What happened
The trustees of an insolvent estate applied to sequestrate a family trust of which the insolvent had been a trustee. Their case was that the insolvent had stolen from a municipality, used the money to buy immovable property in the trust's name, and that the trust's own "audited" financial statements showed a loan from the insolvent of just over R20 million. The trust, they said, had no income of its own and could not be solvent because everything it held belonged, in truth, to the municipality.
The trustees of the trust denied all of it, called the application an abuse of process, said the trust's assets exceeded its liabilities, and pointed out that no demand for payment had ever been made.
The High Court confirmed the rule nisi and granted a final sequestration order with costs. It found three acts of insolvency: the insolvent had bought the properties in the trust's name; the trust had acquired property without repaying the loan; and the trust had tried to alienate property to prefer one creditor over another. Leave to appeal was refused by the High Court, by the Supreme Court of Appeal, and on reconsideration by the President of that court.
What the court held
In a unanimous judgment by Mlambo DCJ, handed down on 11 September 2026 as Mokasule N.O. and Others v Botha N.O. and Another [2026] ZACC 36, the Constitutional Court granted leave to appeal and upheld the appeal.
Two procedural points first. A delay of four days in filing was condoned: the delay was minimal and the explanation adequate, and the respondents, who had not opposed condonation in their answering affidavit, could not oppose it in written submissions. An application to file a further replying affidavit was refused because no exceptional circumstances were shown.
On the merits, the court found the applicants' criticism of the High Court well founded. The High Court had ignored the established principles for assessing and determining insolvency in sequestration proceedings. In particular it did not apply the two stages a court must follow before sequestrating a debtor's estate, and it made its order on the basis of acts of insolvency that the sequestrating creditors had neither alleged nor proved in their founding affidavit.
What it means for your practice
The judgment does not change the law of insolvency. It enforces it, at the highest level, against a High Court that had been upheld all the way up on petition. That is the point for practitioners: a final sequestration order that rests on findings the applicant never pleaded is vulnerable, and remains vulnerable after the Supreme Court of Appeal has refused leave.
For the applicant's attorney, the founding affidavit is the whole case. If you rely on an act of insolvency under section 8 of the Insolvency Act, name the act and plead the facts that constitute it. If you rely on actual insolvency, plead the liabilities and the assets and show the shortfall. A court may not supply, from the general narrative, acts of insolvency you did not allege. And the debt itself must be established: an entry in a set of financial statements that the respondent disputes is an allegation, not proof.
For the respondent's attorney, the answering affidavit should do what the trust's trustees did here: dispute the debt, put solvency squarely in issue, and record that no demand was made. The judgment vindicates exactly that approach.
On condonation, the court's handling is a useful marker. Four days late with an adequate explanation is condoned; a respondent who wants to oppose condonation has to do so in the answering affidavit, not for the first time in heads.
What to do on your files
Review any pending sequestration or liquidation application you have issued. Check that every act of insolvency you intend to argue is pleaded in the founding affidavit with its facts, and that the debt is proved by something the court can accept, not merely asserted. Amend before the hearing rather than argue around the gap at it.
Where you act for a respondent against a final order already granted, and the order rests on findings that were not pleaded, this judgment is your authority that the order is reviewable on appeal even after leave has been refused below.
In your precedent for founding affidavits in sequestration matters, add a dedicated section headed with the act of insolvency relied on, followed by the facts, followed by the evidence. It is a small drafting discipline that this judgment makes decisive.
The court's media summary, from which this note is drawn, is not binding and the judgment should be read in full before you rely on it.
Source: Mokasule N.O. and Others v Botha N.O. and Another [2026] ZACC 36 (CCT 212/24), Constitutional Court, 11 September 2026. The court's own page: https://www.concourt.org.za/index.php/judgement/661-mokasule-n-o-and-others-v-botha-n-o-and-another-cct-212-24