THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case No: 494/13

In the matter between

Reportable

ALEC PETER WRIGHT

APPELLANT

and

WILLIAM ROBERT WRIGHT                                        FIRST RESPONDENT

WRIGHT METALS CC                                              SECOND RESPONDENT

Neutral citation:  Wright v Wright (494/13) [2014] ZASCA 126 (22 September
2014)

Coram:
Maya, Shongwe, Majiedt and Saldulker JJA, Gorven AJA

Heard:
29 AUGUST 2014

Delivered:
22 SEPTEMBER 2014

Summary:
Challenge to factual findings of a referee appointed in terms
of section 19bis of the Supreme Court Act 59 of 1959 – party challenging
referee’s factual findings has to persuade a court through admissible
evidence that there are genuine disputes of fact on material aspects.

______________________________________________________________

ORDER
______________________________________________________________

On appeal from: South Gauteng High Court, Johannesburg (Kathree –
Setiloane J, sitting as court of first instance):

The appeal is dismissed with costs.

______________________________________________________________

JUDGMENT
______________________________________________________________

Majiedt JA (Maya, Shongwe and Saldulker JJA and Gorven AJA
concurring):

[1] Section 19bis of the Supreme Court Act, 59 of 1959 (the section)1
provides for the appointment of a referee to enquire and report upon, inter
alia, a matter which relates wholly or in part to accounts. The present dispute
concerns the debatement of a partnership account. By consent between the
parties, the Wright brothers, a chartered accountant, Mr Desmond Snyman,
was appointed as a referee to investigate the matter and to report to the high
court. At issue in this appeal is how a challenge to a referee’s factual findings
in his or her report is to be approached.

[2] The Wright brothers owned a metal business, Wright Metals CC, the
second respondent. The appellant, Mr Alec Peter Wright, ran the business
and his wife kept the business’ books of account and performed other
administrative duties. A dispute arose between the appellant and the first

1 The section has been replaced, with minor changes, by section 38 of the Superior Courts
Act, 10 of 2013.

respondent, Mr William Robert Wright, concerning the profits from the
business. The sibling enmity culminated in litigation. The first respondent
obtained a court order in the South Gauteng High Court, Johannesburg,
before Satchwell J, declaring that the brothers had conducted business in
partnership, a part whereof comprised the metal business, the second
respondent. Satchwell J’s order dissolved the partnership, ordered the
appellant to provide an accounting of the partnership business, debatement of
the account and payment of any amount found to be due to the first
respondent. The accounting had to be made in respect of the period from
March 1989 to date of dissolution of the partnership.

[3] Attempts to resolve the accounting and debatement between the
parties came to nought. The parties consented to referral of their dispute to a
referee in terms of the section. Thereafter the first respondent brought an
application for payment of the sum of R1 085 000 and interest, being the
amount the referee found to be due to the first respondent pursuant to his
report. The appellant opposed the application, raised a number of disputes
with the referee’s report and sought dismissal of the application. He also
counter-applied for a referral of the disputes for trial, alternatively for the
hearing of oral evidence and, in the further alternative, for remittal to the
referee.2 The high court dismissed the counter-application and adopted the
referee’s report without modification,3 thus having the effect of a finding by the
court in the proceedings.4 The appeal before us is with leave of the high court.

[4] The appellant challenged the referee’s report on a number of aspects:
(a) Whether the referee was correct in adding an amount of
R12 969 to the profits of the business. The appellant averred
that this is telephone expenditure, all of which save for an
amount of R150 was business related.

2 In terms of s 19bis (1).
3 Wright v Wright & another 2013 (3) SA 360 (GSJ).
4 Section 19bis (2).

(b) A dispute arose about the 2001 capital account adjustment
made by the referee on the basis that the source of the funds
was not properly proved by the appellant, who insisted that the
source documents had in fact been provided to the referee.
(c) The amount of sales for the 2005 financial year was allegedly
incorrectly calculated and reflected by the referee.
(d) The referee allegedly incorrectly excluded certain expenses
from his calculations on the basis that they were not business
related. The appellant takes issue with this as they are
weighbridge expenses, which the appellant avers are business
related by their very nature.

[5] The appellant contended that these are genuine disputes of facts,
raised in good faith, which required adjudication at a trial or through the
hearing of oral evidence. In this regard the appellant placed reliance on the
well-known principles set out in Room Hire Co (Pty) Ltd v Jeppe Street
Mansions (Pty) Ltd.5 Before dealing with these contentions, it is necessary to
consider the functions of a referee under the section and how a challenge to
his or her report should be approached by a court.

[6] There is a dearth of reported cases on the section. This may suggest a
lack of use in practice or the uncontentious interpretation and application of
the section whenever it was used. The section provides a useful tool for a
court to resolve factual disputes expeditiously where the court would
otherwise be delayed, inconvenienced or disadvantaged.6

5 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163.
6 PM Nienaber ‘Building and Engineering Contracts’ in Joubert (ed) LAWSA 2 ed vol 2(1)
(2003) para 479.

[7] The section reads in relevant part:
‘(1) In any civil proceedings any court of a provincial or local division may, with the
consent of the parties, refer –
(a) any matter which requires extensive examination of documents or scientific,
technical or local investigation which in the opinion of the court cannot be
conveniently conducted by it; or
(b) any matter which relates wholly or in part to accounts; or
(c) any other matter arising in such proceedings,
for enquiry and report to a referee, and the court may adopt the report of any such
referee, either wholly or in part, and either with or without modifications, or may remit
such report for further enquiry or report or consideration by such referee, or make
such other order in regard thereto as may be necessary or desirable.
(2) Any such report or any part thereof which is adopted by the court, whether with or
without modifications, shall have effect as if it were a finding by the court in the civil
proceedings in question.
(3) Any such referee shall for the purposes of such enquiry have such powers and
shall conduct the enquiry in such manner as may be prescribed by a special order of
court or by rules of court. . .’

[8] The high court undertook an extensive analysis of the origins of the
section.7 I do not deem it necessary to regurgitate this helpful analysis. The
high court also made reference to Young’s Estate v Estate Young,8 the (Natal)
Arbitration Act of 1898, 24 of 1898 (the Natal Arbitration Act) and the
Transvaal Arbitration Ordinance of 1904. I agree with the learned judge’s
finding that Estate Young is authority for the proposition that ‘a court is bound
by the findings of a referee contemplated in s 19bis, unless it can be found
that the conclusions arrived at by the referee were unreasonable, irregular or
wrong’9 And the section is indeed, as the learned judge observed, ‘an almost
verbatim promulgation of the Natal and Transvaal statutory provisions, save
for s 25 of the Natal Arbitration Act of 1898. . . .’10

7 Paragraphs 9 and 10.
8 Young’s Estate v Estate Young 1917 NPD 244.
9 Paragraph 9.
10 Ibid. Similar procedures existed in sections 21 to 23 of the Cape Arbitrations Act 29 of 1898
and in the South West Africa Proclamation 3 of 1926.

[9] Section 25 of the Natal Arbitration Act provided that: ‘the report or
award of any officer of the court, official or special referee, or arbitrator, on
any such references shall unless set aside by the Court, be equivalent to the
verdict of the jury’. In Estate Young the Full Bench interpreted the provision to
mean that a referee’s report shall be equivalent to the verdict of a jury (ie
factual finding). It referred11 with approval to the following dictum of Innes CJ
in Union Government (Minister of Railways and Harbours) v Wilkinson and
Carroll:12
‘The principles which should guide the Court in dealing with the verdict of a jury in a
civil case are well recognised. It cannot retry the suit. The decision upon all matters
of fact – and the existence of the negligence in such matter – is for the jury. And their
conclusion cannot be set aside merely because the Court may not upon a perusal of
the record agree with it, but only if it is such as reasonable men could not properly
have arrived at . . . And we should only be so justified if the conclusions arrived at
were wholly unreasonable.’

[10] The position of a referee under s 19bis is, as the high court correctly
found, similar to that of an expert valuator who only makes factual findings but
dissimilar to that of an arbitrator who fulfils a quasi-judicial function within the
parameters of the Arbitration Act 42 of 1965.13 In this regard, the dictum of
Boruchowitz J in Perdikis v Jamieson14 is apposite:
‘It was held in Bekker v RSA Factors 1983 (4) SA 568 (T) that a valuation can be
rectified on equitable grounds where the valuer does not exercise the judgment of a

11 At 253.
12 Union Government (Minister of Railways and Harbours) v Wilkinson and Carroll 1916
AD 123 at 127. See further: Chaffer and Tassie v Richards 1905 NLR 207 at 216 – 217.
13 Paragraphs 14 and 15 of the high court’s judgment. An arbitral award may be set aside only
on the limited statutory grounds set out in s 33 of the Arbitration Act, namely the arbitrator’s
misconduct in relation to his or her duties qua arbitrator; or where the arbitrator has
committed a gross irregularity in the conduct of proceedings or has exceeded his or her
powers; or where the arbitral award has been improperly obtained. See generally: Lufuno
Mphaphuli & Associates (Pty) Ltd v Andrews & another 2009 (4) SA 529 (CC); Cool Ideas
1186 CC v Hubbard & another [2014] ZACC 16, 2014(4) SA 474 (CC). There are
consequently significant differences between the powers and functions of arbitrators and
referees and between the bases on which an arbitrator’s award and a referee’s report can be
impugned.
14 Perdikis v Jamieson 2002 (6) SA 356 (W) para 7.

reasonable man, that is, his judgment is exercised unreasonably, irregularly or
wrongly so as to lead to a patently inequitable result.’
This is also the position in respect of the referee’s report – it can only be
impugned on these narrow grounds.

[11] As outlined above, the primary thrust of the attack on the referee’s
report concerned disputes on calculations, exclusions and misinterpretations
of validly incurred expenses. The appellant’s case was that genuine disputes
of fact have been raised which warranted referral to trial or for the hearing of
oral evidence or remittal to the referee. But there is an insurmountable
difficulty in these contentions, namely the absence of first hand, primary
evidence from the appellant to underpin these factual disputes.

[12] The referee executed his assignment by evaluating the files,
documents and reports of the parties’ expert witnesses. The appellant had
engaged the services of a chartered accountant, Mr Jacques Pieter Theron
(Mr Theron), while the first respondent had also appointed a chartered
accountant, Mr Mark O’Hara (Mr O’Hara). The referee had conveyed his
proposed methodology to the accountants as well as the parties’ attorneys at
a preliminary meeting. Based on his evaluation of the experts’ submissions
and supporting documentation, the referee concluded that the appellant owes
the sum of R1 085 000 and interest to the first respondent as his share of the
partnership’s profits. On behalf of the appellant Mr Theron challenged the
referee’s findings in the respects enumerated above and concluded that the
total profit due is only R156 106. Mr Theron filed an affidavit in support of the
appellant’s opposition to the application. A confirmatory affidavit of Ms
Thereza Carmen Schmidt (Ms Schmidt), an auditor in Mr Theron’s firm’s
employ, accompanied Mr Theron’s affidavit.

[13] The appellant’s challenge to the referee’s factual findings was based
entirely upon Mr Theron’s report, as confirmed by Ms Schmidt. But the

appellant’s misconceived approach to the matter permeates this challenge.
The factual findings could only be impugned on the narrow grounds outlined
above. It was for the appellant to persuade the high court that the report
should not be adopted or that it should be adopted with modifications. Unless
and until it was properly impugned on the narrow grounds, it stood as the
court’s factual findings upon adoption without modification. It was not for the
first respondent to persuade the high court that the referee’s report and
factual findings were correct. That would subvert the purpose of the section.
The referee had been appointed, by consent between the parties, to facilitate
the high court’s task of resolving the factual issues arising from the accounting
and debatement, as the high court was called upon to do.15 The appellant had
the duty of impugning the factual findings or to raise genuine disputes of fact.
It is legally untenable to approach the matter like the appellant did, namely to
treat the referee’s report as if it was the first respondent’s factual ‘version’
which had to be tested against the appellant’s factual version. That is not the
manner in which the section is meant to operate. Put differently, a court is not
required to adjudicate a challenge to the referee’s factual findings under the
section in the way that it would decide factual disputes in motion proceedings.
I discuss next the challenge itself against the backdrop of this misconceived
approach.

[14] Mr Theron (assisted by Ms Schmidt) prepared his report and reached
his conclusions solely on the basis of the books of account and other source
documentation provided by his client, the appellant. A glaring omission from
the appellant’s papers is a confirmatory affidavit from his spouse who, as
stated, wrote up the books of account of the business. The absence of such
an affidavit confirming the correctness of the information furnished to Mr
Theron to enable him to prepare his report is fatal. Without that affidavit Mr
Theron’s report constitutes inadmissible hearsay.

15 Compare Doyle & another v Fleet Motors PE (Pty) Limited 1971 (3) SA 760(A) at 763 C-D.

[15] It is well established that in application proceedings the affidavits take
the place of both the pleadings and the essential evidence to be led at trial.16
The deponent to an affidavit is required to set out the source of his or her
information. Hearsay evidence is inadmissible, save in urgent applications
and where a court in its discretion permits such evidence in terms of s 3 of the
Law of Evidence Amendment Act 45 of 1988. Where a respondent in motion
proceedings seeks to raise genuine disputes of fact it must do so through
admissible evidence. A court will not permit factual disputes to be raised
through inadmissible evidence where admissible evidence is readily
available.17 Litigants are required to seriously engage with the factual
allegations they seek to challenge and to furnish not only an answer but also
countervailing evidence, particularly where the facts are within their personal
knowledge.18

[16] The appellant’s challenge to the referee’s factual findings must fail on
this ground alone. But there is another compelling reason why the factual
findings must stand. This is on the basis referred to by the high court, namely
that no substantiation for the cross-referenced challenges is provided by Mr
Theron.19 None of the challenges contain any motivation in support of each
challenge. It is not necessary to list them as the high court has already done
so in full.20 On the authorities outlined in footnotes 17 and 18, a genuine
dispute of fact on material aspects can only be raised through a fully
motivated answer and/or countervailing evidence where the facts are
peculiarly within a party’s knowledge. Mr Theron’s challenge on behalf of the
appellant did not meet this standard and was correctly rejected by the high
court.

16 Foize Africa (Pty) Ltd v Foize Beheer BV & others 2013 (3) SA 91 (SCA) para 30.
17 Minister of Land Affairs and Agriculture & others v D&F Wevell Trust 2008 (2) SA 184
(SCA) para 56.
18 Wightman t/a JW Construction v Headfour (Pty) Ltd & another 2008 (3) SA 371 (SCA) para
13.
19 Paragraph 28 of the high court’s judgment.
20 See paras 29–35.

[17] For these reasons the high court was correct in adopting the referee’s
report without modification. The appeal must fail.

[18] The following order is issued:

The appeal is dismissed with costs.
______________________
S A MAJIEDT
JUDGE OF APPEAL

APPEARANCES

For Appellant:
N Alli
Instructed by:

Stan Fanaroff & Associates, Johannesburg

Phatshoane Henny, Bloemfontein

For Respondents:
A Bester

Instructed by:

Halse, Havemann & Lloyd, Pinetown

Webbers, Bloemfontein