Automated Summary
Key Facts
The South African Revenue Service (SARS) applied to declare Gary Walter van der Merwe (GVDM) and the trustees of the Eagles Trust as vexatious litigants under the Vexatious Proceedings Act. The court found that GVDM and the respondents repeatedly instituted legal proceedings without reasonable grounds, including multiple unsuccessful business rescue applications for Zonnekus, which were dismissed as abuses of process. These actions, spanning years, aimed to delay liquidation and challenge tax assessments, but were ruled vexatious, unreasonable, and prejudicial. SARS also successfully struck out portions of the respondents' affidavits containing defamatory or irrelevant allegations. The court ordered that future proceedings by the respondents require judicial leave to prevent further abuse of the court system.
Tax Type
Corporate Income Tax on Zonnekus and related entities
Issues
- The court evaluated SARS' and the respondents' applications to strike out specific parts of each other's affidavits, determining that SARS' application succeeded in removing vexatious and irrelevant content, while the respondents' application was dismissed.
- The court considered whether the respondents, including Gary van der Merwe and the Eagles Trust trustees, should be declared vexatious litigants under the Vexatious Proceedings Act, given their persistent and unreasonable legal actions against SARS and others, which were found to be an abuse of process.
Tax Years
- 2002
- 2018
- 2016
- 2003
- 2017
Holdings
The court granted SARS's application under section 2(b) of the Vexatious Proceedings Act, declaring Gary Walter van der Merwe (in his personal capacity and as a trustee of the Eagles Trust) and the other trustees as vexatious litigants. This order restricts them from instituting legal proceedings against any person in any court without the court's leave, which will only be granted if satisfied the proceedings are not an abuse of process and have prima facie grounds.
Remedies
- The court declared Gary Walter van der Merwe (in his personal capacity and as a trustee of the Eagles Trust) and the other respondents as vexatious litigants under section 2(b) of the Vexatious Proceedings Act. They are prohibited from instituting legal proceedings without prior court leave, which will only be granted if the court is satisfied the proceedings are not an abuse of process and have prima facie grounds.
- The respondents' application to strike out portions of SARS' founding affidavit was dismissed. The court found no basis to strike out the material as it was relevant to the main application and did not breach confidentiality provisions of the TAA. The respondents were ordered to pay SARS' costs for opposing this application.
- The court granted SARS' application to strike out paragraphs 12-15, 62, 64, 67, 69, 115, 117, 157-159, 222-227 and annexure GVDM1 from the respondents' answering affidavit. These paragraphs contained allegations deemed scandalous, vexatious, or irrelevant. The respondents were ordered to pay SARS' costs, including costs of two counsel, for this application.
- The respondents were ordered to pay all costs of the application, including costs incurred during the previous postponement, jointly and severally. This includes the costs of two counsel for both SARS' successful strike out application and the respondents' unsuccessful strike out application.
Tax Issue Category
Other
Legal Principles
The court applied section 2(b) of the Vexatious Proceedings Act to restrict future litigation by the respondents, finding their persistent legal actions against SARS and others constituted an abuse of court process. The judgment references the Constitutional Court's decision in Beinash v Ernst & Young, emphasizing that while the VPA limits access to courts, it is a reasonable restriction to prevent unjustified claims. The principle of abuse of process was central to the evaluation of the respondents' conduct.
Precedent Name
- Beinash v Wixley
- Vaatz v Law Society of Namibia
- Standard Credit Corporation Ltd v Bester and Others
- Beinash and Another v Ernst & Young and Others
- Searll NO and Others v Hough and Others
- Absa Bank Ltd v Dlamini
- MEC for Co-operative Governance and Traditional Affairs, Mpumalanga v Maphanga
Cited Statute
- Companies Act
- Vexatious Proceedings Act
- Uniform Rules Of Court
- Tax Administration Act
- Criminal Procedure Act
Judge Name
Justice Savage
Passage Text
- The respondents have been shown to have persistently and without any reasonable ground repeatedly instituted legal proceedings, whether against SARS, its attorneys or others, in so unreasonable and persistent a manner as to warrant an order being made to restrict such litigation into the future.
- The persistent and vexatious approach taken by GVDM and the respondents in the unreasonable institution of legal proceedings is most clearly apparent in relation to the liquidation of Zonnekus and applications ancillary to it. ... the business rescue applications were patently unwarranted, instituted without any commercial justification, were doomed to failure and set out to achieve an extraneous objective, namely to frustrate and delay the liquidation.
- The first respondent, Gary Walter van der Merwe, in his personal capacity, or his capacity as a director, member or trustee of any company, close corporation or trust, and the second, third and fourth respondents, ... may not institute any legal proceedings against any person in any court without the leave of the court.