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[2026] ZAGPPHC 608
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Commissioner for the South African Revenue Service v Shabangu and Another (121282/2023 ; 121275/2023) [2026] ZAGPPHC 608 (27 May 2026)
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case
No. 121282 / 2023
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED: YES
DATE:
27 May 2026
SIGNATURE
In
the matter between:
THE
COMMISSIONER FOR THE
SOUTH
AFRICAN REVENUE SERVICE
Applicant
and
NGWANE
ROUX SHABANGU
First
Respondent
NOMZAMO
PERSERVERENCE SHABANGU
Second
Respondent
AND
Case
No. 121275 / 2023
In
the matter between:
THE
COMMISSIONER FOR THE
SOUTH
AFRICAN REVENUE SERVICE
Applicant
and
NGWANE
ROUX SHABANGU N.O.
First
Respondent
PROE
SHABANGU N.O
Second
Respondent
STEMBILE
ALPHONSINA SHABANGU N.O.
Third
Respondent
NOMZAMO
PERSERVERENCE SHABANGU N.O.
Fourth
Respondent
(First
to Fourth Respondents cited in their capacities
as the appointed
trustees of the Roux Shabangu
Family Trust, IT
4848/05)
ORDER
1.
A final sequestration order is granted in
matter with case number 121282/2023 and case number 121275/2023.
2.
The costs of the applications will be costs
in the sequestration.
JUDGMENT
TOLMAY
J
:
Introduction
[1]
These
are the return dates of two provisional sequestration orders granted
on 15 October 2024.
[1]
The
sequestration orders deal with Mr Shabangu’s personal estate
case number 121282/2023 and that of the Roux Shabangu Family
Trust
(the Trust) case number 121275/2023. Prior to the sequestration
applications, SARS filed a preservation application under
section 163
of the Tax Administration Act
[2]
(the TAA). This application was opposed, but SARS succeeded in
obtaining a final preservation order. This application will be
referred to as the s163 application.
[2]
The two sequestration applications, although not consolidated,
were
heard simultaneously. The applications, although requiring separate
orders, are interrelated and the one cannot be determined
without
reference to the other.
[3]
The
application to sequestrate Mr Shabangu’s personal estate was
originally brought against both Mr Shabangu and his wife,
since SARS
could not determine their marital regime. During the hearing of the
provisional sequestration SARS accepted that s21
of the Insolvency
Act
[3]
would afford the
concursus
creditorum
sufficient protection and a provisional order was granted against the
estate of Mr Shabangu only.
The
Background to the sequestration applications
[4]
The basis for the sequestration application by SARS for both
Mr
Shabangu’s and the Trust sequestration was his indebtedness to
SARS. On 22 April 2024 tax returns were filed on behalf
of Mr
Shabangu in respect of the 2021 and 2022 assessments claiming credits
to the value of R129 588 870.00. This would have extinguished
his tax
liability. These tax returns were, however, fraudulent. Mr Shabangu
acknowledged that fraud was committed but blamed his
tax advisor for
it. Due to Mr Shabangu’s subsequent admission of the tax
liability this fraud became irrelevant for present
purposes. His tax
liability and as a result the indebtedness to SARS is undisputed.
[5]
Mr Shabangu owed SARS R126,068,305.80 for the 2006 and 2009–2020
periods based on his tax returns. The amount has increased due to
interest. On 5 August 2024, SARS filed its supplementary affidavit,
indicating that the amount was R221,151,047.33. There are no
outstanding objections or appeals concerning the original and
additional
assessments.
[6]
As far as the case against the Trust is concerned the indebtedness
to
SARS was also not disputed. It owed SARS an amount of R7 046
501,10 in respect of income tax for the 2008, 2011, 2013 and
2016
years of assessment.
[7]
SARS argued that the requests for a debt compromise under
s200
of the TAA amounts to an act of insolvency as defined by s8(e) of the
Insolvency Act. Mr Shabangu also indicated in correspondence
with
SARS that he was unable to pay the debt, this constitutes an act of
insolvency as envisaged in s8(f), says SARS.
[8]
According to SARS, the sequestration will benefit creditors,
as
assets - although encumbered - may be realised and sold to their
advantage. The main benefit for creditors is that trustees
and
investigators can examine the finances of both Mr Shabangu and the
Trust and begin impeachment proceedings under the Insolvency
Act.
SARS refers to convoluted transactions that require scrutiny and said
that Mr Shabangu controls a large group of corporate
structures. He
and his wife are also trustees of the Trust. SARS is a creditor of
these entities, which are alleged to have failed
to fulfil their tax
obligations. SARS furthermore refers to Mr Shabangu’s lavish
lifestyle and access to substantial amounts
of money that flow
through bank accounts that he has access to.
[9]
In his opposing affidavit Mr Shabangu indicated that his only
desire
was to settle his tax indebtedness. The opposition to the
sequestration application is based on the assertion that the
sequestration applications brought by SARS is mala fide and should be
dismissed.
Events
after the hearing of the application
[10]
After the hearing, on 12 August 2025, my secretary received an email
confirming that
the Trust had settled its entire debt to SARS. On 5
September 2025, SARS filed a supplementary affidavit requesting time
to determine
the source of funds used for the payments. The Trust
refused to disclose the source of the payments. SARS further asserted
that
prior cost orders issued against the Trust remain outstanding.
These cost orders included the costs awarded in the s163 application,
as well as the costs incurred by the joint provisional trustees. SARS
requested that the judgment be deferred until a subsequent
supplementary affidavit was filed. Mr Shabangu wanted SARS to
withdraw the application which SARS was not willing to do.
[11]
On 16 September 2025, a supplementary affidavit was filed on behalf
of the Trust
and Mr Shabangu personally. In this affidavit the Court
was requested to forthwith discharge the rule nisi against the Trust
as
the debt had been extinguished.
[12]
As far as the case against Mr Shabangu personally was concerned, he
said that the
supplementary affidavit filed supported his argument
that the sequestration application was mala fide and an abuse of
process.
He stated that the identity of the entity that made the
payment is of no concern to a debt extinguishing agreement. He
averred
that the reliance on the costs order in the s163 application
was a mala fide attempt to keep the Trust in a state of
sequestration.
In any event as far as these costs were concerned SARS
has no preference over other creditors. Despite indicating that no
further
affidavits should be allowed he requested permission to file
a further affidavit dealing with SARS’ alleged mala fide
conduct.
He also requested a case management meeting.
[13]
A case management meeting was held on 9 October 2025 and the Court
issued directives
regarding the filing of further affidavits and
heads of argument. On 24 October 2025 SARS filed a further
supplementary affidavit.
In this affidavit the particulars of the
payments made were set out and it was indicated that the source of
the payment had been
established. SARS issued letters requesting
relevant material in terms of s46 of the TAA (Request Letters) from
several entities.
SARS detailed the movement of funds across various
accounts and entities, ultimately determining that inaccurate
information was
submitted regarding the origin of the money. SARS
indicated that the funds applied to settle the Trust’s debt may
not have
originated from a legitimate source, and the transaction
could potentially be subject to challenge. SARS asserted that the
facts
suggest that Mr Shabangu obtained a loan, thereby further
encumbering his insolvent estate. The argument was that transactions
entered into after the
concursus creditorum
may be considered
impeachable by the insolvency trustee.
[14]
SARS also dealt in detail with the costs that must be paid to it
considering the
litigation. SARS argued that despite receiving the
Trust’s payment of the tax debt into its account, it does not
constitute
acceptance of the payment. SARS is prohibited by
legislation to be party to impeachable dispositions and can therefore
not accept
payment.
[15]
On 10 November 2025 Mr Shabangu filed a response to this
affidavit. It was argued that the Trust’s tax liability was
paid
and therefore SARS no longer had legal standing to pursue the
sequestration of the Trust. The source of the funds, he says, is
immaterial to SARS.
The claims of additional
grounds for sequestration (curator's costs, untaxed legal costs from
the preservation order, and untaxed
legal costs from the current
application) are disputed.
SARS, the affidavit states, abused
its investigative powers under s46 of the TAA. The
allegations
of mala fides were again repeated. He states that SARS' attempt to
introduce new grounds for sequestration in its second
supplementary
affidavit is improper and demonstrates an attempt to keep the Trust
under sequestration.
[16]
On 14 November 2025 SARS filed its
affidavit in response to this affidavit.
SARS
questioned the identity of a borrower who contributed to the
repayment. SARS pointed to a discrepancy in this regard. Initially
it
was stated that Mr Shabangu personally procured the loan to settle
his tax debts. However, the Trust later claimed that it was
the
borrower. SARS highlighted that both Mr Shabangu and the Trust were
under provisional sequestration when the loan was allegedly
procured.
It argued that neither had the legal capacity to encumber assets or
attract liabilities without the consent of the provisional
insolvency
trustee. Despite repeated requests, the Trust did not provide
sufficient clarity or particularity regarding the origin
of the
funds.
[17]
SARS contended that the Trust and Mr
Shabangu are liable for the curator's costs as per the provisional
preservation order, which
was confirmed in the final order.
SARS
denied any malice or ulterior motive in filing the sequestration
applications.
It argued that the applications were
a last resort to recover tax debts and were necessary to protect
creditors' interests. It argued
that the payment of the Trust’s
tax debt only after the hearing of the matter demonstrated the
Trust's ability to procure
funds when faced with the risk of final
sequestration.
[18]
Mr Shabangu persisted with his contention that the applications were
in bad faith.
He claimed SARS is running an integrated campaign with
a hidden agenda against him. He pointed out that SARS pursued
litigation
after the Trust paid, suggesting an ulterior motive for
the applications. He claimed that SARS dependence on the unpaid costs
of
section 163 of the application indicated hostility, unfair
treatment, and a desire to punish him instead of simply recovering
tax. SARS denied these allegations.
[19]
SARS filed the amicus curiae report on 28 November 2025 and Mr
Shabangu filed an
affidavit in response thereto on 31 March 2026. In
my view the report and the affidavit only assist to support my
conclusion that
an investigation in terms of the Insolvency Act is
required and I do not deal with the content thereof.
Analysis
[20]
Initially the argument was raised on behalf of Mr
Shabangu and the Trust that SARS lacks the authority to launch a
sequestration
application due to the other remedies provided for in
the TAA for collection of a tax debt. This argument was abandoned and
correctly
so, as
SARS is empowered by s177 of the TAA to
institute a sequestration application for an outstanding tax debt.
Nothing further needs
to be said about this.
[21]
Section 12(1) of the Insolvency Act outlines three key
requirements that must be satisfied for a court to grant a
sequestration
order. The applicant must establish a liquidated claim
against the debtor of at least R100.00, as defined in section 9(1).
The
debtor must have committed an act of insolvency as defined in
section 8 of the Insolvency Act or be factually insolvent and an
advantage to creditors must be proven.
[22]
The applicant bears the onus of proving these requirements on
a balance of probabilities. For a provisional sequestration order,
prima facie evidence suffices, but for a final order, the court
requires proof on a balance of probabilities. The court, however,
retains a discretion to refuse sequestration even if all statutory
requirements are met, particularly in cases where the application
is
abusive or lacks bona fides.
[23]
It is incontrovertible that the threshold requirement of
indebtedness existed at the time that the sequestration applications
were
launched, and the provisional orders were granted. Mr Shabangu
and the Trust committed acts of insolvency, in terms of s8(f) as
both
were unable to pay their debts to SARS. The requests for debt
compromises in terms of s200 of the TAA constitute an act of
insolvency in terms of s8(e) of the Insolvency Act.
[24]
The question of whether the sequestrations will be to the
advantage of creditors may be more controversial, although this does
not
constitute the mainstay of the opposition to the applications.
SARS relies in this regard on both a pecuniary and an indirect
advantage
to creditors. It is an established principle that a
creditor does not have to prove advantage to creditors with certainty
but must
merely prove a reason to believe that sequestration will be
to the advantage of creditors.
[25]
A
trustee is appointed to administer the insolvent estate, and this
trustee is vested with extensive investigative powers. These
powers
include the ability to interrogate the insolvent, examine financial
records, and set aside certain dispositions made by
the insolvent. In
Meskin
& Co v Friedman
[4]
which was cited with approval in
Commissioner
,
SARS
v Hawker Aviation Services Partnership & Others
[5]
the Court explained:
“
The
right of investigation is given, as it seems to me, not as an
advantage in itself, but as a possible means of securing ultimate
material benefit for the creditors in the form, for example, of the
recovery of property disposed of by the insolvent or the disallowance
of doubtful or collusive claims. In my opinion, the facts put
before the Court must satisfy it that there is a reasonable
prospect
– not necessarily a likelihood, but a prospect which is
not too remote – that some pecuniary benefit
will result to
creditors. It is not necessary to prove that the insolvent has
any assets. Even if there are none at all, but
there are reasons for
thinking that as a result of enquiry under the Act
some
may be revealed or recovered for the benefit of creditors, that is
sufficient".
[26]
The right to investigate the financial affairs of a
sequestrated person plays a crucial role in determining an advantage
to creditors.
While the investigative powers are not an advantage in
themselves, they enable trustees to uncover hidden assets, rectify
irregularities,
and ensure equitable distribution among creditors.
This aligns with the broader objectives of the Insolvency Act, which
prioritises
the collective interests of creditors over individual
claims. Thus, the investigative process is integral to establishing
the reasonable
prospect of pecuniary benefit required to justify
sequestration.
[27]
If
there are doubts about the source of a payment, an investigation
should be considered, as it can inform the court's exercise
of a
discretion. The idea of "advantage to creditors" is
fundamental to the court's decision to issue a final sequestration
order.
The Constitutional Court in
Stratford
and Others v Investec Bank Ltd and Others
[6]
clarified that advantage to creditors means a reasonable prospect of
some pecuniary benefit to creditors, which need not be a likelihood
but must be more than speculative
[7]
However, where there is a possibility of an impeachable transaction
the court should take that into account the advantage to creditors
may be situated in the investigation that will follow. The payment of
the Trust’s debts in and of itself, in the circumstances
of
this case, cannot be the end of the matter. It is abundantly clear
that a proper investigation in terms of the Insolvency Act
is
required.
[28]
The facts in this case, the flurry of affidavits after the
hearing and the payments made, amply illustrate the need to
investigate
the financial affairs of Mr Shabangu and the Trust. I am
satisfied that a sequestration order will be to the advantage of
creditors.
[29]
We
now come to the main objection to the sequestration applications and
that is that they are
mala
fide
and an abuse of process. It is a settled principle that a court has a
discretion to refuse a sequestration application on the basis
that
the application is not made for bona fide purposes and if that is the
case the application is an abuse of process and
mala
fide
.
[8]
[30]
The
question that follows is what would constitute an abuse or mala
fides. Our courts have held that an application is an abuse
of
process when it is diverted from its true purpose to serve extortion,
oppression, or to exert pressure for an improper end.
[9]
What would constitute an abuse of process will depend on the facts of
the case.
[10]
In
Price
Waterhouse Coopers Inc and Others v National Potato Co-Operatives
Ltd
[11]
the SCA had the following to say about abuse of process:
‘
'It
has long been recognised in South Africa that a Court is entitled to
protect itself and others against the abuse of its process,
but no
all-embracing definition of 'abuse of process' has been
formulated. Frivolous or vexatious litigation has been held
to be an
abuse of process, and it has been said that 'an attempt made to use
for ulterior purposes machinery devised for the better
administration
of justice' would constitute an abuse of the process (Hudson v Hudson
and another supra at 268). In general,
legal process is used
properly when it is invoked for the vindication of rights or the
enforcement of just claims and it is abused
when it is diverted from
its true course so as to serve extortion or oppression; or to exert
pressure so as to achieve an improper
end. The mere application of a
particular Court procedure for a purpose other than that for which it
was primarily intended is
typical, but not complete proof, of mala
fides. In order to prove mala fides a further inference that an
improper result
was intended is required. Such an application of a
Court procedure (for a purpose other than that for which it was
primarily intended)
is therefore a characteristic, rather than a
definition, of mala fides. Purpose or motive, even a mischievous
or malicious
motive, is not in general a criteria for unlawfulness or
invalidity. An improper motive may however be a factor where the
abuse of Court process is in issue. Accordingly, a plaintiff who
has no bona fide claim but intends to use litigation to cause
the
defendant financial (or other) prejudice will be abusing the
process.”
[12]
[31]
In both applications, SARS initiated proceedings under
circumstances where an undisputed debt was present and where acts of
insolvency
were committed by both Mr Shabangu and the Trust. SARS
chose to avail itself of remedies provided for in both the Insolvency
Act
and the TAA. The facts before this court point to complex
and, on the face of it, convoluted and intertwined financial
operations.
To seek sequestration applications and to investigate the
flow of money and the financial affairs of Mr Shabangu and the Trust
cannot on the papers before me be defined as an abuse of process or
mala fide. The allegations of abuse of process are without merit
and
are based on a perceived and unmeritorious assumption of mala fides.
[32]
The payment of the debt after the provisional sequestration
order and final hearing does not automatically preclude the granting
of a final sequestration order. The court must assess whether the
legal requirements under section 12(1) of the Insolvency Act
are met,
including whether sequestration will provide an advantage to
creditors. The contentious source of the payment may warrant
further
investigation, which supports the need for final sequestration
orders. Ultimately, the court has a discretion to confirm
or refuse
the final sequestration order based on the balance of probabilities
and the circumstances of the case.
[33]
It
is common cause that a debt existed when the applications were
launched. Even if the Trust’s debt has been extinguished,
after
the matter was heard, this may of itself not lead to a dismissal of
either of the applications.
[13]
The
Trust’s payment of the tax debt subsequent to the hearing does
not render the persistence with the application as abusive
or mala
fide. SARS set out in some detail why it would not withdraw the
applications despite the payment. SARS’ argument
that the
payment could form part of an impeachable transaction and SARS cannot
be party to such a transaction has merit.
[34]
Based on all the facts, I exercise my
discretion that final sequestration orders should be granted in both
the applications.
[35]
The following order is made:
1.
A final sequestration order is granted in
case number 121282/2023 and case number 121275/2023.
2.
The costs of the applications will be costs
in the sequestration.
R
TOLMAY
JUDGE
OF THE HIGH COURT
GAUTENG
DIVISION, PRETORIA
This
judgment was prepared and authored by the judge whose name is
reflected and is handed down electronically by circulation to
the
parties/their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines.
The date for
hand-down is deemed to be 27 May 2026.
APPEARANCES:
For
the Applicant
:
Adv MP Van Der Merwe SC
with Adv A Louw
Instructed
by
: MacRobert Inc
Attorneys
For
the Respondent
:
Adv PF Louw SC with
Adv R Mastenbroek
Instructed
by
: Mayet Inc.
Matter
heard on
:
22 & 23 July
2025 and 1 December 2025
Judgment
date
:
27 May 2026
[1]
Commissioner for the South African Revenue Service v Shabangu and Another and a
related matter
[2024]
JOL 67424
(GP).
[2]
28
of 2011.
[3]
24
of 1936.
[4]
1948(2)
SA 555 (W) at 559.See also
Hillhouse
v Stott; Freban Investments (Pty) Ltd v Itzkin; Botha
v Botha 1990 (4) SA 580 (W),
Nedbank
Ltd v Thorpe, [2008] JOL 22675 (N)
.
[5]
2006
(4) SA 292 (SCA).
[6]
[2014]
ZACC 38.
[7]
2015
(3) SA 1
(CC) para 45.
[8]
Wackrill
v Sandton International Removals (Pty) Ltd and others
1984
(1) SA 282
(W)
at 293C-E.
[9]
Class
A Trading 153 (Pty) Ltd v Seven Falls Trading 55 (Pty) Ltd, [2025]
JOL 69757 (WCC)
.
[10]
Beinash
v Wixley
[1997] ZASCA 32
;
1997
(3) SA 721
(SCA) at 734F-G.
[11]
2004
(6) SA 66 (SCA).
[12]
Id
para 50.
[13]
Lundy
v Beck
2019 (5) SA 503
(GJ) par26-27.