THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Case no: 379/2005
REPORTABLE

In the appeals between:

COMMISSIONER FOR THE SOUTH AFRICAN REVENUE
SERVICE

Appellant

and

HAWKER AIR SERVICES (Pty) Ltd

Respondent

AND:

COMMISSIONER FOR THE SOUTH AFRICAN REVENUE
SERVICE

Appellant

and

HAWKER AVIATION SERVICES PARTNERSHIP

First Respondent

HAWKER AIR SERVICES (Pty) Ltd

Second Respondent

HAWKER MANAGEMENT (Pty) Ltd

Third Respondent

Before:
Howie P, Streicher JA, Cameron JA, Nugent JA and
Conradie JA
Heard:

Thursday 9 March 2006
Judgment:
Friday 31 March 2006

Liquidation – urgency – not an independent ground for dismissal of
application – debt arising from VAT assessment – no bona fide and
reasonable dispute – liquidation order to issue – Sequestration –
Insolvency Act 24 of 1936, s 13 – one of partners a company which
cannot be sequestrated – no impediment to sequestration of
partnership – benefit to creditors – disappearance of substantial
partnership asset – investigation justified

Neutral citation: Commissioner for the South African Revenue
Service v Hawker Air Services (Pty) Ltd [2006] SCA 55 (RSA)

JUDGMENT
_______________________________________________________

CAMERON JA:

[1] In the Pretoria high court the appellant (the Commissioner; SARS)
sought the liquidation and sequestration respectively of Hawker
Air Services (Pty) Ltd (HAS) and a now-defunct partnership to
which it belonged, Hawker Aviation Services (the partnership).
Patel J dismissed both applications with punitive costs orders, and
later refused leave to appeal.  His judgment has been reported.1
These are appeals against his orders with leave granted by this
court.  HAS is the respondent in the liquidation appeal and the
second respondent in the sequestration appeal, where the

1 Commissioner, South African Revenue Service v Hawker Aviation Services Partnership 2005
(5) SA 283 (T).

partnership is the first respondent and Hawker Management Co
(Pty) Ltd (ManCo) the third respondent.
[2] Patel J dismissed the applications on the grounds that they had
not been urgent; that the Commissioner had acted with an
improper ulterior purpose in bringing them; that the applications
constituted an impermissible collateral challenge to an earlier
court finding; that the statutory tax judgment on which the
Commissioner relied as constituting the debt rendering him an
unpaid creditor of the company and the partnership was invalid
and therefore that the Commissioner could not apply for either
liquidation or sequestration; that the sequestration application was
fatally defective because it failed to embrace a liquidation
application directed at the other corporate partner, ManCo; and
that the applications should be refused in any event in the
exercise of the court’s residual discretion.  The learned judge
passed strong criticism on the conduct of SARS’s officials.  In
addition he determined that certain statutory provisions were
unconstitutional.  He granted the respondents the costs of four
counsel, and ordered the Commissioner to pay them, not on the

party and party scale, nor even on the attorney and client scale,
but on the ‘attorney and own client scale’.
[3] Though it is unnecessary to traverse all its findings, the judgment
is incorrect and the criticism of the Commissioner and his staff
unjustified.  Some background is necessary.  At the centre are
very substantial tax debts the Commissioner claims Mr David
King, the sole director of HAS, and a number of parties connected
to him owe; and the Commissioner’s attempts over the last four
years to ensure that HAS’s principal asset, its interest in a Falcon
900B jet aircraft, remains available for the satisfaction of that and
other tax debts.  The partnership was formed in August 1999 to
conduct a charter business with a Hawker Executive Jet.  The
partnership registered as a vendor in terms of the Value-Added
Tax Act 89 of 1991 and claimed 100% of the customs VAT on the
Hawker’s acquisition as an input tax. On the premise that the
Hawker was used solely to convey passengers and goods for
reward, the Commissioner paid this claim.  Just more than a year
later, in September 2000, the partnership purchased the Falcon.
A similar VAT input claim was made and paid.

[4] HAS was the manager of the partnership’s charter business and
both aircraft were registered in its name, though beneficial
ownership vested in the partnership.  HAS remains the registered
owner in respect of the Falcon.  The partnership sold the Hawker
in May 2001 to a foreign-registered company King represented in
South Africa, Ben Nevis Ltd (Ben Nevis) (from which the
partnership had originally bought the Hawker).  In February 2002,
the Commissioner issued income tax assessments for the tax
years 1998, 1999 and 2000 against King (for R912 million) and
against Ben Nevis (for nearly R1.5 billion).  In the same month,
the high court granted the Commissioner certain orders designed
to preserve the Falcon – which the Commissioner claims is valued
at some R175 million – as an asset from which these tax debts
might be satisfied.  But the orders were not effective to prevent
the Falcon’s being flown abroad without being returned: and it has
been hangared in Europe, idle, since May 2002.
[5] In September 2002 a new partnership was formed when Rand
Merchant Bank Ltd, an en commandite partner (RMB), and
ManCo, the other public partner, sold their interests.  HAS
continued as a partner in the new partnership, with an

undiminished interest in the Falcon.  It is from its standing as a
partner in the old partnership that the Commissioner claims HAS
continues to be liable for that entity’s tax debts; and from its
continuing interest in the same asset – the Falcon – that the
Commissioner claims its winding-up may render reward.  The tax
debts arise, the Commissioner asserts, from VAT assessments
issued against the partnership on 13 March 2003 after SARS
determined that the Hawker and Falcon aircraft were used
predominantly for unrecompensed private purposes (mainly the
conveyance of Mr King) and not for commercial chartering.  The
Commissioner has fixed the partnership’s VAT liability at
approximately R73 million in tax, additional tax, penalties and
interest.
[6] Between March and early December 2003, correspondence
passed between SARS and the legal representatives of HAS and
the partnership in regard to the VAT assessment.  An objection
was partly successful, but within a few days in early December,
the Commissioner made a final ruling, took statutory judgments in
terms of s 40 of the VAT Act against HAS and the partnership,
obtained nulla bona returns in respect of the judgments, and

moved urgently for the liquidation of HAS and the sequestration of
the partnership.
[7] The urgency, the Commissioner said, lay in the fact not only that
the Falcon while stationary was unproductive and deteriorating,
but that attempts had been made to de-register it in South Africa,
and to transfer its registration abroad in defiance of court rulings.
For in February 2003 Hartzenberg J had granted the
Commissioner an order requiring the new partnership to take all
necessary steps to procure the Falcon’s return to South Africa.  In
September 2003 Hartzenberg J had granted the new partnership
and associated entities leave to appeal against this order, and
had
refused
the
Commissioner’s
application
for
interim
enforcement of the order under Rule 49(11).
[8] On Friday afternoon 5 December and Saturday 6 December
2003,
the
Commissioner
launched
the
liquidation
and
sequestration applications on an urgent basis.  Patel J was the
judge on urgent duty in the Pretoria high court that week.  On
Tuesday 9 December he directed the parties to submit written
argument.  The matters were argued on Wednesday 10 and
Thursday 11 December, when they were postponed sine die.  The

hearing resumed on 14 and 15 June 2004.  After the prolonged
hearing before Patel J, and before he delivered judgment, this
court upheld Hartzenberg J’s order requiring the new partnership
to procure the return of the Falcon to South Africa.2  Patel J
dismissed the applications on 26 November 2004 and handed
down his written judgment on 5 January 2005.

Urgency
[9] One of the grounds on which Patel J dismissed the applications
was that at their inception they had lacked urgency.  This was
erroneous.  Urgency is a reason that may justify deviation from
the times and forms the rules prescribe.  It relates to form, not
substance, and is not a prerequisite to a claim for substantive
relief.  Where an application is brought on the basis of urgency,
the rules of court permit a court (or a judge in chambers) to
dispense with the forms and service usually required, and to
dispose of it ‘as to it seems meet’ (Rule 6(12)(a)).  This in effect
permits an urgent applicant, subject to the court’s control, to forge

2 Metlika Trading Ltd v Commissioner, South African Revenue Service 2005 (3) SA 1 (SCA).  A
subsequent application for leave to appeal to the Constitutional Court was dismissed.

its own rules3 (which must ‘as far as practicable be in accordance
with’ the rules).  Where the application lacks the requisite element
or degree of urgency, the court can for that reason decline to
exercise its powers under Rule 6(12)(a).  The matter is then not
properly on the court’s roll, and it declines to hear it.  The
appropriate order is generally to strike the application from the
roll.4  This enables the applicant to set the matter down again, on
proper notice and compliance.5
[10] Far from striking the applications from his roll, Patel J heard
lengthy argument over two days in December, and then permitted
the parties to postpone the matters, in the event to a date more
than six months later.  In the meanwhile, on Monday 8 December
King on behalf of both HAS and the partnership lodged affidavits
(which he described as ‘preliminary answering affidavits’), which
engaged with the merits of the applications.  There was no
suggestion that deponents other than King wished to testify or
could testify, and King, having the assistance of his legal team,

3 See Republikeinses Publikasies (Edms) Bpk v Afrikaanse Pers Publikasies (Edms) Bpk 1972(1)
SA 773 (A) 782A-783H.
4 Luna Meubel Vervaardigers (Edms) Bpk v Makin 1977 (4) SA 135 (W) 139F-140A.
5 Cf Rule 6(6): ‘The court, after hearing an application whether brought ex parte or otherwise,
may make no order thereon (save as to costs if any) but grant leave to the applicant to renew the
application on the same papers supplemented by such further affidavits as the case may require.’

took a deliberate decision not to ask for extra time to deal with any
other points he may have wished to raise.  In addition, from
December 2003 to June 2004, King and his advisors chose
deliberately not to file additional affidavits, though it was open to
them to do so.  Instead, HAS and the partnership made it clear
that if they lost on the points they did raise, they would, in
defiance of the rule of practice that a matter may not be dealt with
in this piecemeal fashion, ask for a postponement in order to deal
with other points they had not raised.
[11] In this court the respondents persisted in submitting that the
application was not urgent when it was brought in December
2003, but even if that were so, there is nothing now to be made of
that.  I have already pointed out that lack of urgency will entitle a
high court in the exercise of its discretion to refuse to enrol a
matter where the ordinary forms and procedures have not been
followed.  But that is not what occurred.  Patel J traversed the full
ambit of the merits of the relief that was sought, and far from
striking the matter from the roll for want of such compliance,
dismissed it.  Whether or not it was urgent in December 2003 is

immaterial to the question now before us, which is whether the
application ought to have been dismissed.

The liquidation application
[12] The Commissioner applied for the winding-up of HAS as a
creditor of the company.6  He claimed in the founding papers that
HAS owed SARS a VAT debt of ‘approximately R73 million’, the
computation of which he set out in detail.  The founding affidavit
referred to the assessments on which the tax claim was based,
and recorded that SARS had obtained judgment against both
HAS and the partnership in terms of s 40(2)(a) of the VAT Act.7
Both in the high court and in this court, HAS contested the validity
of the statutory judgments on extensive grounds both formal
(invoking the decision of this court in Singh v Commissioner,
South African Revenue Service)8 and constitutional (invoking inter

6 Companies Act 61 of 1973 s 346(1): ‘An application to the Court for the winding-up of a
company may, subject to the provisions of this section, be made – (a) by the company; (b) by one
or more of its creditors (including contingent or prospective creditors); …’
7 VAT Act s 40(2)(a): ‘If any person fails to pay any tax, additional tax, penalty or interest payable
in terms of this Act, when it becomes due or payable by him, the Commissioner may file with the
clerk or registrar of any competent court a statement certified by him as correct and setting forth
the amount thereof so far due and payable by that person, and such statement shall thereupon
have all the effects of, and any proceedings may be taken thereon as if it were, a civil judgment
lawfully given in that court in favour of the Commissioner for a liquid debt of the amount specified
in the statement.’
8 2003 (4) SA 520 (SCA).

alia the separation of powers and the penal nature of some of the
tax claimed).  Patel J upheld these defences.
[13] It is not necessary to consider the objections to the judgments,
because the founding affidavit relies also on the assessments that
underlie them.  The founding deponent states that SARS ‘applies
for the liquidation of [HAS] based on a VAT debt of approximately
R73 million for which the [partnership] was assessed and for
which [HAS] is liable in terms of s 51(3) of the VAT Act’.9  The
assessments constituted SARS a creditor of the partnership and
of HAS.  And at no stage did deponents on behalf of the
partnership or HAS dispute the existence of the debts on bona
fide and reasonable grounds.10
[14] The defences raised by HAS against the assessments may be
shortly disposed of. The first was that it is constitutionally not
permissible for the Commissioner to usurp the function of a court
of law by imposing on a taxpayer any additional burden that has a
penal element. However, the imposition of additional tax or a

9 VAT Act s 51(3): ‘Subject to the provisions of section 46 [dealing with persons acting in a
representative capacity], every member of a partnership shall be liable jointly and severally with
other members of the partnership for performing the duties of the partnership in terms of this Act
and paying the tax imposed by this Act on the partnership in respect of supplies made by the
partnership while such member was a member of the partnership’.
10 See Kalil v Decotex (Pty) Ltd 1988 (1) SA 943 (A) 980-982.

penalty is no more than provisional; its imposition is appealable so
that the ultimate arbiter of the fairness of an additional tax or a
penalty is the court.
[15] On a formal level the assessments were challenged on the
footing that having upheld an objection by HAS the Commissioner
had, despite an undertaking to issue a revised assessment, by the
time the application for liquidation was made, not yet done so.
[16] There are two answers to this point. First, the objection applies
to only one of the assessments. The assessment for the period
ending December 2000 was not revised. Secondly, according to
the plain meaning of s 31(1) of the VAT Act any assessment
issued by the Commissioner creates a debt which is payable
whether or not the taxpayer disputes his liability. If the
Commissioner decides to revise the assessment downwards that
has the effect of reducing the debt. It does not mean that there is
no debt until all a taxpayer's objections have been dealt with and
a 'final' assessment has been issued (see Singh's case para 11)
[17] The argument that the 'pay now argue later' rule, the
constitutionality of which was established by Metcash Trading Ltd

v Commissioner, South African Revenue Service,11 applies only
where the Commissioner takes a statutory ‘judgment’, and not to
an application for liquidation, is unsustainable. Once the
Commissioner is a creditor, he is entitled to whatever remedy a
creditor may have for the enforcement or collection of the debt.
[18] Finally, it was argued in this regard that since the existence of
the debts is disputed on 'reasonable and bona fide grounds' a
court should in the exercise of its discretion not wind up HAS. As I
have indicated, there is no evidence on the papers of a bona fide
dispute.  The assessments derived from SARS’s conclusion that,
in contradiction of the intentions expressed in procuring the VAT
input credits, the aircraft had been used preponderantly for the
private conveyance of King without recompense to the
partnership.  King’s ‘preliminary answering affidavit’ scrupulously
avoids dealing with SARS’s detailed audit that provided the basis
for the assessments.  He refers only to objections made in letters
on behalf of the partnership by the tax attorneys representing it.
These objections were of a factual and legal nature. It was
contended that the reporting partner, ManCo, entirely under the

11 2001 (1) SA 1109 (CC).

control of RMB, at the outset formed the intention that both aircraft
would be used only for making ‘VATable’ supplies. Since ManCo
did not know that the aircraft were not being used as alleged by
SARS, it had no reason to change its original intention which
accordingly persisted with the result that, whatever the actual use,
the original VAT input tax could not be reclaimed by the
Commissioner.
[19] But these objections were never – despite express invitation –
affirmed on oath.  Between March 2003, when the assessments
were first raised, and June 2004, when argument on the
applications was concluded, no attested affirmation was ever
forthcoming that contradicted the detailed investigation and
findings of SARS in relation to the use of the aircraft.  In addition,
SARS’s assertion that those responsible for the management of
the partnership, effectively employees of the financing partner,
RMB, were turning a blind eye to the actual use of the aircraft,
was never controverted.  On the contrary, the RMB employees
were notably silent.  If I find, as I do, that the evidence as to the
intention (whether of HAS or of ManCo) on acquisition of the
aircraft, to use them only for the making of ‘VATable’ supplies is

not bona fide, there is no longer any basis for counsel's
contention that, as a matter of law, such intention as to the use of
the aircraft on their acquisition must be taken to have persisted
throughout the period of their use.
[20] Though the Commissioner relied also on the statutory
judgments obtained against HAS, those judgments neither
extinguished nor superseded the assessments: they were
designed merely to strengthen the revenue’s right to enforce the
assessments.12 Under the VAT Act the issue of the assessments
against the partnership created a deemed debt.13 There can thus
be no doubt that SARS enjoys standing as a creditor of the
partnership, for whose debts HAS is liable.  And it is common
cause, on information supplied by King himself, that HAS is quite
incapable of paying any its debts.  In these circumstances the
court had a discretion whether to order the winding-up of the
company14 and it is clear that that discretion should have been
exercised in favour of doing so.

12 Swadif (Pty) Ltd v Dyke NO 1978 (1) SA 928 (A) 940-944.
13 VAT Act 89 of 1991 s 31(1); 36(1): ‘The obligation to pay and the right to receive and recover
any tax, additional tax, penalty or interest chargeable under this Act shall not, unless the
Commissioner so directs, be suspended by any appeal or pending the decision of a court of law
…’
14 See PM Meskin and others Henochsberg on the Companies Act (5 ed, 1994, with updates) vol
1 p 693f.

[21] The partnership remained free to contest the deemed debt.15
And no doubt a court, in the exercise of its discretion, may
withhold a w-up order even in respect of a deemed debt if it is
shown that the debt is disputed on bona fide and reasonable
grounds.  That was never done here.  There were no other proper
grounds to withhold a winding-up order, for the reasons that
follow, and it ought to have been granted.
[22] HAS and the partnership contended that SARS’s real motive in
bringing the applications was to procure the return of the Falcon,
thereby rendering it available for execution in respect of the tax
debts of King and Ben Nevis – an object thwarted when
Hartzenberg J declined to order interim enforcement of the order
requiring the new partnership to procure its return to South Africa.
They thus contended that SARS thus acted with improper ulterior
purpose, and that the applications constituted an impermissible
collateral challenge to the prior rulings.  There is no merit in these
imputations.   The real motive of SARS was plainly to collect VAT.
No acceptable basis was advanced for impugning this.  The
liquidation and sequestration applications, and the attendant focus

15 Metcash Trading Ltd v Commissioner, South African Revenue Service 2001 (1) SA 1109 (CC)

on the Falcon’s recovery, flowed from this.  It does not constitute
an ulterior purpose.
[23] King and a number of persons are alleged to have interests in
the aircraft, including HAS.  Previous efforts to recover the Falcon
related to the interests of King and other parties associated with
him.  In the present case, the Commissioner seeks the
appointment of a liquidator to pursue whatever interests HAS
enjoys in the aircraft.  That is not an ulterior purpose.  The extent
to which these interests may coincide with interests pursued in
related applications is irrelevant and does not constitute an
ulterior purpose.  King claims that HAS’s interest in the aircraft is
limited to the extent of its share in the partnership, which is no
more than 0.1%.  The Commissioner contests this construction.  A
liquidator will be able to investigate the truth of these claims, and
follow up any interest he may discover.
[24] The proceedings before Hartzenberg J, though also directed to
the preservation and recovery of the Falcon, involved differing
parties and different considerations.  An application under Rule
49(11) for interim enforcement of a court order pending appeal is

paras 34-48.

considered and granted on quite different grounds from those at
issue when a liquidation is sought.  The applications for the
liquidation of HAS and the sequestration of the partnership were
thus not collateral challenges to the refusal by Hartzenberg J to
grant the Commissioner interim enforcement of the order to return
the Falcon, but a legitimate claim that entailed an alternative
means to the same end.  There was thus no impropriety,
ulteriority or impermissibility in SARS seeking to pursue its
purposes through liquidation and sequestration proceedings.

The sequestration application
[25] The partnership sought to be sequestrated consisted of HAS,
ManCo and RMB.  The Commissioner has applied for the
sequestration of the partnership, but not for the liquidation of
ManCo.  The question is whether in these circumstances the
sequestration of the partnership is competent.  Section 13(1) of
the Insolvency Act 24 of 1936 provides:
‘If the court sequestrates the estate of a partnership (whether provisionally or
finally or on acceptance of surrender), it shall simultaneously sequestrate the
estate of every member of that partnership other than a partner en
commandite or a special partner as defined in the Special Partnerships’

Limited Liability Act, 1861 (Act No 24 of 1861) of the Cape of Good Hope or
in Law No 1 of 1865 of Natal, who has not held himself out as an ordinary or
general partner of the partnership in question: Provided that if a partner has
undertaken to pay the debts of the partnership within a period determined by
the court and has given security for such payment to the satisfaction of the
registrar, the separate estate of that partner shall not be sequestrated by
reason only of the sequestration of the estate of the partnership.’
[26] Does s 13, by requiring that the court ‘shall simultaneously
sequestrate’ the estates of all the partners, render impossible a
partnership sequestration where not all the members can be
sequestrated?  In Partridge v Harrison and Harrison,16 Greenberg
JP held No.  There, the estate of one of the partners could not be
sequestrated
because
of
a
military
service
moratorium.
Greenberg JP held that the partnership could nevertheless be
sequestrated.  He found that s 13, though imperatively expressed,
must be limited to cases where the estates of the partners can be
sequestrated, and that it does not apply where there is a lawful
bar to sequestration.  He said:
‘Notwithstanding that this is couched in imperative language, there are cases
where it could not be carried out.  For instance if a partner has been
sequestrated and has not acquired an estate as against his trustee so as to

allow a second sequestration, the Court could do no more than to
sequestrate the partnership estate and the estates of the remaining partners.
The same would probably be the case if one of the partners was a limited
company.  It would appear therefore that the section must at least be limited
to cases where the estates of the partners can be sequestrated and does not
apply where there is a lawful bar to such sequestration.’
Greenberg JP also stated that the proviso to s 13 ‘shows that it
was contemplated that sequestration of the private estates does
not follow automatically in all cases upon a sequestration of the
partnership estate’.
[27] The reasoning of Greenberg JP was followed for nearly half a
century.  The sequestration of partnerships was ordered where
one of the partners was married in community of property,17
where one was the beneficiary of an agricultural moratorium,18
and where one was a company under judicial management,19 in
each case rendering sequestration impossible.  But in P de V
Reklame (Edms) Bpk v Gesamentlike Onderneming van SA

16 1940 WLD 265 266-7.
17 SA Incorporated Merchants’ Protection Agency Ltd v Kruger 1947 (3) SA 304 (T).
18 Laymore (Pty) Ltd v Five Streams Wattle Estate 1957 (3) SA 671 (N) (even though Holmes J
only assumed, without deciding, that the partnership could be sequestrated, the order was indeed
granted on the return day).
19 SA Leather Co (Pty) Ltd v Main Clothing Manufacturers (Pty) Ltd 1958 (2) SA 118 (O).

Numismatiese Buro (Edms) Bpk en Vitaware (Edms) Bpk,20 these
decisions were criticised as conceptually flawed, since the
statutorily created concursus creditorum presupposes the
simultaneous sequestration of all the members of the partnership
and cannot operate effectively without it.21  That the concursus the
statute envisages is incomplete, and that it would operate
incompletely where a partnership sequestration excludes the
estate of one of the partners is correct.  Yet the criticism is not
persuasive.  It proceeds on the premise that a complete
concursus is imperative, when the exceptions s 13 itself creates
show that this is not so.  The interpretation favoured by
Greenberg JP and the decisions that followed him achieve a
pragmatic, if partial, result, which is compatible with the language
of s 13 when interpreted, as Greenberg JP did, as requiring the
sequestration of only those partners whose estates are capable of

20 1985 (4) SA 852 (C).
21 Insolvency Act 24 of 1936, s 49(1): ‘When the estate of a partnership and the estates of the
partners in that partnership are under sequestration simultaneously, the creditors of the
partnership shall not be entitled to prove claims against the estate of a partner and the creditors
of a partner shall not be entitled to prove claims against the estate of the partnership; but the
trustee of the estate of the partnership shall be entitled to any balance of the partner’s estate that
may remain over after satisfying the claims of the creditors of the partner’s estate in so far as that
balance is required to pay the partnership’s debts and the trustee of the estate of a partner shall
be entitled to any balance of the partnership’s estate that may remain over after satisfying the
claims of the creditors of the partnership estate, so far as that partner would have been entitled
thereto, if his estate had not been sequestrated.’

sequestration.22  Even though this means that in such situations
the statutory concursus will be incomplete, it seems to me to offer
a more practicable and coherent approach to the difficulties that
would result if s 13 were interpreted to render sequestration of a
partnership impossible where one of the partners cannot be
sequestrated.
[28] I therefore conclude that the interpretation adopted in the
Partridge case is preferable and that since ManCo is a company,
which is not capable of being sequestrated, s 13 did not require its
sequestration.  It follows that the application for the partnership’s
sequestration is not defective.
[29] The question is whether the Commissioner has established that
sequestration would render any benefit to creditors, given that the
partnership is now defunct.  The answer seems to lie in those
decisions that have held that a court need not be satisfied that
there will be advantage to creditors in the sense of immediate
financial benefit.  The court need be satisfied only that there is
reason to believe – not necessarily a likelihood, but a prospect not

22 Catherine Smith, The Law of Insolvency (3ed, 1988) pp 70-71 favours the approach of
Greenberg JP; while PM Meskin Insolvency Law and its operation in winding-up (1990, with
updates) 2-29, who favours the analysis in P de V Reklame concedes ‘that the resulting situation
clearly is unsatisfactory, given the policy of achieving a sequestration of the partnership’s estate

too remote – that as a result of investigation and inquiry assets
might be unearthed that will benefit creditors.23
[30] In the present case, the partnership was the beneficial owner of
the Falcon which, in circumstances set out in the judgment in
Metlika Trading Ltd v Commissioner, South African Revenue
Service,24 was transferred to a new partnership.  It is true that
HAS continued as a partner in the new partnership; but in
substance the partnership lost an asset of very considerable value
for no discernible return to it.  That, at least, is something in
regard to which investigation and inquiry may yield a benefit for
the creditors of the partnership, if it were found for instance that
the transfer to the new partnership involved a voidable disposition,
or a disposition without value or was, as SARS contends, a
simulated transaction in fraud of the revenue.
[31] Reverting to the liquidation, given that only one creditor is
involved, and only one shareholder, both of whom have had the
opportunity to be heard, it will serve no purpose to issue an
interim winding-up order.  A final order will therefore issue.  The

as such’ and recommends remedy by legislative amendment.
23 Meskin & Co v Friedman 1948 (2) SA 555 (W) 559, per Roper J; Hillhouse v Stott 1990 (4) SA
580 (W) 585 and Dunlop Tyres (Pty) Ltd v Brewitt 1999 (2) SA 580 (W) 585 per Leveson J.
24  2005 (3) SA 1 (SCA).

Commissioner, though employing three, asked for the costs of
only two counsel.

Order:
1. The appeal succeeds with costs, including the costs of two
counsel.

2. The order of the court below is set aside, and in its place is
substituted the following:

A:
In the liquidation application, case number 34593/2003:
(i)
There is a winding-up order in respect of the respondent
company;
(ii)
The costs of the applicant, including the costs of two
counsel, are costs in the winding-up.

B:
In
the
sequestration
application,
case
number
34724/2003:
(i)
The estate of the Hawker Aviation Services Partnership is
placed under provisional sequestration in the hands of the
Master of the High Court;
(ii)
The Partnership is called upon to advance reasons, if
any, on Tuesday 25 April 2006 why the court should not
order the final sequestration of its estate.

E CAMERON
JUDGE OF APPEAL

CONCUR:
HOWIE P
STREICHER JA
NUGENT JA
CONRADIE JA