THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case no: 704/2015

In the matter between:

KRISHNA SOOBRAMONEY PADACHIE
FIRST APPELLANT

AMANDA MARCELLA PADACHIE
SECOND APPELLANT

and

THE BODY CORPORATE OF CRYSTAL COVE
FIRST RESPONDENT

BRIAN EDWARD SHELTON AGAR N.O.
SECOND RESPONDENT

Neutral citation:
Padachie v The Body Corporate of Crystal Cove (704/2015) [2016]
ZASCA 145 (30 September 2016)

Bench:
Maya DP, Petse, Willis JJA and Fourie and Makgoka AJJA

Heard:
29 August 2016

Delivered:
30 September 2016

Summary:
Arbitration - Arbitration Act 42 of 1965 - statement of case to court in terms
of s 20(1) refused for being imprecise - appellant making a qualified request for referral
to court - such request impermissible - s 20(1) only applicable where questions of law
arise during the course of arbitration - party to an arbitration not entitled to refer to court
the very issues referred for arbitration - Arbitrator did not deprive appellant of his right in
terms of s 20 to approach court.

_____________________________________________________________________

ORDER
______________________________________________________________________

On appeal from: KwaZulu-Natal Local Division of the High Court, Durban (Nkosi J
sitting as court of first instance):

The appeal is dismissed with costs.
______________________________________________________________________

JUDGMENT
______________________________________________________________________

Makgoka AJA (Maya DP, Petse, Willis JJA and Fourie and Makgoka AJJA):

[1] This is an appeal against the judgment of the KwaZulu-Natal Local Division of
the High Court, Durban (Nkosi J). The high court dismissed with costs, the appellants‟
application to review and set aside an arbitration award made by the second
respondent, Mr Brian Agar, an attorney, who was appointed as an arbitrator by the
parties in this matter. The appeal is with leave of the high court.
[2] The first and second appellants, Mr and Mrs Padachie, were married to each
other in community of property. They were registered owners of a unit in a residential
estate situated at La Mercy, Durban. The first respondent, the Body Corporate of
Crystal Cove (the Body Corporate) is a sectional title body corporate established in
terms of s 36(1) of the Sectional Titles Act 95 of 1986. It was responsible for the
management of the sectional title scheme in which the appellants‟ property was
situated. The second appellant, Mrs Padachie, and the arbitrator, did not take part in the
appeal. For the sake of convenience, I shall refer to Mr Padachie as „the appellant‟.

[3] The narrow issue for determination is whether the arbitrator deprived the
appellant of his right, in terms of s 20 of the Arbitration Act 42 of 1965 (the Act) to have
certain questions of law stated for the opinion of the court. If he did, his conduct may
have been susceptible to be reviewed and set aside as a gross irregularity in terms of s
33(1) of the Act.
[4] Section 20 of the Act reads as follows :
‘Statement of case for opinion of Court or counsel during arbitration proceedings
(1)
An arbitration tribunal may, on the application of any party to the reference and shall, if
the court, on the application of any such party, so directs, or if the parties to the reference so
agree, at any stage before making a final award state any question of law arising in the course
of the reference in the form of a special case for the opinion of the court or for the opinion of
counsel.
(2)
An opinion referred to in ss (1) shall be final and not subject to appeal and shall be
binding on the arbitration tribunal and on the parties to the reference.‟
[5] The facts are simple. As registered owners of a unit in a sectional title scheme
managed by the Body Corporate, the appellants were liable to the Body Corporate for
monthly levies and other costs.1 During July 2009 the Body Corporate instituted action
against the appellants in the Magistrate‟s Court, Inanda, for a sum of R9 891.83 in
respect of alleged arrear levies and ancillary charges. The appellants defended the
action and delivered their plea. Subsequently, the parties agreed to refer the disputes
arising from that action to arbitration. In the arbitration, the Body Corporate filed five
claims against the appellants. Claims 4 and 5 were abandoned during the course of the
arbitration. Three of the remaining claims were:
(a)
Claim 1 – the payment of R1 362.95 for alleged arrear levies, legal costs, interest
and other charges for the period February 2009 to September 2012;

1 In terms of s 37 of the Sectional Titles Act 95 of 1986.

(b)
Claim 2 – the re-payment of R4 000 made to the appellant by the trustees of the
Body Corporate on 28 July 2008 for carrying out his duties as the chairperson of the
board of trustees of the Body Corporate, which payment the Body Corporate alleged
was unlawful, and in breach of rule 10(1) of the Body Corporate‟s Management rules;2
(c)
Claim 3 – the repayment of R3 500 arrear levies which were alleged to have
been unlawfully credited to the appellants‟ levy account during April 2009.
[6] The appellant filed his statement of defence in which he denied any
indebtedness to the Body Corporate, and pleaded, among others, that the claims had
been extinguished by prescription. The arbitration hearing ultimately commenced before
the arbitrator on 13 November 2012 and concluded on 19 November 2012.  As agreed
between the parties at the conclusion of the arbitration, the Body Corporate, as the
claimant, filed its written argument on 26 November 2012. The appellant‟s written
argument was due on 3 December 2012, and the Body Corporate‟s replying argument
was to be filed on 5 December 2012. However, the appellant was afforded an extension
of time to file his written argument by no later than 7 December 2012.
[7] On 3 December 2012 the appellant‟s attorneys delivered a letter to the arbitrator
in which they stated that a number of legal points had been raised during the evidence
and arguments, which, in their view, could not be resolved by way of arbitration. They
further enquired from the arbitrator whether they should apply for referral to court in
terms of s 20, or deal with the issues in their written argument. In response, on 5
December 2012, the arbitrator stated that he was not aware of any issues which
warranted such referral. He accordingly left it to the appellant to decide how best to deal
with the matter.  But he also reminded the appellant‟s attorneys that he was expecting
their written argument on or before 7 December 2012, as agreed.
[8] On 7 December 2012 the appellant‟s attorneys delivered their written argument
on the substantive issues before the arbitrator. In the penultimate paragraph of the

2 Annexure 8 of the Sectional Titles Schemes Management Act 8 of 2011, promulgated in terms of ss
35(3) and 55 of that Act.

written argument, under the heading „Referral to Court under Arbitration Act‟  it was
recorded that the interpretation of Management rule 10 of the Body Corporate‟s rules,3
the nature of the claims and whether the claims had prescribed, were all questions of
law, which ought to be referred to court.
[9] On 12 December 2012 the appellant‟s attorneys wrote a letter to both the Body
Corporate‟s attorneys and the arbitrator, reiterating that the issues they had raised in
their written argument, should be referred to court for an opinion. Those issues were
summarised in that letter as follows:
„(a)
The interpretation of Management rule 10;
(b)
Whether the nature of the claim is ultra vires; (sic)
(c)
Whether the claimant [the Body Corporate] has pleaded a proper claim;
(d)
What, if any parts of the claim has prescribed;
(e)
If establishing a breach in terms of management rule 10, the claimant [the Body
Corporate] bears the onus of proving unlawful payments to the first respondent [the
appellant]‟
The appellant‟s attorneys enquired from the arbitrator whether he intended to refer
those issues to court, and stated that if the arbitrator was not amenable to a referral,
they intended to bring the necessary application to the high court. The arbitrator was
requested to advise the appellants of his intention by close of business on 13 December
2012, to allow them adequate time to bring the application.
[10] On 13 December 2012 the arbitrator, without responding to the letter mentioned
above, published his award, in which he dealt comprehensively with the issues in
dispute between the parties, including the alleged questions of law raised by the
appellant. I shall revert to the latter aspect. In the end, the arbitrator found the

3 Management rule 10(1) provides:
„Unless otherwise determined by a special resolution of the owners, trustees who are owners shall not be
entitled to any remuneration in respect of their services as such: provided that the body corporate shall
reimburse to the trustees all disbursements and expenses actually and reasonably incurred by them in
carrying out their duties and exercising their powers.‟

appellants liable to the Body Corporate in the amounts claimed. He accordingly ordered
the appellants to pay the Body Corporate a total sum of R8 862.95.
[11] Aggrieved by the arbitrator‟s decision, the appellant, on 4 April 2013, launched
an application in the high court, seeking to set aside the arbitrator‟s award in terms of
s 33(1) of the Act. The appellant raised a number of points, among others, that the
arbitrator had in essence prevented him from approaching court for an opinion on points
of law. The Body Corporate opposed the application and filed a counter-application for
the enforcement of the award in terms of s 31 of the Act.  The high court rejected the
appellant‟s arguments and dismissed his application, primarily on two grounds. First,
that the arbitrator had not committed any irregularity in the course of the arbitration, and
second, that the arbitrator had not prevented the appellant from approaching the court
for an opinion on questions of law. The high court further granted the Body Corporate‟s
counter-application in terms of which the arbitrator‟s award was made an order of court.
[12] Before us, it was argued on behalf of the appellant that the request for referral to
court, made in the appellant‟s written argument on 7 December 2012, constituted an
application in terms of s 20(1) of the Act. Accordingly, it was argued that by issuing his
award in the circumstances referred to above, the arbitrator effectively prevented the
appellant from approaching the court for an opinion.
[13] I disagree. As early as 5 December 2012, the arbitrator had made his position
clear to the appellant‟s attorneys: he discerned no points of law requiring referral to
court.  He further made it plain that he intended finalising his award, and to that extent,
reminded the appellant‟s attorneys to submit written argument as agreed. It could not
have been clearer to the appellant‟s attorneys, at that time already, that the arbitrator
did not intend to refer any issue to court. Nothing, for instance, prevented the appellant
from approaching the court to interdict the arbitrator from publishing his award, pending
the determination of an application for referral.

[14] Counsel for the appellant submitted that as of 5 December 2012, the questions of
law had not been precisely stated, and accordingly, that that request could not be
regarded as a proper application before the arbitrator. There is no merit in this
submission. If the questions were not properly formulated, it was only because the
appellant and his attorneys had not sufficiently applied themselves in formulating them.
The appellant was therefore the author of his own misfortune. But, in any event, the
arbitrator‟s response should have prompted the appellant‟s attorneys immediately to
delineate the alleged points of law. Instead of doing that, they submitted lengthy written
argument, running into some 30 pages, dealing with all the issues in dispute between
the parties.  As already mentioned, after written arguments had been submitted on
behalf of the parties, the arbitrator published his award, in which he dealt thoroughly
with all the disputes between the parties, including the alleged points of law, in respect
of which he said:
„What respondent‟s [i.e. appellant in the present appeal] counsel is asking for is much more than
mere questions of law, delving further into the nature of the claimant‟s [i.e. respondent] claim;
and claimant‟s pleadings.
The questions of law, on the interpretation of Management rule 10 and “the issues of
prescription” are also imprecise.
To raise this request at such late stage of the procedure is, to say the least, inopportune. The
claimant does not wish to state such a case and the arbitrator does not wish to state such a
case and the arbitrator declines to do so. The request for interpretation of management rule 10
is also inconsistent with the contention of the Body Corporate‟s counsel in paragraph 18 where
he states:
“The language of Management rule 10(1) is, with submission, clear and unambiguous and
therefore effect must be given to its ordinary everyday meaning.”‟

[15] There is nothing wrong with the arbitrator‟s reasoning. I therefore conclude that
the arbitrator did not prevent the appellant from approaching the court to compel a
referral.  It is the appellant‟s own inaction, and to some extent, acquiescence, which led
to the arbitrator publishing his award without a referral. I have alluded to the steps which

were open to the appellant, but which he failed to take. This should be the end of the
matter, and the appeal should fail on this point alone.
[16] However, there are two further bases on which the appeal should fail. The first is
that the appellant is not entitled to refer to court the very issues referred for arbitration.
The second concerns the manner in which the appellant formulated his request for a
referral. These issues were fully debated in this court with counsel. I briefly consider
them, in turn.
[17] The purpose of s 20 of the Act was stated by this court in Telcordia Technologies
Inc v Telkom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266 (SCA) para 154 thus:
„[It] can be used only if the legal question arises “in the course” of the arbitration. It is not
intended to apply where the parties agree to put a particular question of law to the arbitrator.
Any other interpretation of the section would defeat its purpose and “it would be futile ever to
submit a question of law to an arbitrator”. Its purpose, at the very least, is not to enable parties,
who have agreed to refer a legal issue to an arbitrator to renege on their deal.‟ (Footnote
omitted.)

[18] In the present case, only two issues could possibly constitute questions of law,
namely, the interpretation of Management rule 10, and prescription. The alleged
contravention of Management rule 10 was first raised in the Body Corporate‟s amended
particulars of claim in the magistrate‟s court. As stated earlier, that action was
withdrawn, and the parties agreed on arbitration. Thus, it was part of the disputes which
the parties agreed to refer to arbitration. When the Body Corporate delivered its
statement of claim in the arbitration during October 2012, that claim was one of the five
it initially pursued against the appellant. Properly construed, therefore, the contravention
of Management rule 10, and by parity of reasoning, also its interpretation, had been
placed squarely before the arbitrator for determination. On that premise, the issue did
not „arise in the course of‟ the arbitration as envisaged in s 20. It is therefore not open to
the appellant to seek an opinion from the court on it.

[19] The issue whether any of the Body Corporate‟s claims had become extinguished
by prescription, similarly arose during the pleading stage in the arbitration. The
appellant raised it in his statement of defence in October 2012. By electing to plead this
issue without any suggestion that it ought to be referred to court, the appellant placed it
among the issues which the arbitrator had to determine. It therefore, similarly did not
arise „in the course‟ of the arbitration. Thus the appellant was not entitled to invoke the
provisions of s 20.
[20] I turn now to the manner in which the appellant formulated his request for referral
of the interpretation of Management rule 10 to court. The appellant vacillated on this
issue.  While, on the one hand, he pressed that the interpretation should be referred to
court, on the other, he argued, extensively with reference to case law, for a particular
interpretation of the rule. He accordingly invited the arbitrator to adopt his preferred
interpretation of the rule. No less than fifteen paragraphs, running over six pages, of the
appellant‟s written argument, were devoted to the appellant‟s interpretation of
Management rule 10.
[21] The significance of this should not be lost. The appellant‟s stance amounted to a
qualified request for referral to court: only if the arbitrator did not accept the appellant‟s
preferred interpretation of the rule, would the appellant seek referral to court. Put
differently, had the arbitrator adopted the appellant‟s preferred interpretation of the rule,
the appellant would not have pressed for a referral. It is an untenable proposition, and
serves only to demonstrate the fallacy in the appellant‟s argument that the question was
one which the arbitrator was not qualified to determine, and which only the court could.
[22] In Government of the Republic of South Africa v Midkon (Pty) Ltd & another 1984
(3) SA 552 (T),4 it was submitted, with reference to English authorities, that a qualified
request for a referral was entirely permissible (at 561I-562D). Preiss J, after a careful
analysis and comparison of the English counterpart of our s 20 of the Act, concluded (at

4 Cited with approval in Telecordia Technologies Inc v Telkom (above) and Road Accident Fund v Cloete
N.O. & others [2009] ZASCA 126; 2010 (6) 120 (SCA).

563H) that a qualified request „has no place in our law by reason of the relatively limited
provisions of s 20 of the South African statute.‟
[23] The facts in Midkon closely resemble those in the present case. There, the
application for questions of law to be referred to the court was made after the hearing of
the evidence was concluded, and at the commencement of argument. It was submitted
to the arbitrator that if he was not prepared to accede to the application he should not
make the award, but should first give the applicant an opportunity to approach the court
for an order compelling him to state a special case in terms of s 20 of the Act. The
arbitrator did not accede to the request. He published an award which dealt with all the
disputes between the parties, including the alleged questions of law. Dealing with that
situation, the court made the following pointed observations (at 561E-F):
„I am of the view that the request made to [the arbitrator] in its qualified form must have fortified
the arbitrator‟s scepticism. It seems to me that the department was saying to the arbitrator, “I am
content for you to decide any question of law arising in the dispute provided you resolve it in my
favour, but if you are going to be against me, I submit that this will be the type of question for
which you are disqualified and for which a court of law is fitted.” In doing so, I am of the view
that the department deprived itself of the contention that these latter issues were such as
necessarily possessed the three requirements postulated in the Halfdan Grieg case supra.5
Moreover, I find it quite inexplicable that on some as yet undefined legal issues an arbitrator
was to be regarded as an adequate Judge while at the same time on other as yet undefined
issues he was to be regarded as inadequate.‟

5 The requirements referred  to here are those formulated in a dictum by Denning MR in Halfdan Grieg &
Co A/S v Sterling Coal and Navigation Corporation and another [1973] 2 All ER 1073 (CA) with reference
to comparable provisions of the English Arbitration Act of 1959. They are that:
(a)
the point of law should be real and substantial and such as to be open to serious argument and
appropriate for decision by a court of law as distinct from a point which is dependent on the special
expertise of the arbitrator or umpire.
(b)
The point of law should be clear cut and capable of being accurately stated as a point of law – as
distinct from the dressing up of a fact as if it were a point of law.
(c)
The point of law should be of such importance that the resolution of it is necessary for the proper
determination of the case – as distinct from a side issue of little importance.
This court, in Telecordia Technologies Inc v Telkom (above) paras 151 -153, did not endorse Denning
MR‟s dictum, and held that there is no obligation on an arbitrator to state a case if the requirements set
out by Denning MR are present. Those requirements remain important factors to consider, but they are
not definitive.

[24] In my view, the appellant‟s approach suffers the same fate. What is more, the
arbitrator noted in his award that the appellant‟s counsel had, in para 18 of his written
argument before him, argued that Management rule 10 was clear and unambiguous,
and that effect must be given to its ordinary meaning. That contention by counsel, to my
mind, was correct. But it undermines the substratum of the appellant‟s argument, for if
the rule is clear and unambiguous, there would be no point in referring it to court for
interpretation. It is on that very basis that the arbitrator deemed it prudent to approach
the issue in the manner he did. I am unable to find fault in that approach.
[25] Lastly, it should be borne in mind that, although the question whether the
arbitrator has some form of legal training is generally irrelevant in determining whether a
referral to court should occur, an arbitrator, in the course of of his or her duties, may
frequently be called upon to decide questions of law. See Strutt v Chalmers & another
1959 (2) SA 536 (N) at 539E-F. In my view, the present case falls within that category.
The parties decided to place issues which involved questions of law before the
arbitrator, an attorney. As it is often said, an arbitrator is entitled to be wrong on the
merits. A wrong interpretation of a document like the Body Corporate‟s Management
rules, in this instance, would ordinarily not amount to an irregularity susceptible to a
review in terms of s 33 of the Act. As explained in Telecordia para 154:
„They have in such a case chosen their decision-maker for the particular issue and they are
bound by their choice….To allow a party in these circumstances to utilise s 20 would frustrate
the arbitration agreement. It is not against public policy to agree to the finality of an extra-curial
decision on a legal issue especially where the review rights contained in s 33 remain available,
enabling the courts to retain control over the fairness of the proceedings.‟ (Footnote omitted.)
[26] To my mind, the arbitrator did not commit any irregularity, let alone the one
envisaged in s 33(1) of the Act. He correctly declined the appellant‟s request to state
issues for the opinion of the court, for the reasons already stated. There was nothing
wrong with that approach, as the high court correctly found. The appeal therefore
stands to fail.

[27] Before I conclude, there is a related issue that requires comment. The capital
amount in dispute is just under R 9000. As it stands, the absurdity is that the costs of
litigation and arbitration by far exceed the capital. The matter should never have been
allowed to reach this point. It is extra-ordinary that it has taken two arbitrators, a high
court judge and five judges of appeal to determine a dispute involving such a paltry
sum.
[28] The following order is accordingly made:
The appeal is dismissed with costs.

_________________
T M Makgoka
Acting Judge of Appeal

APPEARANCES:

For First Appellant:
C B Edy

Instructed by:

Ashlyn Kandhai Attorneys, Tongaat

Van Pletzen Lambrechts Attorneys, Bloemfontein

For Second Appellant:
No appearance

For First Respondent:
K J Kemp SC (Heads of argument prepared by A Stokes
SC)

Instructed by:

De Wet Leitch Hands Incorporated, Ballito

Honey Attorneys, Bloemfontein

For Second Respondent:
No appearance