The Body Corporate of Empire Gardens v Sithole and Another

The appellant, the Body Corporate of Empire Gardens, sought the compulsory sequestration of Ms Nobuhle Gloria Sithole, a co-owner of a sectional title unit, due to her failure to pay sectional title levies. Default judgments for unpaid levies were obtained, but execution against her movable property yielded no proceeds, and a sale in execution of the unit was abandoned because Nedbank, the mortgagee, did not accept the purchase price. The body corporate alleged factual insolvency and argued that it need not prove advantage to creditors because of its statutory role and preferential position. Nedbank opposed the application, contending that sequestration would not benefit the general body of creditors and that its bond repayments were up to date. The High Court dismissed the application, and the body corporate appealed.

The appeal was dismissed, and the refusal of the compulsory sequestration order was upheld.

This case affirms that bodies corporate are subject to the same requirements as other creditors in sequestration proceedings and must prove advantage to the general body of creditors. It reinforces the centrality of the concursus creditorum principle and clarifies that sequestration cannot be used merely as a debt-collection mechanism by sectional title bodies corporate.