South African Forestry Company Limited v York Timbers Limited

The parties concluded two long-term timber supply agreements providing that disputes over price revisions would be determined by arbitration under the Arbitration Act 42 of 1965. An arbitrator fixed the timber price for 1995 and awarded that the respondent pay the costs of the arbitration. During the arbitration both parties led expert evidence, but no request was made for a specific order awarding the qualifying costs of expert witnesses. After the award, the appellant sought to recover those qualifying costs through taxation. The respondent objected, contending that such costs were not included in the award. The appellant then applied to court for a declaratory order that the award included those costs, alternatively for the costs award to be remitted to the arbitrator for reconsideration. The High Court dismissed both forms of relief, and the appellant appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order remitting the costs award to the arbitrator under section 32(2) of the Arbitration Act to consider whether and to what extent the qualifying costs of expert witnesses should be awarded. The appellant was ordered to pay the costs of the remittal application, including the costs of two counsel.

The case clarifies that qualifying costs of expert witnesses are not recoverable in arbitration unless expressly awarded. It further establishes that an arbitrator’s costs award is a ‘matter referred to arbitration’ and may be remitted for reconsideration under section 32(2) of the Arbitration Act. The judgment provides authoritative guidance on the interpretation of sections 32 and 35 of the Act and on the approach to ‘good cause’ and prejudice in applications for remittal.