MATHONSI J: This is an application for the registration of
an arbitral award made by Retired Justice Smith on 31 May 2012 in terms of
which he confirmed as valid, the termination of a lease agreement between the
parties, directed the respondent to vacate the leased premises, namely 1st
and 2nd Mezzenine Floors Century House West, 36 Nelson Mandela
Avenue Harare, (the premises), or face eviction and directed the respondent to
bear the applicant's costs on the scale of legal practitioner and client.
The application is opposed by the respondent which has also filed a counter
application seeking the setting aside of the arbitral award which counter
application is also opposed by the applicant. The applicant is the owner of the
premises which it leased to the respondent by lease agreement signed on 6 July
2010. The said agreement was due to expire on 31 December 2012. In
terms of Clause 1 of the lease agreement;
“1. DURATION
1.1.Notwithstanding the date of signature here of this
agreement shall commence on 1 January 2010 and shall continue for a period of 3
years terminating on 31 December 2012 (here-in after referred to 'the terminal
date') and the agreement shall continue in full force as a periodic lease, terminable
by either party on three calendar months written notice.
1.2.Operating Costs Attributable share shall be based upon
the ratio which the floor areas of the leased premises bears to the total
lettable areas of the building.
1.3.Notwithstanding the terms of sub-paragraph 1.1 above,
this agreement shall continue in full force and effect after the terminal date
as a periodic lease, terminable by either party on three calendar months
written notice to the other unless notice to the contrary has been given by
either party to the other not less than three calendar months prior to the
terminal date.
1.4.Notwithstanding sub-paragraph 1.1 and 1.3 either party
may terminate this agreement by providing 3 months notice”
The lease agreement also contained an arbitration clause,
providing for reference of any disputes arising between the parties to
arbitration. The applicant gave the respondent 3 months written notice of
termination of the lease on 31 March 2011 on the ground that it required the
premises for its own use. The respondent contested the applicant's right
to terminate the lease in terms of Clause1.4 of the lease agreement arguing
that a lease for a fixed period cannot be terminated on the giving of 3 months
notice. The respondent also alleged the existence of an oral lease
agreement the parties allegedly entered into on 7 July 2011 in terms of which
it was entitled to remain in occupation, notwithstanding the notice.
In accordance with the lease agreement, the dispute was
referred to arbitration and Justice Smith issued an award aforesaid. In
arriving at the decision he made, Justice Smith reasoned that:
“The fact that paragraph 1.4 does not impose any conditions
or restrictions is a very clear indication that the parties intended that
either party could at anytime terminate the lease agreement on giving 3 months
notice, without having to give any reason or justification for the termination.
Accordingly I find that the claimant was within its rights to terminate the
lease agreement and, that being the case, that it is entitled to an order of
eviction of the respondent.”
As I have already stated the applicant seeks registration
of the award for enforcement which is opposed by the respondent on the basis
that the award offends the established precepts of law and natural justice in
that it is not competent at law to terminate a lease agreement when there has
been no breach on the part of the tenant. For that reason the
interpretation by the arbitrator “is wrong”. The respondent also attacked
the arbitrator's conclusion that there was no oral agreement as “not correct”.
In its counter application filed on 11 October 2012 the
respondent seeks the setting aside of the award on essentially the same grounds
used to oppose registration. Other than to say that the arbitrator was
wrong in concluding that the applicant was entitled to terminate the lease on
notice, the respondent did not advance any other discernable ground for seeking
to set aside the award. Registration of an arbitral award or its
recognition for purposes of enforcement can only be refused upon the person
against whom it is invoked satisfying the court of the existence of grounds of
refusal set out in Article 36 of the mode law in the Arbitration Act [Cap
7:15]: Tapera &ors v Fieldspark investments (Pvt) Limited HH103/13.
Article 36 sets out the grounds for refusal of recognition
or enforcement of an arbitral award and states that the party against whom it
is invoked must show the court proof that;
1. A party to an arbitration
agreement was under some incapacity or the agreement was invalid under the law
to which the parties subjected it to or under the law of the country where the
award is made.
2. The party was not given
proper notice of the appointment of an arbitrator or the arbitral proceedings or
was otherwise unable to present his case.
3. The award deals with a
dispute not contemplated or not falling within the terms of reference to
arbitration.
4. The composition of the
arbitral tribunal or the procedure was not in accordance with the agreement of
the parties or the law of the country where the arbitration took place.
5. The award has not yet become
binding on the parties or has been set aside or suspended by a court of law.
6. The court finds that the
subject matter of the dispute is not capable of settlement by arbitration under
the law of Zimbabwe or recognition or enforcement will be contrary to the
public policy of Zimbabwe.
The respondent has not set out any of the grounds for refusal of recognition or
enforcement set out above. The closest the respondent has come to setting
out grounds is its challenge on the correctness of the interpretation accorded
to the lease agreement by the arbitrator. MrMcgown for the
respondent submitted that the award is against the law and the public policy of
this country because a lease agreement for a fixed period cannot be terminated
by notice given by either party as it only expires by effluxion of time. As I
said this is the same ground relied upon for seeking to set aside the award.
Accordingly, a resolution of that issue will also resolve the propriety of the
counter application. What is crystal clear from the papers is that the
respondent takes issue with the award on the basis that the interpretation of the
lease agreement done by the erstwhile arbitrator is wrong, faulty and
incorrect. In that regard the seminal pronouncement of Gubbay CJ in Zesa
v Maposa 1999(2) ZLR 452 (S) 466E-G is salutary.
He remarked:
“Under articles 34 or 36, the court does not exercise an
appeal power and either uphold or set aside or decline to recognise and
enforce an award by having regard to what it considers should have been the
correct decision. Where, however, the reasoning or conclusion in an award
goes beyond mere faultiness or incorrectness and constitutes a palpable
inequity that is so far reaching and outrageous in its defiance of logic or
accepted moral standards that a sensible and fair minded person would consider
that the conception of justice in Zimbabwe would be intolerably hurt by the
award, then it would be contrary to public policy to uphold it. The same
consequence applies where the arbitrator has not applied his mind to the
question or has totally misunderstood the issue and the resultant injustice
reaches the point mentioned above.”
See also Decimal Investments (Pvt) Limited v Arundel
Village (Pvt) Limited and Anor HH262/12, Delta Operations v Origen
Corp (Pvt) Limited 2007(2) ZLR81 (S)85 C-D.
I am unable to say that the reasoning or conclusion in the
award constitutes a palpable inequity that defies logic as to offend our
conception of justice. Quite to the contrary, the arbitrator gave effect
to the wishes of the parties, for it is them who contracted to the exclusion of
any protection they may have enjoyed under the law. They agreed that the
lease would be terminable on the giving of 3months notice. The arbitrator
did not go outside the contract. He did not make a contract for the
parties but merely respected the sanctity of contract. Indeed his
conclusion cannot be faulted.
In any event, even if the arbitrator's conclusion was
faulty, I cannot substitute my own conclusion, as I am not exercising an appeal
power. Clearly therefore the inescapable conclusion is that both the
opposition to the application for registration and the application for setting
aside the arbitral award are completely devoid of merit.
As if that was not enough, the respondent has the
unenviable task of proving that the counter application was filed
timeously. In terms of article 34(3) of the model law, an application for
setting aside an award must be made within 3 months from the date the award was
delivered. The applicant objected to the application in its opposing
affidavit pointing to the fact that the award having been delivered on 31 May
2012, the application to set it aside should have been made no later than 31
August 2012. As this application was file on 11 October 2012 it was filed
out of time and should fail on that basis.
The respondent had an opportunity to disprove that
allegation in its answering affidavit but failed dismally to do so. In
the answering affidavit of John Stouyannides, the respondent's managing
director could only say in para 4:
“This is denied. The counter application is properly
before the court. The award was received sometime the end of July 2012
and the application has been made well in time.”
In my view this is not only vague in the extreme but
disarmingly inadequate. It is not clear why the respondent chose to be vague
about the date of receipt of the award. It is improbable that the award
could only be delivered to the respondent two months after it was handed
down. The only inference to be drawn from the respondent's vagueness is
that indeed the award was received immediately after it was handed down on 31 May
2012. I can conceive of no reason why it was not. For that reason the
counter application was filed out of time.
I am satisfied that this is a matter in which the
respondent should be penalised with an award of punitive costs. Not only
was the opposition demonstrably without merit, even the feeble attempt to set
aside the award, coming as it did well out of time and without any merit
whatsoever, should not have been undertaken at all. In pursuing
that ill –conceived misadventure right up to the end even after the life span
of the lease agreement had expired on 31 December 2012, the respondent was
abusing the process of the court. It should therefore pay for that as it
unnecessarily put the applicant out of pocket.
In the result, it is ordered that;
1.
The arbitral award handed down on 31 May 2012 by Honourable Justice L.G.
Smith (Retired), be and is hereby registered as an order of this court.
2.
The respondent and all those claiming occupation through it should vacate stand
2551 Salisbury Township Harare also known as Century House West, 36 Nelson
Mandela Avenue, Harare upon service of this order.
3.
The respondent's counter application for setting aside the award hereby
dismissed.
4.
The respondent shall bear the costs of both applications on a legal
practitioner and client scale.
Tavenhave & Machingauta, applicant' legal practitioners
Messrs
Venturas & Samukange, respondent's legal
practitioners
