Smith NO and Another v Van Jaarsveld and Another (4990/2021) [2025] ZAFSHC 189 (26 June 2025)

Smith NO and Another v Van Jaarsveld and Another (4990/2021) [2025] ZAFSHC 189 (26 June 2025)

The court found that the payments made by Trackstar Trading 140 (Pty) Ltd to the first respondent after the liquidation application was launched but before the liquidation order was granted constituted dispositions within the meaning of section 341(2) of the Companies Act. The first respondent was aware of the liquidation proceedings and the payments amounted to undue preference over other creditors. The default position under section 341(2) is that such payments are void unless the court exercises its discretion to validate them. After considering the facts, the chronology of events, and the relevant case law, the court was not persuaded to validate the payments. The interests of the...

Citation
[2025] ZAFSHC 189
Parties
Applicant: Elrich Ruwayne Smith NO; Applicant: Ethne Mary van Wyk NO; Respondent: Daniël Theodorus van Jaarsveld; Respondent: The Master of the Free State High Court, Bloemfontein
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
26 June 2025
Case Number
4990/2021
Procedural Posture
Civil Application / Final Judgment After Opposed Application and Counter Application
Outcome
Application granted; payments to first respondent declared void and set aside. Counter-application dismissed with costs.
Judges
Ntanga AJ
Legal Topics
Company Liquidation, Void Disposition, Business Rescue Practitioner Fees, Undue Preference, Court Validation of Payments
Civil Procedure Commercial and Corporate Company Liquidation Void Disposition Business Rescue Practitioner Fees Undue Preference Court Validation of Payments

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Parties

Elrich Ruwayne Smith NO

Applicant

Ethne Mary van Wyk NO

Applicant

Daniël Theodorus van Jaarsveld

Respondent

The Master of the Free State High Court, Bloemfontein

Respondent

Procedural Posture

Civil Application / Final Judgment After Opposed Application and Counter Application

Legal Issues

  1. 1 Whether payments made by Trackstar Trading 140 (Pty) Ltd (in liquidation) to the first respondent after commencement of liquidation proceedings are void under section 341(2) of the Companies Act.
  2. 2 Whether the payments to the business rescue practitioner constituted undue preference over other creditors.
  3. 3 Whether the court should exercise its discretion to validate the payments made to the first respondent.

Ratio Decidendi

The court found that the payments made by Trackstar Trading 140 (Pty) Ltd to the first respondent after the liquidation application was launched but before the liquidation order was granted constituted dispositions within the meaning of section 341(2) of the Companies Act. The first respondent was aware of the liquidation proceedings and the payments amounted to undue preference over other creditors. The default position under section 341(2) is that such payments are void unless the court exercises its discretion to validate them. After considering the facts, the chronology of events, and the relevant case law, the court was not persuaded to validate the payments. The interests of the...

Court Disposition

Application granted; payments to first respondent declared void and set aside. Counter-application dismissed with costs.

Orders

  • The payments made in the total sum of R387 287.23 by Trackstar Trading 140 (Pty) Ltd (in liquidation) to the first respondent during November 2019 to December 2019 are declared void under section 341(2) of the Companies Act and set aside.
  • The first respondent is ordered to repay to the applicants the amount of R387 286.23 forthwith.