The Commissioner for the South African Revenue Service v Candice-Jean van der Merwe

SARS obtained a tax judgment against Gary van der Merwe (the respondent's father) for over R66 million arising from unpaid taxes. SARS alleged he used various juristic entities to hide assets. His daughter, Candice-Jean van der Merwe, received USD 15.3 million (approximately R142 million) from Lebanon, allegedly as a gift, and acquired expensive vehicles and properties. SARS contended she was a conduit for her father's assets. SARS obtained a provisional preservation order against her assets under section 163(4)(a) of the Tax Administration Act 28 of 2011, which was confirmed by Savage AJ. However, Savage AJ did not appoint the curator bonis sought by SARS. Ms van der Merwe was granted leave to appeal and SARS was granted leave to cross-appeal. Ms van der Merwe's appeal lapsed due to failure to prosecute it timeously. She applied for condonation to revive her appeal approximately five months after the deadline for filing her notice of appeal.

• Whether condonation should be granted for the late filing of an appeal despite flagrant breaches of the Rules of Court
• Whether an explanation based on legal advice and administrative difficulties is acceptable justification for non-compliance
• Whether a curator bonis should be appointed under section 163(7)(b) of the Tax Administration Act 28 of 2011 to preserve assets subject to a preservation order
• The requirements for granting condonation in appeals
• The appropriateness of attorney-and-client costs for non-compliance with court rules

1. The application for condonation by Ms Candice-Jean van der Merwe was dismissed with costs including those of two counsel on the attorney and client scale. 2. The appeal by SARS was upheld with costs including those of two counsel. 3. The order of the court below was set aside and replaced with an order: (a) confirming the provisional preservation order (except for one excluded bank account); (b) appointing Mr Cloete Murray of Sechaba Trust (Pty) Ltd as curator bonis in whom all assets of Ms van der Merwe would vest; (c) granting the curator extensive powers to control, investigate, and manage the assets; and (d) ordering Ms van der Merwe to pay the costs of the application including those of three counsel.

1. In applications for condonation of late appeals, the applicant must provide a full, detailed and accurate account of the causes of delay and their effects, including specific dates and circumstances, to enable the court to assess responsibility. 2. Where breaches of court rules are flagrant and the explanation offered is unacceptable and wanting, condonation may be refused irrespective of the applicant's prospects of success on appeal. 3. A litigant may not invoke legal advice that is demonstrably unreasonable to excuse non-compliance with court rules; litigants must apply common sense and cannot jettison it based on professional advice alone. 4. Under section 163(7)(b) of the Tax Administration Act 28 of 2011, where a court grants a preservation order over assets and there is evidence that: (a) a third party (particularly one with a history of tax evasion) exercises control over those assets; (b) the assets require administration; and (c) investigation is necessary to determine the true ownership and disposition of funds, it will ordinarily be appropriate to appoint a curator bonis with powers to take control of, administer, and investigate the preserved assets.

The court observed that paragraph 5(b) of the provisional order granted by Rogers J, which set out explanatory notes regarding the prima facie evidence justifying the preservation order, was in truth an explanatory note and ought not to have formed part of the order itself, and consequently should not have been confirmed by Savage AJ. The court also commented on the appropriateness of costs on the attorney-and-client scale, noting that conduct generating costs that should not have been incurred and ought not be borne by compliant taxpayers justifies such punitive cost orders. The court made observations about the pattern of Mr van der Merwe's conduct in using family members and entities to conceal assets from SARS, suggesting a systematic scheme of tax evasion requiring investigation.

This case is significant in South African tax law and civil procedure for: (1) establishing strict standards for condonation applications in the Supreme Court of Appeal, emphasizing that flagrant breaches of court rules with inadequate explanations will result in refusal of condonation regardless of merits; (2) interpreting section 163(7)(b) of the Tax Administration Act 28 of 2011 regarding the appointment of curators bonis in preservation order proceedings, establishing that where there is evidence of asset concealment and third-party control over preserved assets, a curator should ordinarily be appointed; (3) confirming that litigants cannot rely on demonstrably unreasonable legal advice to excuse non-compliance with court rules; (4) demonstrating the court's willingness to award punitive costs on the attorney-and-client scale where non-compliance generates unnecessary costs to the public fiscus; and (5) providing guidance on the powers and duties of curators appointed to preserve assets pending tax collection proceedings.