon it, whether expressly or by conduct plainly inconsistent with the intention to enforce it. Waiver is a question of fact and is difficult to establish.” See Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and Another 2009 (4) SA 529 para 21 (CC)

(56) The plaintiff contends that as at 3 August 2006, there was nothing to cross-appeal against because Plewman JA had reserved judgment against the defendants as sureties, further, that because the award was not final and definitive, it was consequently not appealable, alternatively, that even if it was appealable, the plaintiff’s failure to cross-appeal the award did not constitute a waiver of the plaintiff’s claims against the defendants as sureties.

(57) The plaintiff’s contention that as at the 3 November 2006 it still intended to prosecute its claims against the defendants has no merit. The fact of the matter is, whatever the reason predicating its failure to reconvene the arbitration and its failure not to appeal Plewman JA’s decision not to make an award against the sureties, the plaintiff consciously, deliberately and intentionally decided not to pursue the options of prosecuting it claims against the defendants as sureties by utilizing these arbitral procedural mechanisms.

(58) An objective evaluation shows that the plaintiff’s failure to reconvene the arbitration and obtain an award against the defendants as sureties despite Plewman JA’s injunction that, if the plaintiff did not reconvene the arbitration within 30 days in order to seek an order against the defendants, his award against the first defendant would stand as the only award, and secondly, the plaintiff’s failure to cross-appeal Plewman JA’s award despite having the right to appeal same pursuant to clause 13 of The Arbitration Agreement, ineluctably indicates that the plaintiff took a conscious decision to waive its claims against the defendants as sureties.

THE PLEA OF RES JUDICATA

(59) The defendants bear the onus of establishing the plea of res judicata. Before a plea of res judicata can succeed there must have been a previous final determination of the merits of the same matter between the same parties. An essential requirement for the establishment of res judicata is that a final and definitive judgment must have been made on the merits. The applicable requirements of res judicata are;

(a) there must be a decision on the merits;

(b) the parties in both cases in question must be the same parties;

(c) the same issue must arise in both matters.

(60) In Rail Commuters Action and Others v Transnet Ltd t/a Metro Rail and Others [2007] 1 ALL SA 279 (C); the court succinctly explained the plea as follows: “Where a court has come to a decision on the merits of a question as a causa pendente of the same thing between the same parties, it cannot be resuscitated in subsequent proceedings. A judgment which does not have the effect of settling the dispute between the parties with finality cannot found the exceptio rei judicatae.”

(61) In Bafokeng Tribe v Impala Platinum Limited and Others 1999 (3) SA 517 (B) Friedman JP stated at 566D-567B;

“A court must have regard to the object of the exceptio res judicata that it was introduced with the endeavour of putting a limit to needless litigation and in order to prevent the recapitulation of the same thing in dispute in diverse actions, with the concomitant deleterious effect of conflicting and contradictory decisions.”

(62) As stated in Janse van Rensburg N.O. v Myburgh 2010 (1) SA 649 (SCA) at 659F the first duty of the court is to compare the relevant facts of the two matters to determine whether the cause of action is the same in the matter before the arbitration and in the present action. In order to establish whether the defendants defence based on res judicata can succeed it is necessary to analyse Plewman JA’s award and determine whether same constituted a final determination of the merits of all the claims forming the subject of the dispute between the parties.

(63) In deciding whether the plea of res judicata has been established, the record of the arbitration proceedings must be perused and construed in order to determine whether or not the issues raised in the pleadings have been finally and definitively disposed off. See National Sorghum Breweries Ltd (t/a Vivo African Breweries) v International Liquor Distributors (Pty) Ltd [2000] ZASCA 159; 2001 (2) SA 232 (A).

(64) There is no merit in the plaintiff’s contention that Plewman JA did not traverse the merits of the plaintiff’s claim against the sureties, consequently, that the plaintiff’s claim was not res judicata. Firstly, a perusal of Plewman JA’s award shows that he traversed and interrogated the pleadings. He refers to the defendants admissions as sureties in the pleadings, and their unquestioned legal status as such, and that the plaintiff sought relief against them in their capacity as sureties. He also refers to the plaintiff’s Heads of Argument albeit he wrongly states that nothing therein is made by plaintiff’s counsel of the liability of the defendants. Further, Plewman JA wrongly finds that the plaintiff’s counsel in his oral submissions did not refer to the need to make an award against the sureties. Secondly, Plewman JA also traversed the merits of the plaintiff’s claims against the defendants as sureties, as manifested by his allusion to the fact that: “…….the admission that they were sureties seems unquestionable but in the light of uncertainty created by the arguments made to me I would prefer to preserve any order against them in their personal capacity”.

(65) Plewman JA resolved the dispute placed before him by having regard to the pleadings and oral submissions as per the arbitration agreement. Having regard to the language of his award, it is obvious that Plewman JA dismissed the first defendant’s plea and upheld the plaintiff’s claim. Regarding the plaintiff’s failure to reconvene the arbitration and address him on the liability of the sureties, Plewman JA in effect dismissed the plaintiff’s relief for an order against the defendants as sureties, jointly and severally to be liable to the plaintiff with the first defendant.

(66) The plaintiff argued that Plewman JA’s award was tantamount to an absolution from the instance. Plewman JA’s award as regards the defendants as sureties cannot be interpreted as absolution from the instance as was the case in PCL Consulting (Pty) Limited trading as Phillips Consulting SA v Tresso Trading 119 (Pty) Limited 2009 (4) SA 68 SCA because in the present matter, Plewman JA in respect of plaintiff’s claim against the defendants, made a decision against them as sureties based on their pleas and the admission that they had signed the suretyships. This decision in essence and effect, is a decision on the merits of the issue in dispute before him.

(67) Differently stated, even though Plewman JA made a decision only against the first defendant, his award in view of the plaintiff’s failure to reconvene the arbitration or to cross-appeal his award, constitutes an award which finally determined all matters arising out of the arbitration agreement subject only to appeal in terms of clause 13 of The Arbitration Agreement or review by the High Court in terms of section 33(1) of The Arbitration Act 45 of 1962.

(68) The plaintiff consciously elected to waive its right to appeal Plewman JA’s award after consciously having waived its right to reconvene the arbitration pursuant to the terms thereof, in order to address the question of the liability of the sureties. Further, the plaintiff has not reviewed the award in terms of section 33(1) of The Arbitration Act 45 of 1962. Plewman JA’s award was confirmed by the appeal tribunal save for the costs order. The appeal award is final and binding between the parties in terms of the arbitration agreement and pursuant to section 28 of The Arbitration Act 45 of 1962, consequently the plaintiff is precluded by the binding finality of the arbitration agreement to institute the present action against the defendants in the High Court.

(69) In Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3)

SA 670 (AD) at 692B-D Corbett JA held: “In the event that a plaintiff institutes an action against both a principal debtor and a surety in the High Court and the Presiding Judge, for whatever reason, grants an order against the principal debtor only, the plaintiff is not free to institute a new action against the surety based on the judgment against the principal debtor. Its recourse is to appeal against the judgment in the court-a-quo by seeking a persuade an Appeal Court that the judgment should be against the surety as well”.

(70) The plaintiff’s counsel argued that the court should apply the ratio in the case of Verhagen v Bromowitz 1960 (4) SA 947 (CPD) because in that matter as in the present, the arbitrator did not make a final decision, and had failed to fully and holistically adjudicate the dispute submitted to him. Further counsel argued that in the present matter “there was no lis finita of the issues and the dispute, (in that) the arbitration award lacked finality”. Consequently, that there was no question of the merits of the dispute being res judicata because there was no lis terminate. I demur. In the present matter an analysis of Plewman JA’s award shows that it rendered the issues predicating the dispute res judicata, consequently, the plaintiff is estopped from resuscitating any of the disputes in the High Court.

(71) The factual matrix in the present matter is similar to that in Kroon Meule CC v Wittstock t/a J D Distributors 1999 (3) SA 866 (E) where “it was held that: “the respondent’s argument that the arbitrator’s award, in allowing for subsequent reductions, lacked finality and was for that reason null and void had to be rejected (because) a valid award could not be rendered invalid by virtue of events occurring subsequent to the making thereof. The award had established the respondent’s indebtedness in a specific sum but had allowed for the reduction of that amount by specifically identified credits. The award had accordingly established substantial finality in the dispute between the parties and the arbitrator has substantially fulfilled his mandate. That was sufficient for a valid award. To require absolute finality could delay the completion of the arbitration and unnecessarily increase the cost of the proceedings”. (my emphasis)

(72) In the present matter Plewman JA’s award established the principle and the mechanics in terms whereof the defendants liability as sureties could be determined in terms of an award made against them if sought by the plaintiff on the reconvention of the arbitration. Plewman JA categorically stated that if he is not addressed on that issue, his original decision not to make an award against the sureties would be final. Differently stated, Plewman JA’s award is that no order is made against the defendants regarding their liability as sureties, consequently, the plaintiff’s claim in regard thereto is dismissed. In essence Plewman JA did in fact and law make an award against the defendants, and his award finally determines the dispute between the parties, and consequently, renders the merits pertaining thereto res judicata.

(73) The finality of the award against the first defendant was not dependant upon the fulfilment of the 30 day period reconvening mechanism set by Plewman JA, consequently, Plewman JA’s award became final vis-ά-vis the first respondent on the pronouncement of the award, and it became final vis-à-vis the defendants as sureties after plaintiff’s failure to reconvene the arbitration within the 30 days after the award.

(74) Plewman JA’s mandate entitled him to make such an award. The appeal tribunal was not entitled to alter the award made by Plewman JA unless the plaintiff had noted a cross-appeal against his award.

In Standard Bank of SA Ltd v Stama (Pty) Ltd 1975 (1) SA 730 (AD) at p. 746E Miller JA said:

“In any event, if the terms of the order did not correctly represent the parties’ agreement or intention, the plaintiff, if it wishes to make that point should have cross-appealed in order to try to have it rectified accordingly.”

(75) The plaintiff withdrew the High Court actions pursuant to the arbitration agreement subject only to appeal the arbitration award in terms of clause 13 thereof. The plaintiff by submitting its claims to arbitration subsumed its right to pursue its claim against the sureties in a final and binding arbitration process, and is consequently precluded from reviving any such claim by instituting action in the High Court in respect thereof. When the arbitration award was made an order of court in terms of section 31(1) of The Arbitration Act 45 of 1962 it rendered Plewman JA’s award and the appeal tribunal’s award final and binding, subject only to review in terms of section 33(1) of The Arbitration Act 42 of 1965 in the case of any irregularity.

(76) In Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews 2009 (4) SA 529 (CC) it was held that: “the court may scrutinise arbitration awards in terms of section 33(1) of The Arbitration Act 45 of 1962, but that fairness in arbitration proceedings should not be equated with the process established in Uniform Rules of Court for the conduct of proceedings before courts. Courts should be respectful of the intentions of the parties in relation to procedure. In so doing, they should bear in mind the purposes of private arbitration which include the fast and cost-effective resolution of disputes. If courts are too quick to find fault with the manner in which an arbitration has been conducted, and too willing to conclude that the faulty procedure is unfair or constitutes a gross irregularity within the meaning of section 31, the goals of private arbitration may well be defeated.”

(77) In Telcordia Technologies Inc v Telkom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266 (SCA) (2007 (5) BCLR 503; [2007] 2 ALL SA 243; the court stressed the need when courts have to consider the confirmation or setting-aside of arbitral awards, for adherence to the principle of party autonomy, which requires a high degree of deference to arbitral decisions and minimises the scope for intervention by the courts if the award was obtained in a procedurally fair manner as required by section 34 of The Constitution.

ORDER

(78) In the premises:

1. the plaintiff’s action is dismissed with costs.

Dated the 28 day of June 2012 at Johannesburg.

_____________________________

MOKGOATLHENG J

JUDGE OF THE SOUTH GAUTENG

HIGH COURT, JOHANNESBURG

Counsel for Plaintiff : N G P Redman

Attorney’s for Plaintiff : David Kahn & Associates

Counsel for the first Defendant : A R G Mundell SC

Attorney’s for the first Defendant: Marie-Lou Bester Inc

Date of hearing : 30 NOVEMBER 2011

Date of judgment : 28 JUNE 2012

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