- Mabunda Family Trust fails to pay R146 931 in arrears of sectional title levies despite a Magistrate’s Court judgment.
- The court finds trust committed an act of insolvency; provisional sequestration will benefit all creditors.
- Trustees must appear on March 2, 2026, to explain why final sequestration should not be granted.
The Mabunda Family Trust has been placed under provisional sequestration by the Mpumalanga High Court in Mbombela after failing to pay over R146 000 in sectional title levies owed to the Body Corporate of Ashdown Forest, a well-established sectional title scheme in White River.
Acting Judge MB Madavha ruled that the trust committed an act of insolvency, noting its failure to pay a Magistrate’s Court judgment, despite a warrant of execution being issued.
The dispute began in the Magistrate’s Court of Mbombela, where the Body Corporate obtained a judgment for R38 691.12, covering unpaid levies, interest, and costs. The sheriff later issued a nulla bona return, confirming the trust could not satisfy the debt. By the time of the High Court application, the outstanding levies had grown to R146 931.37, prompting the Body Corporate to seek provisional sequestration to protect its interests and those of other creditors.
Trustees’ defences dismissed
The trustees argued that they had paid half of the debt and claimed the trust was financially healthy, with enough immovable assets to meet its obligations. They also stated there was improper service on employees, banks, and SARS, and suggested there were other ways to resolve the issue.
Judge Madavha rejected these defenses, stating: “It is puzzling for the respondents to allege payment has been made but fail to attach proof of the said payment. Be that as it may, the respondents remain indebted to the applicants since the outstanding debt has not been paid.”
Regarding the service issue, the court found: “From the reading of the return of services attached to the application herein, one can clearly note how evasive the second respondent has been in being served… I am therefore satisfied that service has been affected on the interested parties.”
The judgment also clarified that the trust had no employees needing service.
Legal framework and benefit to creditors
According to sections 9 and 10 of the Insolvency Act 24 of 1936, a court may grant sequestration if the debtor committed an act of insolvency and sequestration would benefit creditors. Judge Madavha emphasised that sequestration serves a collective purpose, quoting the Supreme Court of Appeal: “The purpose and effect of the sequestration process is ‘to bring about a convergence of the claims in an insolvent estate to ensure that it is wound up in an orderly fashion and that the creditors are treated equally.’ It cannot fittingly be described as a mechanism to be used by a creditor to claim a debt due by a debtor to one single creditor.”
The court found that provisional sequestration was appropriate since the trust allegedly holds realisable assets valued at R950 000, which could be fairly distributed among all creditors. Judge Madavha concluded: “I have reason to believe that this provisional sequestration order will be to the advantage of the creditors… the respondent has committed an act of insolvency as contemplated in section 8(b) of the Insolvency Act, by failing to pay the judgment debt and that a nulla bona return of service has been issued, which the respondent does not dispute.”
Provisional sequestration order and next steps
The provisional sequestration order places the Mabunda Family Trust under the control of the Master of the High Court. A rule nisi has been issued, returnable on March 2, 2026, requiring the trustees to explain why a final sequestration order should not be granted.
The rule will be published in the Government Gazette and a local newspaper. The costs of the application will be paid by the sequestrated estate. Judge Madavha stressed that sequestration is meant not to satisfy a single creditor but to protect all creditors collectively, ensuring the orderly management of the insolvent estate.
“A court may grant an application for the sequestration of a debtor’s estate if it is satisfied that the applicant has established a claim… that the debtor committed an act of insolvency or is insolvent, and there is reason to believe that it will be to the advantage of the creditors of the debtor if the estate is sequestrated,” the judgment reads.
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