The Law and Practice of Arbitration

ASSIGNMENT NUMBER CPA3

THE LAW AND PRACTICE OF ARBITRATION

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TABLE OF CONTENTS
QUESTION 1.................................................................................................. 3 ...................................................................................................................... 3 ANSWER 1 .................................................................................................... 3
DIFFERENCE BETWEEN THE ROLES AND POWERS OF ARBITRATOR AND UMPIRE......3 HOW AN UMPIRE COMES TO ACT ...................................................................................................14

QUESTION 2................................................................................................ 19 ANSWER 2 .................................................................................................. 26 BIBLIOGRAPHY..........................................................................................52

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QUESTION 1

Giving references to the Act briefly state the difference between the roles and powers of arbitrators and umpires and how an umpire comes to act.

ANSWER 1

DIFFERENCE BETWEEN THE ROLES AND POWERS OF ARBITRATOR AND UMPIRE

SL. NO. 1 As ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR per subsection 1 of the As per section 18 of arbitration act

arbitration act the role of the where the arbitrators or a majority arbitrators as arbitration tribunal is of them are unable to agree as to to settling the dispute referred to any matter of procedure, or any them in terms of arbitration interlocutory question, they may refer that matter to the or question for

agreement.

forthwith

umpire

decision. Hence role of umpire with resolving the dispute starts only when arbitrators fails to agree on any matter of arbitration

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR procedure or when arbitrator wants any suggestion of umpire about any interlocutory question. As per arbitration act subsection Umpire does not appoint 11(1)(a), 11(1)(b) and 11(2), in arbitrators. specific cases the arbitrators may

2 appoint an umpire. Hence one of the roles of the arbitrator is to appoint umpire. As per arbitration act subsection As per arbitration act sub-section 12(5) if the arbitrator is appointed 12(5) if the umpire is appointed by 3 by court they have same power as court they have same power as 4 they are appointed by parties. they are appointed by parties. As per section 14 of arbitration act The umpire as part of arbitration one of the role of the arbitrator as tribunal can not request as an arbitration tribunal or as sole umpire all these documents from

arbitrator is that they may request parties to submit. However when parties to arbitration to: 1) discover document the umpire as per subsection 19 (c) of relevant arbitration act enter on the

reference in lieu of the arbitrators,

2) Request parties to submit and then he/she can request the pleading or statement of parties to submit the documents claim or defense. as an arbitrator.

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR 3) Require any party to allow the inspection of goods

which is in possession of one of the party 4) Time to time the timing and place of arbitration

proceeding 5) Administer oath of the

parties and witness. 6) Examine the parties and require them to submit

book, documents. 7) Examine evidence 8) Receive evidence given by the affidavit; 9) Inspect disputed goods and property. Oath or affirmation may be person and

administered by any member of the arbitration tribunal designated by it for the purpose.

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR Decision: As per subsection act, in 14 (3) Decisions: of As per sub-section 14 (4) of of arbitration act, in case majority of

arbitration

case

disagreement between arbitrators, arbitrator does not agree, the decision of majority of arbitrators matter is referred to umpire as per becomes the decision of arbitration sub-section 18 of arbitration act. tribunal. 5 It is primary responsibility of the Umpire is not responsible for Arbitrators to carryout the running the arbitration proceeding

arbitration proceeding and when but to assist Arbitrators in carrying they need to seek any advice, they out their duties and reaching in can seek those advice from decision, when arbitrator are in

Umpire as per sub-section 14(4) of disagreement as per sub-section 6 arbitration act. 14(3) of arbitration act.. As per section 15 of arbitration Though being the member of act, arbitrators as arbitration arbitration tribunal, not directly

tribunal provide written notice of related to finalization of time and the time and place of the place of arbitration.

arbitration proceeding and if the party fails to attend the proceeding without any substantial notice, arbitration tribunal has power to

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR proceed with the proceeding. As per section 16 of arbitration act, Though being the member of the arbitrators as arbitration arbitration tribunal, not directly

tribunal may issue summon to related to issuance of summon. compel 7 before the arbitration tribunal to give evidence and to produce books, documents or things to an arbitration tribunal. As per section 17 of arbitration act Though being the member of arbitrators as arbitration tribunal arbitration tribunal, not directly directs 8 how the evidence of related to evidence of witness any person to attend

witness be recorded if the parties recording. fails to get agreement on how the evidence of witness will be

recorded. As per section 18 or arbitration act, As per section 18 of arbitration one of the roles of the arbitrator is act, where arbitrators or majority that in case of non-agreement of arbitrators are unable to agree between the arbitrators, they refer on the matter to umpire. any matters related to or

arbitration

proceeding

interlocutory question, arbitrators may refer the matter or question

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR to Umpire for decision, and hence umpires role is to take decision in As per section 19 (a) of arbitration act: Arbitrator refers only those matter to Umpire over which they do not Umpire has power to seat with the agree. arbitrators and hear the evidence and make any decision about If the arbitrators are in consent matter related or to arbitration interlocutory these circumstances. As per section 19 (a) of arbitration act:

10

with the any issues related to proceeding

arbitration, there is really any need questions upon which arbitrators to consult umpire (only if arbitrator are not in agreement and are wants to seek special advice). referred to him/her. That is, when the arbitrators are not in

agreement they refer the matter to umpire for umpires decision. 11 As per section 19 (c) of arbitration act: As per section 19 (c) of arbitration act:

If arbitrator is not available, then If the arbitrators is not available to only, umpire takes the role of act due to reason such as no arbitrator. extension of time was granted to

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR arbitrator proceeding for and arbitration award, or

arbitrators has stated clearly to party or umpire that they can not agree on the arbitration matter or interlocutory question, or the

arbitrator has not given the award in the time or extended time for arbitration proceeding and award. In these circumstances and in the absence of arbitrators the umpire automatically enters into the

reference in lieu of the arbitrators. In this case the umpire acts like a sole arbitrator 19(d) to and the as per

subsection turned in

umpire in

arbitrator

accordance with 19(c) may recall for further examination any person who has given any evidence. The umpire turned arbitrator can

propose the date and time of

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR hearing, listening to witness, hearing evidence of the parties etc. As per section 14 of arbitration act As per subsection 19(a) of

whole proceeding of arbitration is arbitration act the umpire may sit regulated by arbitrators and hence together with the arbitrators and 12 arbitration proceed proceeding without can not hear the evidence given from time of to time that is Attendance of umpire is not a must for an

presence

arbitrator/s.

arbitration proceeding. As per section 20 of arbitration act, The umpire can only be consulted arbitrators as an arbitration tribunal as per section 18 of arbitration can direct any question of law to act, 13 if there the is disagreement with

court if the parties agrees and in between

arbitrators

that case the decision of the courts respect to directing any question remain binding to the arbitration of law to the court. 14 tribunal. As per arbitration subsection act the 23(a) of As per subsection 23(b) of

arbitration arbitration act the umpire has

tribunal has power and role to power and role to make award make award within 4 months after within 3 months after the date on the date on which such arbitrator which such umpire entered on the or arbitrators entered on the reference or the date on which

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR reference or the date on which such umpire was called on to act such arbitrator was or such by notice in writing from any party

arbitrators were called on to act by to the reference, whichever date notice in writing from any party to be the earlier date. the reference, whichever date be the earlier date. As per subsection 24(a) of As per subsection 24(a) of

arbitration act the award made by arbitration act the award made by the arbitrators shall be in writing the arbitrators shall be in writing 15 and signed by all member of and signed by all member of arbitration tribunal. arbitration tribunal. Umpire also signs the award as member of arbitration tribunal. As per section 25 of arbitration act As per section 25 of arbitration the arbitration tribunal role is to act, being the part of arbitration deliver the award in presence of tribunal umpire may be present 16 the parties or their representatives during the award. present or having summoned to 17 appear. If arbitration agreement is not As per section 18 of arbitration act contrary, as per Arbitration act if arbitrators are in agreement, no section 26, the arbitration tribunal need of consent of umpire about has power that they may make any matter including making

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR interim award at any time within interim award. the period allowed for making an award. As per arbitration act section 27: As per section 18 of arbitration act Unless the arbitration agreement if arbitrators are in agreement, no provides otherwise, an arbitration need of consent of umpire about

18

tribunal

may

order

specific any matter including issue of

performance of any contract in any ordering specific performance or circumstances in which the court not. would have power to do so. As per section 30 of arbitration act The umpire does not has right to the arbitrator as an arbitration correct. tribunal has power that they may 19 correct in any award, any clerical mistake or any patent error arising from 20 any accidental slip or

omission. If the parties remit any matter to As per section 18 of arbitration arbitrator or court direct on act, where arbitrators or majority

application of any party remit any of arbitrators are unable to agree matter to arbitration tribunal as per on any matters related to or

subsection 32(1) and 32(2) for arbitration

proceeding

reconsideration and for making interlocutory question, arbitrators

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR further award or a fresh award or may refer the matter or question any purpose stated by the parties. to Umpire, and hence if arbitrator The arbitrator has role to dispose need to refer any matter to umpire of such matter within 3 months when the matter is remitted by after the date of the said writing or parties or court to them, they can order as per sub-section 32(3) of refer the matter to umpire for arbitration act. As per subsection 34(4) his/her suggestion/decision. of As per subsection 34(4) of

arbitration act the arbitrator or arbitration act the umpire have arbitrators have power that he/they power that he may withhold

may withhold his/her or their award his/her award pending payment of pending payment of his/her or their his fees and of any expenses fees and of any expenses incurred incurred by him/her in connection 21 by him/her or them in connection with with the arbitration, with the arbitration with the the consent of the parties, or pending

consent of the parties, or pending the giving of security for the the giving of security for the payment thereof. payment thereof. 22 As per subsection 35(1) of As per section 18 of arbitration act

arbitration act, the arbitrator as if arbitrators are in agreement, no arbitration tribunal has discretion need of consent of umpire about

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SL. NO.

ROLE AND POWER OF ROLE AND POWER OF UMPIRE ARBITRATOR that they can award the cost. using their discretion to award cost or not.

It is to be noted that umpire does not comes in to existence if the arbitration tribunal is consists of only one arbitrator.

HOW AN UMPIRE COMES TO ACT

1.

As per Sub-Section 11(1) (a) of arbitration act, if the arbitration panel consists of even number of panel member, and if there is no contrary intention of the party or in the arbitration agreement, the arbitrators may at any time appoint an umpire. Hence umpire can come in to act after his/her appointment by arbitrators in accordance with sub-section 11(1) (a) of arbitration act.

2.

As per Sub-Section 11(1)(b) of arbitration act where the arbitration agreement has got provision of there arbitrators and one of the arbitrator is to be appointed by other two arbitrators and if there is no contrary intention by the parties is expressed by the parties, it will be interpreted as the other two arbitrators will appoint the umpire immediately after their appointment.

3.

As per Sub-Section 11(2) of arbitration act, in case due to any reasons umpire refuses to act or not available due to any reasons, the parties or

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arbitrators, who has initially appointed umpire, may appoint another umpire. Hence umpire can be appointed by parties or arbitrators and when needed can replace the umpire. However same parties or arbitrator can appoint the umpire, who has selected at first time. 4. As per Sub-Section 12 (1) and 12(2): The umpire can be appointed by the court after application by any party, in the below mentioned circumstances, however before applying to court the party must have given notice to appointing party/parties or arbitrators as the case may be, with a written notice that he/they should appoint the umpire, and in case he/they fails to appoint umpire within 7 days, the notifying part will request court to appoint umpire. The circumstances where the party can apply to court after failure of party/parties/arbitrators are as follows: (a) If the arbitration agreement provides provision of even number of arbitrators and if the parties or arbitrators can appoint an umpire but do not appoint though such appointment is necessary; (b) If the arbitration agreement provides the provision of three arbitrators, and parties or arbitrators responsible for appointment of umpire has failed to appoint the umpire. (c) Where appointed umpire is not available due to any reasons such as his death or his removal from his/her officer or due to termination and the parties or arbitrators who appointed the umpire is not appointing another umpire, though the appointment of the umpire is necessary for arbitration proceeding;

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(d) In case of dispute between the parties about the appointment of umpire. 5. As per sub-section 12 (3) of arbitration act, in case an umpire is not available due to his/her removal by the court or umpire did not entered in to reference (not started to work/act) and arbitration agreement does not provide any provision of appointment of umpire in this situation, the court on application of any party may appoint that umpire. 6. As per sub-section 12 (4) of arbitration act, where umpire is not available due to his/her removal or umpire did not entered in to reference (not started to work/act), the court on application of any party may: (a) Appoint that umpire to act in place of non available umpire. (b) Appoint umpire, which has been removed or whose appointment has been set aside.

As per sub-section 12(5) and 12 (6) the umpire appointed by court has same power and authority as he/she has been appointed in accordance with arbitration agreement and he/she may act accordingly, and if he/she need may recall further examination or go back revisit the arbitration proceeding.

As per section 18 of arbitration act, where arbitrators or majority of arbitrators are unable to agree on any matters related to arbitration proceeding or interlocutory question, arbitrators may refer the matter or question to Umpire

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for decision, and hence umpires role is to take decision in these circumstances.

As per section 19 (a) of arbitration act, Umpire has power to seat with the arbitrators and hear the evidence and make any decision about matter related to arbitration proceeding or interlocutory questions upon which arbitrators are not in agreement and are referred to him/her. That is, when the arbitrators are not in agreement they refer the matter to umpire for umpires decision.

As per section 19 (c) of arbitration act If the arbitrators is not available to act due to reason such as no extension of time was granted to arbitrator for arbitration proceeding and award, or arbitrators has stated clearly to party or umpire that they can not agree on the arbitration matter or interlocutory question, or the arbitrator has not given the award in the time or extended time for arbitration proceeding and award. In these circumstances and in the absence of arbitrators the umpire automatically enters into the reference in lieu of the arbitrators. In this case the umpire acts like a sole arbitrator and as per subsection 19(d) the umpire turned in to arbitrator in accordance with 19(c) may recall for further examination any person who has given any evidence. The umpire turned arbitrator can propose the date and time of hearing, listening to witness, hearing evidence of the parties etc.

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Umpire comes only in case of more than one arbitrator.

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Question 2

Read the following scenario carefully. Prepare a

template

for an award

that you would give, if you were the arbitrator. You ARE NOT required to prepare an award. You are required to give careful consideration to the facts set out and then prepare a template for the structure of your award. You will also need to put in place titles to each action followed by its individual structure.

The facts set out in the scenario emerge from the submissions and the evidence given at the hearing.

Lady Millicent Middleton-Martin is the owner of a very large late Victorian house on Parktown Ridge, Johannesburg. Several months ago she was perturbed (worried) to observe fresh worm holes in the timber paneling in the dining room. She called in an expert from the National Institute of Building Technology, who advised her that there was an extensive infestation (Plage or influse of huge number) of death-watch beetle in the timber throughout the house, possibly introduced when some repairs were carried out recently using imported teak - the teak might have contained the larvae of death-watch beetle. While there was little damage so far, and only a small amount of timber needed to be replaced, he suspected that the beetle might have laid its

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eggs throughout the house, and he recommended that the entire house be fumigated by a reputable pest-control contractor.

She therefore telephoned Bug-gone Pest Exterminators CC to carry out the fumigation of the house. Having asked her some pertinent questions including how many rooms the house comprised, they sent her a written quotation for carrying out the work for R20 000.00, of which R10 000.00 was payable as a deposit before the work commenced and the balance on completion, with a 10% discount if the balance was paid within five days of completion. Lady M.M-M accepted the quotation by telephone, and it was arranged that the work would be carried out in the following week. Lady M.M-M and her servants would vacate the house for a two-day period, leaving a maid behind to open the house when Bug-gone arrived and to lock it up after they had left. Lady M.M-M duly paid the deposit and departed to spend the couple of days at Sun City, and Bug-gone arrived at the house, carried out the fumigation, and when they had finished, presented their account to the maid and told her she could lock up.

When she returned, Lady M.M-M was horrified to discover that her five highlypedigreed and very valuable Chinese Mandarin cats, which must somehow have entered the house, had been overcome by the fumes of the gas used by Bug-gone, and had died in their basket in the laundry. She telephoned Christopher Crippen, the sole member and proprietor of Bug-gone CC to

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express her deep distress and to demand compensation. He refused liability, saying that the gas he used was not injurious to pets, but that he had nevertheless warned the maid not to let any pets into the house for twenty-four hours after they had completed their work. He asked when he could collect his cheque. Lady M.M-M angrily told him he was not getting a cent and that she would be suing him for thousands of rand to compensate her for the loss of her very valuable cats.

On the reverse of the form on which the quotation was set out were a number of conditions pertaining to the contract that would result from the acceptance of the quotation, including a provision that all disputes arising out of the contract, or its breach, were to be subject to the arbitration and final decision of an arbitrator to be appointed by the Chairman of the Association of Arbitrators. Crippen at once applied for the appointment of an arbitrator, who, when appointed, convened a preliminary meeting at which it was agreed, inter alia, that the Summary Procedure Rules would apply.

Crippen stated that the claimant was claiming the amount of R26 000.00. He alleged that when he had quoted to carry out the fumigation, Lady M.M-M had told him that the house had ten rooms, and he had based his price on this, but when he arrived to carry out the work, he found there were eighteen rooms. He was therefore entitled to adjust his price pro rata, the revised

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contract price therefore being R36 000.00, of which he had received R10 000.00 as a deposit, leaving R26 000.00 now due to him.

Lady M.M-M denied that she had misinformed Crippen; the house had indeed ten habitable rooms: a sitting room, a family room, a T.V. room, a dining room, a study and five bedrooms. When Crippen pointed out that she had omitted three bathrooms, a guest toilet, the kitchen, scullery, pantry and laundry, she said that these rooms did not count - when someone talked about a ten-roomed house they were talking about proper habitable rooms, not bathrooms, toilets and the like. Moreover (having been advised by her nephew, a final year law student), she pointed out that the parol evidence rule prevented Crippen from giving evidence about how he had arrived at his quotation - he had quoted a price of R20 000.00 for doing the work, she had accepted it, and a binding contract had come into existence.

Crippen's response was that the parol evidence rule did not apply to a contract that was party in writing and partly oral. Moreover, it was unlawful and unfair to rely on the parol evidence rule to exclude evidence of a misrepresentation that rendered the contract null and void.

Lady M.M-M, having denied that the contract sum was other than R20 000.00, said that her counterclaim was for R200 000.00 for the death of her cats caused by Bug-gone. This was made up of R25 000.00, being the value

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of the cats, a further R75 000.00 being the profit she would have made from breeding with them and selling the kittens, and R100 000.00 for her trauma, grief and suffering.

She said that two of her cats had been imported from China at a cost of R5 000.00 each, and she produced invoices to substantiate this allegation. The other three were offspring of the first two. She expected that the cats would produce twenty-five kittens over the next five years, which she would be able to sell for R5 000.00 apiece.

Crippen denied any negligence and any liability for the death of the cats. When he started to fumigate the house, he checked that every room was empty of cats, dogs or any other pets, then closed all windows and doors and introduced the poison gas into each room. After six hours, he opened all windows and doors to allow the gas to escape, and told the maid he was leaving. He impressed on the maid that she should not allow any pets into any of the rooms for several hours until all the gas had escaped

Lady M.M-M said that the maid was too distressed to give evidence, but had told her that Crippen had never said to keep the cats out. Shortly after Crippen had left, it had started to rain, so the maid had closed all the windows. She had not noticed the cats come in, but supposed that they must have done so to escape from the rain. She added that Crippen had no

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business to give orders to her servant, and should have given the necessary warnings to herself.

Crippen disputed that the cats were worth R 5000.00 apiece, and stated that he had bought a similar sort of cat for his girl-friend for R500.00. He suggested that the value that Lady M.M-M attributed to her cats was scarcity value which would rapidly decrease as they bred and multiplied. He also denied that he was liable to compensate Lady M.M-M for her distress at losing her cats, and that the amount she was claiming was outrageous. If he was held to be liable for any compensation at all, it should be a nominal amount not exceeding R1000.00.

Lady M.M-M testified that the loss of her cats in this tragic manner had caused her severe depression, for which he was taking Prozac and a course of therapy which had, to date, cost in excess of R12 000.00. She feared she would never get over this tragedy and would need Prozac and counseling for the rest of her life. She produced receipts to prove that her medical costs to date were more than R12 000.00.

She further contended that, if Bug-gone had not acted with gross negligence in respect of her cats, she would have paid their account promptly and would therefore only have owed them R8 000.00. She thus seeks an award for R192 000.00 (R200 000.00 less R8 000.00). Crippen denied that she was

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entitled to any discount whatever; she would only have been entitled to the discount if she had settled the account in full within five days of completion of the contract.

Crippen argued that he should be awarded costs and that, although the Summary Procedure Rules had prohibited him from engaging a lawyer to represent him at the hearing, he had found it necessary to consult his lawyer about various aspects of this dispute and should be awarded the fees that he had paid his lawyer, which amounted to R16 500.00, for which he produced receipted invoices. Lady M.M-M's response was that she should also be awarded an amount of R16 500.00 from which she would be able to pay her law-student nephew a fee for his advice.

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Answer 2

Few points which are important for award were noted down and listed below before template of award:

1. The award must be within the period prescribed by the act or arbitration agreement or within extended period allowed by the parties or the court. 2. The parties will be informed in writing that the award is ready and they can sent their representative on ,,,,,,,,,,,,,,,at ..hour at arbitrators office at . Where the arbitrator will deliver the award by first reading out the award then providing one copy to each party. The parties will be requested to make payment of arbitrators fee before the date of delivering the award will not be delivered until full payment will be made by both parties or either of the party. 3. The parties summoned to appear on the date and time of award and if substantial reason for not appearing is stated the date of award could be changed. 4. Since summary procedure rules is going to be used for the arbitration, hence as per sub-clause 45.1.6 of the Rules for Conduct of Arbitration, the arbitrator may rely, in his Award, on his own expert knowledge or experience in any field.

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As an arbitrator while writing award, I will keep eye on following additional points. I tried to consider these things in the template prepared. The award should be reasoned award The award must be clear, explicit and unambiguous. If the arbitrator is not mentioned in the arbitration agreement, he should state in the award how he came to be appointed. Award should be related to the arbitration agreement, and if the agreement does not recite the dispute that he is required to determine. He should set out a brief summary of the disputes which he was required to arbitrate in terms of reference. Arbitrator should state clearly his finding on each matter referred to him for decision. The arbitrator should ensure that his award should be certain, final, possible, lawful, and intra vires. From award it must be clear who must do what, clearly state currency and amount to be paid within stated duration from the date of award. The award must be final that is it must deal with all the matters submitted to the arbitrator and leave no matter unsettled. The award should be based on evidence and document presented by the parties. Both parties should be asked to submit all the evidence, document, witness and they confirmed that they do not have any other information or evidence to add. The award should be possible to execute.

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The award must be legal and should not be against public policy. The award should be within the jurisdiction of arbitrator and must be under arbitration agreement and referred to the arbitrator.

Arbitrator should not seek legal assistance without taking consent of the parties.

The arbitrator should identify various crucial issues and should summaries briefly the evidence on each issue. The arbitrator should clearly state what evidence arbitrator accept and what he rejects and reason for accepting the evidence The conclusion should be based on argument and evidence

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TITLE: COVER PAGE

ARBITRATION AWARD

In the matter of arbitration between

BUG-GONE PEST (B-GP or claimant)

and

LADY MILLICENT MIDDLETON-MARTIN (Lady M.M-M or defendant)

before

Arbitrator Rakesh Kumar

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TITLE: ARBITRATION AWARD

Arbitration Award

Arbitration Name: Bug-gone Pest Exterminators CC and Lady Millicent Middleton-Martin

Arbitration Number: ___________________________________,

1.

INTRODUCTION:

This is the decision of the Arbitrator in a dispute brought by sole proprietor Mr. Christopher Crippen of Bug-gone pest Exterminators CC (B-GP) a company who carry out fumigation service for house, against Lady Millicent Middleton-Martin (L.M.M-M) owner of a very large late Victorian house on Parktown Ridge, Johannesburg, who took service of Bug-gone pest Exterminators CC, and was not ready to pay to Bug-gone pest Exterminators CC for the service provided by (B-GP), stating that due to fault of (B-GP), her five highly-pedigreed and very valuable Chinese Mandarin cats died and due to loss of her cats in tragic manner caused her depression.

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2.

BACKGROUND/ SUMMARY OF CASE/DISPUTE

Lady M.M-M requested quote from B-GP to carryout fumigation of her house. After asking some pertinent questions, including how many rooms the house comprised, they sent quotation for carrying out the work for R20,000.00, of which R10,000.00 was payable as a deposit before the work commenced, and the balance on completion, with a 10% discount if the balance was paid within five days of completion. Lady M.M-M accepted the quotation by telephone, and it was arranged that the work would be carried out in the following week. Lady M.M-M and her servants would vacate the house for a two-day period, leaving a maid behind to open the house when B-GP arrived and to lock it up after they had left. Lady M.M-M duly paid the deposit.

Bug-gone carried out fumigation, presented their account to the maid and told her, she could lock the house.

When Lady Millicent Middleton-Martin returned she found her five highlypedigreed and very valuable Chinese Mandarin cats, which must somehow have entered the house, had been overcome by the fumes of the gas used by B-GP.

3.

SUMMARY

OF

NON-CONTENTIOUS

BACKGROUND EVENTS:
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Lady M.M-M wanted to fumigate her house. She requested quotation from BGP to carryout fumigation. Quotation was submitted by B-GP to Lady M.M-M. B-GP carried out fumigation.

4.

COMMENCEMET OF ARBITRATION

As per provisions made on the reverse of the form, on which the quotation was set out, containing provision that all disputes arising out of the contract or its breach, were to be subject to the arbitration, and final decision of an arbitrator to be appointed by the Chairman of the Association of Arbitrators. Crippen the sole proprietor of Bug-Gone applied for the appointment of an arbitrator. Mr. Rakesh Kumar was appointed as an Arbitrator by Association of Arbitrator, Southern Africa accepted by the parties. Mr. Rakesh Kumar convened a preliminary meeting at which many points were agreed, the summary of which is as follows:

1.

It was confirmed by the parties through submitting the

quotation containing the provision of arbitration in case of dispute, and confirmed that the dispute falls under arbitration agreement and dispute is ready for arbitration. Hence the appointed arbitrator have jurisdiction to decide in the case of dispute related to fumigation service provided by B-GP.

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2.

The parties accepted Mr. Rakesh Kumar, who was

appointed by Association of Arbitrator Southern Africa as arbitrator and agreed by parties. The parties agreed with his fee too. 3. It was agreed that the Summary Procedure Rules would

apply for arbitration proceeding. 4. arbitrator. 5. Parties presented their case and clearly stated points on The summary of dispute was presented by the parties to the

which they agree and on which they dont agree. 6. The statement made was recorded in writing and was

signed by the parties and the arbitrator. 7. Mr. Rakesh Kumar (the Arbitrator) requested both the

parties to submit the document in support of their statement. 8. The next date and time of hearing was decided as .

Next hearing took place on the time, date and place agreed. In course of time, both parties submitted all relevant documentations and information and latter clearly stated that no further information with respect to dispute in concern is available with them.

5.

THE CLAIM

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Christopher Crippen of Bug-gone pest Exterminators CC (B-GP) setout the claim as follows: Claim of R26,000.00; That Lady Millicent Middleton-Martin has stated that she has 10 rooms and on this basic Crippen of B-GP has provided the quotation. However when he arrived to carryout the works he found 18 rooms; Hence Crippen of B-GP (claimant) is entitled to adjust his price pro rata and the revised price is R 36,000.00 of which B-GP has received 10,000 as deposit and hence rest R 26,000.00 is now due to be paid;

Lady Millicent Middleton-Martin setout her deference and counter claim as follows: Denied that she had misinformed Crippen of B-GP about number of rooms. The house has indeed 10 habitable rooms that is a sitting room, a family room, a T.V. room, a dinning room, a study and five bedrooms.

Crippen in defense of his claim responded as follows: Lady M.M-M had omitted 3 bathrooms, a guest toilet, the kitchen, scullery, pantry and laundry

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Lady M.M-M defended her initial deference and presented her counter claim as follows: She responded that these rooms (3 bathrooms, a guest toilet, the kitchen, scullery, pantry and laundry) did not count, when someone talking about a 10-roomed house, they were talking about proper habitable rooms, not bathrooms, toilets and the like. Further she pointed out that parol evidence rule prevent Mr. Crippen from giving evidence about how he arrived at his quotation Mr. Crippen has quoted a price of R20,000.00 for doing the work, she has accepted it, and a binding contract had come into existence.

Crippen of B-GP in defense of his claim further responded as follows: That the parol evidence rule did not apply to a contract that was party in writing and partly oral. Moreover, it was unlawful and unfair to rely on the parol evidence rule to exclude evidence of a misrepresentation that rendered the contract null and void.

Lady M.M-M defended and presented her counterclaim as follows: She denied that the contract sum was other than R20,000.00. Further she said that her counterclaim was for R200,000.00 for the death of her cats caused by B-GP. This claim was made up of R25,000.00, being the value of the cats, a further R75.000.00 being

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the profit she would have made from breeding with them and selling the kittens, and R100,000.00 for her trauma, grief and suffering. She said that two of her cats had been imported from China at a cost of R5 000.00 each, and she produced invoices to substantiate this allegation. The other three were offspring of the first two. She expected that the cats would produce twenty-five kittens over the next five years, which she would be able to sell for R5,000.00 a piece.

Crippen in defense of his claim further responded as follows: Crippen denied any negligence and any liability for the death of the cats. When he started to fumigate the house, he checked that every room was empty of cats, dogs or any other pets, then closed all windows and doors and introduced the poison gas into each room. After six hours, he opened all windows and doors to allow the gas to escape, and told the maid he was leaving. He impressed on the maid that she should not allow any pets into any of the rooms for several hours until all the gas had escaped

Lady Millicent Middleton-Martin defended and further stated as follows: Lady M.M-M said that the maid was too distressed to give evidence, but had told her that Crippen had never said to keep the cats out. Shortly after Crippen had left, it had started to rain, so the maid had closed all the windows. She had not noticed the cats come

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in, but supposed that they must have done so to escape from the rain. She added that Crippen had no business to give orders to her servant, and should have given the necessary warnings to herself.

Crippen in defense of his claim further responded as follows: Crippen disputed that the cats were worth R 5000.00 apiece, and stated that he had bought a similar sort of cat for his girl-friend for R500.00. He suggested that the value that Lady M.M-M attributed to her cats was scarcity value which would rapidly decrease as they bred and multiplied. He also denied that he was liable to compensate Lady M.M-M for her distress at losing her cats, and that the amount she was claiming was outrageous. If he was held to be liable for any compensation at all, it should be a nominal amount not exceeding R1000.00.

Lady M.M-M defended and further stated as follows: Lady M.M-M testified that the loss of her cats in this tragic manner had caused her severe depression, for which she was taking Prozac and a course of therapy which had, to date, cost in excess of R12,000.00. She feared she would never get over this tragedy and would need Prozac and counseling for the rest of her life. She produced receipts to prove that her medical costs to date were more than R12 000.00.

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She further contended that, if Bug-gone had not acted with gross negligence in respect of her cats, she would have paid their account promptly and would therefore only have owed them R8 000.00. She thus seeks an award for R192 000.00 (R200 000.00 less R8 000.00).

Crippen in defense of his claim further responded as follows: Crippen denied that she was entitled to any discount whatever;

she would only have been entitled to the discount if she had settled the account in full within five days of completion of the contract. Crippen argued that he should be awarded costs and that, although the Summary Procedure Rules had prohibited him from engaging a lawyer to represent him at the hearing, he had found it necessary to consult his lawyer about various aspects of this dispute and should be awarded the fees that he had paid his lawyer, which amounted to R16 500.00, for which he produced receipted invoices.

Lady Millicent Middleton-Martin defended and further stated as follows: Lady M.M-M's response was that she should also be awarded an amount of R16 500.00 from which she would be able to pay her lawstudent nephew a fee for his advice.

6.

RELIEF SOUGHT

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Crippen of B-GP setout the relief that it seeks as follows

He should be paid R26,000.00 which includes the cost of extra room; He should not be considered liable for death of cats. In case he considered liable for death of cats the compensation should not be more than R1000.00.

No discount to Lady M.M-M as she has not settled the account within 5 days of completion of contract.

He should be awarded cost. He should be awarded consulting fee of Lawyer that is R16,500

Whereas Lady M.M-M setout the relief in her defense and counterclaim as follows She should not pay for the claim of Crippen of B-GP, which he has carried out more services than 10 rooms and hence should be paid more. The contract sum is of R20,000.00 only. She should be paid R200,000 for the death of her cats due to grossnegligence of Crippen of B-GP. She should get paid for the cost of cat (R25,000) including expected cost of earning from selling cats (R75,000) and cost incurred and to be incurred on her trauma, grief and suffering (R100,000). Final claim of Lady M.M-M was that she should be paid R192,000 as she should have paid the money promptly and she would have got the got discount of R 2000. As she has to pay

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R10,000 more, her claim after making all payment and receiving discount is R192,000.00. She should be additionally awarded an amount of R16,500 against legal consultation fee to her nephew.

7.

PARTIES

Christopher Crippen of Bug-gone pest Exterminators CC (B-GP): Christopher Crippen is the sole proprietor of the company name Bug-gone pest Exterminators CC, who provided fumigation service to Lady Millicent Middleton-Martin for her house.

Lady Millicent Middleton-Martin (Lady M.M-M): She is the owner of a very large late Victorian house on Parktown Ridge, Johannesburg, who took service of Christopher Crippen of Bug-gone pest Exterminators CC to get her house fumigated.

Other interested Parties: There are no other interested parties.

8.

RELEVENT DOCUMENT/FACTS/EVIDENCE

Crippen of Bug-gone pest Exterminators CC substantiated his claim presenting his case as follows:

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Submitted copy of quotation and Substantiation that the house of Lady M.M-M has 18 rooms (a sitting room, a family room, a T.V. room, a dinning room, a study and five bedrooms in addition 3 bathrooms, a guest toilet, the kitchen, scullery, pantry and laundry).

That the parol evidence rule did not apply to a contract that was party in writing and partly oral. Moreover, it was unlawful and unfair to rely on the parol evidence rule to exclude evidence of a misrepresentation that rendered the contract null and void.

B-GP gets confirmation from Lady M.M-M that the she agreed that her maid will open and close the house of Lady M.M-M.

Lady Millicent Middleton-Martin has substantiated her defense and claim by presenting her case as follows: Submitted document in support that the house is of 10 habitable room plus 3 bathrooms, a guest toilet, the kitchen, scullery, pantry and laundry. Submitted in support the account/invoice submitted by Bug-gone pest Exterminators CC after completing fumigation service which clearly indicates the amount initially agreed based on 10 bed room house. She responded that these rooms (3 bathrooms, a guest toilet, the kitchen, scullery, pantry and laundry) did not count, when someone

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talking about a 10-roomed house, they were talking about proper habitable rooms, not bathrooms, toilets and the like. Further she pointed out that parol evidence rule prevent Mr. Crippen from giving evidence about how he arrived at his quotation Mr. Crippen has quoted a price of R20,000.00 for doing the work, she has accepted it, and a binding contract had come into existence She denied that the contract sum was other than R20,000.00. Her substantiation of counterclaim amount by providing copy of invoice showing that the cats were imported from china for R 5000 each and receipt of her medical cost of more than R12,000 to date. She stated that shortly after Crippen of B-GP had left; it had started to rain, so the maid had closed all the windows. She had not noticed the cats come in, but supposed that they must have done so to escape from the rain.

9.

FINDINGS/ IDENTIFICATION OF THE VARIOUS

CRUCIAL ISSUES:

9.1. Issue Number 1: Was B-GP claim that he should be paid R26,000 due to more rooms is correct or not?

9.1.1

B-GP has provided quotation to Lady M.M-M based on the questions they wanted to ask, where B-GP were free to ask
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more details. In addition B-GP when reached to provide service, they found 10 bed room plus other rooms, they did not raised the issues, but carried out the works and provided the bill to the maid of lady M.M-M without stating the issue of more room.

9.1.2

Hence the arbitrator found that the claim of Bug-gone that he should be paid more due to the reason that he should be paid due to the reason that the room was more than he has been told was not correct.

9.2. Issue Number 2: Is Bug-gone is responsible for the death of Cats or not?

9.2.1 The arbitrator noted following:

That it was agreed between Lady M.M-M and B-GP that found that Lady M.M-M and her servants would vacate the house for a two-day period, leaving a maid behind to open the house when Bug-gone arrived and to lock it up after they had left. Hence the liability of closing the house lies with the Lady M.MM.

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Accordingly Bug-gone arrived at the house, carried out the fumigation, and when they had finished, presented their account to the maid.

It was noted that there was no agreement between the parties and no evidence found that Mr. Crippen has stated or not stated the maid to keep the cats out.

Lady M.M-M has stated that shortly after Crippen of B-GP had left; it had started to rain, so the maid had closed all the windows. She (maid) had not noticed the cats come in, but supposed that they must have done so to escape from the rain. Here it was noted down that maid of Lady M.M-M failed to notice that the cats came inside the house due to rain.

9.2.2

The arbitrator found that it was agreed at the start that Lady M.M-M will leave a maid to open the house when Bug-gone arrived and to lock it up after they had left. Hence the

locking the house is the responsibility of Lady M.M-M. Further the contract with Bug-gone is to fumigate the house and not locking the house after fumigation. Hence under present circumstanced locking the house and keeping security of cats remains with the owner Lady M.M-M. Hence arbitrator found that Bug-gone is not responsible for death of cats.

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9.3. Is Lady M.M-M is entitled to discount?

9.3.1

It was noted by the arbitrator that the conditions of the contract between the parties was that 10% discount, if the balance was paid within five days of completion. However the payment was not made within specified period.

9.3.2 Hence the arbitrator found that Lady M.M-M is not entitled to discount.

9.4. Bug-gone should be awarded consulting fee of Lawyer that is R16,500 or not?

9.4.1 The party during preliminary agreed that the arbitration will be conducted as per Summary Procedure Rule of Rule of Conduct of Arbitration of Association of Arbitrators Southern Africa. As per clause 46 of Summary Procedure Rule Unless the parties otherwise agree in writing neither of them shall be entitled to be represented in the arbitration, further the arbitrator does not consider that there was any necessity of Bug-gone to consult a lawyer.

9.4.2 Since the parties did not agreed in writing to be represented in the arbitration and the arbitrator too did not consider any

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necessity of any consultation of lawyer. Hence arbitrator found that Bug-gone should not be awarded consulting fee of Lawyer that is of R16,500

9.5. She should not pay for the claim of Crippen that B-GP has carried out more services than 10 rooms and hence should be paid more. The contract sum is of R20,000.00 only.

9.5.1 Bug-gone has provided quotation to Lady M.M-M based on the questions they wanted to ask, where Bug-gone were free to ask more details. In addition Bug-gone when reached to provide service, they found 10 bed room plus other rooms, they did not raised the issues, but provided the bill to the maid of lady M.MM without stating the issue of more room. Further it was noted that Bug-gone never raised this issue of extra room and carried out the service, without any force.

9.5.2

Hence the arbitrator found that the claim of Bug-gone that he should be paid more due to the reason that he should be paid due to the reason that the room was more than he has been told was not correct.

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9.6. She should be paid R200,000 for the death of her cats due to grossnegligence of crippen and her depression. She should get paid for the cost of cat (R25,000) including expected cost of earning from selling cats (R75,000) and cost incurred and to be incurred on her trauma, grief and suffering (R100,000). Final claim of Lady M.M-M was that she should be paid R192,000 as she should have paid the money promptly and she would have got the got discount of R 2000. As she has to pay R10,000 more, her claim after making all payment and receiving discount is R192,000.00.

9.6.1 The arbitrator noted following:

That it was agreed between Lady M.M-M and B-GP that Lady M.M-M and her servants would vacate the house for a two-day period, leaving a maid behind to open the house when Buggone arrived and to lock it up after they had left. Hence the liability of closing the house lies with the Lady M.M-M.

Accordingly Bug-gone arrived at the house, carried out the fumigation, and when they had finished, presented their account to the maid.

It was noted that there was no agreement between the parties and no evidence found that Mr. Crippen has stated or not stated the maid to keep the cats out.

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Lady M.M-M has stated that shortly after Crippen of B-GP had left; it had started to rain, so the maid had closed all the windows. She (maid) had not noticed the cats come in, but supposed that they must have done so to escape from the rain. Here it was noted down that maid of Lady M.M-M failed to notice that the cats came inside the house due to rain.

9.6.2

The arbitrator found that it was agreed at the start that Lady M.M-M will leave a maid to open the house when Bug-gone arrived and to lock it up after they had left. Hence the

locking the house is the responsibility of Lady M.M-M. Further the contract with Bug-gone is to fumigate the house and not locking the house after fumigation. Hence under present circumstanced locking the house and keeping security cats remains with the owner Lady M.M-M. Hence arbitrator found that Bug-gone is not responsible for death of cats. Since Buggone is not responsible for death of the cat, hence he is not responsible for any further consequences related to this.

9.7. Bug-gone should be awarded cost or not?

9.7.1

Bug-gone provided the service in accordance with the contract between the parties that is carried out fumigation as agreed by

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the parties. As stated earlier (under 9.2.2), they are not responsible for death of cat too. Yes, as stated earlier (under 9.4.2)they can not be awarded cost of legal assistance due to reasons stated earlier. Further as stated earlier (under 9.3.2) Lady M.M-M is not entitled to discount too. Hence B-GP is only entitled to cost of service provided by them excluding any discount.

9.7.2 The arbitrator found that Lady M.M-M must pay Bug-gone a sum of R 10,000.00 within 15 days of award, which is due to be paid by Lady M.M-M under contract. .

9.8. She should be additionally awarded an amount of R16,500 against legal consultation fee to her nephew.

9.8.1 The party during preliminary agreed that the arbitration will be conducted as per Summary Procedure Rule of Rule of Conduct of Arbitration of Association of Arbitrators Southern Africa. As per clause 46 of Summary Procedure Rule Unless the parties otherwise agree in writing neither of them shall be entitled to be represented in the arbitration, further the arbitrator does not consider that there was any necessity of Bug-gone to consult a lawyer.

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9.8.2 Since the parties did not agreed in writing to be represented in the arbitration and the arbitrator too did not consider any necessity of any consultation of lawyer. Hence arbitrator found that Lady M.M-M should not be awarded an amount of R16,500 against legal consultation fee to her nephew.

9.9. Was Bug-gone entitled to refer how they arrived the quotation against the claim of Lady M.M-M that as per parol rule, bug-gone is not entitled to refer how they arrived to quotation?

9.9.1 It was noted that the arbitration agreement was a written agreement and Lady M.M-M has not misrepresented any thing from Bug-gone as stated above.

9.9.2 Hence arbitrator found that Bug-gone is not entitled to refer that to refer how he arrived the quotation

10. DECISION

10.1 Based on above, Bug-gone need to be paid R10,000 for rest of the amount due to be paid by lady M.M-M for the service provided by Buggone.

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11. RELIEF

GRANTED

Lady M.M-M is required to pay R10,000 to Bug-gone. Lady M.M-M is required to bear the cost of this arbitration proceeding. Lady M.M-M must make this payment within 15 calendar days.

Signed at Maseru this September 29, 2011

Sole Arbitrator Mr. Rakesh Kumar

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BIBLIOGRAPHY

Act (1965). Arbitration Act 42 of 1965. South Africa: Government of South Africa.

Butler and Finsen (1993). Arbitration in South Africa Law and Practice. South Africa: Juta & Co, Ltd

Rules of the conduct of Arbitration 6th Edition of The Association of Arbitrators (Southern Africa) (5)

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