The Tribunal of Commercial Property

THE TRIBUNAL FOR COMMERCIAL PROPERTY: LEASE ARBITRATION

The Tribunal is focused on finalising disputes in an effective, fair and just manner emanating from Agreements of Lease. The Rules of the Tribunal is aimed to have disputes finalised within 12 (twelve) weeks from the date of the appointment of the Arbitrator to the date of the closing argument. Awards by the Arbitrators should be granted within 10 (ten) days after the closing argument.

Fairness is achieved by introducing countermeasures for "procedural injustice" experienced in Civil Courts where matters are postponed and/or delayed to the extent that any outcome becomes theoretical, alternatively, the parties effectively run out of "funds" to pay legal costs. This is achieved by the Tribunal as follows:

Front End Loaded System

All information in support of a claim must be presented at the outset being the relevant facts, witness statements (factual and expert) and all relevant documents. There is therefore no "cloak and dagger" approach which could lead to surprises and delays. The rationale is for each party to know exactly what case to meet at the outset;

Costs

Although legal costs should be carefully managed in any matter we are of the opinion that the Tribunal will be more cost effective and economical in the long term.
- the effectiveness will deter unnecessary litigation;
- matters proceeding will be processed effectively;
- strategic decisions can be planned around a more predicable process;
- unjustified or unmerited "settlements" due to the threat of cost and time delays will be reduced;

Inquisitorial nature of the Arbitrator

The Arbitrator will have the ability to ask questions on an inquisitorial basis and also request the leading of evidence and call for documents out of his or her own accord. This will be a catalyst for the parties to break from the traditional approach of "playing" for an audience;

Cost Awards

In line with the Arbitrations Act the Arbitrator may fix or award the costs. The Rules make provision for this process to be taken away from the taxing master of the High Court and the Arbitrator will make an award in the amount of costs after the parties presented their bills of costs to the Arbitrator for adjudication. The Arbitrator may require the parties to agree on the amount of costs upfront alternatively he/she may make use of the services of a cost consultant in this regard. This will curtail a long delay in the recovery of costs. The award on the merits is separated from the award on costs.

FAQ's

Is the Tribunal for Commercial Property (hereinafter referred to as the "TCP") only going to facilitate the hearing of disputes relating to Landlord and Tenant?

No, the aim of the TCP is to facilitate the hearing of all disputes in the property industry such as disputes from Sale of Property Agreements, Small (constructions) Works, Service Providers and Co-Ownership or Shareholders disputes.

Who are the Proprietors of the TCP?

The Proprietors are Gideon Pretorius, Jean Bence both being admitted attorneys specialising in property law and two Counsels being Advocate Chris Erasmus (SC) and Ben Ridgard from the Pretoria and Johannesburg Bars respectively. The independent Custodian of the TCP is Judge Willem van der Merwe.

Who are the Arbitrators and how were they selected?

The Arbitrators are 27 selected practicing Counsel from the Johannesburg, Pretoria, Durban and Cape Town Bars.This selection was personally done by Judge Willem van der Merwe.

What training did the Arbitrators receive?

The Arbitrators attended an Arbitration course in Commercial Lease Agreements presented by the University of Pretoria (Continued Education) under the leadership of Professor Chris Cloete.

The proceedings as envisaged by the TCP might be perceived as one-sided in favour of the Landlord, and it might therefore be difficult to get a Tenant to sign the Lease with the TCP clause included?

The proceedings envisaged by the TCP are not one sided or in favour of the Landlord. Arbitration clauses, giving the power to Arbitrators to hear disputes, have two characteristics, to record the scope of disputes and secondly to stipulate the process. It is in the interest of both parties agreeing on the TCP Lease Arbitration that disputes relating to the Lease Agreement and/or the occupation of the premises be described in the widest sense as to avoid proceeding to arbitration on one aspect but referring another to Court. This would simply not serve the interest of justice. The clause therefore includes general disputes and specifically defined disputes such as disputed renewals, tenant installations, failure to meet payment arrangements all of which may not be recorded in the Agreement of Lease and matters relating to the Landlordâ€™s Hypothec. These defined disputes should not be "perceived" as favouring the Landlord or any party for that matter, as they do not add or detract from the material lease terms. Procedurally the process also does not favour one party above the other and is aimed to be effective and fair. To have disputes heard within a period of three months is in the interest of all parties as documents, witnesses (and their memories) will be available as evidence at hearings. Should a Tenant or any party for that matter comprehend the aforegoing there should be no difficulty in them agreeing to and signing a Lease Agreement containing the TCP Lease Arbitration Clause.

Should the TCP Arbitration clause be inserted in a Lease, how many pages will be added to the Agreement?

The final TCP Annexure consists of the following:

Lease Annexure - approximately 5 pages;
and Deed of Suretyship - approximately 2.5 pages additional to the Deed of Suretyship

A decision was taken by the TCP (in line with other Arbitration forums) not to attach the Rules to the Agreement but to have such Rules readily available here on the website and elsewhere.

What are the costs of the TCP and is it affordable?

We are of the opinion that the costs are affordable and fair. The TCP took a decision to move away from any cost calculation using a percentage of the amount claimed to a fixed scale as recorded hereunder.

Monetary Claims:

Claim Amount	The claim amount includes the total amount claimed.
Fees in terms of Monetary Claims	Arbitration fees payable (excluding VAT) as per the tariff below.

Claim Amount	Fees in terms of Monetary Claims (excluding VAT)
R1 - R150 000	R12 000 - R6000 per party
R150 001 - R300 000	R14 000 - R7000 per party
R300 001 - R600 000	R16 000 - R8000 per party
R600 001 - R1 000 000	R18 000 - R9000 per party
Above R1 000 001	R20 000 - R10 000 per party

Non Monetary Claims - R20 000.00, however (i.e. failure to maintain part of the leased premises by the Landlord, or eviction of the Tenant) where a non monetary claim is claimed with a monetary claim the amount of R4 000 plus VAT i.e. R2 000.00 per party shall be payable in addition to what is payable in respect of a monetary claim. (See the Terms and Conditions for more detail) The Arbitrators would also fall into certain cost brackets in relation to the value of any claim amounts. In meeting the requirements of fairness the TCP was senstive to the fact that the costs must be affordable to all parties.

Finally we are of the opinion that in the long run and taking all factors into consideration the TCP process as opposed to the court process would prove to be much more economical. The longer it takes to finalise a matter, the more expensive it becomes directly or indirectly.

From what legislation does the TCP derive its powers?

The TCP derives its powers from the Arbitrations Act 1965 (Act No. 42 of 1965) (hereinafter referred to as the "Act") as well as agreements concluded between contracting parties containing provisions by which disputes are referred to the TCP. Awards not being adhered to can be made Orders of Court in terms of the Act.

Are there any material differences between "normal" arbitration proceedings (through any other tribunal) and the TCP procedures, except that the Arbitrators are more property focussed and have greater expertise?

The TCP has certain industry specific advantages such as that Arbitrators have been trained in this specific industry, the TCP is further unique in that the full disclosure of documents and evidence prescribed at the outset of the TCP process is aimed to avoid a "cloak and dagger" approach to proceedings, the inquisitorial nature of the Arbitrator allowing him/her to call for evidence, strict guidelines regarding postponements and delays including cost awards as a deterrent for causing delays, guidelines on the filing of expert evidence (i.e. damages suffered by either party), the period within which the arbitration award must be given as well as the unique process with regards to the determination and awarding of costs by the Arbitrator.

Why does the process not make provision for an appeal procedure?

It is standard in most arbitration provisions that the award of the Arbitrator will be final and binding. Allowing an appeal in the TCP process would effectively diminish the benefit of expedited justice. We are confident that the selected and trained Arbitrators will give quality awards that can only exponentially increase in quality with their exposure to the industry.

How soon will default awards be granted?

Should the other party not participate in the process of Arbitration either by filing a statement of defense or not filing a statement of defense to a counterclaim, the Arbitrator may grant a default award. Should the party requesting the award meet the requirements of the Rules with regards to the delivery of documents the award may be granted with or without the leading of evidence. We do not foresee a delay in this regard as each Arbitration is assigned to a specific Arbitrator.

Will the arbitration award be kept confidential?

Yes, the Rules make provision for the arbitration awards to be kept confidential unless written permission is granted that such award may be contained in a precedence register.

How can a successful party enforce an award and what power does it carry?

An award may be made an Order of Court in terms of the Act and it carries the power of a civil judgment of the High Court.

Can a party object to an award being made an Order of Court?

No as the parties agreed in terms of the Arbitration clause and Rules to have awards made Orders of Court. The content of the award will not be revisited in the normal course of making an award an Order of Court.

Can a party apply for the review of an award?

The grounds for review of any award will be limited to the grounds stated in the Act dealing with the aspects relating to transgression of principles of natural justice, i.e. a party not given the opportunity to state his or her case or proven bias on the side of the Arbitrator being some of these limited grounds. The content of the award will not be revisited in the normal course of making an award an Order of Court.