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

Dex Group (Pty) Ltd (Dex Group) was a company that sold shares in Trustco Group Holdings Limited (the Trustco shares) to Snowball Wealth (Pty) Ltd (Snowball) and the other respondents. The appellants, who are the joint liquidators of Dex Group, claimed that the sales of the Trustco shares constituted dispositions without value under section 26(1) of the Insolvency Act 24 of 1936. They argued that the sales were made for an illusory or nominal value, as the respondents paid significantly less than the reasonable market value of the shares. Dex Group was placed in final liquidation and the appellants sought the return of the Trustco shares or payment of their value from the respondents. The respondents, Snowball and the other respondents, excepted to the appellants' particulars of claim. The high court upheld the exceptions, and the appellants appealed the decision.

The court began by examining the relevant provisions of the Insolvency Act 24 of 1936, specifically section 26(1), which allows for the setting aside of dispositions of property not made for value. The key issue was the interpretation of the phrase "not made for value" in this provision.

The court noted that previous decisions of the court, such as Estate Wege and Estate Jager, had not definitively decided whether the phrase means a disposition made for no value at all or if it includes dispositions made for inadequate or insufficient value.

The court then analyzed the arguments put forward by the parties. The appellants argued that the sales of the Trustco shares were dispositions not made for value because the respondents paid significantly less than the reasonable market value of the shares. They contended that the value given for the shares was illusory or merely nominal.

On the other hand, the respondents argued that the phrase "not made for value" should be interpreted to mean a disposition made for no value at all. They contended that since they had paid a price for the shares, even if it was less than the market value, the sales could not be considered dispositions not made for value.

The court considered the previous decisions of the court, including Estate Wege, Estate Jager, Langeberg Koöperasie, and Swanee's Boerdery. It noted that these decisions focused on the nature of the transaction and whether any value was received in return.

The court concluded that the phrase "not made for value" means a disposition made for no value at all. It held that the focus should be on whether any benefit or value was received or promised as a quid pro quo for the disposition. If no benefit or value was received or promised, then the disposition could be considered not made for value.

Applying this interpretation to the facts of the case, the court found that the sales of the Trustco shares to the respondents were not dispositions not made for value. Although the respondents had paid less than the market value for the shares, they had still given some value in return. The court emphasized that the sales were arm's length transactions and there was no suggestion of invalidity or unenforceability.

Therefore, the court upheld the exceptions raised by the respondents and dismissed the appellants' claims. It held that the sales of the Trustco shares were not dispositions not made for value under section 26(1) of the Insolvency Act.

In reaching this conclusion, the court clarified that the phrase "not made for value" does not include dispositions made for inadequate or insufficient value. It stated that the value given must be considered in relation to the specific transaction and the circumstances of the case.

Overall, the court's reasoning process involved a careful analysis of the relevant provisions of the Insolvency Act, previous decisions of the court, and the arguments put forward by the parties. It ultimately interpreted the phrase "not made for value" to mean a disposition made for no value at all and applied this interpretation to the facts of the case to reach its decision.