Venmop 275 (Pty) Ltd and Another v Cleverland Projects (Pty) and Another (2014/14286) [2015] ZAGPJHC 176; 2016 (1) SA 78 (GJ) (3 August 2015)

In December 2010, Cleverlad Projects (Pty) Ltd commenced action in the High Court against Venmop 275 (Pty) Ltd to obtain payment in terms of a written acknowledgement of debt. The main issue in dispute was the authenticity of the signature appearing on behalf of Venmop.

On August 30, 2012, the High Court action was referred to arbitration by a retired High Court judge. The arbitration trial commenced on November 13, 2012 and proceeded for a total of 16 days over several months, culminating on August 1, 2013. On December 12, 2013, the arbitrator published a final award in favour of Cleverlad, finding the signature to be genuine and making an award of payment in terms of the acknowledgement of debt.

On January 9, 2014, Cleverlad's attorneys demanded payment of the award amount from Venmop's attorneys. On February 13, 2014, Cleverlad made an application to the High Court for the award to be made an order of court. On February 19, 2014, Venmop's attorneys offered to pay the award amount in installments, which Cleverlad did not accept. On March 10, 2014, Cleverlad obtained an interim order interdicting the disposal of certain immovable property by Venmop.

On April 16, 2014 (one day shy of 18 weeks after publication of the award), Venmop and another applicant brought the present application to set aside the arbitration award on the grounds that the arbitrator had committed a "gross irregularity in the conduct of the proceedings".

The core legal principle underlying the decision is that in order to set aside an arbitration award, there must be a showing of a "gross irregularity" in the proceedings. A "gross irregularity" refers to a methodological error that prevents a fair hearing and must be calculated to prevent the aggrieved party's case from being fully and fairly determined. In this case, the court found that the alleged irregularities in the arbitration proceedings, particularly the refusal to order the production of certain financial documents, did not amount to a gross irregularity. The court emphasised that the arbitrator's conduct was neither irregular nor prevented Venmop from having its case fully and fairly determined, leading to the dismissal of the application to set aside the award.

1) In motion proceedings, affidavits serve a dual function as both pleadings and evidence. Argumentative matter and legal submissions should not be included in affidavits as they are neither evidence nor pleadings. Courts should strike out such irrelevant and unnecessary matter.
2) Where an applicant utilises Rule 53 in review proceedings to obtain the record of proceedings, the applicant has a duty to select and identify what portions of the record are relevant as evidence for the purposes of the review application. The entire record should not be dumped before the court.
3) The doctrine of pre-emption, preventing a party from attacking a judgment or award they have acquiesced in, applies to applications to set aside arbitration awards under the Arbitration Act.
4) For "good cause" to be shown to extend the time period under Section 38 of the Arbitration Act for setting aside an award, there must be both a reasonable explanation for the delay and a bona fide case on the merits with some prospect of success.

Here are the key cases relied on by the court and a brief summary of each:

1. Radebe and Others v Eastern Transvaal Development Board 1988 (2) SA 785 (A) at 793 D – F: This case establishes that affidavits serve the dual function of pleadings and evidence in motion proceedings.

2. Competition Commission v Arcelormittal South Africa Ltd and Others 2013 (5) SA 538 (SCA) at 549 – 550 paras 33 – 34 and 551 para 37: This case illustrates the test for imputed/implied waiver of legal privilege where privileged information is disclosed to gain an advantage in proceedings.

3. Gcabashe v Nene 1975 (3) SA 912 (D) at 914E: This case sets out the requirements for the "without prejudice" privilege to apply in settlement negotiations, namely (1) the existence of a dispute, and (2) that the statement forms part of negotiations to settle or compromise that dispute.

4. Ellis v Morgan; Ellis v Dessai 1909 TS 576 at 581: This case defines a "gross irregularity" in proceedings as a methodological error that prevents a fair hearing. It has two aspects: (1) an irregularity, and (2) it must be "gross" in that it prevents the case from being fully and fairly determined.

5. De Wet and Others v Western Bank Ltd 1979 (2) SA 1031 (A) at 1042: This case sets out the requirements for showing "good cause" to extend a time period, namely (1) a reasonable explanation for the delay, and (2) a bona fide case on the merits with some prospect of success.

6. Samancor Group Pension Fund v Samancor Chrome and Others 2010 (4) SA 540 (SCA) at 546 para 25: This case discusses the doctrine of pre-emption, where a litigant acquiesces in a judgment and thus cannot appeal against it based on their objective conduct.