RSA’s High Court confirms ‘slip rule’ only available to correct clerical errors

The case provides a useful explanation of the law around ‘accidental slips’, and it is important for parties to take note of the court’s decision on the circumstances that the slip rule can be used in, and those in which it cannot.

What is the slip rule?

The slip rule allows courts to correct any accidental errors or omission in awards or orders. Such errors can usually be corrected at any time by a court on application without an appeal.

The slip rule is provided for in Section 31(2) of the 1965 Arbitration Act, which states: “The court to which application is so made, may, before making the award an order of court, correct in the award any clerical mistake or any patent error arising from any accidental slip or omission.”

Origin of the dispute

In 2014, a Ms Adlam bought a property in Boskruin, Randburg, from Kopane Financial Services Ltd, and also entered into a building agreement with the developer. As a condition of the sale, Adlam was obliged to become a member of a homeowners’ association called Kruinkloof Bushveld Estate NPC, which she did in November 2014.

However, when a dispute arose between Adlam and Kopane, the matter was referred to arbitration proceedings overseen by retired Judge Van der Merwe. The arbitration concluded that Adlam had cancelled both the sale and building agreement with Kopane.

A further dispute then arose between Adlam and Kruinkloof, which claimed she owed them R1.4 million ($89,740) in unpaid monthly levies, penalty levies and interest. Initial arbitration proceedings found in Kruinkloof’s favour for the full amount, before an arbitration appeal tribunal rejected the claim for penalties and interest, finding instead that Adlam’s debt totalled R72,000 for unpaid monthly levies only.

The tribunal also ordered Kruinkloof to pay the legal costs of separate arbitration proceedings overseen by retired Judge Van der Merwe, which the homeowners’ association was not party to.

Kruinkloof sought a review before the High Court on two grounds, arguing firstly that the appeal panel had exceeded its jurisdiction by ordering it to pay the costs of the Van der Merwe arbitration proceedings. It also argued that the appeal tribunal had decided the appeal on a novel ground that had not been canvassed in the original arbitration.

First ground for review before the High Court

Kruinkloof argued that the irregular cost order had a far-reaching effect in that it proved that the appeal tribunal had failed to apply its mind to the dispute as a whole. It added that the mistake did not simply amount to a misunderstanding on a point of law, but also resulted in the entire nature of the enquiry being misconceived.

Adlam agreed that the appeal tribunal had exceeded its jurisdiction in ordering Kruinkloof to pay costs of unrelated arbitration proceedings - but held that the cost order amounted to an “accidental slip” as provided for in the 1965 Arbitration Act. She argued that the mistake had no bearing on the rest of the tribunal’s conclusions.

Handing down her judgment in the High Court, Judge Opperman said the slip rule was intended to give effect to the true intention of an arbitrator or tribunal. She added that a court still has a duty to intervene to correct a mistake regardless of whether the arbitrator or tribunal in question has admitted to making one. Importantly, Judge Opperman noted that the slip rule is not available to correct the misapplication of the law - or an incorrect assessment of evidence - but rather the rule is designed to correct clerical errors.

Citing paragraph 81 of the appeal tribunal’s award, which stated that Kruinkloof “must therefore be held liable for the cost incurred in this appeal,” Judge Opperman found that the appeal tribunal had intended for Kruinkloof to be liable for the costs of the appeal before it - and not the Van der Merwe proceedings. The judgment also cited the precedent set in cases involving Telecordia and Palabora, finding that the mispronunciation on costs did not negate the homeowners’ association’s rights to a fair proceeding. It also did not stop Kruinkloof from having its case fully heard and fairly determined.

Ultimately, Judge Opperman found that the appeal panel had made an “accidental slip” in requiring Kruinkloof to pay costs of proceedings it was not party to. She ordered that paragraph 82.4 of the panel’s award be amended to read: “The respondent is to pay the costs of this arbitration which costs are to include the costs occasioned by the employment of two counsel where applicable.”

Second ground for review before the High Court

Kruinkloof’s second ground for review centred on whether or not the appeal tribunal could decide on the imposition of penalty levies, despite such levies not being canvassed in the original arbitration hearing. The homeowners’ association argued that the appeal tribunal exceeded its jurisdiction, and that its power to decide on issues was circumscribed by the grounds of appeal which was contained in the notice of appeal.

Kruinkloof cited the Arbitration Foundation of South Africa (AFSA) expedited rules and the pre-arbitration agreement which provided the right to appeal and included the ‘annexure x’ - which sets out relevant information to the appeal. Adlam, on the other hand, argued that the appeal tribunal had the same jurisdiction as the original arbitrator.

Judge Opperman found that ‘annexure x’ in question did not define the grounds or the scope of jurisdiction of the appeal tribunal, instead only setting out the procedure for an appeal. In her evaluation, it would be absurd if a notice of appeal limited the jurisdiction of an appeal tribunal. The judge did mention, however, that the parties can agree to this if they so wish. The relationship between the arbitration agreement, the issues determined in arbitration proceedings and the powers of the arbitrator was also reaffirmed.

Judge Opperman quoted rule 13.2 of Kruinkloof’s homeowners’ association rules, which allowed for discretion when deciding whether to impose penalty levies on a member. She also found that the review proceedings dealt specifically with the relevant paragraphs of the award, which enabled the appeal panel to deal with the imposition of penalties. As a result, Judge Opperman held that the panel had not exceeded its jurisdiction by dealing with the question around the imposition of penalty levies.

The impact of the case

This case is a useful primer for the law and the application around ‘accidental slips’ that may occur in arbitration awards It reminds parties that the rule is not available to correct instances of misapplication of law or evidence and highlights the finality that arbitration proceedings aim to achieve.

This judgment makes it clear that the slip rule is only available to correct clerical errors – irrespective of whether the relevant party admits to making such an error. This is a welcome example of the mutualistic relationship South African courts share with arbitration proceedings in general.

The judgment further illuminates the relationship an arbitrator or tribunal has with the arbitration agreement and the issues canvassed in arbitration proceedings. Furthermore, the judgment deals with that cornerstone of arbitration, party autonomy, and makes clear that parties are free to determine the jurisdiction of an arbitrator or tribunal.

Co-written by Kyle Melville of Pinsent Masons.