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THE REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
Case No: 48495/2021
In
THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE
SERVICE Applicant
and
ROY MULEYA
Respondent
Delivered: By transmission to the parties via email and uploading onto Case
Lines the Judgment is deemed to be delivered.
JUDGMENT
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: NO
09 June 2026 _______________
DATE SIGNATURE
MBOWENI AJ:
INTRODUCTION:
[1] This matter serves before this Court on the return day of a provisional
sequestration order granted by Malindi J on 29 October 2025 against the estate of
the Respondent, Mr Roy Muleya.
[2] The Applicant, the Commissioner for the South African Revenue Service
(“SARS”), seeks confirmation of the provisional sequestration order and the granting
of a final sequestration order in terms of section 12 of the Insolvency Act 24 of 1936.
[3] The Respondent opposes the granting of final relief and seeks the discharge of
the rule nisi.
[4] The matter has a lengthy procedural history. It has its origins in investigations
conducted by SARS into the importation of tobacco products and tobacco refuse
through entities associated with the Respondent, as well as substantial income tax
assessments raised against him.
[5] The dispute has generated multiple interlocutory proceedings, review
proceedings, Tax Court litigation and earlier judgments of this Court. The issues
presently before this Court are therefore considerably broader than a conventional
sequestration application and require consideration of the interaction between
insolvency law, the Tax Administration Act 28 of 2011 (“the TAA”), and the Customs
and Excise Act 91 of 1964 (“the Customs Act”).
[6] The Respondent contends, amongst other things, that SARS lacks locus standi to
bring the application, that section 177(3) of the TAA required prior leave before
sequestration proceedings could be instituted, that the application constitutes an
abuse of process designed to derail pending Tax Court proceedings, that the alleged
debts are genuinely disputed on reasonable grounds, that no act of insolvency has
been established, that factual insolvency has not been proven, and that
sequestration will not be to the advantage of creditors.
[7] SARS disputes those contentions and maintains that the Respondent is indebted
to it in an amount exceeding R188 million, comprising approximately R32 million in
income tax liabilities and approximately R155 million in customs liabilities. SARS
further contends that the Respondent has dissipated assets, has committed acts of
insolvency and is factually insolvent.
[8] The Court is accordingly required to determine whether SARS has established,
on a balance of probabilities, the jurisdictional requirements prescribed by section
12(1) of the Insolvency Act and whether a final sequestration order should follow.
FACTUAL BACKGROUND:
[9] The material facts emerge from the affidavits and are substantially reflected in the
chronology recorded by my Brother Judge Malindi.
[10] The Respondent is a businessman with commercial interests in both South
Africa and Zimbabwe. He was associated with several entities, including Afri Teecee
Investments (Pty) Ltd (“Afri Teecee”), of which he was the sole director, and Verbena
Freight and Logistics Management CC (“Verbena”), which he managed together with
his wife.
[11] During 2019 SARS commenced investigations into the importation of tobacco
and tobacco refuse through Verbena.
[12] According to SARS, documentation submitted in respect of those imports
described the imported goods as “tobacco refuse” or “core tobacco”, thereby
attracting lower duties than would otherwise have been payable.
[13] SARS contends that its investigation revealed that Verbena acted as clearing
agent for substantial quantities of tobacco imported on behalf of several entities,
including Afri Teecee.
[14] SARS further contends that documentation and information requested during the
course of the investigation were either not provided or were inadequate.
[15] As a consequence of those investigations SARS concluded that customs duties
in an amount exceeding R155 million were payable and that the Respondent was
personally liable in terms of section 103 of the Customs Act.
[16] Parallel to the customs investigation, SARS conducted an audit of the
Respondent’s income tax affairs for the period 2015 to 2019.
[17] On 23 July 2020 SARS issued audit findings to the Respondent.
[18] On 16 October 2020 SARS finalised the audit and issued additional
assessments in respect of the relevant tax years.
[19] SARS contends that the resulting income tax liability exceeded R32 million.
[20] The Respondent objected to those assessments.
[21] On 15 January 2021 the Respondent donated Erf 7 […] Bartlett Extension 78 to
the Roy Muleya Trust.
[22] SARS contends that this transfer constituted a dissipation of assets and forms
part of a broader pattern of conduct designed to place assets beyond the reach of
creditors.
[23] The Respondent disputes that contention and maintains that the transaction was
lawful and does not constitute an act of insolvency.
[24] During January 2021 SARS issued third -party appointment notices in terms of
section 179 of the TAA to certain banking institutions.
[25] On 1 February 2021 the Respondent lodged an objection to revised
assessments relating to the 2015 to 2019 tax years.
[26] On 23 February 2021 SARS withdrew an earlier section 103 demand and
simultaneously issued a notice of intention to hold the Respondent personally liable
for customs duties allegedly owed by Afri Teecee.
[27] On 12 March 2021 the Respondent requested suspension of payment in respect
of the assessed income tax debt pending the determination of his objection and
appeal proceedings.
[28] SARS ultimately declined the request for suspension of payment.
[29] On 30 April 2021 SARS issued a final demand in terms of section 103 of the
Customs Act asserting that the Respondent was personally liable for customs duties
in excess of R155 million.
[30] On 5 July 2021 SARS obtained a certified statement judgment in respect of the
income tax debt.
[31] During August 2021 the Respondent’s objections to the income tax
assessments were disallowed.
[32] The Respondent thereafter pursued an appeal in terms of section 107 of the
TAA and the Tax Court Rules.
[33] SARS launched the present sequestration application during September 2021.
[34] The Respondent opposed the application and raised numerous substantive and
procedural defences.
[35] The matter first came before my Brother Judge Mokose on an urgent basis.
[36] Thereafter the matter ultimately served before Judge Malindi, who granted a
provisional sequestration order on 29 October 2025.
[37] It is that provisional order which now serves before this Court for final
determination.
THE JUDGMENT OF JUDGE MOKOSE:
[38] Before considering the merits of the return day, it is necessary to examine the
significance of the judgment delivered by Judge Mokose.
[39] The sequestration application initially served before Judge Mokose as an urgent
application.
[40] SARS approached the Court on an urgent basis seeking the provisional
sequestration of the Respondent’s estate.
[41] SARS relied upon two principal categories of indebtedness.
[42] The first was an income tax debt arising from assessments issued against the
Respondent in respect of the 2015 to 2019 tax years.
[43] The second was a customs debt allegedly arising from the importation of
tobacco products and tobacco refuse through Afri Teecee and Verbena.
[44] SARS alleged that the Respondent’ s total indebtedness exceeded R188 million
and contended that he was both factually insolvent and had committed acts of
insolvency.
[45] SARS further alleged that the Respondent was dissipating assets and that
urgent intervention by the Court was necessary.
[46] The Respondent opposed the urgent application.
[47] He contended that the income tax debt formed the subject matter of pending
Tax Court proceedings instituted in terms of section 107 of the Tax Administration
Act and the Tax Court Rules.
[48] The Respondent further contended that he had instituted proceedings to review
and set aside SARS’ refusal to suspend payment pending the determination of the
Tax Court appeal.
[49] In relation to the customs debt, the Respondent denied personal liability and
contended that SARS had failed to establish any basis upon which he could be held
personally liable for the alleged customs obligations of Afri Teecee.
[50] The Respondent also disputed urgency and contended that SARS had delayed
in bringing the application despite being aware of the transfer of immovable property
months earlier.
[51] Judge Mokose did not determine the merits of those disputes.
[52] The Court confined itself to the issue of urgency.
[53] Having considered the papers, Judge Mokose concluded that SARS had failed
to establish urgency sufficient to justify a departure from the ordinary procedures of
the Court.
[54] The Court further observed that the founding affidavit was scant in detail in
certain material respects.
[55] The urgent application was accordingly struck from the roll.
[56] Importantly, Judge Mokose did not determine whether the Respondent was
indebted to SARS.
[57] Nor did the Court determine whether the Respondent was insolvent, whether the
Commissioner possessed locus standi, whether section 177(3) of the Tax
Administration Act required prior leave, whether the Badenhorst principle applied, or
whether sequestration would be to the advantage of creditors.
[58] The significance of the judgment of Judge Mokose is therefore limited.
[59] It establishes only that SARS failed to demonstrate urgency at that stage of the
proceedings.
[60] The substantive issues remained open for determination in the ordinary course.
THE JUDGMENT OF JUDGE MALINDI:
[61] Following the judgment of Mokose J, the litigation continued through various
interlocutory processes and further exchange of affidavits.
[62] The matter ultimately served before my Brother , Judge Malindi.
[63] By that stage a substantial record had been assembled.
[64] Judge Malindi identified the principal issues requiring determination.
[65] These included:
(a) whether the Commissioner possessed the requisite locus standi;
(b) whether leave was required in terms of section 177(3) of the Tax Administration
Act;
(c) whether the alleged indebtedness established a claim for purposes of
sequestration;
(d) whether the application constituted an abuse of process;
(e) whether the Respondent had committed acts of insolvency or was factually
insolvent; and
(f) whether sequestration would be to the advantage of creditors.
[66] The Respondent raised a number of preliminary objections.
[67] The first was that the Commissioner was not the creditor contemplated by the
relevant legislation and therefore lacked standing to institute sequestration
proceedings.
[68] The second was that section 177(3) required prior leave before sequestration
proceedings could be instituted.
[69] The third was that the indebtedness relied upon by SARS was genuinely
disputed and therefore incapable of supporting sequestration proceedings.
[70] The fourth was that the sequestration application constituted an abuse of
process because SARS was allegedly seeking to circumvent the statutory dispute
resolution mechanisms established by Chapter 9 of the Tax Administration Act.
[71] Judge Malindi rejected those preliminary objections.
[72] The Court concluded that SARS had established a prima facie case entitling it to
interim relief.
[73] A provisional sequestration order was accordingly granted on 29 October 2025.
[74] It is however important to recognise the procedural nature of that order.
[75] A provisional sequestration order does not finally determine the rights of the
parties.
[76] Nor does it finally determine disputed questions of indebtedness, insolvency,
locus standi, abuse of process or advantage to creditors.
[77] The findings made by Judge Malindi were necessarily provisional and directed
at determining whether a prima facie case had been established.
[78] The return day requires this Court to undertake a fresh enquiry and determine,
on a balance of probabilities, whether the requirements of section 12 of the
Insolvency Act have been established.
[79] While considerable weight must be accorded to the careful reasoning of Malindi
J, this Court remains obliged independently to evaluate the evidence and the
applicable legal principles.
ISSUES FOR DETERMINATION:
[80] The issues requiring determinatio n on the return day may conveniently be
formulated as follows.
[81] First, whether the Commissioner possesses the requisite locus standi to seek
the sequestration of the Respondent’s estate.
[82] Second, whether section 177(3) of the Tax Administration Act required SARS to
obtain leave before instituting sequestration proceedings.
[83] Third, whether the present application constitutes an abuse of process.
[84] Fourth, whether SARS has established a claim against the Responden t as
contemplated in section 12(1)(a) of the Insolvency Act.
[85] That issue requires consideration of both the income tax debt and the customs
debt relied upon by SARS.
[86] Fifth, whether the disputes raised by the Respondent concerning those debts
are bona fide and reasonable within the meaning of the Badenhorst principle.
[87] Sixth, whether the Respondent has committed an act of insolvency or is factually
insolvent.
[88] Seventh, whether there is reason to believe that sequestra tion will be to the
advantage of creditors.
[89] Finally, whether the Court should exercise its discretion in favour of granting a
final sequestration order.
LEGAL FRAMEWORK:
[90] The present matter lies at the intersection of insolvency law, tax administration
law and customs law.
[91] The Court must therefore consider the Insolvency Act, the Tax Administration
Act and the Customs and Excise Act together with the authorities relied upon by the
parties.
[92] Section 12(1) of the Insolvency Act provides that a court may grant a final
sequestration order if it is satisfied that the petitioning creditor has established a
claim against the debtor, that the debtor has committed an act of insolvency or is
insolvent, and that there is reason to believe that sequestration will be to the
advantage of creditors.
[93] The jurisdictional requirements are cumulative.
[94] Failure to establish any one of them is fatal to the application.
[95] The return day is a final-order enquiry.
[96] Accordingly, the facts relied upon by the applicant must be established on a
balance of probabilities.
[97] The Respondent relies heavily upon the principle articulated in Badenhorst v
Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T).
[98] Badenhorst established that sequestration proceedings are not debt -collection
proceedings and should not be used to enforce a debt that is bona fide disputed on
reasonable grounds.
[99] The rationale is that insolvency proceedings are designed to address insolvency
and not to resolve ordinary disputes concerning indebtedness.
[100] The principle was reaffirmed by the Supreme Court of Appeal in Exploitatie-en
Beleggingsmaatschappij Argonauten 11 BV v Honig 2012 (2) All SA 22 (SCA).
[101] The Court in Honig confirmed that sequestration proceedings remain
inappropriate where the indebtedness relied upon is genuinely disputed on
reasonable grounds.
[102] The enquiry is therefore not whether a dispute has merely been asserted but
whether the dispute is genuine, bona fide and supported by facts.
[103] Similar considerations informed the decisions in Kalil v Decotex (Pty) Ltd and
Another 1988 (1) SA 943 (A) and Investec Bank Ltd v Lewis.
[104] Those authorities require a court to distinguish between genuine disputes and
disputes that are illusory, contrived or unsupported by evidence.
[105] The approach to factual disputes in motion proceedings was authoritatively
considered in Wightman t/a JW Construction v Headfour (Pty) Ltd 2008 (3) SA
371 (SCA).
[106] The Supreme Court of Appeal held that a respondent who seeks to create a
genuine dispute of fact must engage seriously and unambiguously with the facts
relied upon by the applicant.
[107] Bare denials and speculative assertions are insufficient.
[108] The Respondent also relies upon the Court’s inherent power to prevent abuses
of process.
[109] The governing authority is Beinash v Wixley 1997 (3) SA 721 (SCA).
[110] Beinash confirms that courts possess an inherent power to prevent their
procedures from being employed for ulterior or improper purposes inconsistent with
the administration of justice.
LOCUS STANDI:
[111] The first substantive issue concerns the standing of the Commissioner to
institute the present sequestration proceedings.
[112] The Respondent contends that the Commissioner lacks locus standi because
the debts relied upon by SARS are not debts owed to the Commissioner personally.
[113] The Respondent submits that income tax debts are debts owed to SARS and
that customs duties are debts owed to the State.
[114] On that basis, the Respondent argues that the Commissioner is not a creditor
for purposes of section 9 of the Insolvency Act and therefore lacks standing to seek
sequestration.
[115] The Respondent further submits that neither the Tax Administration Act nor the
Customs and Excise Act expressly authorises the Commissioner to seek
sequestration in his own name.
[116] SARS disputes those contentions.
[117] SARS contends that the Commissioner is the statutory functionary charged
with the administration of both the Tax Administration Act and the Customs and
Excise Act.
[118] It submits that the Commissioner acts in an official capacity and exercises
powers conferred upon him by Parliament for the collection and recovery of tax and
customs debts.
[119] The issue must be determined with reference to the statutory framework.
[120] Section 3 of the Tax Administration Act establishes SARS as an organ of state
responsible for the efficient and effective collection of tax.
[121] The Act vests substantial powers in the Commissioner to administer the
legislation and to perform the functions assigned to SARS.
[122] Sections 169 and 177 of the Tax Administration Act expressly contemplate
legal proceedings being instituted for the recovery of tax debts.
[123] The Commissioner is the functionary through whom those statutory powers are
exercised.
[124] The present proceedings are not instituted by the Commissioner in a personal
capacity.
[125] They are instituted by the Commissioner acting in his official capacity as the
statutory representative of SARS.
[126] The Respondent’s argument draws a distinction between SARS, the
Commissioner and the State.
[127] While that distinction may be conceptually correct, it does not follow that the
Commissioner lacks standing to institute proceedings authorised by legislation and
undertaken in the exercise of statutory powers.
[128] The question is not whether the Commissioner is personally owed the debt.
[129] The question is whether the legislation authorises the Commissioner, acting in
his official capacity, to invoke legal remedies for the collection and recovery of tax
and customs debts.
[130] In my view, it plainly does.
[131] To hold otherwise would undermine the statutory framework created by
Parliament and artificially separate SARS from the statutory office through which its
powers are exercised.
[132] I accordingly conclude that the Commissioner possesses the requisite locus
standi to institute the present proceedings.
SECTION 177(3) OF THE TAX ADMINISTRATION ACT:
[133] The Respondent further contends that the application is fatally defective
because SARS failed to obtain prior leave in terms of section 177(3) of the Tax
Administration Act before instituting sequestration proceedings.
[134] According to the Respondent, section 177(3) requires a separate judicial
authorisation process before sequestration proceedings may be commenced.
[135] The Respondent submits that the leave enquiry and the sequestration enquiry
are distinct and that the failure to obtain leave is fatal to the application.
[136] SARS disputes that interpretation.
[137] SARS contends that section 177 forms part of the statutory collection
machinery created by Parliament and that no separate preliminary application for
leave is required.
[138] SARS relies upon authorities dealing with the recovery powers conferred by
the Tax Administration Act and the predecessor legislation.
[139] The proper interpretation of section 177 requires consideration of its language,
context and purpose.
[140] Statutory interpretation requires the Court to consider the text of the provision
in light of the legislative scheme as a whole.
[141] The Tax Administration Act was enacted to create a comprehensive framework
for the administration and collection of taxes.
[142] One of its central objectives is to ensure the efficient recovery of tax debts.
[143] Section 164 embodies the so-called “pay now, argue later” principle.
[144] That principle was recognised and approved by the Constitutional Court in
Metcash Trading Ltd v Commissioner, South African Revenue Service and
Another 2001 (1) SA 1109 (CC).
[145] The Constitutional Court recognised that the effective collection of taxes is
fundamental to the functioning of the State and that Parliament may legitimately
create mechanisms ensuring that disputes do not automatically suspend collection.
[146] The collection provisions of the Tax Administration Act must be understood
within that broader context.
[147] The interpretation advanced by the Respondent would require SARS to
institute separate leave proceedings before commencing sequestration proceedings.
[148] Such an interpretation would introduce an additional procedural layer not
clearly required by the wording of the statute.
[149] It would also potentially frustrate the efficient collection mechanisms which the
Act seeks to establish.
[150] I am unable to find anything in the language of section 177 that compels the
conclusion that Parliament intended a separate and distinct judicial leave process as
a jurisdictional prerequisite to sequestration proceedings.
[151] The section must instead be interpreted in a manner consistent with the
legislative purpose of facilitating effective tax collection while preserving judicial
oversight through the sequestration proceedings themselves.
[152] I therefore conclude that the Respondent’ s interpretation of section 177 cannot
be sustained.
[153] The objection founded upon section 177(3) accordingly falls to be dismissed.
ABUSE OF PROCESS:
[154] The Respondent contends that the present application constitutes an abuse of
process.
[155] The essence of the complaint is that SARS has elected to pursue
sequestration proceedings while Tax Court proceedings and related review
proceedings remain pending.
[156] The Respondent submits that SARS is improperly attempting to obtain through
insolvency proceedings what it has not yet obtained through the statutory dispute
resolution mechanisms established by the Tax Administration Act.
[157] The Respondent further argues that the sequestration proceedings interfere
with the Tax Court process and create unfair litigation advantages.
[158] SARS disputes those allegations.
[159] SARS contends that the Tax Administration Act expressly authorises collection
measures notwithstanding pending objections and appeals, subject only to
suspension in terms of section 164.
[160] SARS points out that the Respondent’s application for suspension of payment
was refused and that the refusal remains operative.
[161] The governing authority is Beinash v Wixley 1997 (3) SA 721 (SCA).
[162] Beinash confirms that courts possess an inherent power to prevent their
procedures from being employed for ulterior purposes inconsistent with the proper
administration of justice.
[163] However, the mere fact that proceedings place pressure upon an opposing
litigant does not establish abuse.
[164] The enquiry is whether the proceedings are being employed for a purpose
foreign to the purpose for which they were created.
[165] Sequestration proceedings serve legitimate insolvency objectives.
[166] They are designed to protect creditors collectively and to secure the orderly
administration of insolvent estates.
[167] The Tax Administration Act expressly recognises sequestration as one of the
mechanisms available for the recovery of tax debts.
[168] The fact that SARS has elected to invoke that remedy does not, without more,
establish abuse.
[169] Nor does the existence of pending Tax Court proceedings automatically render
sequestration proceedings impermissible.
[170] The statutory framework expressly contemplates that tax debts remain
recoverable notwithstanding objections and appeals unless payment has been
suspended.
[171] The Respondent’s complaint is therefore directed not at an illegitimate use of
sequestration proceedings but at the consequences flowing from the legislative
scheme enacted by Parliament.
[172] Having considered the evidence as a whole, I am not persuaded that SARS
instituted the present proceedings for an ulterior purpose.
[173] The evidence establishes that SARS seeks to recover debts which it contends
are due and payable and that it relies upon insolvency legislation for that purpose.
[174] Those objectives fall squarely within the recognised purposes of sequestration
proceedings.
[175] The abuse of process defence accordingly cannot succeed.
CLAIM AGAINST THE RESPONDENT: THE BADENHORST PRINCIPLE
[176] The next enquiry concerns whether SARS has established a claim against the
Respondent for purposes of section 12(1)(a) of the Insolvency Act.
[177] This issue lies at the heart of the dispute between the parties.
[178] The Respondent relies heavily upon the principle articulated in Badenhorst
and reaffirmed in Honig.
[179] It is therefore convenient first to consider the Badenhorst principle before
turning separately to the customs debt and the income tax debt.
[180] Badenhorst established that sequestration p roceedings should not be used to
enforce a debt that is bona fide disputed on reasonable grounds.
[181] The rationale is straightforward.
[182] Insolvency proceedings are not designed to resolve ordinary commercial
disputes concerning indebtedness.
[183] Where a genuine dispute exists, the creditor must ordinarily pursue ordinary
proceedings to establish the debt.
[184] Honig reaffirmed that principle and emphasised that the dispute must be
genuine and bona fide.
[185] Kalil similarly requires a court to distinguish between genuine disputes and
disputes that are contrived or lacking evidential foundation.
[186] Wightman further makes clear that a respondent cannot create a genuine
dispute merely through bare denials.
[187] The respondent must engage seriously and unambiguously with the facts relied
upon by the applicant.
[188] The question before this Court is therefore whether the disputes advanced by
the Respondent in relation to the customs debt and the income tax debt are genuine,
bona fide and reasonable.
[189] It is to those debts that I now turn.
THE CUSTOMS DEBT:
[190] SARS relies upon a customs debt which it contends exceeds R155 million.
[191] The debt arises from customs investigations conducted into the importation of
tobacco products and tobacco refuse through entities associated with the
Respondent, principally Afri Teecee and Verbena.
[192] SARS contends that those investigations revealed substantial underpayment of
customs duties and excise obligations.
[193] According to SARS, documentation submitted to customs authorities described
imported products as tobacco refuse or core tobacco when, in reality, the products
attracted substantially higher customs duties.
[194] SARS further contends that Afri Teecee was the beneficial importer and that
the Respondent exercised effective control over the relevant transactions.
[195] Following the investigation, SARS issued notices to the Respondent indicating
its intention to invoke section 103 of the Customs and Excise Act.
[196] Representations were invited from the Respondent.
[197] Thereafter SARS issued a final demand on 30 April 2021 asserting that the
Respondent was personally liable for the customs debt.
[198] The Respondent disputes both the factual basis of the debt and the legal basis
upon which personal liability is imposed.
[199] He contends that SARS has failed to establish the liability of Afri Teecee and
has further failed to establish the jurisdictional facts necessary to invoke section 103.
[200] The Respondent submits that these disputes ar e genuine, bona fide and
reasonable and that the Badenhorst principle accordingly prevents SARS from
relying upon the alleged customs debt for sequestration purposes.
[201] The Court must therefore determine whether the disputes advanced by the
Respondent are of the nature contemplated in Badenhorst and Honig.
[202] The Court does not determine in these proceedings whether the section 103
determination is ultimately correct.
[203] Nor does the Court determine whether SARS will ultimately succeed in any
proceedings directed at enforcing the customs debt.
[204] The enquiry is narrower.
[205] The question is whether SARS has established a claim and whether the
Respondent has demonstrated a genuine and bona fide dispute on reasonable
grounds.
[206] The evidence reveals that the customs investigation was extensive.
[207] It was conducted over a significant period.
[208] Numerous documents were examined.
[209] SARS issued notices, invited representations and ultimately issued a formal
determination under section 103.
[210] The Respondent disputes the conclusions reached by SARS.
[211] However, the Respondent does not merely face an unparticularised allegation
of indebtedness.
[212] SARS has identified the transactions relied upon, the statutory basis of liability
and the amount claimed.
[213] The Respondent’s challenge is therefore directed at the correctness of SARS’
conclusions rather than the absence of a factual foundation for the claim.
[214] Having regard to the evidence as a whole, I am unable to conclude that the
customs debt is so genuinely and fundamentally disputed that SARS is deprived of
creditor status for purposes of section 12 of the Insolvency Act.
[215] The Respondent has demonstrated that disputes exist.
[216] However, the existence of disputes does not in itself invoke the Badenhorst
rule.
[217] The Court must consider whether the disputes are supported by evidence
sufficient to show that the debt is genuinely disputed on reasonable grounds.
[218] Applying the principles articulated in Badenhorst, Honig, Kalil and
Wightman, I am persuaded that SARS has established a claim based upon the
customs debt for purposes of the Insolvency Act.
THE INCOME TAX DEBT:
[219] SARS further relies upon income tax liabilities arising from assessments issued
against the Respondent in respect of the 2015 to 2019 tax years.
[220] SARS contends that those assessments resulted in tax liabilities exceeding
R32 million.
[221] The Respondent objected to the assessments.
[222] The objections were disallowed.
[223] Thereafter the Respondent pursued appeal proceedings in terms of Chapter 9
of the Tax Administration Act.
[224] The Respondent also sought suspension of payment pending the
determination of the appeal.
[225] SARS declined the request.
[226] The Respondent contends that because the assessments remain the subject of
pending appeal proceedings, they cannot properly support sequestration
proceedings.
[227] The Respondent further argues that SARS is attempting to use insolvency
proceedings to circumvent the statutory dispute resolution mechanisms created by
the Tax Administration Act.
[228] Those submissions must be evaluated against the statutory framework.
[229] Section 164 of the Tax Administration Act provides that the obligation to pay
tax is not suspended merely because an objection or appeal has been lodged.
[230] Suspension occurs only where SARS directs otherwise or where a competent
court intervenes.
[231] The Constitutional Court considered the constitutionality of that legislative
choice in Metcash Trading Ltd v Commissioner, South African Revenue Service
and Another.
[232] The Court recognised that Parliament deliberately adopted a pay -now-argue-
later system to ensure the efficient collection of revenue.
[233] The Constitutional Court held that such a system serves an important public
purpose and is constitutionally permissible.
[234] SARS further relied upon Capstone 556 (Pty) Ltd v Commissioner for the
South African Revenue Service, Commissioner for the South African Revenue
Service v United Manganese of Kalahari (Pty) Ltd, Commissioner for the South
African Revenue Service v Zikhulise Cleaning Maintenance and Transport
Services, and Commissioner for the South African Revenue Service v Miles
Plant Hire (Pty) Ltd.
[235] Those authorities recognise the extensive collection powers conferred upon
SARS and underscore the importance of preserving the efficacy of the statutory tax
collection system.
[236] The Respondent’s appeal proceedings remain pending.
[237] However, the assessments have not been set aside.
[238] The refusal to suspend payment likewise remains extant.
[239] The existence of pending appeal proceedings therefore does not, in itself,
extinguish the tax debt or deprive SARS of creditor status.
[240] The Court must nevertheless consider whether the Respondent has
demonstrated a genuine and bona fide dispute regarding the indebtedness.
[241] The Respondent disputes the correctness of the assessments.
[242] Those disputes are being ventilated in the specialised dispute -resolution
mechanisms created by the Tax Administration Act.
[243] However, the fact that a taxpayer disputes an assessment does not
automatically render the debt incapable of supporting sequestration proceedings.
[244] Were that so, the pay-now-argue-later principle embodied in section 164 would
be substantially undermined.
[245] Having regard to the statutory framework and the authorities relied upon by
SARS, I am satisfied that SARS has established a claim based upon the assessed
tax liabilities.
[246] The income tax debt accordingly constitutes a claim for purposes of section
12(1)(a) of the Insolvency Act.
INSOLVENCY:
[247] The next enquiry is whether the Respondent has committed an act of
insolvency or is factually insolvent.
[248] SARS relies upon both forms of insolvency.
[249] It points to the transfer of immovable property to the Roy Muleya Trust, the
liquidation of Verbena, the existence of substantial liabilities and the alleged inability
of the Respondent to satisfy those liabilities.
[250] The Respondent disputes that any act of insolvency has been established.
[251] He contends that the property transfer was lawful and that SARS has failed to
demonstrate that his liabilities exceed his assets.
[252] The Court accepts that not every disposition of property constitutes an act of
insolvency.
[253] Nor is every transfer to a trust indicative of insolvency.
[254] The enquiry is whether the evidence, viewed holistically, establishes either an
act of insolvency or factual insolvency.
[255] The liabilities relied upon by SARS exceed R188 million.
[256] Those liabilities arise from both the customs debt and the income tax debt.
[257] The Respondent has not placed before the Court a comprehensive statement
of assets demonstrating an ability to satisfy liabilities of that magnitude.
[258] The Court is therefore confronted with substantial established liabilities and
insufficient evidence of assets capable of meeting them.
[259] The transfer of the Bartlett property to the Roy Muleya Trust is not decisive in
itself.
[260] It nevertheless forms part of the broader factual matrix relevant to the
Respondent’s financial affairs.
[261] When the evidence is considered cumulatively, I am satisfied that SARS has
established factual insolvency on a balance of probabilities.
ADVANTAGE TO CREDITORS:
[262] The final jurisdictional requirement concerns advantage to creditors.
[263] The Respondent contends that SARS has failed to establish that sequestration
will produce any meaningful benefit for creditors.
[264] SARS disputes that contention.
[265] The governing principles are well established.
[266] In Estate Logie v Priest the Appellate Division emphasised the collective
nature of insolvency proceedings and the protection of creditors as a class.
[267] In Fundstrust (Pty) Ltd (in liquidation) v Van Deventer the Court reiterated
that sequestration proceedings are concerned with the orderly administration of
insolvent estates for the benefit of creditors collectively.
[268] The leading authority remains Court v Standard Bank of South Africa Ltd;
Court v Bester NO and Others.
[269] That decision established that an applicant need not prove with certainty that a
dividend will result.
[270] It is sufficient if there is reason to believe that sequestration may yield a
pecuniary benefit to creditors.
[271] The Constitutional Court reaffirmed that approach in Stratford and Others v
Investec Bank Ltd and Others.
[272] Stratford emphasised that the threshold is relatively low.
[273] The Court recognised that one of the principal benefits of sequestration lies in
the investigative powers conferred upon trustees.
[274] Trustees are able to investigate transactions, trace assets, examine witnesses
and determine whether dispositions may be impeached for the benefit of creditors.
[275] The present matter involves trust structures, substantial transfers of property,
corporate entities associated with the Respondent and significant financial
transactions.
[276] A trustee would be able to investigate those matters in a manner not presently
available to ordinary creditors.
[277] There is a reasonable prospect that such investigations may reveal assets,
claims or transactions capable of producing a pecuniary benefit.
[278] Applying Estate Logie, Fundstrust, Court v Standard Bank and Stratford, I
am satisfied that there is reason to believe that sequestration will be to the
advantage of creditors.
CONCLUSION:
[279] SARS has established claims arising from both the customs debt and the
income tax debt.
[280] The Respondent has failed to demonstrate disputes of the nature contemplated
in Badenhorst and Honig that would deprive SARS of creditor status for purposes of
the Insolvency Act.
[281] The Commissioner possesses locus standi to institute the proceedings.
[282] The objection founded upon section 177(3) cannot be sustained.
[283] The abuse of process defence has not been established.
[284] SARS has established that the Respondent is factually insolvent.
[285] SARS has further established that sequestration will be to the advantage of
creditors.
[286] The jurisdictional requirements prescribed by section 12(1) of the Insolvency
Act have therefore been satisfied.
ORDER:
The following order is made:
1. The rule nisi issued on 29 October 2025 is confirmed.
2. The estate of the Respondent, Mr Roy Muleya, is placed under final
sequestration.
3. The costs of the application, including all reserved costs, shall be costs in the
sequestration of the Respondent’s estate.
LJ MBOWENI
ACTING JUDGE OF THE HIGH
COURT GAUTENG DIVISION,
PRETORIA
Date of Hearing : 13 May 2026
Date of Judgment : 09 June 2026
Attorneys for the Applicant : VDT ATTORNEYS
REF M CHRISTODOULOU
Counsel for the Applicant : HGA SNYMAN SC
ADVOCATE N KOMAR
Attorneys for the Respondent : SERFONTEIN VILJOEN AND
SWART ATTORNEYS
Counsel for the Respondent : PA SWANEPOEL SC
ADVOCATE CA BOONZAAIER