Tongaat Hulett faces US$32.3M sugar levy claim after court ruling

SOUTH AFRICA – Tongaat Hulett’s business rescue practitioners (BRPs) are facing a R517 million (US$32.3M) claim from the Sugar Association of South Africa (Sasa) for outstanding statutory sugar industry levies after the Constitutional Court rejected their legal challenge. 

The Constitutional Court on Monday dismissed with costs the BRPs’ application for leave to appeal against the Supreme Court of Appeal’s (SCA) December 2025 dismissal of their case.  

The application sought a declaratory order allowing business rescue practitioners to temporarily suspend payment obligations under pre-existing agreements during rescue proceedings. 

The court ruled that “there are no reasonable prospects of success on the merits of the application for leave to appeal”. 

“Therefore leave to appeal must be refused with costs,” it said. 

Tongaat’s joint BRPs said they were engaging with their counsel and relevant stakeholders to assess the implications of the judgment for the business rescue process. 

Sasa executive director Sifiso Mhlaba said the association was owed R517 million by Tongaat in outstanding statutory sugar industry levies. He said Sasa was awaiting legal advice on when the outstanding amount must be paid, adding that payment should be made in line with Tongaat’s approved business rescue plan. 

Mhlaba said Sasa had recovered part of the R1.5 billion owed by Tongaat at the end of March 2023 and confirmed that the company had been paying industry levies since April 1, 2023. 

He said Tongaat’s non-payment of levies had affected the sugar industry and cane growers because a special levy was raised to settle amounts owed to banks and other parties. 

“The special levy was borne by all growers and millers, who remain out of pocket,” Mhlaba said. 

The BRPs said the Constitutional Court proceedings concerned their decision to temporarily suspend certain payment obligations to Sasa under the Sugar Industry Agreement between October 28, 2022, and April 1, 2023. 

They said the suspension was critical to preserving Tongaat’s sugar operations and supporting the long-term survival of the business, which they described as important to the sustainability of KwaZulu-Natal’s sugar industry. 

“If these payments had been made at that time, there was a strong possibility of the company running out of funds and being forced to go into liquidation,” the BRPs said. 

They stressed that payments to Sasa had been made since April 2023 and that cane growers had been paid all amounts owing to them since the start of the business rescue process. 

The central legal issue before the SCA was whether the Sugar Industry Agreement, promulgated under the Sugar Act, qualifies as an “agreement” under the relevant section of the Companies Act.  

This determines whether payment obligations under the agreement can be suspended while business rescue proceedings are ongoing. 

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