Case: Seabeach Property Investment no 28 (PTY) Ltd v Nunn
Arbitration clauses in contracts can often lead to various questions of interpretation and can even at times be the subject of a dispute between parties, even though disputes are the very thing which arbitration clauses are meant to address.
The Judgement in Seabeach Property Investment NO 28 (Pty) Ltd V Nunn is of great importance for the interpretation and enforceability of arbitration clauses.
The question before the Cape Town High Court was whether or not the parties intended for a dispute to be referred to, and determined by, an arbitrator in terms of an arbitration clause in an agreement between them.
The court found that arbitration was in fact the route to go. The court was of the opinion that the parties in fact intended that any dispute, irrespective of whether or not the contract was void or voidable, should be referred to arbitration and, interpreted contextually, such a conclusion gives the contract a commercially sensible meaning.
by Lucas Theron (B. Com Law, LL. B, Dipl. Fin. Plan); source: https://www.lexisnexis.co.za/
Seabeach Property Investment No 28 (Pty) Ltd v Nunn
|Case Number:||18310 / 18|
|Judgment Date:||22 / 02 / 2019|
|Division:||Western Cape, Cape Town|
|Bench:||Le Grange J|
Arbitration – Arbitration clause in sale agreement – Applicability
In terms of a written agreement of sale, the applicant sold a flat to the respondent. The property included two parking bays and a roof terrace. The respondent alleged that when buying the property, she was led to believe that she was buying, and would become the owner of, the rooftop terrace. The estate agents denied the alleged misrepresentation.
The dispute was referred to arbitration by the applicant, as required by the agreement between the parties. However, the respondent argued that owing to the respondent’s fundamental mistake, the entire contract between the parties should be regarded as void ab initio, and all of its clauses, including the arbitration clause, had to fall with it. In the present proceedings, the applicant sought an order that the dispute between the parties had properly and validly been referred to arbitration.
Held that the interpretation of contracts requires a court to ascertain what the parties intended by having regard to the purpose of their agreement, and interpret it contextually so as to give it a commercially sensible meaning.
The ultimate question in this matter was whether the parties intended that if a dispute arose, that dispute would be determined by an arbitrator, and if so, then the arbitrator should determine whether the contract was valid and enforceable, or voidable or void. Having regard to agreement as a whole, the court found the parties envisaged and intended, at the time of concluding the agreement, that all their disputes regarding the agreement whether void or voidable would be determined by arbitration. To view it differently would give the agreement a commercially insensible meaning. The applicant properly referred the matter to arbitration as the dispute was arbitrable in terms of the agreement.