Strydom N.O. and Another v Snowball Wealth (Pty) Ltd and Others (356/2021) [2022] ZASCA 91; 2022 (5) SA 438 (SCA) (15 June 2022)

Strydom N.O. and Another v Snowball Wealth (Pty) Ltd and Others (356/2021) [2022] ZASCA 91; 2022 (5) SA 438 (SCA) (15 June 2022)

The Supreme Court of Appeal held that the phrase 'not made for value' in section 26(1) of the Insolvency Act 24 of 1936 means for no value at all, not for inadequate or insufficient value. The court found that the appellants' interpretation would require significant reading-in and would lead to absurd results, such as setting aside bona fide sales at discounted prices years after the fact. The statutory context and purpose indicate that section 26(1) is intended to apply only to gratuitous dispositions, not to ordinary commercial transactions. The appeal was dismissed as the sales in question were for substantial value and did not fall within the scope of section 26(1).

Citation
[2022] ZASCA 91
Parties
Appellant: Pieter Hendrik Strydom N.O.; Appellant: Amelia Strecker N.O.; Respondent: Snowball Wealth (Pty) Ltd; Respondent: Leo Chih Hao Chou; Respondent: W Zhang; Respondent: Julian David Rabinowitz
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
15 June 2022
Case Number
356/2021
Procedural Posture
Civil Appeal / Appeal From the Western Cape Division of the High Court, Cape Town
Outcome
Appeal dismissed with costs, including the costs of two counsel where so employed.
Judges
Ponnan, Van der Merwe, Hughes, Musi, Smith
Legal Topics
Insolvency Act Section 26, Disposition Without Value, Liquidation, Company Winding Up, Adequate Value, Remedies for Creditors
Banking and Finance Commercial and Corporate Insolvency Act Section 26 Disposition Without Value Liquidation Company Winding Up Adequate Value Remedies for Creditors

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Parties

Pieter Hendrik Strydom N.O.

Appellant

Amelia Strecker N.O.

Appellant

Snowball Wealth (Pty) Ltd

Respondent

Leo Chih Hao Chou

Respondent

W Zhang

Respondent

Julian David Rabinowitz

Respondent

Procedural Posture

Civil Appeal / Appeal From the Western Cape Division of the High Court, Cape Town

Legal Issues

  1. 1 Does the phrase 'not made for value' in section 26(1) of the Insolvency Act 24 of 1936 mean a disposition for no value at all, or does it include dispositions for inadequate or insufficient value?
  2. 2 Are sales of shares at a discounted price by an insolvent company to respondents subject to being set aside under section 26(1) as dispositions not made for value?

Ratio Decidendi

The Supreme Court of Appeal held that the phrase 'not made for value' in section 26(1) of the Insolvency Act 24 of 1936 means for no value at all, not for inadequate or insufficient value. The court found that the appellants' interpretation would require significant reading-in and would lead to absurd results, such as setting aside bona fide sales at discounted prices years after the fact. The statutory context and purpose indicate that section 26(1) is intended to apply only to gratuitous dispositions, not to ordinary commercial transactions. The appeal was dismissed as the sales in question were for substantial value and did not fall within the scope of section 26(1).

Court Disposition

Appeal dismissed with costs, including the costs of two counsel where so employed.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel where so employed.