Judgment summary
This is a judgment on an application for leave to appeal against a judgment and order of the same Court delivered on 8 June 2026, which confirmed a rule nisi issued on 29 October 2025 and placed the estate of Roy Muleya under final sequestration (paras [1]-[2]).
The principal judgment had found that SARS established the jurisdictional requirements for a final sequestration order under section 12(1) of the Insolvency Act 24 of 1936, including claims arising from a customs debt and assessed income-tax liabilities, rejection of the Badenhorst objection, SARS's locus standi, rejection of a section 177(3) TAA objection, factual insolvency, and advantage to creditors (para [3]).
On reconsideration for purposes of leave to appeal, the Court (Mboweni AJ) found that several of these issues raised reasonable prospects that another court could reach a different conclusion, and granted leave to appeal to the Full Court of the High Court, Pretoria (paras [37]-[43]).
Background
The principal judgment, delivered on 8 June 2026, confirmed a rule nisi issued on 29 October 2025 and placed Muleya's estate under final sequestration (para [1]).
The Court in the principal judgment found that SARS had established claims arising from a customs debt and assessed income-tax liabilities; that the disputes advanced by Muleya did not attract the operation of the principle in Badenhorst v Northern Construction Enterprises (Pty) Ltd; that the Commissioner possessed the requisite locus standi; that the objection based upon section 177(3) of the Tax Administration Act 28 of 2011 could not be sustained; that factual insolvency had been established; and that there was reason to believe that sequestration would be to the advantage of creditors (para [3]).
Muleya sought leave to appeal against that judgment and the resultant final sequestration order (para [4]).
Core dispute
The question before the Court was narrower than the merits of the principal judgment: whether the statutory threshold for leave to appeal under section 17(1)(a) of the Superior Courts Act 10 of 2013 had been satisfied, namely whether the appeal would have a reasonable prospect of success or whether there was some other compelling reason why the appeal should be heard (paras [5]-[6]).
Court findings
The Court held that it remained satisfied with the conclusions reached in the principal judgment, but noted that this was not the test to be applied, and that a court persuaded of the correctness of its judgment may nonetheless recognise that another court could reasonably reach a different conclusion (para [11]).
On section 177(3) of the TAA, the Court found that the proper interpretation of that provision, particularly its relationship with sequestration proceedings under the Insolvency Act, raises a sufficiently important question of statutory interpretation, and that there was a reasonable prospect that another court may adopt a different construction (paras [16]-[17]).
On the Badenhorst principle and the customs debt, the Court was persuaded that another court could reasonably conclude that the disputes concerning the foundation and extent of the customs liability were sufficiently substantive to engage the Badenhorst principle, particularly where personal liability for the substantial customs debt remained contested (para [22]).
On the income-tax liability, the Court found that although its conclusion that the assessments remained operative and that the 'pay now, argue later' regime did not prevent SARS from relying on the assessed liability remained supported by the statutory framework, the relationship between an immediately recoverable assessed tax debt, a pending statutory challenge, and the Badenhorst principle raised an issue on which an appellate court could reasonably take a different view (paras [24]-[26]).
On factual insolvency, the Court noted that its finding was based on liabilities exceeding R188 million established by SARS, together with the absence of a comprehensive statement of assets, but that there was a reasonable prospect that this finding may require reconsideration depending upon the appellate court's determination of the antecedent questions concerning indebtedness (paras [28], [31]).
On advantage to creditors, the Court remained persuaded that the threshold was met, but found that this issue could not entirely be divorced from the conclusions concerning indebtedness and insolvency, such that a different appellate conclusion on those requirements would necessitate reconsideration of the exercise of the Court's discretion (para [33]).
The Court concluded that the threshold in section 17(1)(a)(i) had been met, and that there was a sound and rational basis upon which an appellate court could reasonably reach different conclusions on one or more of the material issues (para [37]). It further found that the proper relationship between the statutory collection mechanisms available to SARS and the protections inherent in insolvency law raised questions of sufficient legal importance to constitute a further consideration favouring appellate determination (para [38]).
Outcome
The application for leave to appeal was granted. Leave to appeal was granted to the Full Court of the High Court, Pretoria, against the whole of the judgment and order delivered on 8 June 2026. The costs of the application for leave to appeal were ordered to be costs in the appeal (paras [43]-[44] and Order).
Major issues / areas of contention
- Whether SARS was required to obtain leave before instituting sequestration proceedings under section 177(3) of the Tax Administration Act 28 of 2011
- Whether the Badenhorst principle applied to the disputed customs debt liability under the Customs and Excise Act 91 of 1964
- Whether the Badenhorst principle applied to the assessed income-tax liability notwithstanding the 'pay now, argue later' regime
- Whether the finding of factual insolvency required reconsideration depending on the appellate court's determination of the underlying indebtedness
- Whether the advantage-to-creditors requirement could be assessed independently of the findings on indebtedness and insolvency
- Whether the statutory threshold for leave to appeal under section 17(1)(a) of the Superior Courts Act 10 of 2013 was satisfied