Case  CCT 212/24
[2026] ZACC 36

Judgement Date: 11 September 2026

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

Today, the Constitutional Court handed down judgment in an application for leave to appeal against the judgment and order of the High Court of South Africa, North West Division, Mahikeng (High Court), which ordered the final sequestration of the Mokasule Investment Trust (Trust).

On 5 December 2019, the respondents were appointed as trustees of the insolvent estate of Mr TP Mokasule (the insolvent’s trustees), an erstwhile trustee of the Trust, alongside the applicants. The insolvent’s trustees claimed that the insolvent was a creditor of the Trust in the amount of R20 388 840.73. This was alleged to be reflected in the “audited” financial statements of the Trust. The insolvent’s trustees alleged that the insolvent acquired assets in the name of the Trust by fraudulently purporting to render services to the Klerksdorp Municipality (Municipality) as a meter reader. They further alleged that the insolvent had used the money stolen from the Municipality to acquire immovable property in the name of the Trust and that the application to sequestrate the Trust was necessary for the recovery of the stolen money.

On 18 April 2019, the insolvent’s trustees were granted a provisional sequestration order of the Trust and a return date for the rule nisi was issued. Overall, the case advanced by the insolvent’s trustees for the final sequestration of the Trust was that: (a) all the funds utilised to acquire the immovable properties originated from the theft perpetrated by the insolvent; (b) the Trust had no independent income, as all the funds utilised to acquire the assets were either advanced by the insolvent from the stolen funds or channelled to the Trust directly by the insolvent from ill-gotten gains; and (c) the Trust could not be deemed to be solvent as all funds in its name were to be reimbursed to the Municipality, being the “relevant creditor”.

The insolvent’s trustees averred in their founding affidavit that the Trust had no source of income by which it could possibly have acquired the immovable properties, as at all material times since its registration in 2010, the Trust was not a trading entity and generated no income whatsoever. They alleged that the Trust’s “audited” financial statements ending February 2015 revealed that the insolvent had loaned an amount of R20 388 840.73 to the Trust.

In contrast, the applicants denied any theft of money from the Municipality by the insolvent. They branded the application as a gross abuse of court process. They further submitted that the Trust had assets that exceeded its liabilities; that the Trust assets could easily pay the insolvent’s trustees’ proven debts, if any, yet no such demand had been made; and that the insolvent’s trustees had launched an application to sequestrate the Trust so as to maliciously take control of the Trust’s assets for their own gain. They denied that the insolvent had ever done any meter reading as a form of business. Importantly, they contended that the insolvent’s trustees had not qualified the solvency and liquidity test that they relied on to sequestrate the Trust.

The High Court outlined the legal principles pertaining to applications for the sequestration of debtors. It held that the onus of proving insolvency was on the insolvent’s trustees and that should they fail to do so, they were not entitled to an order for sequestration. The Court proceeded to find that the Trust had committed the following acts of insolvency: (a) disposing of immovable property, in that the insolvent had purchased the properties in the name of the Trust; (b) acquiring property without repaying the loan made to it by the insolvent; and (c) attempting to alienate the property with the intent to prejudice one creditor above another. The Court held that the insolvent’s trustees had made out a case for the confirmation of the rule nisi and granted an order for the final sequestration of the Trust with costs.

On 8 January 2024, the High Court dismissed an application for leave to appeal with costs on the basis that there were no reasonable prospects that another court may come to a different conclusion. The applicants petitioned the Supreme Court of Appeal for leave to appeal but their application was dismissed with costs. Subsequently, they applied to the President of that Court for reconsideration of their application for leave to appeal in terms of section 17(2)(f) of the Superior Courts Act. That application was also dismissed with costs.

In this Court, the applicants requested condonation of their late filing of their application for leave to appeal. Although the application is drafted in a confusing way that is exacerbated by manifest date errors, the applicants submitted that the delay was not due to the fault of their own or their legal representatives. Importantly, they submitted that their application has good prospects of success and that the respondents will suffer no prejudice if condonation is granted. The respondents did not oppose condonation in their answering affidavit. However, they opposed condonation in written submissions. They averred that the applicants failed to provide an explanation for the entire period of delay and that the interests of justice do not favour the granting of condonation.

The applicants also sought leave to file a replying affidavit. They averred that the replying affidavit is extremely important and directly addresses the incorrect submissions set out by the respondents in their answering affidavit in relation to the nature of the dispute between the parties. They also deemed it necessary to respond to what they submitted to be incorrect and inaccurate submissions by the respondents relating to allegations of the commission of crimes.

The applicants submitted that this Court’s general jurisdiction is engaged. They submitted that the High Court committed a clear error of law and misapplication of the applicable test for insolvency in sequestration applications. This was alleged to be as a result of the High Court failing to apply the two stages that must be followed when a court is called upon to sequestrate a debtor’s estate. They therefore submitted that the interests of justice require the intervention of this Court.

On the merits, the applicants’ main contentions were that the findings of the High Court were not supported by evidence, and that it failed to apply principles applicable in sequestration matters. The applicants advanced a number of submissions in this regard, particularly: that the respondents failed to make out a proper case before the High Court; that the High Court’s judgment failed to account for the respondents’ failure to establish a debt to sustain the claim for sequestration; that the High Court failed to appreciate the fact that the assets of the Trust far exceeded any liabilities that could be attributed to it; and that the High Court made an order on the basis of acts of insolvency without the respondents having alleged or proved any act of insolvency in their founding affidavit.

The respondents submitted that the applicants have failed to establish that this Court’s jurisdiction is engaged. They contended that the finding of factual and technical insolvency in terms of section 8 of the Insolvency Act (Act) does not raise a constitutional issue, nor does it raise an arguable point of law of general public importance that ought to be heard by this Court. They submitted that the finding was purely a question of fact, which the applicants were unable to surmount.

On the merits, the respondents submitted that the applicants have failed to indicate with specificity which aspects of sections 8, 9 and 12 of the Act were not complied with. They further submitted that the debt was established through audited financial statements from the insolvent, which fact was accepted by the High Court and the Supreme Court of Appeal. They further contended that there is nothing wrong with the High Court’s interpretation of the provisions of the Act and that they made out a proper case for the sequestration of the Trust.

In a unanimous judgment penned by Mlambo DCJ (Dambuza J, Kollapen J, Majiedt J, Mathopo J, Mhlantla J, Nuku AJ, Opperman AJ, Rogers J, Savage J and Tshiqi J concurring), this Court held that condonation must be granted as the delay of four days was minimal and the application for the delay was adequate. Moreover, this Court held that the application to file a replying affidavit must be refused as the applicants failed to provide exceptional circumstances justifying the granting of the application.

This Court took the view that the applicants’ criticism of the High Court’s judgment was well-founded for the reasons raised by the applicants. The High Court ignored applicable and established principles regarding the assessment and determination of the insolvency of debtors. This was quintessentially a matter of general public importance warranting the attention of this Court. As submitted by the applicants, the errors in the High Court judgment were pervasive, especially in its failure to decide the issues with which it was confronted, based on the evidence before it. In a nutshell, this triggered the jurisdiction of this Court in that the applicants did not enjoy a fair hearing as guaranteed by section 34 of the Constitution and there was clearly a failure of justice. This failure invoked this Court’s constitutional jurisdiction.

This Court held that it was in the interests of justice to grant leave to appeal. This was based on the fact that the applicants have demonstrated that the High Court’s judgment was flawed. The reading of the High Court’s judgment led to an ineluctable conclusion that the High Court failed to appreciate the facts and issues before it.

This Court emphasised that at this stage, the application was fact-laden and required a proper consideration and assessment of the facts. This Court has stated that it does not involve itself in factual controversies. That was for the lower courts. However, since the High Court woefully failed to assess and determine the matter on its facts, it was crucial that this Court demonstrated how the High Court failed to comply with the duty of proper consideration. The Court reiterated that it will not be making a pronouncement on the merits.

The overarching premise of the High Court’s finding of insolvency of the Trust was with regard to the alleged criminal conduct of the insolvent, and not the Trust. The High Court focused on how the properties of the Trust were acquired, which ties back to the allegation that the Trust acquired all of its assets utilising stolen money. How the properties were obtained was of no consequence in a sequestration application. In a sequestration application, what was important was whether the subject of the application was factually insolvent. In this case in particular, what was important was whether the Trust was factually insolvent, as that was the case advanced by the insolvent’s trustees in the High Court. The debt itself was denied and, importantly, no acts of insolvency were relied upon in the pleadings. The High Court relied on allegations of criminal conduct by the insolvent, allegations which have not been proven in criminal proceedings and were clearly hearsay. The High Court did not explain how and why it found these allegations of criminal conduct to be admissible and relevant in a sequestration application.

The High Court held that the Trust committed an act of insolvency in attempting to alienate the property with the intent to prejudice one creditor above another. However, this was not pleaded. Even the High Court’s judgment disclosed no such facts. No such property was identified. Nothing in the judgment disclosed how the High Court came to this conclusion. The path of reasoning was not disclosed.

The High Court further found that the Trust committed an act of insolvency by disposing of immovable property, in that the insolvent purchased the properties in the name of the Trust. This Court found it difficult to see how this qualified as an act of insolvency by the Trust, even if it was pleaded as such, which it was not. This finding by the High Court demonstrated a lack of appreciation not only of the facts before it, but also of the applicable law.

The High Court further found, despite the absence of such a pleaded case, that the Trust had committed an act of insolvency by having property but not refunding the loan to the insolvent. The loan was disputed, and there was no evidence before the High Court of a demand for its repayment. The High Court relied on a disputed forensic report, but it did not explain how it dealt with the applicants’ rejection of the veracity of the forensic report.

Overall, the above demonstrated that the High Court failed in its duty of proper consideration. Consequently, the order of final sequestration of the Trust must be set aside. Therefore, this Court granted leave to appeal. This Court upheld the appeal. This Court set aside the orders of the Supreme Court of Appeal in the application for leave to appeal and reconsideration. This Court also set aside the order of the High Court of South Africa, North-West Division, Mahikeng.

This Court held that the application heard under case number M282/2020 seeking an order for the final sequestration of the Mokasule Investment Trust with Registration Number IT143/10, is remitted to the High Court, to be heard by a different judge. This Court ordered the respondents to pay the applicants’ costs in this Court. This Court also ordered the respondents to pay the applicants’ costs in the application for leave to appeal in the Supreme Court of Appeal. This Court further ordered, each party to pay their own wasted costs in respect of the abortive hearing of the matter that resulted in the High Court, handing down judgment on 15 September 2022.

The Full judgment  here