The short version
On 28 October 2026 the KwaZulu-Natal High Court in Pietermaritzburg provisionally sequestrated a family business trust. The deciding piece of evidence was not a bank statement or a valuation. It was an email from one of the trustees asking the bank for six months "to get all affairs in order".
The case is Standard Bank of South Africa Limited v Trustees for the time being of the Continental Trust [2026] ZAKZPHC 105 (Mossop J). If you are a trustee of a trust that borrows money, owns property or runs a business, it is worth five minutes of your time.
What happened
The trust ran a butchery, deli and bakery in Durban. In December 2016 it signed a R9 million commercial property loan with Standard Bank, secured over the trust’s building and repayable over ten years.
Things went wrong on two fronts. First, municipal rates: alterations were made to the building without approved plans, penalties followed, and by 2023 the trust owed the municipality about R5.2 million. Second, the bank loan: instalments fell into arrears. The bank sent demands, met with a trustee, and twice gave the trust months of breathing room. No payment followed, and the full balance was called up in 2023.
In March 2025, after receiving a section 129 notice demanding about R6.1 million, a trustee replied by email that the business had been "experiencing challenges" for years and that the trust "would require six months to get all affairs in order". The bank granted that indulgence too. Still no payment. The bank then applied to sequestrate the trust.
Yes, a trust can be sequestrated
Many families assume a trust sits outside insolvency law. It does not. A trust acquires assets and debts through its trustees, so it is a "debtor" under the Insolvency Act 24 of 1936 and can be sequestrated much like a person. The court confirmed this, relying on long-standing authority.
Why the email mattered
Under section 8(g) of the Insolvency Act, a debtor commits an "act of insolvency" if it tells a creditor in writing that it is unable to pay its debts.
The email never said "we cannot pay". It did not have to. The court applied an objective test: how would a reasonable creditor read it? A written request for time to pay a debt that is already due ordinarily means the debtor cannot pay now. What the trustee privately intended was irrelevant.
The law draws a line between being unable to pay and being unwilling to pay. Nothing in the trust’s correspondence suggested it could pay if pressed. It had been pressed, more than once, and paid nothing. It also never paid even the part of the debt it did not dispute.
The defences that failed
"The amount is disputed." The trust compared the capital figure on the bank’s certificate of balance with the total in the section 129 notice. The court added up all three figures on the certificate (capital, interest and interest on arrear interest) and found that the only difference was interest that had run in the months between the two documents.
"We paid substantial amounts." No dates, no amounts, no proof. A party who says it has paid must prove it. "The interest rate is exorbitant." The rate was prime plus 1.8%, written into the loan agreement and signed by the same trustee.
"Our assets are worth R25 million." That was the trustee’s own estimate. The court preferred the bank’s professional valuer: R12 million on a forced sale and R16 million on the open market, against claims of about R22 million. "The municipality’s billing is unreliable." No evidence was offered, and the trust had previously blamed unapproved building work, not billing errors.
The court found that the trust had not played open cards. It disclosed no financial records and answered most of the bank’s allegations with a bare "noted" or "denied". The disputes were found to be contrived to avoid sequestration.
The outcome
The trust’s estate was placed under provisional sequestration in the hands of the Master. Interested parties may show cause on 27 January 2027 why a final order should not be made.
Five lessons for trustees
1. Your trust is not insolvency-proof. If it borrows, it can be sequestrated.
2. Watch the words in your emails. A written request for time to pay a debt that is already due can count as an act of insolvency. Before you reply to a letter of demand, get advice on how to word it.
3. Keep proper records. A trust that cannot show what it paid, what it owns and what it is worth has no answer when a creditor goes to court.
4. Pay what you don’t dispute. Refusing to pay even the undisputed part tells a court you cannot pay at all.
5. Deal with municipal debt early. Rates and penalties on trust property can grow faster than the business can carry.
How Lawvero can help
A trust only protects a family if it is properly run. Lawvero prepares the documents that keep a trust in order: trustee resolutions, updated trust records and the paperwork when trustees change, at a fixed fee quoted upfront. If your trust has received a letter of demand, speak to an attorney before you respond.
Questions? Email office@lawvero.co.za or WhatsApp 065 764 3430.
Source: Standard Bank of South Africa Limited v Trustees for the time being of the Continental Trust (2025-000318) [2026] ZAKZPHC 105 (28 October 2026). This case note summarises a provisional order and is not a substitute for advice on your own facts. Lawvero provides document preparation services and does not provide legal advice.