This blog was co-authored by Adam Butler, Candidate Attorney.

The failure to put up security for costs when required to do so can have significant consequences.

On 20 November 2024, the Johannesburg High Court delivered judgment in Redpath Mining (South Africa) (Pty) Ltd v Siyakhula Sonke Empowerment Corporation (Pty) Ltd and Others, ordering that Siyakhula’s application be dismissed for its failure to provide Redpath with adequate security for Redpath’s costs as ordered by the court.

In May Siyakhula had been ordered to provide security for Redpath’s costs in an amount to be determined by the Registrar, in accordance with the provisions of Rule 47 of the Uniform Rules of Court.

In August the Registrar determined that an amount of R2 million be furnished by Siyakhula, with the form of that security to be agreed by the parties within a time frame set by the Registrar. If the parties could not agree, then an irrevocable guarantee issued by a South African commercial bank was to be provided.

In the event, the parties could not agree and so an irrevocable bank guarantee was required. This was not forthcoming.

Redpath therefore approached the court with its own application for an order that Siyakhulu’s application be dismissed on account of its failure to comply with the order that it furnish security.

Siyakhulu opposed the Redpath application, but only filed its answering affidavit on the eve of the hearing. Attached to the affidavit was a bank guarantee for R2 million issued by a commercial bank.

Redpath argued that the guarantee was not compliant with the court’s previous order for two reasons. Firstly, it was not irrevocable, and secondly, it was not provided within the stipulated time limits.

The court considered the provisions of Rule 47(4), which states that the court may “if security be not given within a reasonable time, dismiss any proceedings instituted or strike out any pleadings filed by the party in default, or make such other order as to it may seem meet.” It found that the power to dismiss proceedings must be exercised “sparingly and with circumspection.”

The court held that the guarantee provided was not irrevocable because it could be revoked by the bank at any time before its term of 5 years by giving the beneficiary 30 days’ notice. Though the beneficiary could demand payment within that 30 day period, this did not solve the prejudice posed by the guarantee. The parties could not know how long the litigation would take, or once complete, the time required for taxing the applicable bills of costs. As such, the guarantee did not fulfil its primary function as reliable security for Redpath’s costs.

Siyakhulu had therefore failed to provide an irrevocable bank guarantee, and failed to do so within the set time limits. The court was asked by counsel for Siyakhulu to exercise its discretion and afford Siyakhulu time to rectify the deficiencies in the guarantee, but refused to do so on the grounds that the guarantee as it stood was not compliant and there was no authority for the proposition that a court could exercise its discretion to allow the curing of a non-compliant guarantee.

The court ordered that Siyakhulu’s main application be dismissed as it had failed to comply with the court order regarding the furnishing of security. Siyakhulu was also ordered to pay the costs of Redpath’s application.

This case reinforces the necessity of providing security in the form, and within the timelines, imposed by the court and Registrar where an application in terms of Rule 47 is brought. The possibility of rectifying a deficient guarantee, or the late provision of a guarantee, will not automatically save a litigant from having their application (or summons or defence, depending on the circumstances) dismissed for failure to furnish security.