Proposed amendments to rule 41 of the uniform rules of court and its impact on the Companies Tribunal
On 13 December 2018 the Rules Board for Courts of Law released a proposed amendment to the Uniform Rules of Court. The draft Rule 41A is entitled ‘Mediation as a Dispute Resolution Mechanism’, which aims to regulate the procedure for referral to mediation of cases in the various High Courts.
In terms of this draft rule, every new action or application must be accompanied by a notice, which must be delivered by a plaintiff or applicant with the summons or notice of motion and by a defendant or respondent with a plea or answering affidavit, indicating whether the party agrees to or opposes referral of the dispute to mediation. The notice must set out clearly the party’s reason for believing that the dispute is or is not capable of being resolved by mediation. This notice is delivered on a without prejudice basis and therefore does not form part of the record of the trial or hearing.
The parties can agree to refer the matter to mediation at any stage before judgment is given, but the current wording provides that where a trial or opposed application has already commenced the parties must obtain the leave of the court to refer the matter to mediation. There is also provision for the Judge or the Case Management Judge in terms of Rule 37A to direct the parties to consider that the matter be referred to mediation.
Interestingly, the draft provisions in Rule 41A also make provision for specific issues or disputes to be referred to mediation with the aim of limiting the issues to be decided at trial rather than trying to settle the matter in its entirety. In proceedings where there are multiple parties involved, it also allows for those who want to refer the matter to mediation to proceed with mediation even if the other parties involved are not willing to do so.
The process for referring a matter to mediation will begin with a joint signed minute prepared by the parties recording their decision to refer the dispute, or part thereof, to mediation. From the date of signature of this joint minute, the time limits prescribed for the delivery of any further pleadings, notices or affidavits are suspended. The parties will then enter into an agreement to mediate.
In terms of the draft rule, the mediation must be concluded within 30 days from the date of signature of the minute, but the Judge or the court is given discretion to extend this time period if necessary. Once the mediation process is finalised, the parties must file a joint minute with the mediator indicating to the court whether a full or partial settlement was reached or whether mediation was unsuccessful. The minute should also indicate which issues were resolved and therefore do not require hearing by the court. Communications and disclosures made by the parties during mediation are treated as confidential and are inadmissible in evidence if the matter does proceed to hearing or trial.
The Draft Rule 41A provides that once the parties have reached settlement at mediation proceedings, the provisions of Rule 41 relating to the withdrawal, settlement, discontinuance, postponement and abandonment of proceedings. Of particular interest here is Rule 41(4), which provides that “any party to a settlement which has been reduced to writing and signed by the parties or their legal representatives but which has not been carried out, may apply for judgment in terms thereof on at least five days’ notice to all interested parties.” This mechanism should help to reassure parties that their agreement is enforceable.
While this development is to be welcomed and should go a long way to resolving some of the backlogs in the High Court, it must not be forgotten that the Companies Tribunal is also set up for mediation and was specifically established to adjudicate for specific matters relating to the Companies Act 71 of 2008 (‘the Companies Act’) and to assist in the voluntary resolution of disputes.
In terms of section 166 of the Companies Act, a person who would be entitled to make an application for relief or file a complaint in terms of a provision of the Companies Act at a Court or at CIPC can refer a matter to the Companies Tribunal for resolution by mediation, conciliation or arbitration.
The members of the Companies Tribunal are fully qualified and experienced in diverse areas such as economics, law, commerce, industry or public affairs. Upon receipt of a request for mediation, the Tribunal will appoint a qualified commercial mediator to mediate the dispute and provide a venue for the mediation free of charge. While mediation in terms of the Draft Rule 41A, in whatever form it is enacted, will undoubtedly be a step forward in terms of the use of Alternative Dispute Resolution in South Africa’s overburdened court system, it is important that the dedicated mediation services provided by the Companies Tribunal are not forgotten, as they can provide a speedy and cost-effective way to resolve disputes that arise in terms of the Companies Act.
* PJ Veldhuizen is a member of the Companies Tribunal based in Cape Town and he is also a Managing Director at Gillan & Veldhuizen Inc.