REPORTABLE
CASE NO:  457/2000

IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

In the matter between:

TOTAL SUPPORT MANAGEMENT (PTY) LTD

1ST APPELLANT

G W SLABBERT

2ND APPELLANT

and

DIVERSIFIED HEALTH SYSTEMS (SOUTH
AFRICA) (PTY) LTD

1ST RESPONDENT

P E B  REYNOLDS

2ND RESPONDENT

CORAM: SMALBERGER ADP, MARAIS, CAMERON, BRAND JJA and
LEWIS AJA

DATE OF HEARING: 25 FEBRUARY 2002

DELIVERY DATE:
25 MARCH 2002

Summary:  Arbitration - alleged misconduct by arbitrator - principles applicable
- s 33(1) of the Constitution has no application - no misconduct established -
costs.
___________________________________________________________________

JUDGMENT
___________________________________________________________________

SMALBERGER ADP
SMALBERGER ADP:
Introduction
[1] On 25 October 1995 a written agreement ("the agreement") was concluded
between Interpharm Integrated Pharmaceutical Benefit Management (Pty) Ltd
("Interpharm") and the first appellant, Mr G W Slabbert ("Slabbert"), as sellers, and
the first respondent, Diversified Health Systems (South Africa) (Pty) Ltd ("DHS"), as
purchaser, for the sale of the pharmaceutical benefit management business ("the
business") owned and conducted jointly by Interpharm and Slabbert.  Subsequently
Interpharm ceded any claims it might have against DHS arising out of the agreement
to the first appellant, Total Support Management (Pty) Ltd ("TSM").  (I shall, where
appropriate, refer to TSM and Slabbert jointly as "the appellants".)
[2] Clause 30 of the agreement provided for the resolution of any disputes arising
out of or in connection with the agreement by an arbitrator agreed upon by the parties

or, failing consensus, by an arbitrator nominated by the President of the Law Society
of the Transvaal.  Clause 30.12.3 specifically provided that "unless the terms of
submission provide otherwise, the arbitrator's determination shall be final and not
subject to appeal. . . .".
[3] A dispute arose concerning TSM's liability for payment of portion of the
purchase price and interest, a matter dealt with in more detail below.  The dispute was
duly referred to arbitration.  As the parties could not agree upon an arbitrator the
second respondent, Mr P E B Reynolds, a senior attorney of some forty years'
standing, was nominated as such.
[4] The arbitration was duly conducted before the second respondent in September
1999.  The parties had earlier filed a claim and counterclaim respectively.  Five
witnesses testified for the appellants; DHS closed its case without leading any
evidence.  The second respondent delivered his written judgment and award on 21
October 1999.  Both the appellants and DHS were unsuccessful in their respective

claims.  The dismissal of the claims was accompanied by an adverse order as to costs
in each instance.
[5] On 1 December 1999 the appellants launched an application in the Transvaal
Provincial Division of the High Court in terms of sec 33(1) of the Arbitration Act 42
of 1965 ("the Act") to set aside the award made by the second respondent.  The matter
in due course came before Ngoepe JP.  The learned judge dismissed the application
with costs, but granted the appellants leave to appeal to this Court.
The issues in the arbitration and their determination
[6] In terms of clause 9 of the agreement the purchase price of the business and
assets (as defined) was R49 439 500,00 payable, as provided for in clause 10, as
follows:
"10.1 The sum of R2 439 500,00  (Two Million Four Hundred and Thirty Nine
Thousand Five Hundred Rand) shall be paid by the PURCHASER in
cash on the CLOSING DATE [as defined].

10.2 The GUARANTEED AMOUNT [the sum of R47 000 000] shall be paid

to the SELLER in the following manner:

10.2.1
The PURCHASER shall pay to the SELLER:

10.2.1.1

The sum of R13 500 000,00 (Thirteen Million Five
Hundred Thousand Rand) upon the happening of the earlier
of the following events:

10.2.1.1.1

The target of 500 000 (Five Hundred Thousand)
individual lives under claims clearing agreements
being achieved by IDS; or

10.2.1.1.2

The expiry of a period of 12 (Twelve) months after
the CLOSING DATE.

10.2.1.2
A further sum of R13 500 000,00 (Thirteen Million Five
Hundred Thousand Rand) once the consolidated net
earnings before taxes, exclusive of any royalties or
administrative fees, of the TSM GROUP for a period of 12
(Twelve) consecutive months has reached R6 500 000,00
(Six Million Five Hundred Thousand Rand);

provided that should an agreement between IDS on the one hand
and Medscheme (Proprietary) Limited or the alliance of Affiliated
Medical Administrators on the other be concluded upon mutually
acceptable terms and conditions for the processing by IDS of
claims for the members of the other contracting party, the

PURCHASER shall ensure that the aggregate of the amounts
referred to in clauses 10.2.1.1 and 10.2.1.2 above is paid to the
SELLER on the effective date of such agreement.

10.2.2
The PURCHASER shall pay to the SELLER the sum of
R20 000 000,00 (Twenty Million Rand) once the volume of
claims cleared by IDS has reached an average of 500 000 (Five
Hundred Thousand) per month over a period of 3 (Three)
consecutive months, provided that such target volume is achieved
within 3 (Three) years of the CLOSING DATE, failing which the
PURCHASER shall with effect from the third anniversary of the
CLOSING DATE have no further obligation to effect payment of
the said sum to the SELLER."

In clause 10.2.5 provision was made for the payment of interest.

[7] It is common cause that DHS paid to the appellants:

1)
The amount of R2 439 500,00 referred to in clause 10.1;

2)
The amount of R13 500 000,00 referred to in clause 10.2.1.1 ("the first
payment") on 30 October 1996;

3)
The amount of R13 500 000 referred to in clause 10.2.1.2 ("the second
payment") on 21 January 1997.

[8] It was also common cause between the parties:

1.
That interest as provided for in clause 10.2.5 on the first payment, in an
amount of R1 824 238,36, was payable by DHS to the appellants in
respect of the period 28 October 1995 to 30 October 1996, and that the
appellants were entitled to what is referred to as mora interest on that
amount from 31 October 1996 to date of payment;

2.
That interest as provided for in clause 10.2.5 on the second payment up
to 21 January 1997 (if payable) amounted to R2 253 954,45, on which
amount alleged mora interest would have been payable from 22 January
1997 to date of payment;

3.
That DHS refused to make any interest payments to the appellants;

4.
That DHS denied liability to pay the amount of R20 000 000,00 referred
to in clause 10.2.2 and interest thereon to the appellants.
[9] In their Statement of Claim in the arbitration proceedings the appellants claimed

from DHS the amount of R4 078 192,81 (being the sum of the amounts referred to in
[8(1) and (2)] above) together with "mora interest" ("the first claim"), and the amount
of R20 000 000,00 referred to in clause 10.2.2 ("the second claim").
[10]  In its Plea and Counterclaim DHS, in response:

1.
Admitted making the second payment to the appellants but claimed that
it was paid in the bona fide and reasonable but mistaken belief that it was
due when it was not;

2.
Admitted that interest was payable on the first payment in the sum of
R1 824 238,36;

3.
Claimed set-off of the second payment against the amount of interest
payable, leaving a balance overpaid of R11 675 761,64;

4.
Claimed repayment of that amount on the basis of the condictio indebiti;

5.
Denied liability for any other amounts.
[11]    The second respondent made the following award:

1.
He dismissed the appellants' first claim with costs.  The underlying
reasoning was:  the appellants failed to establish that any of the pre-
conditions for liability to make the second payment had been fulfilled;
accordingly DHS was not under a legal liability to make the second
payment when it did so on 21 January 1997; the second payment was
made by mistake; liability for such payment was an essential prerequisite
for the interest claimed in respect of the second payment; the appellants
claim for accrued interest on the second payment thus failed; the interest
admittedly due in respect of the first payment had to be set off against
the natural obligation owing by the appellants to DHS as a result of the
latter having mistakenly made the second payment.

2.
He dismissed the appellants' second claim with costs.  It is not necessary
to dwell  on his reasons for doing so as the appellants did not seek to
attack the award in this respect.

3.
He dismissed DHS's counterclaim with costs, on the grounds that DHS
had not established the essential requirements of a claim under the
condictio indebiti and was therefore not entitled to repayment of the
balance of the second payment after deduction of the interest due by it in
respect of the first payment.  DHS has never sought to challenge this
finding.
The issues arising from the arbitration
[12]  In their application to review and set aside the second respondent's award the
appellants only attacked that part of the award dismissing their first claim.  The
gravamen of their initial complaint, as set out in Slabbert's founding affidavit, was that
the second respondent
"made a mistake so gross and so manifest and was so grossly careless in
ignoring facts that were common cause between the parties and evidence that
was not disputed in cross-examination that an inference of misconduct as
envisaged by section 33 (1) (a) of the Arbitration Act, 1965 on the part of
second respondent can be made."

(I shall refer to this as the first ground of review.)
[13]  The appellants subsequently filed a supplementary founding affidavit after their
attorney had received schedules from the second respondent detailing his attendances
and fees, and those of his assistant, Mr D Milo ("Milo"), relating to the arbitration.  I
shall deal more fully below with how Milo came to be involved in the matter.  The gist
of the appellants' allegations in their supplementary and later replying affidavits was
that the final judgment and award handed down in the arbitration represented the
findings and award not of the second respondent, but of Milo.  The appellants
accordingly submitted that the second respondent's conduct relating to the role played
by Milo amounted to misconduct on his part, alternatively, to a gross irregularity in
the conduct of the proceedings as envisaged by sec 33(1)(a) and (b) respectively of the
Act (the second ground of review).
The applicable legal principles
[14]  Section 33(1) of the Act provides:

"(1) Where-
(a)
any member of an arbitration tribunal has misconducted himself in
relation to his duties as arbitrator or umpire; or
(b)
an arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration proceedings or has exceeded its powers; or
(c)
an award has been improperly obtained,
the court may, on the application of any party to the reference after due notice to the
other party or parties, make an order setting the award aside."

[15]  In Dickenson & Brown v Fisher's Executors 1915 AD 166 this Court considered
the provisions of sec 18 of Natal Act 24 of 1898 which provided for the setting aside
of an arbitral award where, inter alia, "an arbitrator or umpire has misconducted
himself".  In the course of his judgment (concurred in by all the other members of the
court) Solomon JA stated (at 176) that there could not be misconduct, if the word was
used in its ordinary sense, "unless there has been some wrongful or improper conduct
on the part of the person whose behaviour is in question" and rejected the notion "that
a bona fide mistake either of law or of fact made by an arbitrator can be characterised
as misconduct. . . ."  He went on to hold (also at 176) that "in ordinary circumstances

where an arbitrator has given fair consideration to the matter which has been
submitted to him for decision, I think it would be impossible to hold that he had been
guilty of misconduct merely because he had made a bona fide mistake either of law or
of fact".
[16]  Earlier in his judgment (at 174) Solomon JA referred to the case of Dutch
Reformed Church v Town Council of Cape Town 15 SC 14 where De Villiers CJ had
occasion to examine the Roman-Dutch law of awards, and where it was pointed out
that under that system a practice had been introduced called "reductie" which was to
all intents and purposes an appeal against the award.  De Villiers CJ remarked that no
case could be found in the Cape Colony in which the process of "reductie" had been
resorted to and added that
"[c]ertainly since the appointment of English and Scotch Judges in 1828 the
principle of the finality of awards became firmly established in our Courts."

Solomon JA went on to observe

"That was so before any legislation had been introduced on the subject, and
since that time the question is placed beyond doubt."

In the light of the authorities referred to below this remains the position in our law
today.
[17]  In Donner v Ehrlich 1928 WLD 159 Solomon J considered the effect of sec
16(2) of Ordinance 24 of 1904 (T), the wording of which was virtually identical to
that of sec 18 of Natal Act 24 of 1898.  He stated (at 160):
"As I read Dickenson and Brown v Fisher's Executors (1915, A.D. p. 166), the
misconduct which entitles a Court to set aside the award of an arbitrator must
amount to dishonesty.  I think that is the true reading of the judgment."

He went on to hold (at 161) that even a gross mistake, unless it establishes mala fides
or partiality, would be insufficient to warrant interference.
[18]  Later cases, some of which are referred to in Hyperchemicals International
(Pty) Ltd and Another v Maybaker Agrichem (Pty) Ltd and Another 1992(1) SA 89
(W) ("the Hyperchemicals case") at 97-8 followed the same line.  That was the

position which existed in 1965 when the Act came into operation.  In the
Hyperchemical's case Preiss J came to the conclusion that the Legislature intended the
words of the Act to bear the meaning which had been judicially determined in
similarly worded pre - 1965 statutes (at 98 E - F).  This led him to reject the argument
that "misconduct" as envisaged in s 33(1)(a) of the Act embraced the notion of what
was referred to as "legal misconduct" - conduct calling for the application of a less
stringent test for interference than laid down in the authorities referred to.
[19]  Preiss J also rejected an alternative argument that the pre - 1965 decisions
represented an old approach which had been implicitly overruled by a new extended
criterion which resulted in complaints falling short of imputations of dishonesty being
brought within the ambit of s 33(1)(a) of the Act.  This argument was based in the
main upon the analysis of certain sections of the Act undertaken by Jansen JA in
Theron en Andere v Ring van Wellington van die NG Sendingkerk in Suid-Afrika en
Andere 1976(2) SA 1 (A) at 22 (which included a reference to the decision in Dutch

Reformed Church v Town Council of Cape Town, supra).  Preiss J concluded (at 99
H - I):
"I certainly do not read into this analysis any indication that the field of review
has been extended or altered beyond the field so positively laid down in
Dickenson & Brown v Fisher's Executors (supra) and its successors.  It says no
more than that some remnants of judicial interference derived from the common
law persist in this statute."

[20]  In Amalgamated Clothing and Textile Workers Union of South Africa v
Veldspun (Pty) Ltd 1994(1) SA 162 (A) ("the Veldspun case") this Court (at 169 C -
E) confirmed the legal position as laid down in Dickenson & Brown v Fisher's
Executors and Donner v Ehrlich.  See also Bester v Easigas (Pty) Ltd and Another
1993(1) SA 30 (C) and Kolber and Another v Sourcecom Solutions (Pty) Ltd and
Others 2001(2) SA 1097 (C) at 1106 J to 1108 D.
[21]  Because the submission to arbitration did not provide otherwise, the parties
were precluded by the provisions of clause 30.12.3 of the agreement from appealing
against the decision of the second respondent.  The appellants can challenge the

second respondent's award only by invoking the statutory review provisions of sec
33(1)(a) and (b) of the Act.  Proof that the second respondent misconducted himself in
relation to his duties or committed a gross irregularity in the conduct of the arbitration
is a prerequisite for setting aside the award.  The onus rests upon the appellants in this
regard.  As appears from the authorities to which I have referred, the basis on which
an award will be set aside on the grounds of misconduct is a very narrow one.  A gross
or manifest mistake is not per se misconduct.  At best it provides evidence of
misconduct (Dickenson & Brown v Fisher's Executors, supra, at 176) which, taken
alone or in conjunction with other considerations, will ultimately have to be
sufficiently compelling to justify an inference (as the most likely inference) of what
has variously been described as "wrongful and improper conduct" (Dickenson &
Brown v Fisher's Executors, supra, at 176), "dishonesty" and "mala fides or partiality"
(Donner v Ehrlich, supra, at 160 - 1) and "moral turpitude" (Kolber and Another v
Sourcecom Solutions (Pty) Ltd and Others, supra, at 1108 A).

The Constitution
[22]  The above principles are well established and firmly entrenched in our law.
They govern the present appeal unless there are provisions in the Bill of Rights in the
Constitution of the Republic of South Africa, 1996 ("the Constitution") that require
their re-assessment and re-evaluation.  That follows from the fact that all statutes must
be interpreted through the prism of the Bill  of Rights (Investigating Directorate:
Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and
Others:  in re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others
2001(1) SA 545 (CC) at 558 E - F (para [21]).  We raised with counsel the question of
what, if any, the implications of sec 33(1) of the Constitution were in relation to the
appeal.  The answer, for reasons that follow, is that it has no relevance.
[23]  Section 33(1) of the Constitution provides:
"Everyone has the right to administrative action that is lawful, reasonable and
procedurally fair."

It is only administrative action which is subject to the administrative justice right in
sec 33(1).  Generally speaking administrative action is conduct of an administrative
nature performed by a functionary in the exercise of a public power or the
performance of a public function.  Compare in this regard the definition of
"administrative action" in sec 1 of the Promotion of Administrative Justice Act 3 of
2000.  The focus of the enquiry as to whether conduct is "administrative action" is not
on the position which the functionary occupies, but on the nature of the power he or
she is exercising.  "What matters is not so much the functionary as the function.  The
question is whether the task itself is administrative or not" (President of the Republic
of South Africa and Others v South African Rugby Football Union and Others 2000(1)
SA 1 (CC) at 67 B (para [141]).
[24]  Arbitration does not fall within the purview of "administrative action".  It arises
through the exercise of private rather than public powers.  This follows from
arbitration's distinctive attributes, with particular emphasis on the following.  First,

arbitration proceeds from an agreement between parties who consent to a process by
which a decision is taken by the arbitrator that is binding on the parties.  Second, the
arbitration agreement provides for a process by which the substantive rights of the
parties to the arbitration are determined.  Third, the arbitrator is chosen, either by the
parties, or by a method to which they have consented.  Fourth, arbitration is a process
by which the rights of the parties are determined in an impartial manner in respect of a
dispute between parties which is formulated at the time that the arbitrator is appointed.
See Mustill and Boyd, Commercial Arbitration, 2nd Ed (1989) at 41.
[25]  The hallmark of arbitration is that it is an adjudication, flowing from the
consent of the parties to the arbitration agreement, who define the powers of
adjudication, and are equally free to modify or withdraw that power at any time by
way of further agreement.  This is reflected in sec 3(1) of the Act.  As arbitration is a
form of private adjudication the function of an arbitrator is not administrative but
judicial in nature.  This accords with the conclusion reached by Mpati J in Patcor

Quarries CC v Issroff and Others 1998(4) SA 1069 (SECLD) at 1082 G.  Decisions
made in the exercise of judicial functions do not amount to administrative action (cf
Nel v Le Roux NO and Others 1996(3) SA 562 (CC) at 576 C (para [24]), and compare
also the exclusionary provision to be found in (b) (ee) of the definition of
"administrative action" in sec 1 of the Promotion of Administrative Justice Act).  It
follows in my view that a consensual arbitration is not a species of administrative
action and sec 33(1) of the Constitution has no application to a matter such as the
present.
[26]  The position may be different in the case of statutorily imposed arbitrations (cf
Carephone (Pty) Ltd v Marcus NO and Others 1999(3) SA 304 (LAC)).  In the light
of the administrative justice provisions of sec 33(1) of the Constitution the decision in
the Veldspun case may merit reconsideration in the context of compulsory as opposed
to consensual arbitrations.  The principles laid down in that case still hold good in the
latter type of matter.

[27]  The further question that arises is whether the fairness requirements of sec 34
of the Constitution apply to consensual or private arbitrations.  While at first blush it
may seem that they do, closer analysis may lead to a different conclusion.  The section
provides:
"Everyone has the right to have any dispute that can be resolved by the
application of law decided in a fair public hearing before a court or, where
appropriate, another independent and impartial tribunal or forum."

It is a moot point whether the words "another independent and impartial tribunal or
forum" in their contextual setting apply to private proceedings before an arbitrator or
whether they must be restricted to statutorily established adjudicatory institutions.
The word "fair" qualifies "public hearing" and the phrase "fair public hearing" relates
not only to proceedings before a court but also before "another independent and
impartial tribunal or forum".  In a private arbitration the parties may by agreement
exclude any form of public hearing - the need for anonymity or secrecy may well
underlie the decision to resort to arbitration.  The proper interpretation of sec 34 may

also involve the vexed question whether there may be a waiver of a constitutional
right.
[28]  The ambit and application of sec 34 was not fully argued before us and its
proper interpretation must be left open.  It may well not be of application.  Even if the
fairness requirement of sec 34 applies to private arbitrations there is nothing which
precludes the parties themselves from defining what is fair.  In my view the fairness
requirement is satisfied where parties who resort to arbitration agree to forego a right
of appeal and accept that the well-known and well-established principles governing
arbitration will apply.  Consequently, viewing the Act through the prism of the Bill of
Rights does not in my view justify any departure from those principles.
The first ground of review
[29]  The appellants rely upon the following main considerations to justify an
inference of misconduct on the part of the second respondent:
1.
He ignored the fact that the onus to prove set-off, and what this entailed, rested

on DHS.
2.
He held that the second payment had been made by mistake without any
evidence or facts to support such a finding.
3.
He found, contrary to the tenor of cross-examination by the appellants' counsel,
and contrary to what was submitted in argument, that neither the appellants nor DHS
relied on the first condition stipulated for in clause 10.2.1.2 of the agreement.
4.
He ignored the fact that there is a presumption against payment by a person of
money not owing, and that this created a prima facie case that the second payment was
due and payable when it was made.
5.
Certain factual and credibility findings made by him were not justified.
[30]  In terms of clause 10.2.1.2 of the agreement DHS was liable to make the second
payment on fulfillment of any one of three conditions - (1) the attainment by the TSM
group of certain specified target earnings, (2) the conclusion of an agreement between
IDS (Interpharm Data Systems (Pty) Ltd) and Medscheme (Pty) Ltd, or (3) the

conclusion of an agreement between IDS and the alliance of Affiliated Medical
Administrators ("AMA"), in both instances (2) and (3) upon mutually acceptable
terms and conditions for the processing of claims by IDS.  It is clear from the evidence
of Slabbert that the appellants claimed the second R13.5 million from DHS because
they believed that condition (3) had been fulfilled; and it was on the strength of this
claim that DHS made the second payment.  The appellants' claim for interest on this
amount was predicated on the second payment having been due and payable.  Interest
being ancillary to a principal debt, without a valid debt that is enforceable a party
cannot be held liable for interest (Commissioner for Inland Revenue v First National
Industrial Bank Limited 1990(3) SA 641 (A) at 652 H - J).  The  appellants set out to
prove that condition (3) had been fulfilled, but the second respondent held, after a
comprehensive review of the relevant evidence, that they had failed to do so.
Consequently they were not entitled to any interest on the second payment.
[31]  That left the question whether DHS was entitled to set off the interest

admittedly due by it in respect of the first payment against the second payment,
which it claimed to have made by mistake.  In his judgment the second respondent
stated that "he was prepared to find that the second payment of R13.5 million was
made by the defendant [DHS] in the mistaken belief that it was due".  DHS not having
called any witnesses in this regard, there was no evidence to justify such a finding.  In
any event, the onus was on DHS to prove that the second payment was not due and
payable and, if it succeeded in so doing, that it mistakenly believed that it was.  This
involved proof, in the first instance, that none of the three pre-conditions for payment
had been fulfilled.  Failing that set-off could not operate.
[32]  At no stage of the hearing did the appellants concede that condition (1) (the
attainment of the specified target earnings) had not been fulfilled.  It was therefore
incumbent on DHS to prove this.  It is common cause that in their heads of argument,
which were read out to the second respondent, the appellants specifically made the
point that DHS had failed to prove that the specified target earnings had not been

achieved.  The second respondent therefore erred in holding that "it is common
cause that neither the plaintiffs [appellants] nor the defendant [DHS] rely on the first
condition stipulated for in clause 10.2.1.2 of the agreement, namely whether the target
earnings had been reached. . . ."  Had he not erred in this regard the second respondent
would presumably have concluded that DHS failed to establish that it was entitled to
set off the interest it admittedly owed the appellants in respect of the first payment
against the second payment, for want of proof that the latter was due and payable.
[33]  The second respondent's error was a cardinal one with potentially unfortunate
financial implications for the appellants.  It is an error which is perhaps more readily
discernible with hindsight.  It is common cause that no evidence was led with regard
to the fulfillment or otherwise of condition 1.  All the evidence was concentrated on
the fulfillment of condition 3.  Whether or not the target earnings had been reached
would have been a matter largely within the knowledge of the appellants.  One would
have expected them to have relied on condition 1 if there was a case to be made out

for its fulfillment.  These considerations together with no more than a relatively
fleeting reference to condition 1 in the appellants' heads of argument may have
induced the mistaken belief on the part of the second respondent that when all was
said and done the non-fulfillment of condition 1 was never really in issue.  The second
respondent concerned himself only with condition 3.  His finding that, irrespective of
whom the onus was on, he was satisfied that no agreement had been concluded
between IDS and AMA would have justified the conclusion he came to on set-off if
only condition 3 had been in issue.  I do not wish to be thought to be making excuses
for second respondent's error.  I mention these factors because, at the end of the day, I
do not believe that the second respondent's error can be described as gross.
[34]  I do not propose to consider the remaining complaints in detail.  For their
contention that there is a presumption against payment by a person of money not
owing, and that this created a prima facie case that the second payment was due and
payable when it was made, the appellants relied upon the decision in Recsey v Reiche

1927 AD 554 at 556.  Even if there is a legal presumption to that effect, and it
applies in a matter such as the present, all of which is open to doubt, it would be of no
real significance, first, because it would have been rebutted by the positive finding by
the second respondent that condition 3 had not been fulfilled and, second, in the light
of my conclusion that set-off was not established because DHS failed to discharge the
onus resting on it.  The second respondent's finding that condition 3 had not been
fulfilled was based on his assessment of the relevant evidence and the credibility of
the witnesses who testified.  I am not convinced that the second respondent erred in
any respect in arriving at such finding.  Even if he did, it would make no difference to
the ultimate conclusion I have came to on an overall conspectus of the matter.
[35]  The question arises whether the appellants have succeeded in making out a case
of misconduct, as envisaged by sec 33(1)(a) of the Act, against the second respondent
- given that he erred in regard to set-off and even accepting that he may have erred in
other respects.  Mr Delport, for the appellants, conceded that if the principles laid

down in Dickenson & Brown v Fisher's Executors, supra, and later decisions
applied, as I have held to be the case, then an error of fact or law, or both, even gross
error, would not per se justify the setting aside of the second respondent's award.
Accepting that he would have to go further than that, he contended that the most
probable inference to be drawn from the second respondent's collective mistakes was
that he was guilty of deliberate partiality or conscious bias in favour of DHS, a clear
imputation of impropriety and mala fides, amounting to dishonesty, on the part of the
second respondent.  This despite the fact (1) that no allegations were made in the
founding affidavit to that effect (as one would have expected) and the second
respondent was not afforded an opportunity to deal with them (as he should have
been); (2) that DHS's counterclaim, which was substantially in excess of the
appellants' claims for interest, was dismissed by the second respondent; and (3) that no
other considerations indicative of bias or mala fides on his part were relied upon.  In
the circumstances the inference contended for lacks conviction and probability.

[36]  Misconduct in the required sense will in any event not lightly or readily be
inferred on the part of an arbitrator who is a professional man of considerable
experience in his field with a reputation to uphold, solely on the strength of errors
made in his judgment, especially where, as in the present instance, such errors could
never be described as gross.  In my view it is, as a matter of inference, more likely that
any errors made by the second respondent were bona fide mistakes made by him in the
course of a difficult adjudication.  In the result there is no room for a finding of
misconduct on his part.  It follows that the first ground of review cannot succeed.
The second ground of review
[37]  This ground focuses on the extent of Milo's involvement in the arbitration and
his participation in the preparation of the judgment and award.  The crux of the
appellants' argument is that the judgment was in fact that of Milo, having been
prepared by him without material input from the second respondent, and that in
abdicating his responsibilities in this regard the second respondent misconducted

himself or was guilty of a gross irregularity.  (As to the meaning of an irregularity in
this context see Ellis v Morgan; Ellis v Dessai 1909 TS 576 at 581.)  For this
allegation the appellants rely primarily, if not solely, on inferences they seek to draw
from details appearing in the schedules of fees delivered by the second respondent on
behalf of himself and Milo after the conclusion of the arbitration.  A related argument
is that the functions entrusted to Milo by the second respondent went beyond those
expressly or impliedly agreed upon between the parties and that this constituted a
gross irregularity.
[38]  At the pre-arbitration conference it was agreed that the second respondent
would have an assistant working with him throughout the arbitration, and that the
assistant's fee would be included within the second respondent's fee.  On 4 May 1999
the second respondent wrote a letter to the attorneys for the parties in which he stated,
inter alia, that "upon reflection I consider that there should be a charge for my
assistant's time in view of the apparent complexity of this matter".  He suggested that

his assistant be paid R700 a day for the arbitration and R300 per hour "for ancillary
related work outside the arbitration proceedings".  This was agreed to.  During the
course of the arbitration the parties further agreed to increase the assistant's
remuneration to a flat rate of R300 per hour, including the arbitration proceedings.
[39]  No agreement was reached as to the precise nature and scope of the services to
be rendered by the assistant (Milo).  The appellants accept that he would have been
required to do research on behalf of the second respondent.  For the rest they claim
their understanding to have been that Milo would do the equivalent of the work they
allege is normally done by the registrar of a judge of the High Court, i e attendances at
court, general secretarial work and related matters.  They claim that at no time did it
enter their minds "that the second respondent would discuss the merits of the disputes
between the parties with his assistant or would require [as they allege] the assistant to
write the judgment and award for him. . .".
[40]  It is common cause that the services eventually rendered by Milo included (1)

assisting with the arrangements for the pre-arbitration meeting; (2) being involved in
correspondence and discussions with the parties' attorneys; (3) taking down detailed
notes during the arbitration; (4) participating in discussions regarding the merits of the
dispute with the second respondent; (5) doing research; (6) preparing the first draft of
the award; and (7) subsequently effecting changes to the initial draft.  What is in issue
is whether he acted beyond the functions agreed upon by the parties, expressly or
impliedly, and whether his conduct amounted to a usurpation of the second
respondent's duties.
[41]  When selecting an arbitrator the parties to the arbitration agree to someone in
whom, by dint of his (or her) experience and ability, they can repose the necessary
confidence and trust to determine their dispute.  What they seek is a judgment from
the person chosen.  An arbitrator is not entitled to delegate this function.  He alone
must perform the duties he has undertaken and with which he has been entrusted,
unless the parties agree otherwise.  Because of the essentially personal nature of his

appointment he should be circumspect about utilising the services of an assistant.
Making use of an assistant is not per se objectionable.  Where the parties agree to an
arbitrator doing so, care should be taken to reach consensus on what precise functions
the assistant may perform, to obviate any later dispute in this regard.  Failing
agreement, an assistant should not be allowed  to perform tasks that may encroach on
what would be regarded as the normal functions of an arbitrator.  In no circumstances
may the assistant be allowed to usurp the decision-making function of the arbitrator or
act in a manner subversive of his independence.  Ultimately the question to be asked,
and answered, is whether the arbitrator exercised his own judgment in deciding the
issues.  This will depend upon the facts of each particular case.
[42]  There is no justification for the appellants' purported belief that Milo would
only play a formal or secretarial role in the arbitration.  The reference in the letter of 4
May 1999 to the "apparent complexity of this matter" coupled with the reasonably
substantial fees it was suggested should be paid to the assistant, inter alia, "for

ancillary related work outside the arbitration proceedings" clearly signalled the
second respondent's intention to involve Milo to a greater extent than that.  If, as the
appellants have conceded, Milo was to undertake research, he would have had to be
sufficiently acquainted with the issues and those aspects on which the second
respondent required the benefit of research.  He would have needed to understand
what the second respondent wanted done for his consideration in that regard.  To
render the research effective discussion of the merits with the second respondent
would have been not only unavoidable but also desirable to provide the necessary
guidance.  The results of the research and discussion could reasonably and logically
have led to the preparation by Milo of a document constituting a draft award for the
second respondent's consideration.  There could be no breach of the second
respondent's duty as an arbitrator if he availed himself of assistance expressly or
impliedly agreed upon.
[43]  Despite their protestations to the contrary, it must have been reasonably obvious

to the appellants, having regard to what was agreed upon and anticipated, that Milo
would be closely involved in the arbitration.  There can be no objection in principle to
that, provided always, in keeping with what has been said above, that the second
respondent did not abdicate his responsibilities in favour of Milo and, in effect, allow
him to decide the dispute.  The second respondent has made it clear, however, that this
was not the case.  He admitted that he discussed the matter, including the merits, with
Milo throughout.  He wanted him to be conversant with all aspects of the dispute.  In
his answering affidavit the second respondent further states:
"[W]e also discussed the manner in which I would structure my award when the
time came, and I advised my assistant of my views on the various issues as it
proceeded and, at the end of the proceedings, my views as to the result and
award I had in mind and intended.  He also gave me the benefit of his own
research and answers to my comments, and prepared memoranda for me, which
we then also discussed."

[44]  It was Milo who, after the conclusion of the arbitration proceedings, suggested
that he should prepare a rough draft of the award while the second respondent was

temporarily absent in Cape Town.  The second respondent agreed to this, according
to him,
"subject to my direction, following my views (of which he was fully aware as
we had discussed them), and also the manner in which I had told him I required
the draft to be prepared.  My assistant was also aware of my views in general as
to what my award would be, as I had told him.  Accordingly, it was clear to us
that the draft was subject to my overall supervision and prior direction."

[45]  The second respondent went on to explain that the draft presented to him by
Milo contained matters with which he did not agree or which required change to
reflect more accurately his emphasis and views; its structure was not what he wanted;
he devoted 15 hours to a consideration of the draft, its re-drafting and discussing
aspects of it with Milo; he applied his mind to the relevant authorities, memoranda
prepared by Milo and the heads of argument; what was reflected in his schedule of
fees as proof-reading actually amounted to a substantial re-drafting of the draft to
reflect his own views and conclusions.  The schedule of fees bears out the second
respondent's claim to have devoted considerable time to the draft.

[46]  No contrary facts were advanced by the appellants.  There is thus nothing to
refute what was said by the second respondent.  Nor is there any reason why his word
should not be accepted, particularly having regard to the principles that apply in
motion proceedings.  The suggestion in the court below that the matter be referred to
evidence was never strenuously pursued.  Based on what appeared in his answering
affidavit it is apparent that the award was the product of the second respondent's own,
independent view.  There is nothing to suggest that he was influenced, consciously or
unconsciously, by Milo to an extent where the latter's view became his.  There is no
substance in the appellants' contentions to the contrary which are based on unfounded
speculation and unwarranted inferences flowing from the schedules of fees viewed in
isolation without proper regard to their contextual and factual setting.  There is no
basis for a finding that the appellants did not have the issues fully and fairly
determined by the second respondent himself.
[47]  In the result the appellants have failed to establish that the second appellant

committed any irregularity, let alone a gross irregularity, in the conduct of the
arbitration proceedings.  Nor, in utilising Milo's services to the extent that he did,
could there have been any misconduct on his part.  The requirements of sec 33(1)(a)
and (b) of the Act have not been satisfied.  It follows that the second ground of review
cannot succeed either.
Costs
[48]  Two issues arise under this head.  Mr Delport asked that, whatever the outcome
of the appeal, a special costs order should be made in respect of the costs attendant
upon the procurement and introduction of numerous affidavits and annexures relating
to the duties and functions of judges' clerks or registrars elsewhere, notably the United
States of America, in terms of a notice of motion dated 5 May 2000 filed by the
respondents jointly.  The affidavits and foreign material ultimately served no purpose
in the determination of the issues on appeal.  They were introduced because of the
appellants' objection to certain allegations made by the respondents regarding the

functions of judges' clerks or registrars elsewhere as hearsay.  While the respondents
went to unnecessary lengths in this regard their conduct did not exceed the bounds of
reasonableness to such an extent as to warrant a departure from the normal rule that
the costs incurred should follow the result.
[49]  Mr Kuper, for the second respondent, asked for a punitive order if the
appellants persisted in their allegations of personal impropriety.  I have referred to
those allegations, which impute grave impropriety to the second appellant, in para
[35].  Mr Delport was not prepared to forego his reliance on them even though he
sought to distance himself from any imputation of dishonesty.  The appellants'
continued reliance on impropriety, however, inevitably means that they persist in their
unwarranted attack on the second respondent's integrity.  There is no justification for
such a spurious attack.  It was ill-conceived and groundless.  To mark our displeasure
the appellants will be ordered to pay the second respondent's costs of the hearing
before us on an attorney and client scale.

Order
The appeal is dismissed with costs including, in respect of both respondents, the costs
of two counsel.  In addition the appellants are ordered to pay the second respondent's
costs of the hearing on 25 February 2002 on an attorney and client scale.

_____________________________

J W SMALBERGER

ACTING DEPUTY PRESIDENT

MARAIS JA
)Concur
CAMERON JA
)
BRAND JA
)
LEWIS AJA
)