IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
In the matter between
LERICH RUWA YNE SMITH N 0
[In his capacity as business rescue practitioner
of Trackstar Trading 1409 (Pty) Ltd]
ETHNE MARY VAN WYK N 0
[In her capacity as business rescue practitioner
of Trackstar Trading 1409 (Pty) Ltd]
and
DANIEL THEODORUS VAN JAARSVELD
THE MASTER OF THE FREE STATE HIGH
COURT: BLOEMFONTEIN
Not reportable
Case no: 4990/2021
FIRST APPLICANT
SECOND APPLICANT
FIRST RESPONDENT
SECOND RESPONDENT
Neutral citation: Smith NO & Another v Van Jaarsve/d & Another (4990/2021)
[2025] ZAFSHC 292 (16 September 2025)
Coram : DE LA REY AJ
Heard: 1 Septemb er 2025
Delivered: This judgment was handed down electronically by circulation to
the parties' representatives by email and released to SAFLII. The date and time for
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hand-down is deemed to be 12h00 on 16 September 2025.
Summary: Superior Courts Act 1 0 of 2013 - leave to appeal - exercise
of judicial discretion in the true sense - duty to provide reasons. Whether the
decision of a court can stand where it confirms general principles but fails to deal
with any of the pertinent aspects raised in exercising of its discretion.
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ORDER
1 The application for leave to appeal is granted to the Full Bench of this
Honourable Court.
2 The cost of this application shall be costs in the appeal.
JUDGMENT
De la Rey AJ
Introduction
[1] The first respondent applies for leave to appeal against the judgment of Ntanga
AJ, delivered on the 26th of June 2025 (court a quo).1 The application for leave to
appeal is opposed by the applicants.
[2] In summary , the court a quo granted an order in terms of which payments
amounting to R387 287.23 made by Trackstar Trading 140 (Pty) Ltd (in liquidation)
(Trackstar Trading) to the first respondent during the period November 2019 to
December 2019, were declared void as contemplated in s 341 (2) of the Companies
Act 61 of 1973 (Companies Act).2
[3] The first respondent was ordered to pay the applicants the said amounts and
interest a tempore morae. The first respondent's counter-application seeking
validation of the payments was dismissed.
Leave to appeal prevailing legal position:
[4] Section 17(1 )(a) of the Superior Courts Act 10 of 2013, regulates applications
1 The judgment is reported sub-nom Smith NO and Another v Van Jaarsveld and Another [2025]
ZAFSHC 189.
2 Although this Act has been repealed by section 224 (1) of the Companies Act 71 of 2008, Chapter 14
is retained -see Schedule 5, paragraph 9 of the Companies Act 71 of 2008.
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for leave to appeal and provides that:
'Leave to appeal may only be given where the judge or judges concerned are of the opinion
that-
(i) the appeal would have a reasonable prospect of success; or
(ii) there is some other compelling reason why the appeal should be heard, including
conflicting judgments on the matter under consideration.'
[5] The Supreme Court of Appeal in MEG for Health, Eastern Cape v Mkhitha and
Anothei3 explained s 17(1 )(a) as follows:
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'[16] Once again it is necessary to say that leave to appeal, especially to this court, must not
be granted unless there truly is a reasonable prospect of success. Section 17(1 )(a) of the
Superior Courts Act 10 of 2013 makes it clear that leave to appeal may only be given where
the judge concerned is of the opinion that the appeal would have a reasonable prospect of
success; or there is some other compelling reason why it should be heard.
(17] An applicant for leave to appeal must convince the court on proper grounds that there
is a reasonable prospect or realistic chance of success on appeal. A mere possibility of
success, an arguable case or one that is not hopeless, is not enough. There must be a sound,
rational basis to conclude that there is a reasonable prospect of success on appeal.
Grounds for appeal
[6] The first ground for appeal is that the court a quo erred in paragraph 20 of the
judgment, in that it failed to appreciate that s 341 of s 341 (2) only has retrospective
powers from the deemed date of liquidation as a result of the provisions of s 348 of
the Companies Act and therefore that any payment made after the application for
liquidation has been issued but before liquidation has been granted is validly made
and would only become void after the date of liquidation.
[7] Besides the fact that nothing turns on this interpretation in the matter under
consideration, it is in direct contrast of the wording of s 341 (2) of the Companies Act
which provides:
'Dispositions and share transfers after winding-up void.
( 1)
which provides:
'Dispositions and share transfers after winding-up void.
( 1)
3 MEG for Health, Eastern Cape v Mkhitha and Another2016 ZASCA 176; 2016 JDR 2214 (SCA) paras
16 and 17.
Every disposition of its property (including rights of action) by any company being wound-up
and unable to pay its debts made after the commencement of the winding-up, shall be void
unless the Court otherwise orders.'
[8] As stated in Pride Milling Company (Pty) Ltd v Bekker NO and Another (Pride
Milling):4
'The provisions of s 341 (2) could not be clearer. They, in unequivocal terms, decree that every
disposition of its property by a company being wound-up is void. Thus, the default position
ordained by this section is that all such dispositions have no force and effect in the eyes of the
law ie the disposition is regarded as if it had never occurred. The mischief th.at s 341 (2) seeks
to obviate is plain enough. It is to prevent a company being wound-up from dissipating its
assets and thereby frustrating the claims of its creditors.'
[9] It was furthermore held in Pride Milling:5
'In Engen Petroleum Ltd v Goudis Carriers (pty) Ltd (In Liquidation) the court held that the
"primary purpose of s 341 (2) is to address the anomaly that occurs as a result of the
retrospective invalidation of dispositions by a company which were initially lawful and valid".
This statement is not entirely correct. What s 341 (2) does as its predominant purpose is to
decree that all dispositions made by a company being wound-up are void. This provision must
of course be read withs 348, which provides that the w inding-up of a company by a court shall
be deemed to have commenced at the time of the presentation of the application for winding
up to the court. The effect is that the payments are potentially invalid at the moment they are
made, because the grant of a winding-up order will renders 341 (2) operative. This is different
from saying that they are rendered invalid retrospectively, or that they were initially lawful and
valid. That suggests that the invalidation of all such payments is presumptively harsh or
undesirable, which is not the case.'
undesirable, which is not the case.'
[1 O] Irrespective of the interpretation as advanced for the first respondent the
payments totaling R387 287.23 were clearly void in the circumstances in which they
were made.
[11] The second ground of appeal does not constitute a separate ground .
Paragraph 23 of the judgment makes no finding but merely states the de facto legal
4 Pride Milling Company (Ply) Ltd v Bekker NO and Another (2021] ZASCA 127; (2021] 4 All SA 696
(SCA); 2022 (2) SA 410 (SCA) (Pride Milling) para 30.
5 Pride Milling para 13.
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position in relating to first respondent's alternative options. The fact that the court a
quo did not specify the available remedies in as much detail as stated in Mazars
Recovery & Restructuring (Pty) Ltd and Others v Montie Dairy (Pty) Ltd (in liquidation)
and Others6 is of no consequence.
[12] The allegations in paragraphs 2.1.1 to 2.2 are no more than factors the court
would have had to consider in the exercise of its discretion on whether to grant the
relief sought in the first respondent's counterapplication.
[13] Regarding the third ground of appeal, it is hard to imagine how the first
respondent, clearly knowing that his fees would be at risk because of the financial
position of Trackstar Trading, did not, by making the payments to himself immediately
prior to liquidation manufacture an undue preference to himself, irrespective of the
other creditors of the estate. Even if it could be argued that the payments, were,
because of the financial status of Trackstar Trading at the time, not an undue
preference, the following passage from Pride Milling, although relating to payments
made after provisional liquidation, seems equally applicable to first respondent:
'In the context of the facts of this case, validating the payments wo uld mean that Pride Milling
would be left to enjoy the benefit of its claim being settled in full, whilst the other creditors
would have to be content with whatever residue might still be available.'7
[14] The grounds set out as the fourth ground of appeal is simply a repeat of what
was stated earlier and again clearly relates to the factors that the court would have
had to considered in exercising its discretion on whether to validate the payments. The
fact that the first respondent's fees were undisputed and whether it was reasonably
and duly earned are simply factors the court would have considered in the exercising
of its discretion.
[15] During the hearing of this application, it transpired that leave to appeal the
[15] During the hearing of this application, it transpired that leave to appeal the
judgement of the full bench in Smith N. 0 and Another v Magnus N. 0 and Others> to
the Supreme Court of Appeal has been granted. This matter is distinguishable from
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6 Mazars Recovery & Restructuring (Pfy) Ltd and Others v Mon tie Dairy (Pfy) Ltd (in liquidation) and
Others [2022) ZASCA 135; 2023 (1) SA 398 (SCA) (Mazars) para 28.
7 Pride Milling para 20.
8 Smith N .O and Anotherv Magnus N .O and Others [2025) ZAFSHC 109; 2025 (5) SA 273 (FB ).
the matter under consideration and the fact that leave to appeal was granted is
inconsequential.
[16] The court was clearly alive to the factors that had to be considered in exercising
its discretion as is evident in paragraphs 24, 26, and 33 of the judgment. The Court
exercised its discretion in the true sense.9 A court on appeal will thus only interfere if
it can be demonstrated that the discretion was exercised capriciously, on a wrong
principle or has not brought an unbiased judgement to bear on the questions it
considered.10
[17] The position is encapsulated in the remarks of the Constitutional Court in Giddy
NO v JC Barnard and Partners,11 where it was said that an appellate court will not
consider:
' ... [W]hether the decision reached by the court of first instance was correct, but will only
interfere in limited circumstances; for example, if it is shown that the discretion has not been
exercised judicially or has been exercised based on a wrong appreciation of the facts or wrong
principles of law. Even where the discretion is not a discretion in the strict sense, there may
still be considerations which would result in an appellate court only interfering in the exercise
of such discretion in the limited circumstances as mentioned above.'
[18] Whether leave to appeal should be granted thus centers on the court's exercise
of its discretion in evaluating the counterapplication (to validate the payments or not).
[19] Whilst recognising the factors to be considered the court however did not, at
least in the judgement pertinently apply them to the facts at hand, and merely stated
that it had done so.12
[20] In hearing the application for leave to appeal this Court is thus blind as to the
factors considered by the court a quo in the exercising of its discretion and cannot
evaluate its refusal to validate the payments. It is for instance, impossible to ascertain
9 Pride Milling para 22.
10 Pride Milling para 23.
9 Pride Milling para 22.
10 Pride Milling para 23.
11 Giddy NO v JC Barnard and Partners 2006 (ZACC) 13; 2007 (5) SA 525 (CC); 2007 (2) BC LR 125
(CC) para 19.
12 Op cit fn 1 para 31 .
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to what extent the reasonableness of first respondent's fees which appears to stand
uncontested, the fact that he had to continue with the execution of his duties as
business rescue practitioner pending the liquidation and the fact that his fees wou ld
have ranked preferent against the free residue played any role in the court's
assessment. In the absence of any details by the court a quo it is impossible to state
whether the court exercised its discretion judicially.
[21] Purely because of the court a quo·s failure to deal with any of the pertinent
aspects raised in the seeking of validation, which would have been essential in the
exercising of its discretion, I am of the opinion that a court on appeal would be free in
determining the matter in as far as it relates to the exercising of the court a quo's
discretion and would be entitled to substitute its exercise of the discretion with that of
the court.
[22] I thus do believe that an appeal would have a reasonable prospect of success.
The submission that clarity needs to be obtained regarding the payment of business
rescue practitioners finding themselves in similar circumstances, has already been
considered13 and is not, in this Court's opinion reason to grant leave to appeal to the
Supreme Court of Appeal.
[23] In the result the following orders are granted:
1 The application for leave to appeal is granted to the Full Bench of this
Honourable Court.
2 The cost of this application shall be costs in the appeal.
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DE LA REY AJ
ACTING JUDGE OF THE HIGH COURT
13 Mazars para 13
Appearances
For the appellant:
Instructed by:
P Zietsman SC
Phatshoane Henney Incorporated,
Bloemfontein
For the first respondent: P J J Zietsman SC
Instructed by: Tintingers Incorporated, Pretoria
c/o Honey Attorneys,
Bloemfontein.
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