Miles Plant Hire (Pty) Ltd v The Commissioner for the South African Revenue Service

Miles Plant Hire (Pty) Ltd, a plant hiring business in the construction industry, was sole director by Ms Melanie Pandaram. Miles was granted tax amnesty in 2006 but Ms Pandaram subsequently submitted false income tax and VAT returns for the 2008 year of assessment, reducing tax liability by R1,740,508.77 and claiming a fraudulent VAT refund of R840,245.61. She was convicted of tax and VAT evasion. Miles had a history of non-payment of taxes and failed to submit returns for 2010-2012, accumulating a tax debt of R37 million. After a failed section 155 Companies Act compromise and a subsequent failed business rescue, SARS served a statutory demand and instituted winding-up proceedings on 22 April 2013. SARS obtained a final winding-up order on 3 October 2013. Leave to appeal was granted on 12 February 2014. Miles lodged notice of appeal on 11 March 2014 but failed to lodge the record within the prescribed three-month period. The appeal lapsed. Miles only filed the record, heads of argument and application for condonation on 18 August 2014, well beyond the deadline.

• Whether condonation should be granted for non-compliance with the Rules of the Supreme Court of Appeal, specifically the failure to timeously prosecute an appeal
• Whether the cumulative effect of flagrant breaches of court rules without acceptable explanation warrants refusal of condonation regardless of prospects of success
• Whether costs de bonis propriis should be awarded against the director personally

The application for condonation was dismissed. Ms Melanie Pandaram was ordered to pay the respondent's costs of the application for condonation and costs incurred in opposing the lapsed appeal de bonis propriis on the attorney and client scale, which costs in both instances included those of two counsel.

In cases of flagrant breaches of the rules of court without any acceptable explanation, condonation may be refused irrespective of the prospects of success on appeal, particularly where the cumulative effect of multiple breaches, lack of acceptable explanation, the respondent's interest in finality of judgment, and evident prejudice to the respondent and other affected parties (such as creditors in liquidation proceedings) render the application for condonation unworthy of consideration. An applicant seeking condonation must provide a full, detailed and accurate account of the causes of delay and their effects. Where a director or representative causes a company to incur costs through unjustified litigation characterized by lack of candour and flagrant disregard for court rules, a punitive costs order de bonis propriis on the attorney and client scale may be appropriate to prevent prejudice to creditors.

The Court noted (without deciding definitively) that in circumstances where a winding-up has progressed to an advanced stage with liquidators having taken control and realized assets, it may prove impossible to turn back the clock and the appeal may arguably have become academic (following Dolphin Ridge). The Court observed that even if Miles succeeded on appeal, the result would merely be that SARS would have to bring another winding-up application which would succeed given Miles' hopeless insolvency, thereby further prejudicing creditors. The Court also commented that there seemed to be no reason why compliant taxpayers should be saddled with the costs of defending against Miles' unmeritorious litigation.

This case reinforces the Supreme Court of Appeal's strict approach to compliance with court rules and the prosecution of appeals. It establishes that flagrant breaches of court rules without acceptable explanation can result in refusal of condonation regardless of the merits of the appeal. The judgment demonstrates that courts will impose punitive costs orders de bonis propriis against directors who show lack of candour and play loose with court rules, protecting creditors from bearing costs of unjustified litigation. It also illustrates the court's consideration of interests in finality of judgments, particularly in liquidation matters where the process has advanced significantly. The case serves as a warning to litigants and their legal representatives about the serious consequences of non-compliance with procedural rules.