- Body Corporate Plaza Mayor could not prove that a property owner had left to avoid or delay paying her debts.
- The application did not show that sequestration would benefit creditors more than simply executing against the property.
- Acting Judge Gilbert dismissed the application and found that the body corporate also had not tried hard enough to find the property owner.
A body corporate cannot use sequestration as a shortcut to recover unpaid levies unless it proves the legal grounds for insolvency and shows the process would benefit all creditors.
In Body Corporate Plaza Mayor v Bologo, the High Court in Johannesburg dismissed an application to sequestrate Mavhungu Maudline Bologo’s estate over unpaid levies and charges. The court found that the body corporate had not proved an act of insolvency, had not shown an advantage to creditors, and had not tried hard enough to find Bologo before seeking the order.
Failure to establish an act of insolvency
Body Corporate Plaza Mayor went to the High Court asking for the sequestration of Bologo’s estate because of unpaid levies and charges on a sectional title property. The body corporate based its case on section 8(a) of the Insolvency Act 1936, which says a debtor commits an act of insolvency if they leave or stay away from their home intending to avoid or delay paying their debts.
However, the court found that the main affidavit, drawn up by the body corporate’s attorney and not a trustee, had little factual information. It mentioned magistrates’ court cases and returns of non-service but did not properly explain how Bologo had actually committed an act of insolvency. A supplementary affidavit filed in July 2025 did not fix this problem.
During argument, the body corporate’s lawyers relied on returns of non-service from attempts to serve warrants of execution at two properties linked to Bologo. The returns showed that both properties had tenants who said Bologo was their landlord.
The judge found that the body corporate had not explained whether it tried to contact these tenants to see how they paid rent or find information to help trace Bologo. One return of non-service included a tenant’s phone number, and another had a lease agreement attached.
The court stressed that simply proving absence was not enough under Section 8(a). The body corporate had to show that Bologo stayed away specifically to avoid or delay paying her debts. The judge concluded that the returns of non-service did not show either the necessary behaviour or the required intention.
Sequestration must benefit creditors as a whole
The body corporate also did not show that sequestration would actually help Bologo’s creditors. In its supplementary affidavit, the body corporate said Bologo owed about R210,000 in levies and charges, while FirstRand Bank was owed around R573,000. That made the total debt roughly R783,000.
The body corporate relied on what looked like a desktop valuation that put the sectional title unit’s value at about R550,000. It also mentioned two other properties owned by Bologo, but gave no valuations or details about whether those were bonded.
The court found that this information did not show if Bologo’s debts were bigger than her assets. The body corporate did not give enough detail to work out the likely financial position of the estate. The application also did not explain why sequestration would be better for creditors than simply executing against the sectional title unit.
To back this up, the judge referred to Pebble Rock Golf Village Homeowners Association NPC v Ratladi, where the court looked at applications for sequestration brought by bodies corporate and homeowners’ associations trying to recover unpaid levies. That judgment said, “Sequestration is not a mere debt collection device.”
The principle is that sequestration is a collective process meant to benefit all creditors. It is not supposed to be a private tool for one creditor to get its own debt paid. The judge found that the reasoning in Pebble Rock applied directly to the Plaza Mayor case.
The body corporate did not give solid evidence about the properties, secured debts, administration costs or the likely payout to creditors. It also did not compare sequestration to ordinary execution to show that sequestration would be better. The judge concluded that the generic claims in the application suggested it was really just an attempt at debt collection.
Body corporate failed to make sufficient efforts to locate owner
The court found another problem with the application, which was that the body corporate had not tried hard enough to serve the sequestration documents on Bologo. The judge said that, given how serious sequestration is, trying to serve documents at just two addresses where Bologo did not live was not enough.
The body corporate could have asked the tenants for information that might help find her. If those efforts did not work, it could have asked for substituted service. The judge was not satisfied that the body corporate had tried hard enough to find Bologo before asking for the sequestration order.
Application dismissed without costs
The court dismissed Body Corporate Plaza Mayor’s application, finding that it did not prove an act of insolvency, did not show sequestration would benefit creditors, and did not show that enough had been done to serve Bologo.
The court did not make any order about costs.
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