Strydom and Another v Snowball Wealth (Pty) Limited and Others (10287/2019) [2020] ZAWCHC 103 (11 September 2020)

Strydom and Another v Snowball Wealth (Pty) Limited and Others (10287/2019) [2020] ZAWCHC 103 (11 September 2020)

The court held that the plaintiffs' particulars of claim do not disclose a cause of action under section 26(1) of the Insolvency Act. The facts pleaded show that the shares were sold for a price, which, although below market value, constitutes value in the ordinary sense and is neither illusory nor nominal. Section 26(1) is not triggered by dispositions for inadequate value, but only by those for no value or illusory/nominal value. The authorities relied upon by the plaintiffs to equate inadequate value with no value are outdated or misapplied. The exception is upheld, and the claim is set aside, with leave to amend granted to the plaintiffs.

Citation
[2020] ZAWCHC 103
Parties
Plaintiff: Pieter Hendrik Strydom N.O.; Plaintiff: Amelia Strecker N.O.; Defendant: Snowball Wealth (Pty) Limited; Defendant: Leo Chih Hao Chou; Defendant: WZhang; Defendant: Julian David Rabinowitz
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
11 September 2020
Case Number
10287/2019
Procedural Posture
Exception Application / Exception to Amended Particulars of Claim
Outcome
Exceptions upheld; plaintiffs' claim set aside with leave to amend.
Judges
N C Erasmus
Legal Topics
Insolvency Act Section 26, Voidable Dispositions, Exception Procedure, Adequacy of Value
Civil Procedure Commercial and Corporate Insolvency Act Section 26 Voidable Dispositions Exception Procedure Adequacy of Value

Case Brief

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Parties

Pieter Hendrik Strydom N.O.

Plaintiff

Amelia Strecker N.O.

Plaintiff

Snowball Wealth (Pty) Limited

Defendant

Leo Chih Hao Chou

Defendant

WZhang

Defendant

Julian David Rabinowitz

Defendant

Procedural Posture

Exception Application / Exception to Amended Particulars of Claim

Legal Issues

  1. 1 Whether the plaintiffs' amended particulars of claim disclose a cause of action under section 26(1) of the Insolvency Act.
  2. 2 Whether the sale of shares at a price below market value constitutes a disposition 'not made for value' under section 26(1).
  3. 3 Whether the pleadings allege facts sufficient to sustain a claim for setting aside the dispositions.

Ratio Decidendi

The court held that the plaintiffs' particulars of claim do not disclose a cause of action under section 26(1) of the Insolvency Act. The facts pleaded show that the shares were sold for a price, which, although below market value, constitutes value in the ordinary sense and is neither illusory nor nominal. Section 26(1) is not triggered by dispositions for inadequate value, but only by those for no value or illusory/nominal value. The authorities relied upon by the plaintiffs to equate inadequate value with no value are outdated or misapplied. The exception is upheld, and the claim is set aside, with leave to amend granted to the plaintiffs.

Court Disposition

Exceptions upheld; plaintiffs' claim set aside with leave to amend.

Orders

  • The exceptions of the first to fourth defendants are upheld.
  • The plaintiffs' claim is set aside.