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[2015] ZAGPJHC 176
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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)
Links to summary
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
CASE
NO: 2014/14286
(1)
REPORTABLE: YES /
NO
(2)
OF INTEREST TO OTHER JUDGES: YES/
NO
(3)
REVISED.
……………………
..
………………………...
DATE
SIGNATURE
In
the matter between:
VENMOP
275 (PTY) LTD AND
ANOTHER
Applicants
and
CLEVERLAD
PROJECTS (PTY) LTD AND ANOTHER
Respondents
JUDGMENT
PETER
AJ
Introduction
[1]
The issues, in this application to set
aside an arbitration award, are the admissibility of a letter, in
respect of which the “without
prejudice privilege” or
“privilege in aid of settlement” is claimed, the
existence of “good cause”
as contemplated in section 38
of the Arbitration Act, 1965 (“the Act”) for an extension
of the time period prescribed
in terms of the provisions of section
33(2) of the Act, and in such context, whether or not the applicants
perempted their right
to apply for the setting aside of the award and
whether or not the irregularity complained of is a “gross
irregularity”
within the meaning of section 33(1)(
b
)
of the Act. In addition to these evidentiary and substantive
issues, the manner in which the parties conducted this application
merits comment on the role and function of affidavits in motion
proceedings and how the provisions of rule 53, of the uniform rules
of court, are to be applied in review proceedings.
The Facts
[2]
In December 2010, Cleverlad Projects (Pty)
Ltd (“Cleverlad”) commenced action in the High Court
against Venmop 275 (Pty)
Ltd (“Venmop”) to obtain payment
in terms of a written acknowledgement of debt. The principal
issue in dispute
was the authenticity of the signature appearing on
behalf of Venmop. On 30 August 2012, and in terms of a written
agreement,
the High Court action was referred to arbitration to a
retired High Court judge to be conducted in accordance with the
uniform
rules of the High Court. The arbitration trial
commenced on 13 November 2012 and proceeded for a total of 16 days,
in intermittent
periods over the ensuing months, seven days in
November 2012, six days in February 2013, two days in July 2013 and
culminating
on 1 August 2013. On 12 December 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.
[3]
On 9 January 2014, Cleverlad’s
attorneys addressed a letter to Venmop’s attorneys demanding
payment of the amount in
terms of the award. On 13 February
2014, not having received a response to this demand, Cleverlad made
application to the
High Court for the award to be made an order of
court in terms of section 31 of the Act. On 19 February 2014,
Venmop’s
attorneys replied to the letter of demand by way of a
letter in which Venmop offered to make immediate payment of the sum
of R50 000
with further payments of R10 000 per month and
an undertaking to “review the offer every twelve months”.
Cleverlad did not accept this offer. On 10 March 2014,
Cleverlad obtained an urgent interim order in the High Court
interdicting
the disposal of certain immovable property by Venmop,
pending an action to set aside such disposal. The disposal was
alleged
to be a dissipation of Venmop’s assets in order to
frustrate the enforcement of the award.
[4]
On 16 April 2014, one day shy of 18 weeks
after the publication of the award, Venmop and the second applicant,
whom I refer to as
“the mother”, brought the present
application to set aside the award on the grounds that the arbitrator
had committed
a “gross irregularity in the conduct of the
proceedings”. Three grounds were advanced in the founding
affidavit
in support of the allegation of gross irregularity.
First, that the arbitrator had rejected evidence of a director of
Venmop,
the daughter of the alleged signatory, that the signature was
not in fact her mother’s signature. The signatory to the
acknowledgement of debt, was also the mother of the director of
Cleverlad, and a defendant in the arbitration (“the mother”).
Secondly, the arbitrator allegedly committed an irregularity in
finding that the evidence of an expert graphologist, which
was not
adduced, would not have swayed the probabilities of a factual finding
on the authenticity of the disputed signature.
Rather
bizarrely, this graphologist was called by Venmop to give evidence
that, because he had received threats and intimidation,
he would not
be giving evidence in relation to his opinions on the authenticity of
the disputed signature. The third ground
was that the
arbitrator refused to order production of certain financial
documentation, notwithstanding that he had regarded such
documentation as relevant. The first two grounds were not
pursued in argument, in my view rightly so.
[5]
The facts giving rise to this third ground
was that, on Friday 26 July 2013, Venmop brought an application in
terms of the provisions
of rule 35(7), for the production of
financial documents, which it had demanded on Monday 22 July 2013, in
terms of the provisions
of rule 35(3). The application was
argued on 29 July 2013, the fourteenth day of the trial. On 30
July 2013, the arbitrator
dismissed the application. In his
reasons the arbitrator acknowledged that the documents were relevant,
in that if they contained
a reference to the alleged indebtedness in
the books of account of Cleverlad, they would support Cleverlad’s
case and, if
they did not, they would be evidence against Cleverlad.
Notwithstanding such finding of relevance, the arbitrator refused
to
order production of the documents by reason of the lateness of the
application. Cleverlad had led all its evidence, closed
its
case and there were no good grounds to recall its witnesses.
[6]
Notwithstanding the refusal of the
application, Cleverlad made available its 2010 audited financial
statements to Venmop.
These financial statements showed that
the indebtedness was probably not disclosed. This evidence was
taken into account
and mentioned in the arbitrator’s final
award which did not accord the documents much weight. It was
noted that the
financial statements were introduced late in the trial
and Cleverlad’s main witness was not cross examined on them.
It was said that although they did weaken Cleverlad’s case they
did not disturb the arbitrator’s view that Cleverlad’s
case had been established overwhelmingly on the probabilities.
The arbitrator dismissed Cleverlad’s claim against the
mother
and ordered Cleverlad to pay to the mother half the defendants’
costs on the High Court scale.
The Affidavits
[7]
The efficient conduct of litigation has as
its object the judicial resolution of disputes optimising both
expedition and economy.
The conduct and finalisation of
litigation in a speedy and cost efficient manner is a collaborative
effort. The role of witnesses
is to testify to relevant facts
of which they have personal knowledge. The role of legal
representatives has two key aspects.
First is the supervision,
organisation and presentation of evidence of the witnesses and
secondly, the formulation and presentation
of argument in support of
a litigant’s case. The diligent observation of those
roles facilitates the role of the judicial
officer, which is to
arrive at a reasoned determination of the issues in dispute, in
favour of one or other of the parties.
Where
practitioners neglect their roles, it leads to the protracted conduct
of the litigation in an ill-disciplined manner, the
introduction of
inadmissible evidence and the confusion of fact and argument, with
the attendant increase in costs and delay in
its finalisation,
inimical to
both expedition and economy
.
[8]
In motion proceedings, affidavits serve a
dual function of both pleadings and evidence;
Radebe
and Others v Eastern Transvaal Development Board
1988 (2) SA 785
(A) at 793 D – F
;
Minister of Land Affairs and Agriculture
and Others v D & F Wevell Trust and Others
2008
(2) SA 184
(SCA) at 200 para 43,
ABSA
Bank Ltd v Kernsig 17 (Pty) Ltd
2011
(4) SA 492
(SCA) at 498 – 499 para 23;
Foize
Africa (Pty) Ltd v Foize Beheer BV and Others
2013 (3) SA 91
(SCA) at 103 para 30.
In
Choice Holdings Ltd v Yabeng Inv Holding
Co Ltd
2001 (3) SA 1350
(W) at 1360
para 34, Goldstein J, in a judgment of the full court, summed up the
principal thus:
“
In
application proceedings the affidavits serve two purposes: first that
of pleadings,
ie
delineating the
facta probanda
or essential averments necessary to found a cause of action or
defence, and, secondly, the supply of the
facta
probantia
or evidence to support a
finding of the correctness of the
facta
probanda
.”
[9]
A consideration of these references reveal
that the emphasis on the dual function of affidavits in motion
proceedings is highlighted
where the affidavits contain conclusions
or allegations of a depth that is sufficient for a declaration, but
are deficient in evidence
of the facts upon which those conclusions
or allegations are based. Deponents to the affidavits are
testifying in the motion
proceedings.
Save
in urgent applications for interim relief to restrain irremediable
injury and to keep matters in
status
quo
, where otherwise inadmissible
hearsay might be permitted,
Cerebos Food
Corporation Ltd v Diverse Foods SA (Pty) Ltd and Another
1984 (4) SA 149
(T) at 157E – G, there is no authority that the
admissibility of the evidence of a witness in motion proceedings is
somehow
different from that in a trial action.
[10]
Inadmissible material falls to be struck
out of affidavits, as does matter, in terms of rule 6(15), which is
scandalous, vexatious
or irrelevant. In the past, observance
and enforcement of the rules through strike out applications consumed
a great deal
of time and resources. These applications lead to
an increase in costs and delay in the finalisation of the proceedings
–
the polar opposites of economy and expedition. Strike
out applications were thus discouraged. For the past 50 years,
rule 6(15) has required an additional element: that the court be
satisfied that the applicant for the striking out would be prejudiced
if an order were not granted. Thus, almost 50 years ago, Margo
AJ remarked in
Jones v John Barr &
Co (Pty) Ltd and Another
1967 (3) SA
292
(W) at 296D:
“
In
a proceeding before a Judge alone an occasional item of inadmissible
evidence ordinarily creates no prejudice, for the Court
simply
ignores it or gives it no weight.”
[11]
In
Epstein v
Christodoulou and Another
1982 (3) SA
347
(W) at 347 – 348, Van Reenen J identified the dilemma that
arises between the relaxation of rules and their enforcement, when
seeking to optimise economy and expedition, with the following
observation:
“
Meticulous
observance of the Rules applying to each type of pleading was sought
by litigants and enforced by our Courts. But
for some decades
now we have been moving away from this formalism and these
technicalities. The pressure on our time and
resources has
become too great to squander energy in this way.
Litigants
were allowed greater freedom in formulating their pleadings and the
tendency has been to relax the Rules whenever it seemed
expedient to
do so. But this tendency has led to another undesirable consequence,
namely that the real issues to be decided were
no longer clearly
formulated at the outset, but were left to emerge and become
clarified as the case proceeded. Although this has
given litigants
greater freedom, it, in its turn, has now tended to overstrain our
time and our resources. We must somehow resolve
this dilemma with
which we are faced.”
[12]
In
Reynolds NO
v Mecklenberg (Pty) Ltd
1996 (1) SA 75
(W) at 78G – 80F, Stegmann J decried argumentative matter
cluttering up affidavits and called for a return to a more
disciplined form of practice in which relevant facts are set out
simply, clearly and in a chronological sequence. Disputes
of
fact ought not to be disguised in a mass of indignant argument,
expostulation and other useless verbiage. Where the matter
is
not prepared in such an orderly way, problems tend to arise and
result in substantial delay. Notwithstanding subsequent
judicial approval of these observations;
Swissborough
Diamond Mines (Pty) Ltd and Others v Government of the Republic of
South Africa and Others
1999 (2) SA 279
(T) at 323D and
President of the
Republic of South Africa and Others v South African Rugby Football
Union and Others
2000 (1) SA 1
(CC) at
19 para 17, the practice of including voluminous matter of an
argumentative and irrelevant nature has continued unabated.
[13]
In
Minister of
Environmental Affairs & Tourism v Phambili Fisheries (Pty) Ltd;
Minister of Environmental Affairs & Tourism
v Bato Star Fishing
(Pty) Ltd
2003 (6) SA 407
(SCA) at 439
para 39, Schutz JA remarked in the context of replying affidavits
that they were the longest – and the most
valueless and that
“being forced to wade through almost endless repetition brings
about irritation, not persuasion. It is
time that the courts declare
war on unnecessarily prolix replying affidavits and upon those who
inflate them.” A similar
sentiment was expressed by Harms
ADP, in
Van Zyl and Others v Government
of the Republic of South Africa and Others
2008 (3) SA 294
(SCA) at 307 – 8 paras 44 – 46, in the
context of an appeal against an order striking out parts of an
affidavit The
Supreme Court of Appeal stated that instead of
wasting judicial time in analysing the affidavit “sentence by
sentence and
paragraph by paragraph such affidavits should not only
give rise to adverse costs orders but should be struck out as a
whole”
and that the court
a quo
should have taken that route
mero
motu
; see too
SA
Railways & Harbours v Hermanus Municipality
1931 CPD 184
and
Wingaardt and Others v
Grobler and Another
2010 (6) SA 148
(ECG) at 152 – 153 paras 17 – 22.
In
National Director of Public Prosecutions
v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA) at 308
para 81, Harms DP remarked that “instead of having a short and
simple case the matter ballooned”.
[14]
The inclusion of unnecessarily prolix and
repetitive material in court papers is not a peculiarly domestic
problem. In the
context of an appeal against a conviction for
tax evasion and whether or not a defence was waived by being buried
in a single unreasoned
paragraph, the United States Court of Appeals
for the Seventh Circuit remarked that “Judges are not like
pigs, hunting for
truffles buried in briefs”;
US
v Dunkel
[1991] USCA7 185
;
927 F.2d 955
(7
th
Cir 1991). In a recent case, using
similes
more appropriate to more northerly climes, in the Canadian Federal
Court of Appeals in
McKesson Canada
Corporation v Canada
2014 FCA 290
,
Stratas JA remarked:
“
[23]
The difference between what the appellants propose in page length and
what I am willing to grant is nine pages. Some might
wonder, “What’s
the big deal about nine pages?”
[24]
Unnecessarily lengthy, diffuse submissions are like an unpacked,
fluffy snowball. Throw it, and the target hardly feels it.
On the
other hand, short, highly focused submissions are like a snowball
packed tightly into an iceball. Throw it, and the target
really feels
it. Shorter written submissions are better advocacy and, thus, are
much more helpful to the Court.
[25] Structures
that lead to repetition, over-elaboration of arguments, block
quotations, and rhetorical flourishes make submissions
diffuse.
Simple but strategic structures, arguments presented only once and
compactly, tight writing that arranges clinical details
in a
persuasive way, and short snippets from authorities only where
necessary make submissions highly focused. The former dissipates
the
force of the argument; the latter concentrates it.”
[15]
The answering affidavit of Cleverlad
amounted to 40 pages without annexures. Its contribution to the
factual narrative was
to introduce, into the chronology, the
correspondence concerning the offer to settle the award in
instalments, Cleverlad’s
application to make the award an order
of court and interlocutory proceedings to prevent the dissipation of
assets. For the
rest, the common cause facts are set out in the
founding affidavit of Venmop. This amounted to 16 pages and
included a repetition,
in reported speech, of the contents of the
relief sought in the notice of motion, under the guise of an
unhelpful explanation of
“the purpose of the application”,
as well as a number of argumentative comments on rule 53 and the case
that was being
made under the Act. In argument I put to Mr
Berlowitz, who appeared for Cleverlad, that stripped of its
argumentative matter,
the answering affidavit would be reduced to
approximately a quarter of its size. Mr Berlowitz conceded the
unnecessary expanse
but offered his estimate of one third of
non-argumentative matter.
[16]
A statement appeared in the introductory
paragraphs of the answering affidavit made by Cleverlad’s
director that where he
made legal submissions, he did so on the
strength of legal advice having been obtained by him on behalf of
Cleverlad from its legal
representatives in the application. A
statement of such nature in motion proceedings has become
increasingly popular in practice
in the last few years. Its
apparent purpose is to disclaim responsibility of the deponent for
later argumentative matter
which serves to inflate the papers and of
which the deponent has no comprehension. However impressive
this might be to a
lay client in justifying a legal representative’s
fee for voluminous affidavits, I find this practice disturbing in at
least
four respects. First, by their very nature these
submissions have neither evidential content nor probative value; as
argumentative
matter they have no place in affidavits. It is
not for nothing that rule 6(1) of the uniform rules of court provides
for
an application to be supported by an affidavit “as to the
facts”. Secondly, the argumentative submissions that
follow are expressly admitted hearsay and, as such, inadmissible.
Thirdly, the submissions amount to legal opinions on matters
upon
which the court is required to decide. Even expert legal
opinion on matters of domestic law is neither necessary nor
admissible;
South Atlantic Islands
Development Corporation Ltd v Buchan
1971 (1) SA 234
(C) at 237 C – F and
Prophet
v National Director of Public Prosecutions
2007 (6) SA 169
(CC) at 188 para 43. Lastly, there is the
aspect of professional legal privilege. It is well established
that a communication
made in confidence between a client, or an agent
for that purpose, and a legal professional, in such professional
capacity, for
the giving or receiving of legal advice, attracts the
professional legal privilege unless the purpose of the advice is to
facilitate
the commission of a crime or fraud; see generally
Three
Rivers District Council & Others v Bank of England (No 6)
[2005]
1 AC 610
;
[2005] 4 All ER 948
(HL);
[2004] 3 WLR 1274
[2004] UKHL 48
and
Thint (Pty) Ltd v NDPP; Zuma v NDPP
2009 (1) SA 1
(CC) at 78 – 79 paras 183 – 185.
However, the privilege may be waived. In this sense, it is not
only a
waiver in the contractual sense of a decision to abandon a
right with full knowledge thereof;
Laws
v Rutherfurd
1924 AD 261
at 263.
It is rather an imputed waiver by implication; one which arises from
the element of publication of the privileged
content, or part
thereof, which can serve as a ground for the inference of an
intention no longer to keep the content secret;
Ex
parte Minister of Justice: In re S v Wagner
1965 (4) SA 507
(A) at 514D. A waiver by implication, is
concerned not so much with an ascertainment of the subjective implied
intention
of the party relinquishing the privilege, but fairness and
consistency. It is where the conduct in disclosing part of a
confidential
communication touches a point that fairness and
consistency require disclosure of the whole, irrespective of whether
or not there
was an intention to have this result; Wigmore
On
Evidence
3
rd
ed volume 8, para 2327;
Kommisaris van
Binnelandse Inkomste v Van den Heever
1999 (3) SA 1051
(SCA) at 1061B – C. This test of imputed
or implied waiver is well illustrated in the context of the
litigation privilege
in
Competition
Commission v Arcelormittal South Africa Ltd and Others
2013 (5) SA 538
(SCA) at 549 – 550 paras 33 – 34 and 551
para 37. Although the mere disclosure of the fact of a
privileged communication,
or its existence, is not sufficient to
justify an imputed waiver of its contents, where its substance is
disclosed to secure an
advantage in proceedings, the High Court of
Australia has found that this will reach the point that fairness and
consistency requires
disclosure of the whole of the communication and
a concomitant loss of privilege;
Mann v
Carnell
(2000) 201 CLR 1
;
Osland
v Secretary to the Department of Justice
[2008] HCA 37
;
(2008)
234 CLR 275.
Where parties in motion proceedings disclose the
substance of otherwise privileged legal advice from their legal
representatives,
in the form of submissions to advance their case, it
is difficult to comprehend that fairness and consistency would not
permit
them to “cherry pick” those parts of the advice
that they received without being required to disclose the whole of
the advice.
The Application and Use
of Rule 53
[17]
Rule 53 of the uniform rules of court
provides a mechanism for an applicant, in review proceedings, to
obtain a record of the proceedings
and to facilitate the presentation
of the applicant’s case in the review. Rule 53(1)
provides for the notice of motion
to call for the dispatch of the
record of such proceedings to the registrar. Rule 53(4)
provides the applicant with an opportunity,
after having inspected
the record, to vary the terms of the notice of motion and supplement
the supporting affidavit. The
provisions of rule 53(3) are
quite clear. They require the applicant to “cause copies
of such portions of the record
as may be necessary for the purpose of
the review” to be made. The purpose of the rule is
equally clear. It is
to provide an aggrieved applicant, who
might not necessarily have all the evidence at his or her disposal,
the opportunity to supplement
the case made in the application by
providing potential evidence in the full record of the review
proceedings. Having been
given such opportunity, it is the duty
of the applicant to select what is relevant from the record to serve
as evidence for the
purpose of the review application. It is
only what is selected by the applicant in terms of rule 53(3) that
serves as evidence.
Should there be documents forming part of
the record omitted, which in the view of the respondent are relevant,
these can be introduced
into evidence as annexures to the answering
affidavit. Any other part of the record omitted which is
necessary to rebut what
is said in answer might similarly be
introduced as an annexure to the replying affidavit.
[18]
The provisions of rule 53(3) are almost
universally ignored in practice and were ignored in this case.
What occurred in this
application is that a written transcript of the
proceedings was provided, numbering almost 2 400 pages, together
with pleadings
and documentary exhibits of over 500 pages.
These documents are included in the court file as part of the
“evidence”
to be considered by the court. There was
no attempt by the applicant to discriminate between what was
considered to be relevant
and not relevant for the purposes of the
review. Furthermore, Venmop did not supplement its notice of
motion or deliver a
supplementary affidavit. In argument, all
that I was referred to in the “record” that had been
filed, was four
pages of the transcript; pages 2198 – 2201
which contained the arbitrator’s reasons for dismissing the
application.
None of the parties had seen fit to include these
pages in the annexures to their affidavits.
[19]
The idea that more is better and that it is
wiser “to put everything before the judge” belongs to the
lazy and the insecure.
It ignores the sentiment expressed in
Phambili, Van Zyl, Zuma, Dunkel
and
McKesson
.
Litigants who deluge a court with a welter of irrelevant and
unnecessary material, which hides and confuses what is relevant,
ought not to be heard to complain about the quality of the judicial
determination they receive. When representing applicants
utilising the provisions of rule 53, practitioners ought to take heed
of the provisions of rule 53(3) and apply their minds to
what is
relevant.
The Admissibility of the
Letter Dated 19 February 2013
[20]
In argument, both counsel accepted as
correct the formulation in
The South
African Law of Evidence
(2
nd
ed 2010 at 703) that a statement which forms part of genuine
negotiations for the compromise of a dispute is inadmissible as
privileged.
This is so, irrespective of whether or not the
words “without prejudice” have been used. There are
two essential
requirements. First is the existence of the
dispute. Secondly, is that the statement is part of
negotiations for the
settlement or compromise of such dispute;
Millward v Glaser
1950 (3) SA 547
(W) at 554;
Gcabashe v
Nene
1975 (3) SA 912
(D) at 914E;
Jili
v SA Eagle Ins Co Ltd
1995 (3) SA 269
(N) at 275B;
Lynn & Main Inc v
Naidoo and Another
2006 (1) SA 59
(N)
at 65 para 22.
[21]
The letter was written in response to a
demand for payment of the amount of the award, at a time when an
application had been launched
for the enforcement of the award and
there existed no challenge to the award. Other than the dispute
as to the authenticity
of the signature, which had been resolved by
the arbitrator’s award, there was no dispute in existence.
The letter
could not be said to be a statement in negotiations to
settle a dispute. In its terms, the letter merely attempted to
obtain
an extended time period by offering to satisfy the amount of
the award in instalments. By reason of the foregoing, the
requirements
for the privilege have not been satisfied; the letter is
admissible and the application, to strike out the letter, accordingly
fails.
Good Cause
[22]
Section 33(2) of the Act prescribes that an
application for the setting aside of an award, in terms of section
33, shall be made
within six weeks after publication of the award.
This section is subject to certain exceptions in relation to offences
in
the
Prevention and Combating of Corrupt Activities Act, 2004
,
which are not presently relevant. Section 38 of the Act
provides that the court may, on good cause shown, extend any period
of time fixed by or under the Act, whether such period expired or
not. As the application was made almost 12 weeks after
the
expiry of the six-week period, it is incumbent upon Venmop to show
good cause for an extension of time.
[23]
Although “good cause” defies
precise or comprehensive definition, in this context it is a
well-known expression that
has two principal requirements.
First is a reasonable explanation for the delay and, secondly, a
bona
fide
case on the merits with some
prospect of success;
De Wet and Others v
Western Bank Ltd
1979 (2) SA 1031
(A)
at 1042;
Chetty v Law Society,
Transvaal
1985 (2) SA 756
(A) at
765;
Government of the Republic of
Zimbabwe v Fick and Others
2013 (5) SA
325
(CC) at 334 para 25 and 350 paras 85 and 86.
[24]
Venmop’s explanation for its delay is
that its present attorneys who were involved in the disposition of
the property, referred
to above, had not represented it in the
arbitration. They only became aware of the arbitration on or
about 19 February 2014
in the context of an earlier abortive
application to prevent the disposition of the property referred to
above. They required
“considerable time to familiarise
themselves with the relevant facts and evidence” giving rise to
the application.
The letter dated 19 February 2014 was written
by the attorneys who represented Venmop in the arbitration and were
fully familiar
with everything that had transpired prior thereto.
It appears that the previous attorneys who represented Venmop in the
arbitration
did not conceive of any possible ground to set aside the
award, as opposed to the new attorneys who presently represent Venmop
in the application. To me this is an unimpressive explanation
of the delay particularly viewed in the light of the chronology
sketched above. The application was brought almost two months
after the new attorneys became aware of the arbitration award
and
almost five weeks after an order was made preventing the disposition
of the property. Such a thin explanation might be
acceptable
when accompanied by powerful prospects of success under the second
requirement of good cause, which is to be considered.
Peremption
[25]
The first consideration of the prospects of
success is whether or not Venmop has perempted its right to set aside
the award.
An unsuccessful litigant who has acquiesced in a
judgment cannot appeal against it. The onus of proof rests on
the person
alleging acquiescence and in doubtful cases it must be
held not to be proven. Although peremption has its origin in
policy
considerations similar to those of waiver and estoppel, the
question of acquiescence does not involve an enquiry into the subject
of state of mind of the person
alleged to
have acquiesced in the judgment. Rather it involves a
consideration of the objective conduct
of
such person
and the conclusion to be drawn
therefrom;
Dabner v South African
Railways and Harbours
1920 AD 583
at
594;
Standard Bank v Estate Van Rhyn
1925 AD 266
at 268;
Gentiruco AG v
Firestone SA (Pty) Ltd
1972 (1) SA 589
(A) at 600A – D;
Natal Rugby Union
v Gould
[1998] ZASCA 62
;
1999 (1) SA 432
(SCA) at 443F –
G;
Samancor Group Pension Fund v
Samancor Chrome and Others
2010 (4) SA
540
(SCA) at 546 para 25 and
Qoboshiyane
NO and Others v Avusa Publishing Eastern Cape (Pty) Ltd and Others
2013 (3) SA 315
(SCA) at 318.
[26]
Although the doctrine of peremption has its
genesis in relation to appeals, it has been extended to applications
for rescission
of default judgment
Hlatshwayo
v Mare & Deas
,
1912 AD 232
;
Sparks
v David Polliack & Co (Pty) Ltd
1963 (2) SA 491
(T) at 496 D – F and
Nkata
v Firstrand Bank Ltd and Others
2014
(2) SA 412
(WCC) at 421, and to the common law right of judicial
review in respect of the exercise of statutory authority
Liberty
Life Association of Africa v Kachelhoffer NO and Others
2001 (3) SA 1094
(C).
Although there
appears to be no precedent for peremption in the context of an
application to set aside an arbitration award, there
appears to be no
reason, either in policy or principal, not to apply the doctrine of
peremption to such a right.
[27]
At the time the letter was written, the
award had not been made an order of court and there was no writ
capable of execution.
The writing of the letter and the offer
to satisfy the award, albeit on terms more favourable to Venmop, was
not something Venmop
was required or compelled to do. In my
view, the only reasonable inference and conclusion to be drawn from
the dispatch of
such a letter, is that Venmop had acquiesced in the
award and perempted any right to set the award aside.
Gross Irregularity
[28]
In terms of section 33(1)(
b
)
of the Act, where an arbitration tribunal has committed a “gross
irregularity” in the proceedings, an application
may be made to
set the award aside. The concept of “gross irregularity”,
in relation to legal proceedings, is
a methodological error which
prevents a fair hearing; it is comprised of two aspects. First,
there must be an irregularity
and secondly it must be “gross”.
An irregularity is high-handed or mistaken action; it is “gross”
when it is calculated to cause the consequence that it prevents the
case of the aggrieved party from being fully and fairly determined;
Ellis v Morgan; Ellis v Dessai
1909 TS 576
at 581;
Goldfields
Investment Ltd v City Council of Johannesburg
1938 TPD 551
at 560 – 561 and
Telcordia
Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007
(3) SA 266
(SCA) at
298 – 299
.
[29]
The irregularity complained of is that the
arbitrator, having found the documents to be relevant, mistakenly
refused to order their
production under the provisions of rule
35(7). Rule 35(7) provides “
If
any party fails to give discovery as aforesaid . . . the party
desiring discovery or inspection may apply to a court, which may
order compliance with this rule . . . .”
.
The wording of the rule has a long genealogy which clearly imparts a
discretion whether or not to order compliance and production
of the
documents;
Rainsford v African Banking
Corporation Ltd
1912 CPD 729
;
Bothma
v Protea Furnishers (Pty) Ltd
1970 (3)
SA 180
(O) and
Continental Ore
Construction v Highveld Steel & Vanadium Corp Ltd
1971 (4) SA 589
(W) at 594 – 595.
[30]
Mr Segal, who appeared for Venmop,
submitted that where the documents are relevant there is no longer a
discretion to order compliance
with the rule; an order of compliance
ought to follow as a matter of course. The import of such
submission is that where
the documents are not relevant, the court
retains a discretion to order compliance with the rule on discovery.
I cannot agree
with the submission on three bases. First, the
case authority referred to above suggests the discretion to refuse
discovery
of documents notwithstanding that they are relevant.
Secondly, rule 35 requires a party to make discovery of relevant
documents.
Compliance with the rule requires the discovery of
relevant documents. Where the documents are not relevant,
ordering a party
to make discovery or produce such documents cannot
be said to be ordering compliance with rule 35 in circumstances where
there
has been a failure to give discovery in terms of the provisions
of sub-rules 35(1) to 35(6). Thirdly, it is difficult to
conceive of a situation where the discretion would be exercised to
order a party to give discovery of irrelevant documents.
In my
view the discretion in rule 35(7) is predicated on the documents, in
respect of which discovery is sought, being relevant.
[31]
The reasons for the arbitrator’s
refusal to order the production of the documents reflect a carefully
measured consideration
of the facts and circumstances in which the
application was brought as well as the considered exercise of a
discretion. That
being so, the arbitrator neither misconstrued
the nature of his power nor committed any methodological error.
There cannot
be said to be any irregularity. Furthermore when
regard is had to the fact that Cleverlad produced its audited
financial
statements, which Venmop introduced into evidence, there
was simply no basis for Venmop to allege that the arbitrator’s
failure,
to order production of the documents sought, resulted in
Venmop being prevented from having its case fully and fairly
determined.
The arbitrator’s conduct complained of was
neither irregular nor gross.
[32]
The explanation for the delay impresses me
as neither reasonable nor satisfactory. The conduct of Venmop
in response to a
demand for payment leads to the conclusion that it
acquiesced in the award. The conduct of the arbitrator upon
which the
application was pursued, was neither irregular nor
prevented Venmop from having its case fully and fairly determined.
The
case to set aside the award is so thoroughly devoid of merit,
that no good cause has been shown, as contemplated by section 38 of
the Act, for an extension of the period of six weeks prescribed in
section 33(2).
Costs
[33]
Venmop sought the costs of the application
on the attorney-client scale, Mr Berlowitz submitted that the
application was not brought
bona fide
but was brought with the intention of delaying the enforcement of the
arbitration award. Mr Segal submitted that there was
no
dishonesty involved and no intention merely to delay, but that
Cleverlad had prosecuted a claim in good faith. Although
there
might well be substance in Mr Berlowitz’s contentions, it is
not necessary for me to find dishonesty or a vexatious
intention.
Even with the most upright and most firm belief in the justice of its
cause, a litigant can be vexatious by putting
the other side to
unnecessary trouble and expense, which it ought not to bear;
In
re Alluvial Creek Ltd
1929 CPD 532
;
Johannesburg City Council v Television &
Electrical Distributors (Pty) Ltd and Another
1997 (1) SA 157
(A) at 177D – F;
Claase
v Information Officer, South African Airways (Pty) Ltd
2007 (5) SA 469
(SCA) at 474 – 475 para 11, and
Camps
Bay Ratepayers' and Residents' Association and Another v Harrison and
Another
2011 (4) SA 42
(CC) at 71 para
76. Taking into account the fact that Venmop abandoned the
first two grounds of its application before argument,
the delay in
the enforcement of the award that this application has caused, and,
in respect of the last ground together with the
aspects of
peremption, delay and good cause, the application was so lacking in
arguable merit, I am of the view that an attorney-client
costs order
is merited. However, notwithstanding their conduct in this
application, the applicants ought not to be held responsible
for the
manner in which the answering affidavit was presented.
[34]
In the result I make the following order:
1
The application is dismissed.
2
Subject to 3 below, the applicants are
ordered and directed to pay the respondents’ costs, jointly and
severally, the one
paying the other to be absolved, on the
attorney-client scale.
3
No costs shall be allowed on taxation in
respect of the drafting and settling of the answering affidavit.
___________________________
J
R PETER
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Appearance
for applicants:
Mr
M M Segal, instructed by Schoonees Belling & Georgiev, Edenvale
Appearance
for the second respondent
:
Mr
J K Berlowitz, instructed by Paul Friedman & Associates Inc,
Johannesburg
Date
of hearing
:
3
February 2015
Date
of judgment
:
3
August 2015