THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 356/2021

In the matter between:

PIETER HENDRIK STRYDOM N.O.
FIRST APPELLANT

AMELIA STRECKER N.O.
SECOND APPELLANT

and

SNOWBALL WEALTH (PTY) LTD
FIRST RESPONDENT

LEO CHIH HAO CHOU
SECOND RESPONDENT

W ZHANG
THIRD RESPONDENT

JULIAN DAVID RABINOWITZ
FOURTH RESPONDENT

Neutral citation:
Strydom N.O. and Another v Snowball Wealth (Pty) Ltd and
Others (356/2021) [2022] ZASCA 91 (15 June 2022)
Coram:
PONNAN, VAN DER MERWE and HUGHES JJA and MUSI and SMITH
AJJA
Heard:            4 May 2022
Delivered:
15 June 2022
Summary:
Insolvency – s 26(1) of Insolvency Act 24 of 1936 – disposition not made
for value – means for no value at all.

ORDER

On appeal from: Western Cape Division of the High Court, Cape Town (Erasmus J,
sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel where so
employed.

JUDGMENT

Van der Merwe JA (Ponnan and Hughes JJA and Musi and Smith AJJA
concurring)
[1] The appellants are the joint liquidators of DexGroup (Pty) Ltd (in liquidation)
(DexGroup). The first respondent is Snowball Wealth (Pty) Ltd (Snowball). The second,
third and fourth respondents are Mr LCH Chou, Ms W Zhang and Mr JD Rabinowitz
respectively. I refer to the three of them collectively as the other respondents. Prior to
its liquidation, DexGroup sold shares in Trustco Group Holdings Limited (the Trustco
shares) to each of the respondents. The appellants sued the respondents in the
Western Cape Division of the High Court, Cape Town (the high court) for the return of
the Trustco shares, alternatively payment of the value of the shares, on the ground that
each sale constituted a disposition without value in terms of s 26(1) of the Insolvency
Act 24 of 1936. Snowball and the other respondents separately excepted to the
appellants’ particulars of claim. The high court (Erasmus J) upheld both exceptions.
The appeal is with the leave of this court.

[2] By virtue of Item 9 of Schedule 5 to the Companies Act 71 of 2008, Chapter 14
of the repealed Companies Act 61 of 1973 continues to apply to insolvent companies,

until a date to be determined. Sections 339 and 340 form part of Chapter 14. Section
339 makes the provisions of the law relating to insolvency mutatis mutandis applicable
to the winding-up of a company unable to pay its debts. Section 340(1) provides:
‘(1)
Every disposition by a company of its property which, if made by an individual, could,
for any reason, be set aside in the event of his insolvency, may, if made by a company, be set
aside in the event of the company being wound up and unable to pay all its debts, and the
provisions of the law relating to insolvency shall mutatis mutandis be applied to any such
disposition.’

[3] Section 26(1) of the Insolvency Act (s 26(1)), in turn, reads:
‘(1)
Every disposition of property not made for value may be set aside by the court if such
disposition was made by an insolvent –
(a) more than two years before the sequestration of his estate, and it is proved that,
immediately after the disposition was made, the liabilities of the insolvent exceeded his
assets;
(b) within two years of the sequestration of his estate, and the person claiming under or
benefited by the disposition is unable to prove that, immediately after the disposition
was made, the assets of the insolvent exceeded his liabilities:
Provided that if it is proved that the liabilities of the insolvent at any time after the making of the
disposition exceeded his assets by less than the value of the property disposed of, it may be
set aside only to the extent of such excess.’
The issue in the appeal is the meaning of the phrase ‘not made for value’ in s 26(1)
(the phrase).

Background
[4] The background to the claims against the respondents, as sketched in the
particulars of claim, was the following. DexGroup was placed in final liquidation on 26
October 2016, whereafter the appellants were appointed as joint liquidators. Since at
least 2007 and at all times thereafter, however, DexGroup was unable to pay its debts
and its liabilities exceeded its assets. The particulars of the dispositions of the Trustco
shares by DexGroup to the respondents were as follows. On 23 September 2010, it
sold 21 million shares to Snowball at 27 cent per share and on 22 November 2010, it

sold a further 6 million shares to Snowball at 48 cent per share. On 22 November 2010,
it also sold 4 136 755 shares to Mr Chou, at the same price. On the same date, it sold
300 000 shares to Ms Zhang and 1 million shares to Mr Rabinowitz, all at the same
price.

[5] The particulars of claim proceeded to state that the ‘reasonable market value’
of the shares at the time of each sale was 67 cent per share. Because the respondents
paid 27 cent (40 per cent of the market value) and 48 cent (72 per cent of the market
value), the value given for the shares was ‘illusory or merely nominal’. The dispositions
took place more than two years prior to 25 February 2014, being the deemed date of
sequestration in terms of s 340(2)(a) of Act 61 of 1973.1 On the strength of these
allegations, the appellants sought orders setting aside each sale under s 26(1)(a).

[6] Snowball’s exception departed from the premise that ‘illusory or merely nominal’
value means no value. It emphasised that the according to the particulars of claim,
DexGroup had received payment of R5 670 000 for the 21 million shares and
R2 880 000 for the 6 million shares. Therefore, so Snowball said, the value given by it
was not illusory or merely nominal. On this basis it contended that the appellants’
allegations were not capable of sustaining claims based on dispositions not made for
value as contemplated in s 26(1).

[7] The nub of the exception of the other respondents was the following:
‘A disposition of property is “not made for value” within the meaning of s 26 where (i) no benefit
at all is received for the property, or (ii) some benefit is received for the property, but it is merely
illusory or nominal, so that the benefit amounts to no value at all.
A disposition of property for an inadequate value (as opposed to for an illusory or nominal
value) is not a disposition “not made for value” within the meaning of s 26.’

1 Section 340(2)(a) reads:
‘(2) For the purpose of this section the event which shall be deemed to correspond with the sequestration
order in the case of an individual shall be–
(a) in the case of a winding-up by the Court, the presentation of the application, unless that winding-up
has superseded a voluntary winding-up when it shall be the registration in terms of section 200 of the
special resolution to wind up the company.’

The exception proceeded to state that since the particulars of claim revealed that the
other respondents had paid more than 70 per cent of the alleged reasonable market
value of the shares, the sales in question were not dispositions not made for value.

[8] As I have said, the high court upheld both exceptions. The crux of its reasoning
appeared from the following:
‘I now turn to the facts of this matter tested against the legal position set out above. It is clear
that the disposition was clearly not for “no value” and was also not “illusionary” nor “nominal”.
The plaintiffs’ own factual allegations are destructive of any claims in terms of section 26 of the
Insolvency Act. The proper interpretation, in the context of the act, as set out above does simply
not apply to the facts as pleaded. The pleadings excepted must be taken as it stands, the
truthfulness thereof is accepted for these purposes. Even if accepted that the value paid was
less than the reasonable market value, no basis is laid nor suggested that there was anything
remiss therewith. It would be an absurdity to equate the position that, when paying a discounted
price, it can be said you gave no value.’

[9] Whilst this passage cannot be faulted, the high court did not directly address
the exception of the other respondents. Thus, it refrained from deciding whether the
phrase means for no value at all. I have demonstrated that Snowball’s exception was
founded on a narrower ground. However, if the exception of the other respondents is
good, then it must follow that Snowball’s exception had to succeed on that ground as
well.

Case law
[10] I therefore proceed to consider the meaning of the phrase. Although it has been
considered in a number of decisions of this court, as I shall show, it has not definitively
been decided whether s 26(1) contemplates a claim based on a disposition for
inadequate or insufficient value as opposed to no value at all.

[11] Estate Wege v Strauss 1932 AD 76 (Estate Wege) dealt with the provisions of
s 24 of the Insolvency Act 32 of 1916. For present purposes they did not differ from

those of s 26(1) in any material respect. The essential issue in that matter was whether
the payment of bets on horse races were dispositions not made for value. The appellant
contended that in law betting agreements were null and void. For that reason, so it was
submitted, the payments that Mr Wege had made to a bookmaker whilst the former
was factually insolvent, were dispositions without value. Wessels ACJ rejected the first
part of the contention in these terms at 81:
‘A bet, therefore, is not illegal by our law, though it is not enforceable in our Courts between
the parties to it, and when we speak of a wagering contract being null and void we mean no
more than that our Courts will not lend their aid to its enforcement.’

[12] The court proceeded to adopt the finding of the court below that there was no
good reason for making value dependent on the existence of a legal sanction. After
saying that the word ‘value’ in the provision in question carried no technical meaning
and could therefore only mean value in the ordinary sense of the word, it stated at 84:
‘The object of sec. 24 is not to prevent a person in insolvent circumstances from engaging in
the ordinary transactions of life, but to prevent a person from impoverishing his estate by giving
his assets away without receiving any present or contingent advantage in return.’
It is apparent that the question whether the phrase meant no value or inadequate value,
did not arise in Estate Wege and this dictum must be read in that light.

[13] In Estate Jager v Whittaker & Another 1944 AD 246 (Estate Jager), a trustee,
acting under s 26(1), sought to reclaim interest that the insolvent had paid to a creditor
in contravention of the Usury Act 27 of 1926. Relying on Estate Wege, the creditor
contended that the benefit that the insolvent had derived from the money lent to him
was a quid pro quo for his promise to pay (and the payment of) interest in excess of
the rate allowed by law. Watermeyer CJ, writing for the court, disagreed. He said at
251-252:
‘But, in my opinion, the Legislature, by making it a criminal offence for a lender to stipulate for,
demand, or receive interest at a rate higher than that allowed by the Usury Act, has in effect
said that the use by the borrower of the money lent shall not be regarded as value for the
promise or for payment of anything more than the rate of interest permitted by the Usury Act.

No obligation of any sort to pay a higher rate of interest than that permitted by the Act can arise
from a promise to pay a higher rate, and therefore it follows that such a promise is a mere
nullity, and any payment of such a higher rate in pursuance of such promise is in effect a
donation, or disposition not made for value, and is consequently liable to be set aside under
sec. 26 of the Insolvency Act. This view is not in conflict with the decision of this Court in the
case of Estate Wege v Strauss because there are passages in the judgment in that case which
indicate clearly that when the question arises whether payments made in pursuance of such
contracts can be set aside under sec. 26 of the Insolvency Act, a distinction must be drawn
between a contract which, though lawful, gives rise only to moral obligations unenforceable in
a court of law and an illegal contract which gives rise to no obligations at all.’

[14] Importantly, this court stated at 250-251:
‘The words “disposition not made for value” mean, in their ordinary signification, a disposition
for which no benefit or value is or has been received or promised as a quid pro quo. The most
obvious example of such a disposition is a donation and . . . it would appear prima facie that
any payment, purporting to be made solely in discharge of an existing obligation, is in effect a
donation if no obligation to make such payment in fact exists. If a lawful obligation to pay the
money in fact exists, then the obvious benefit which the payer receives in return for such
payment is a discharge from his liability to pay. Such a payment decreases his assets, but at
the same time it diminishes his liabilities, and in transactions which are entered into in the
ordinary course of business such a discharge from a liability would be value for the payment
made. For the purposes of this case, it is unnecessary to consider what the legal position would
be if the obligation which is discharged arises from a promise to donate or a promise made in
return for an inadequate consideration.’
Therefore, the question whether s 26(1) could apply to dispositions for inadequate
value not only did not arise on the facts of Estate Jager, but was expressly left open.

[15] The question also did not arise in Langeberg Koöperasie Bpk v Inverdoorn
Farming and Trading Company Ltd 1965 (2) SA 597 (A) (Langeberg Koöperasie).
There a creditor appealed against an order setting aside a suretyship and mortgage
bond as dispositions not made for value under s 26(1). Two points arose for decision.
The first was whether the suretyship agreement in question constituted a disposition of

property within the meaning of the Insolvency Act. If so, the second point was whether
there was a disposition not made for value under s 26(1).

[16] The suretyship agreement was entered into by a farming company to secure
an overdue debt owed by its insolvent parent company to the creditor. The suretyship
agreement entailed an obligation to pay (as surety and co-principal debtor), as well as
an obligation to pass a mortgage bond over the unencumbered property of the farming
company. The mortgage bond was registered accordingly. This court endorsed the
finding of the court below that in the circumstances the suretyship agreement clearly
constituted a transaction falling within the definition of ‘disposition’ in the Insolvency
Act.

[17] The argument on the second point was that the disposition was for value as
the farming company derived a benefit from a moratorium that had been granted by the
creditor to the parent company as a result of the execution of the suretyship agreement.
Whilst acknowledging that such a benefit could in principle constitute value under
s 26(1), Beyers JA, for the majority,2 held that on the facts the farming company had
derived no direct or indirect benefit from the moratorium.

[18] Swanee’s Boerdery (Edms) Bpk (In Liquidation) v Trust Bank of Africa Ltd 1986
(2) SA 850 (A) (Swanee’s Boerdery) concerned a similar case to Langeberg
Koöperasie. There a company that formed part of a group of companies undertook a
suretyship obligation to guarantee the debt of another company in the group. The
former company was liquidated and the question arose whether the suretyship was a
disposition not made for value. Galgut AJA referred extensively to Langeberg
Koöperasie in considering an argument that the suretyship gave financial stability to
the whole group of companies and therefore amounted to a disposition for value. He
held, however, that this had not been established on the facts.

2 Williamson JA dissenting, only on the question whether a contract of suretyship could be a disposition.

[19] In the course of the judgment, the following was stated at 860E-F:
‘We were referred to Bloom’s Trustee v Fourie 1921 TPD 599 at 601 where DE WAAL J when
discussing s 24 of Act 32 of 1916 says:
“It seems to me that the word “value” means adequate value or “just and valuable
consideration”.”
It is clear from what is said in that judgment that the learned Judge came to that conclusion
because he adopted the words “just and valuable consideration” which appeared in s 83 of Ord
6 of 1843 (C) and also the dictionary meaning of value. Be that as it may, the dictum is no
longer applicable since this Court has now defined value in the Estate Wege case and the
Estate Jager case, both cited above.’
In my view this dictum also did not decide the question raised in the present matter. I
say so for two reasons. The first is that the facts in Swanee’s Boerdery did not require
the consideration of a distinction between the concepts of inadequate value and no
value. Secondly, on the issue of value under s 26(1) this dictum went no further than
Estate Wege and Estate Jager discussed above.

[20] In each of the mentioned authorities the focus of this Court was on the nature
of the transaction, whether it be the: (i) wager in Estate Wege, which was likened to an
insurance and thus not a disposition of property without value; (ii) usurious interest rate
in Estate Jager, where it was held that no obligation arose from a promise to pay a
higher interest rate than that permitted by the Act and that such a promise was a mere
nullity; (iii) suretyship in Langeberg Koöperasie, where the court held that it was difficult
to see what possible value there could be for a company that was forced to pledge its
assets for a substantially overdue debt for its hopelessly insolvent parent company; (iv)
suretyship in Swanee’s Boerdery where, whilst emphasising that a company had a
personality of its own, it was held that the facts were distinguishable from Langeberg
Koöperasie, inasmuch as the company would for all practical purposes have ceased to
exist. Thus, in each of those matters, the court was not strictly speaking required to
consider the issue that confronts us in this matter. The importance of this is twofold.
First, there is no authority of this court directly on point as seems to have been
suggested, by which we are bound. Second, unlike the other matters, here it is not the

nature of the transaction that occupies our attention. It is a sale at arm’s length. There
is no suggestion that it lacks validity, is unenforceable or otherwise susceptible to
impeachment. The argument is that although a price was fixed in terms of an arm’s
length transaction, the disposition of the shares at that price was a disposition ‘not
made for value’.

[21] Before turning to the interpretation of the phrase, it is also necessary to refer
to the decision in Terblanche NO v Baxtrans CC and Another 1998 (3) SA 912 (C). The
facts of that case were similar to the facts of this matter. The liquidator of a company
sought, inter alia, to have a disposition set aside under s 26(1) on the ground that
ownership of assets worth R1 276 000 had been transferred for a consideration of only
R383 539. The payment of the latter amount to two banks enabled the transfer of
ownership of the assets to the transferee. The latter excepted to this claim on the
grounds that according to the authorities any value would suffice to render s 26(1)
inapplicable and that the plaintiff had not pleaded any basis upon which the payment
of the amount of R383 539 could be regarded as not constituting value.

[22] In his judgment Selikowitz J employed the expressions ‘illusory value’ and
‘nominal value’. The learned judge stated at 917B-C:
‘Illusory or nominal value is what those words suggest – no value at all. “Illusory value” is merely
an illusion and “nominal value” is value in name only.’
Why this was done is not apparent from the judgment. According to the judgment these
expressions were not mentioned in the particulars of claim, the argument or the case
law referred to. Before us, lead counsel for the appellants confirmed that this judgment
was relied upon for the use of these expressions in the appellants’ particulars of claim.
I may mention that in his minority judgment in Langeberg Koöperasie, Williamson JA
(at 612), after having concluded that ‘the circumstances actually precluded any benefit
accruing to . . . or ever being likely to accrue in the future’, added ‘the possible benefit
to be gained . . . was really, in the event, illusory’. In my view, the importation of the
expressions ‘illusory value’ and ‘nominal value’ does conduce to confusion. However,
in the light of the conclusion to which I arrive, the issue need not detain me.

[23] Selikowitz J said that neither the argument that s 26(1) could only apply where
there is a total absence of value nor the argument that inadequate value would always
be prima facie evidence of no value, could prevail. It proceeded to determine the
exception raised in that case on the basis that there was no allegation that the value
conceded (R383 539) ‘should be treated as equivalent to no value having been
received’. It is thus apparent that this judgment also does not provide a clear answer to
the question in the present matter.

Interpretation
[24] It follows that the meaning of the phrase has to be determined on ordinary
principles of interpretation. There is no need to cite authority for the proposition that
this exercise entails giving meaning to the phrase by a holistic consideration of its text,
context and purpose. As I have shown, the other respondents contended that the
phrase meant for no value at all. The appellants pleaded that it meant for less than
‘reasonable market value’ and submitted that it referred to a counter performance that
did not represent a ‘fair return or equivalent’.

[25] It follows that the appellants’ interpretation requires significant reading-in into
s 26(1). Not so with the interpretation of the other respondents. It will be recalled that
in Estate Wege this court said that the word ‘value’ in the predecessor of s 26(1) meant
value in the ordinary sense of the word. This was taken further in Estate Jager when
Watermeyer CJ said:
‘The words “disposition not made for value” mean, in their ordinary signification, a disposition
for which no benefit or value is or has been received or promised as a quid pro quo’.3
According to its text, therefore, the phrase means for no value at all. The next question
is whether the context and purpose of the phrase indicate that it should nevertheless
carry a different meaning.

3 See para 14 above.

[26] The most important contextual consideration is that s 26 forms part of a set of
remedies available to a trustee or liquidator under the Insolvency Act. The other
remedies are contained in s 29 (‘Voidable preferences’), s 30 (‘Undue preference to
creditors’) and s 31 (‘Collusive dealings before sequestration’).

[27] Under s 26(1),4 a disposition not made for value may be set aside when the
debtor was factually insolvent at the time or when it caused the debtor to become
factually insolvent. Subsections 26(1)(a) and (b) only deal with the incidence of the
onus in respect of factual insolvency. It follows that the availability of the remedy under
s 26(1) is not limited in time. It does not require proof of an intention to prefer one
creditor over another or of collusion, nor can a claim under s 26(1) be defeated by
showing that the disposition occurred in the ordinary course of business and without
the intention to prefer.

[28] Section 29(1)5 permits the setting aside of a disposition that had the effect of
preferring one creditor over another, where the debtor was factually insolvent when the
disposition was made or where it caused the debtor’s factual insolvency. The remedy
is only available in respect of dispositions made within six months prior to the
sequestration or the commencement of winding-up. A claim under s 29 may be
defeated by establishing that the disposition was made in the ordinary course of
business and that it was not intended to prefer one creditor above another.

[29] Section 30(1)6 provides for the setting aside of a disposition by a debtor, who
was factually insolvent at the time and whose estate was subsequently sequestrated

4 Quoted in para 3 above.
5 Section 29(1) reads:
‘Every disposition of his property made by a debtor not more than six months before the sequestration
of his estate or, if he is deceased and his estate is insolvent, before his death, which has had the effect
of preferring one of his creditors above another, may be set aside by the Court if immediately after the
making of such disposition the liabilities of the debtor exceeded the value of his assets, unless the person
in whose favour the disposition was made proves that the disposition was made in the ordinary course
of business and that it was not intended thereby to prefer one creditor above another.
6 Section 30(1) reads:

or placed in liquidation, if the disposition was made with the intention of preferring one
creditor above another. In principle this remedy may be employed irrespective of how
much time elapsed between the disposition and the sequestration or winding-up.
Section 30 also does not provide for any defences to, or exclusions from, the scope of
a claim thereunder.

[30] Finally, s 317 permits the setting aside of a transaction entered into by a debtor
prior to sequestration or liquidation, whereby the debtor, in collusion with another,
disposed of property in a manner which had the effect of prejudicing the debtor’s
creditors or by preferring one  above another. The remedy is also in principle available
no matter how much time elapsed since the transaction had been entered into. A
person, who was party to the collusion is liable to make good the loss caused to the
estate, as well as for payment of a penalty. If the person is a creditor, the claim against
the estate is forfeited.

[31] In my view, this contextual setting materially informs the interpretation of the
phrase. Whilst the purpose of these provisions clearly is to protect the interests of the
general body of creditors, they do not evince an intention to advance the interests of
creditors above all other interests. This is, inter alia, illustrated by s 29: a disposition
that in fact had the effect of preferring one creditor over another, is immune from a
challenge under s 29 if the disposition was made more than six months before the

‘If a debtor made a disposition of his property at a time when his liabilities exceeded his assets, with the
intention of preferring one of his creditors above another, and his estate is thereafter sequestrated, the
court may set aside the disposition.’
7 Section 31 reads:
‘(1) After the sequestration of a debtor’s estate the court may set aside any transaction entered into by
the debtor before the sequestration, whereby he, in collusion with another person, disposed of property
belonging to him in a manner which had the effect of prejudicing his creditors or of preferring one of his
creditors above another.
(2) Any person who was a party to such collusive disposition shall be liable to make good any loss
thereby caused to the insolvent estate in question and shall pay for the benefit of the estate, by way of
penalty, such sum as the court may adjudge, not exceeding the amount by which he would have
benefited by such dealing if it had not been set aside; and if he is a creditor he shall also forfeit his claim
against the estate.
(3) Such compensation and penalty may be recovered in any action to set aside the transaction in
question.’

sequestration or winding-up and, when made within the period of six months, if the
recipient shows that it was made in the ordinary course of business and without the
intention to prefer. This is also indicated by the provisos to s 26(1)8 and 26(2).9

[32] In my view, these provisions were intended to constitute a comprehensive set
of remedies to reverse objectionable transactions that occurred prior to sequestration
or winding-up. A comparison of these remedies demonstrates that the more
objectionable the transaction, the more extensive the remedy afforded. As I have said,
the remedies under s 26, s 30 and s 31 allow retrospective redress that is unlimited in
time. But both s 30 and s 31 deal with conduct intended to prejudice the general body
of creditors. Section 30 requires proof of the intention to prefer and s 31 requires proof
of collusion. However, there is nothing inherently, commercially or morally
objectionable to a sale at a discounted price. The same cannot be said of a factually
insolvent person squandering or giving away assets for no return. That, I think, is what
Wessels ACJ meant when he said ‘the object of sec. 24 is not to prevent a person in
insolvent circumstances from engaging in the ordinary transactions of life, but to
prevent a person from impoverishing his estate by giving his assets away without
receiving any present or contingent advantage in return’.10 This indicates that s 26(1)
was intended to apply only to gratuitous dispositions.

[33] Importantly, in terms of s 26(2),11 the recipient has no claim in competition with
the creditors of the insolvent estate. Section 32(3)12 provides that should the property

8 See para 3 above.
9 Section 26(2) provides:
‘A disposition of property not made for value, which was set aside under subsection (1) or which was
uncompleted by the insolvent, shall not give rise to any claim in competition with the creditors of the
insolvent’s estate: Provided that in the case of a disposition of property not made for value, which was
uncompleted by the insolvent, and which-
(a) was made by way of suretyship, guarantee or indemnity; and
(b) has not been set aside under subsection (1),
the beneficiary concerned may complete with the creditors of the insolvent’s estate for an amount
not exceeding the amount by which the value of the insolvent’s assets exceeded his liabilities
immediately before the making of that disposition.’
10 See para 12 above.
11 See footnote 9 above.
12 Section 32(3) reads:

have been alienated or consumed in the period between the disposition and the setting
aside, the recipient would be liable for the value of the property at the date of the
disposition or at the date on which it is set aside, whichever is the higher. On the
appellants’ construction therefore, should a purchaser, with no knowledge of the
seller’s financial situation, in the ordinary course of business purchase property at a
discounted price (something less than ‘reasonable market value’ or a ‘fair return or
equivalent’) from a person that is sequestrated years later, the purchaser would have
to return the property without the right to reclaim the purchase price. Moreover, should
the purchaser bona fide have alienated or consumed the property, he or she would be
liable for payment of the higher of the value of the property at the time of the sale or at
the time of the setting aside of the disposition and forfeit the purchase price. Many
examples could be given of the absurd results that the appellants’ interpretation would
lead to. It suffices to say that they could not have been intended.

[34] As I have said, the appellants’ case is that dispositions for less than the
‘reasonable market value’ or a ‘fair return or equivalent’ are not made for value. In
Goode, Durrant and Murray Ltd v Hewitt and Cornell, NNO 1961 (4) SA 286 (N) at
291E-F Fannin J said:
‘The word “value” is not, however, confined to a monetary or tangible material consideration,
nor must it necessarily proceed from the person to whom the disposition is made. Whether an
insolvent has received “value” for a disposition must be decided by reference to all the
circumstances under which the transaction was made.’
In Langeberg Koöperasie at 604B-C this court quoted this passage with approval. Thus,
it is an established principle that ‘value’ under s 26(1) includes benefits that do not have
a reasonable market value and in respect of which a fair return or equivalent could not
be evaluated or expressed in monetary terms. This consideration, too, points away
from the construction favoured by the appellants.

‘When the Court sets aside any disposition of property under any of the said sections, it shall declare the
trustee entitled to recover any property alienated under the said disposition or in default of such property
the value thereof at the date of the disposition or at the date on which the disposition is set aside,
whichever is the higher.’

[35] Finally, there is s 25(4)(c) of the Insolvency Act. In relevant part it provides:
‘(4)
If a person who is or was insolvent unlawfully disposes of immovable property or a
right to immovable property which forms part of his insolvent estate, the trustee may,
notwithstanding the provisions of subsection (3), recover the value of the property or right so
disposed of-
(a) . . .
(b) . . .
(c) from any person who acquired such property or right from the insolvent or former
insolvent without giving sufficient value in return, in which case the amount so recovered
shall be the difference between the value of the property or right and any value given in
return.’
Subsection 4(c) was introduced by an amendment that took effect on 1 September
1993.13 The legislature is presumed to be acquainted with the existing law14 and a
deliberate change of expression indicates a change of intention.15 In the result, the
phrase could not bear the meaning of not for ‘sufficient value’.

[36] All the contextual and purposive indicators reinforce the ordinary meaning of
the phrase. For these reasons, I conclude that the phrase ‘not made for value’ in s 26(1)
of the Insolvency Act 24 of 1936 means for no value at all.16 It follows that the appeal
must fail.

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

_______________________
C H G VAN DER MERWE
JUDGE OF APPEAL

13 In terms of the Insolvency Amendment Act 122 of 1993.
14 See Fundstrust (Pty) Ltd (In liquidation) v Van Deventer 1997 (1) SA 710 (A) at 732B.
15 See Shalom Investments (Pty) Ltd & Others v Dan River Mills Incorporated 1971 (1) SA 689 (A) at
701B-C.
16 Therefore the decision in De Jongh Ontwikkelings (Pty) Ltd & Another v Kilotech Investments (Pty) Ltd
& Others 2021 (4) SA 492 (GP) para 6.3.7 and 6.3.8 should not be followed.

Appearances:

For appellant:

F H Terblanche SC (with P W T Lourens)
Instructed by:

Susan Strydom Inc., Pretoria

Symington & De Kok Attorneys, Bloemfontein

For first respondent:
C M Eloff SC
Instructed by:

Bowman Gilfillan Attorneys, Sandton

McIntyre Van der Post Attorneys, Bloemfontein

For second, third and
fourth respondents:

J Muller SC (with K Reynolds)

Instructed by:

Edward Nathan Sonnenbergs, Cape Town

Matsepes Inc., Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 356/2021

In the matter between:

PIETER HENDRIK STRYDOM N.O.
FIRST APPELLANT

AMELIA STRECKER N.O.
SECOND APPELLANT

and

SNOWBALL WEALTH (PTY) LTD
FIRST RESPONDENT

LEO CHIH HAO CHOU
SECOND RESPONDENT

W ZHANG
THIRD RESPONDENT

JULIAN DAVID RABINOWITZ
FOURTH RESPONDENT

Neutral citation:
Strydom N.O. and Another v Snowball Wealth (Pty) Ltd and
Others (356/2021) [2022] ZASCA 91 (15 June 2022)
Coram:
PONNAN, VAN DER MERWE and HUGHES JJA and MUSI and SMITH
AJJA
Heard:            4 May 2022
Delivered:
15 June 2022
Summary:
Insolvency – s 26(1) of Insolvency Act 24 of 1936 – disposition not made
for value – means for no value at all.

ORDER

On appeal from: Western Cape Division of the High Court, Cape Town (Erasmus J,
sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel where so
employed.

JUDGMENT

Van der Merwe JA (Ponnan and Hughes JJA and Musi and Smith AJJA
concurring)
[1] The appellants are the joint liquidators of DexGroup (Pty) Ltd (in liquidation)
(DexGroup). The first respondent is Snowball Wealth (Pty) Ltd (Snowball). The second,
third and fourth respondents are Mr LCH Chou, Ms W Zhang and Mr JD Rabinowitz
respectively. I refer to the three of them collectively as the other respondents. Prior to
its liquidation, DexGroup sold shares in Trustco Group Holdings Limited (the Trustco
shares) to each of the respondents. The appellants sued the respondents in the
Western Cape Division of the High Court, Cape Town (the high court) for the return of
the Trustco shares, alternatively payment of the value of the shares, on the ground that
each sale constituted a disposition without value in terms of s 26(1) of the Insolvency
Act 24 of 1936. Snowball and the other respondents separately excepted to the
appellants’ particulars of claim. The high court (Erasmus J) upheld both exceptions.
The appeal is with the leave of this court.

[2] By virtue of Item 9 of Schedule 5 to the Companies Act 71 of 2008, Chapter 14
of the repealed Companies Act 61 of 1973 continues to apply to insolvent companies,

until a date to be determined. Sections 339 and 340 form part of Chapter 14. Section
339 makes the provisions of the law relating to insolvency mutatis mutandis applicable
to the winding-up of a company unable to pay its debts. Section 340(1) provides:
‘(1)
Every disposition by a company of its property which, if made by an individual, could,
for any reason, be set aside in the event of his insolvency, may, if made by a company, be set
aside in the event of the company being wound up and unable to pay all its debts, and the
provisions of the law relating to insolvency shall mutatis mutandis be applied to any such
disposition.’

[3] Section 26(1) of the Insolvency Act (s 26(1)), in turn, reads:
‘(1)
Every disposition of property not made for value may be set aside by the court if such
disposition was made by an insolvent –
(a) more than two years before the sequestration of his estate, and it is proved that,
immediately after the disposition was made, the liabilities of the insolvent exceeded his
assets;
(b) within two years of the sequestration of his estate, and the person claiming under or
benefited by the disposition is unable to prove that, immediately after the disposition
was made, the assets of the insolvent exceeded his liabilities:
Provided that if it is proved that the liabilities of the insolvent at any time after the making of the
disposition exceeded his assets by less than the value of the property disposed of, it may be
set aside only to the extent of such excess.’
The issue in the appeal is the meaning of the phrase ‘not made for value’ in s 26(1)
(the phrase).

Background
[4] The background to the claims against the respondents, as sketched in the
particulars of claim, was the following. DexGroup was placed in final liquidation on 26
October 2016, whereafter the appellants were appointed as joint liquidators. Since at
least 2007 and at all times thereafter, however, DexGroup was unable to pay its debts
and its liabilities exceeded its assets. The particulars of the dispositions of the Trustco
shares by DexGroup to the respondents were as follows. On 23 September 2010, it
sold 21 million shares to Snowball at 27 cent per share and on 22 November 2010, it

sold a further 6 million shares to Snowball at 48 cent per share. On 22 November 2010,
it also sold 4 136 755 shares to Mr Chou, at the same price. On the same date, it sold
300 000 shares to Ms Zhang and 1 million shares to Mr Rabinowitz, all at the same
price.

[5] The particulars of claim proceeded to state that the ‘reasonable market value’
of the shares at the time of each sale was 67 cent per share. Because the respondents
paid 27 cent (40 per cent of the market value) and 48 cent (72 per cent of the market
value), the value given for the shares was ‘illusory or merely nominal’. The dispositions
took place more than two years prior to 25 February 2014, being the deemed date of
sequestration in terms of s 340(2)(a) of Act 61 of 1973.1 On the strength of these
allegations, the appellants sought orders setting aside each sale under s 26(1)(a).

[6] Snowball’s exception departed from the premise that ‘illusory or merely nominal’
value means no value. It emphasised that the according to the particulars of claim,
DexGroup had received payment of R5 670 000 for the 21 million shares and
R2 880 000 for the 6 million shares. Therefore, so Snowball said, the value given by it
was not illusory or merely nominal. On this basis it contended that the appellants’
allegations were not capable of sustaining claims based on dispositions not made for
value as contemplated in s 26(1).

[7] The nub of the exception of the other respondents was the following:
‘A disposition of property is “not made for value” within the meaning of s 26 where (i) no benefit
at all is received for the property, or (ii) some benefit is received for the property, but it is merely
illusory or nominal, so that the benefit amounts to no value at all.
A disposition of property for an inadequate value (as opposed to for an illusory or nominal
value) is not a disposition “not made for value” within the meaning of s 26.’

1 Section 340(2)(a) reads:
‘(2) For the purpose of this section the event which shall be deemed to correspond with the sequestration
order in the case of an individual shall be–
(a) in the case of a winding-up by the Court, the presentation of the application, unless that winding-up
has superseded a voluntary winding-up when it shall be the registration in terms of section 200 of the
special resolution to wind up the company.’

The exception proceeded to state that since the particulars of claim revealed that the
other respondents had paid more than 70 per cent of the alleged reasonable market
value of the shares, the sales in question were not dispositions not made for value.

[8] As I have said, the high court upheld both exceptions. The crux of its reasoning
appeared from the following:
‘I now turn to the facts of this matter tested against the legal position set out above. It is clear
that the disposition was clearly not for “no value” and was also not “illusionary” nor “nominal”.
The plaintiffs’ own factual allegations are destructive of any claims in terms of section 26 of the
Insolvency Act. The proper interpretation, in the context of the act, as set out above does simply
not apply to the facts as pleaded. The pleadings excepted must be taken as it stands, the
truthfulness thereof is accepted for these purposes. Even if accepted that the value paid was
less than the reasonable market value, no basis is laid nor suggested that there was anything
remiss therewith. It would be an absurdity to equate the position that, when paying a discounted
price, it can be said you gave no value.’

[9] Whilst this passage cannot be faulted, the high court did not directly address
the exception of the other respondents. Thus, it refrained from deciding whether the
phrase means for no value at all. I have demonstrated that Snowball’s exception was
founded on a narrower ground. However, if the exception of the other respondents is
good, then it must follow that Snowball’s exception had to succeed on that ground as
well.

Case law
[10] I therefore proceed to consider the meaning of the phrase. Although it has been
considered in a number of decisions of this court, as I shall show, it has not definitively
been decided whether s 26(1) contemplates a claim based on a disposition for
inadequate or insufficient value as opposed to no value at all.

[11] Estate Wege v Strauss 1932 AD 76 (Estate Wege) dealt with the provisions of
s 24 of the Insolvency Act 32 of 1916. For present purposes they did not differ from

those of s 26(1) in any material respect. The essential issue in that matter was whether
the payment of bets on horse races were dispositions not made for value. The appellant
contended that in law betting agreements were null and void. For that reason, so it was
submitted, the payments that Mr Wege had made to a bookmaker whilst the former
was factually insolvent, were dispositions without value. Wessels ACJ rejected the first
part of the contention in these terms at 81:
‘A bet, therefore, is not illegal by our law, though it is not enforceable in our Courts between
the parties to it, and when we speak of a wagering contract being null and void we mean no
more than that our Courts will not lend their aid to its enforcement.’

[12] The court proceeded to adopt the finding of the court below that there was no
good reason for making value dependent on the existence of a legal sanction. After
saying that the word ‘value’ in the provision in question carried no technical meaning
and could therefore only mean value in the ordinary sense of the word, it stated at 84:
‘The object of sec. 24 is not to prevent a person in insolvent circumstances from engaging in
the ordinary transactions of life, but to prevent a person from impoverishing his estate by giving
his assets away without receiving any present or contingent advantage in return.’
It is apparent that the question whether the phrase meant no value or inadequate value,
did not arise in Estate Wege and this dictum must be read in that light.

[13] In Estate Jager v Whittaker & Another 1944 AD 246 (Estate Jager), a trustee,
acting under s 26(1), sought to reclaim interest that the insolvent had paid to a creditor
in contravention of the Usury Act 27 of 1926. Relying on Estate Wege, the creditor
contended that the benefit that the insolvent had derived from the money lent to him
was a quid pro quo for his promise to pay (and the payment of) interest in excess of
the rate allowed by law. Watermeyer CJ, writing for the court, disagreed. He said at
251-252:
‘But, in my opinion, the Legislature, by making it a criminal offence for a lender to stipulate for,
demand, or receive interest at a rate higher than that allowed by the Usury Act, has in effect
said that the use by the borrower of the money lent shall not be regarded as value for the
promise or for payment of anything more than the rate of interest permitted by the Usury Act.

No obligation of any sort to pay a higher rate of interest than that permitted by the Act can arise
from a promise to pay a higher rate, and therefore it follows that such a promise is a mere
nullity, and any payment of such a higher rate in pursuance of such promise is in effect a
donation, or disposition not made for value, and is consequently liable to be set aside under
sec. 26 of the Insolvency Act. This view is not in conflict with the decision of this Court in the
case of Estate Wege v Strauss because there are passages in the judgment in that case which
indicate clearly that when the question arises whether payments made in pursuance of such
contracts can be set aside under sec. 26 of the Insolvency Act, a distinction must be drawn
between a contract which, though lawful, gives rise only to moral obligations unenforceable in
a court of law and an illegal contract which gives rise to no obligations at all.’

[14] Importantly, this court stated at 250-251:
‘The words “disposition not made for value” mean, in their ordinary signification, a disposition
for which no benefit or value is or has been received or promised as a quid pro quo. The most
obvious example of such a disposition is a donation and . . . it would appear prima facie that
any payment, purporting to be made solely in discharge of an existing obligation, is in effect a
donation if no obligation to make such payment in fact exists. If a lawful obligation to pay the
money in fact exists, then the obvious benefit which the payer receives in return for such
payment is a discharge from his liability to pay. Such a payment decreases his assets, but at
the same time it diminishes his liabilities, and in transactions which are entered into in the
ordinary course of business such a discharge from a liability would be value for the payment
made. For the purposes of this case, it is unnecessary to consider what the legal position would
be if the obligation which is discharged arises from a promise to donate or a promise made in
return for an inadequate consideration.’
Therefore, the question whether s 26(1) could apply to dispositions for inadequate
value not only did not arise on the facts of Estate Jager, but was expressly left open.

[15] The question also did not arise in Langeberg Koöperasie Bpk v Inverdoorn
Farming and Trading Company Ltd 1965 (2) SA 597 (A) (Langeberg Koöperasie).
There a creditor appealed against an order setting aside a suretyship and mortgage
bond as dispositions not made for value under s 26(1). Two points arose for decision.
The first was whether the suretyship agreement in question constituted a disposition of

property within the meaning of the Insolvency Act. If so, the second point was whether
there was a disposition not made for value under s 26(1).

[16] The suretyship agreement was entered into by a farming company to secure
an overdue debt owed by its insolvent parent company to the creditor. The suretyship
agreement entailed an obligation to pay (as surety and co-principal debtor), as well as
an obligation to pass a mortgage bond over the unencumbered property of the farming
company. The mortgage bond was registered accordingly. This court endorsed the
finding of the court below that in the circumstances the suretyship agreement clearly
constituted a transaction falling within the definition of ‘disposition’ in the Insolvency
Act.

[17] The argument on the second point was that the disposition was for value as
the farming company derived a benefit from a moratorium that had been granted by the
creditor to the parent company as a result of the execution of the suretyship agreement.
Whilst acknowledging that such a benefit could in principle constitute value under
s 26(1), Beyers JA, for the majority,2 held that on the facts the farming company had
derived no direct or indirect benefit from the moratorium.

[18] Swanee’s Boerdery (Edms) Bpk (In Liquidation) v Trust Bank of Africa Ltd 1986
(2) SA 850 (A) (Swanee’s Boerdery) concerned a similar case to Langeberg
Koöperasie. There a company that formed part of a group of companies undertook a
suretyship obligation to guarantee the debt of another company in the group. The
former company was liquidated and the question arose whether the suretyship was a
disposition not made for value. Galgut AJA referred extensively to Langeberg
Koöperasie in considering an argument that the suretyship gave financial stability to
the whole group of companies and therefore amounted to a disposition for value. He
held, however, that this had not been established on the facts.

2 Williamson JA dissenting, only on the question whether a contract of suretyship could be a disposition.

[19] In the course of the judgment, the following was stated at 860E-F:
‘We were referred to Bloom’s Trustee v Fourie 1921 TPD 599 at 601 where DE WAAL J when
discussing s 24 of Act 32 of 1916 says:
“It seems to me that the word “value” means adequate value or “just and valuable
consideration”.”
It is clear from what is said in that judgment that the learned Judge came to that conclusion
because he adopted the words “just and valuable consideration” which appeared in s 83 of Ord
6 of 1843 (C) and also the dictionary meaning of value. Be that as it may, the dictum is no
longer applicable since this Court has now defined value in the Estate Wege case and the
Estate Jager case, both cited above.’
In my view this dictum also did not decide the question raised in the present matter. I
say so for two reasons. The first is that the facts in Swanee’s Boerdery did not require
the consideration of a distinction between the concepts of inadequate value and no
value. Secondly, on the issue of value under s 26(1) this dictum went no further than
Estate Wege and Estate Jager discussed above.

[20] In each of the mentioned authorities the focus of this Court was on the nature
of the transaction, whether it be the: (i) wager in Estate Wege, which was likened to an
insurance and thus not a disposition of property without value; (ii) usurious interest rate
in Estate Jager, where it was held that no obligation arose from a promise to pay a
higher interest rate than that permitted by the Act and that such a promise was a mere
nullity; (iii) suretyship in Langeberg Koöperasie, where the court held that it was difficult
to see what possible value there could be for a company that was forced to pledge its
assets for a substantially overdue debt for its hopelessly insolvent parent company; (iv)
suretyship in Swanee’s Boerdery where, whilst emphasising that a company had a
personality of its own, it was held that the facts were distinguishable from Langeberg
Koöperasie, inasmuch as the company would for all practical purposes have ceased to
exist. Thus, in each of those matters, the court was not strictly speaking required to
consider the issue that confronts us in this matter. The importance of this is twofold.
First, there is no authority of this court directly on point as seems to have been
suggested, by which we are bound. Second, unlike the other matters, here it is not the

nature of the transaction that occupies our attention. It is a sale at arm’s length. There
is no suggestion that it lacks validity, is unenforceable or otherwise susceptible to
impeachment. The argument is that although a price was fixed in terms of an arm’s
length transaction, the disposition of the shares at that price was a disposition ‘not
made for value’.

[21] Before turning to the interpretation of the phrase, it is also necessary to refer
to the decision in Terblanche NO v Baxtrans CC and Another 1998 (3) SA 912 (C). The
facts of that case were similar to the facts of this matter. The liquidator of a company
sought, inter alia, to have a disposition set aside under s 26(1) on the ground that
ownership of assets worth R1 276 000 had been transferred for a consideration of only
R383 539. The payment of the latter amount to two banks enabled the transfer of
ownership of the assets to the transferee. The latter excepted to this claim on the
grounds that according to the authorities any value would suffice to render s 26(1)
inapplicable and that the plaintiff had not pleaded any basis upon which the payment
of the amount of R383 539 could be regarded as not constituting value.

[22] In his judgment Selikowitz J employed the expressions ‘illusory value’ and
‘nominal value’. The learned judge stated at 917B-C:
‘Illusory or nominal value is what those words suggest – no value at all. “Illusory value” is merely
an illusion and “nominal value” is value in name only.’
Why this was done is not apparent from the judgment. According to the judgment these
expressions were not mentioned in the particulars of claim, the argument or the case
law referred to. Before us, lead counsel for the appellants confirmed that this judgment
was relied upon for the use of these expressions in the appellants’ particulars of claim.
I may mention that in his minority judgment in Langeberg Koöperasie, Williamson JA
(at 612), after having concluded that ‘the circumstances actually precluded any benefit
accruing to . . . or ever being likely to accrue in the future’, added ‘the possible benefit
to be gained . . . was really, in the event, illusory’. In my view, the importation of the
expressions ‘illusory value’ and ‘nominal value’ does conduce to confusion. However,
in the light of the conclusion to which I arrive, the issue need not detain me.

[23] Selikowitz J said that neither the argument that s 26(1) could only apply where
there is a total absence of value nor the argument that inadequate value would always
be prima facie evidence of no value, could prevail. It proceeded to determine the
exception raised in that case on the basis that there was no allegation that the value
conceded (R383 539) ‘should be treated as equivalent to no value having been
received’. It is thus apparent that this judgment also does not provide a clear answer to
the question in the present matter.

Interpretation
[24] It follows that the meaning of the phrase has to be determined on ordinary
principles of interpretation. There is no need to cite authority for the proposition that
this exercise entails giving meaning to the phrase by a holistic consideration of its text,
context and purpose. As I have shown, the other respondents contended that the
phrase meant for no value at all. The appellants pleaded that it meant for less than
‘reasonable market value’ and submitted that it referred to a counter performance that
did not represent a ‘fair return or equivalent’.

[25] It follows that the appellants’ interpretation requires significant reading-in into
s 26(1). Not so with the interpretation of the other respondents. It will be recalled that
in Estate Wege this court said that the word ‘value’ in the predecessor of s 26(1) meant
value in the ordinary sense of the word. This was taken further in Estate Jager when
Watermeyer CJ said:
‘The words “disposition not made for value” mean, in their ordinary signification, a disposition
for which no benefit or value is or has been received or promised as a quid pro quo’.3
According to its text, therefore, the phrase means for no value at all. The next question
is whether the context and purpose of the phrase indicate that it should nevertheless
carry a different meaning.

3 See para 14 above.

[26] The most important contextual consideration is that s 26 forms part of a set of
remedies available to a trustee or liquidator under the Insolvency Act. The other
remedies are contained in s 29 (‘Voidable preferences’), s 30 (‘Undue preference to
creditors’) and s 31 (‘Collusive dealings before sequestration’).

[27] Under s 26(1),4 a disposition not made for value may be set aside when the
debtor was factually insolvent at the time or when it caused the debtor to become
factually insolvent. Subsections 26(1)(a) and (b) only deal with the incidence of the
onus in respect of factual insolvency. It follows that the availability of the remedy under
s 26(1) is not limited in time. It does not require proof of an intention to prefer one
creditor over another or of collusion, nor can a claim under s 26(1) be defeated by
showing that the disposition occurred in the ordinary course of business and without
the intention to prefer.

[28] Section 29(1)5 permits the setting aside of a disposition that had the effect of
preferring one creditor over another, where the debtor was factually insolvent when the
disposition was made or where it caused the debtor’s factual insolvency. The remedy
is only available in respect of dispositions made within six months prior to the
sequestration or the commencement of winding-up. A claim under s 29 may be
defeated by establishing that the disposition was made in the ordinary course of
business and that it was not intended to prefer one creditor above another.

[29] Section 30(1)6 provides for the setting aside of a disposition by a debtor, who
was factually insolvent at the time and whose estate was subsequently sequestrated

4 Quoted in para 3 above.
5 Section 29(1) reads:
‘Every disposition of his property made by a debtor not more than six months before the sequestration
of his estate or, if he is deceased and his estate is insolvent, before his death, which has had the effect
of preferring one of his creditors above another, may be set aside by the Court if immediately after the
making of such disposition the liabilities of the debtor exceeded the value of his assets, unless the person
in whose favour the disposition was made proves that the disposition was made in the ordinary course
of business and that it was not intended thereby to prefer one creditor above another.
6 Section 30(1) reads:

or placed in liquidation, if the disposition was made with the intention of preferring one
creditor above another. In principle this remedy may be employed irrespective of how
much time elapsed between the disposition and the sequestration or winding-up.
Section 30 also does not provide for any defences to, or exclusions from, the scope of
a claim thereunder.

[30] Finally, s 317 permits the setting aside of a transaction entered into by a debtor
prior to sequestration or liquidation, whereby the debtor, in collusion with another,
disposed of property in a manner which had the effect of prejudicing the debtor’s
creditors or by preferring one  above another. The remedy is also in principle available
no matter how much time elapsed since the transaction had been entered into. A
person, who was party to the collusion is liable to make good the loss caused to the
estate, as well as for payment of a penalty. If the person is a creditor, the claim against
the estate is forfeited.

[31] In my view, this contextual setting materially informs the interpretation of the
phrase. Whilst the purpose of these provisions clearly is to protect the interests of the
general body of creditors, they do not evince an intention to advance the interests of
creditors above all other interests. This is, inter alia, illustrated by s 29: a disposition
that in fact had the effect of preferring one creditor over another, is immune from a
challenge under s 29 if the disposition was made more than six months before the

‘If a debtor made a disposition of his property at a time when his liabilities exceeded his assets, with the
intention of preferring one of his creditors above another, and his estate is thereafter sequestrated, the
court may set aside the disposition.’
7 Section 31 reads:
‘(1) After the sequestration of a debtor’s estate the court may set aside any transaction entered into by
the debtor before the sequestration, whereby he, in collusion with another person, disposed of property
belonging to him in a manner which had the effect of prejudicing his creditors or of preferring one of his
creditors above another.
(2) Any person who was a party to such collusive disposition shall be liable to make good any loss
thereby caused to the insolvent estate in question and shall pay for the benefit of the estate, by way of
penalty, such sum as the court may adjudge, not exceeding the amount by which he would have
benefited by such dealing if it had not been set aside; and if he is a creditor he shall also forfeit his claim
against the estate.
(3) Such compensation and penalty may be recovered in any action to set aside the transaction in
question.’

sequestration or winding-up and, when made within the period of six months, if the
recipient shows that it was made in the ordinary course of business and without the
intention to prefer. This is also indicated by the provisos to s 26(1)8 and 26(2).9

[32] In my view, these provisions were intended to constitute a comprehensive set
of remedies to reverse objectionable transactions that occurred prior to sequestration
or winding-up. A comparison of these remedies demonstrates that the more
objectionable the transaction, the more extensive the remedy afforded. As I have said,
the remedies under s 26, s 30 and s 31 allow retrospective redress that is unlimited in
time. But both s 30 and s 31 deal with conduct intended to prejudice the general body
of creditors. Section 30 requires proof of the intention to prefer and s 31 requires proof
of collusion. However, there is nothing inherently, commercially or morally
objectionable to a sale at a discounted price. The same cannot be said of a factually
insolvent person squandering or giving away assets for no return. That, I think, is what
Wessels ACJ meant when he said ‘the object of sec. 24 is not to prevent a person in
insolvent circumstances from engaging in the ordinary transactions of life, but to
prevent a person from impoverishing his estate by giving his assets away without
receiving any present or contingent advantage in return’.10 This indicates that s 26(1)
was intended to apply only to gratuitous dispositions.

[33] Importantly, in terms of s 26(2),11 the recipient has no claim in competition with
the creditors of the insolvent estate. Section 32(3)12 provides that should the property

8 See para 3 above.
9 Section 26(2) provides:
‘A disposition of property not made for value, which was set aside under subsection (1) or which was
uncompleted by the insolvent, shall not give rise to any claim in competition with the creditors of the
insolvent’s estate: Provided that in the case of a disposition of property not made for value, which was
uncompleted by the insolvent, and which-
(a) was made by way of suretyship, guarantee or indemnity; and
(b) has not been set aside under subsection (1),
the beneficiary concerned may complete with the creditors of the insolvent’s estate for an amount
not exceeding the amount by which the value of the insolvent’s assets exceeded his liabilities
immediately before the making of that disposition.’
10 See para 12 above.
11 See footnote 9 above.
12 Section 32(3) reads:

have been alienated or consumed in the period between the disposition and the setting
aside, the recipient would be liable for the value of the property at the date of the
disposition or at the date on which it is set aside, whichever is the higher. On the
appellants’ construction therefore, should a purchaser, with no knowledge of the
seller’s financial situation, in the ordinary course of business purchase property at a
discounted price (something less than ‘reasonable market value’ or a ‘fair return or
equivalent’) from a person that is sequestrated years later, the purchaser would have
to return the property without the right to reclaim the purchase price. Moreover, should
the purchaser bona fide have alienated or consumed the property, he or she would be
liable for payment of the higher of the value of the property at the time of the sale or at
the time of the setting aside of the disposition and forfeit the purchase price. Many
examples could be given of the absurd results that the appellants’ interpretation would
lead to. It suffices to say that they could not have been intended.

[34] As I have said, the appellants’ case is that dispositions for less than the
‘reasonable market value’ or a ‘fair return or equivalent’ are not made for value. In
Goode, Durrant and Murray Ltd v Hewitt and Cornell, NNO 1961 (4) SA 286 (N) at
291E-F Fannin J said:
‘The word “value” is not, however, confined to a monetary or tangible material consideration,
nor must it necessarily proceed from the person to whom the disposition is made. Whether an
insolvent has received “value” for a disposition must be decided by reference to all the
circumstances under which the transaction was made.’
In Langeberg Koöperasie at 604B-C this court quoted this passage with approval. Thus,
it is an established principle that ‘value’ under s 26(1) includes benefits that do not have
a reasonable market value and in respect of which a fair return or equivalent could not
be evaluated or expressed in monetary terms. This consideration, too, points away
from the construction favoured by the appellants.

‘When the Court sets aside any disposition of property under any of the said sections, it shall declare the
trustee entitled to recover any property alienated under the said disposition or in default of such property
the value thereof at the date of the disposition or at the date on which the disposition is set aside,
whichever is the higher.’

[35] Finally, there is s 25(4)(c) of the Insolvency Act. In relevant part it provides:
‘(4)
If a person who is or was insolvent unlawfully disposes of immovable property or a
right to immovable property which forms part of his insolvent estate, the trustee may,
notwithstanding the provisions of subsection (3), recover the value of the property or right so
disposed of-
(a) . . .
(b) . . .
(c) from any person who acquired such property or right from the insolvent or former
insolvent without giving sufficient value in return, in which case the amount so recovered
shall be the difference between the value of the property or right and any value given in
return.’
Subsection 4(c) was introduced by an amendment that took effect on 1 September
1993.13 The legislature is presumed to be acquainted with the existing law14 and a
deliberate change of expression indicates a change of intention.15 In the result, the
phrase could not bear the meaning of not for ‘sufficient value’.

[36] All the contextual and purposive indicators reinforce the ordinary meaning of
the phrase. For these reasons, I conclude that the phrase ‘not made for value’ in s 26(1)
of the Insolvency Act 24 of 1936 means for no value at all.16 It follows that the appeal
must fail.

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

_______________________
C H G VAN DER MERWE
JUDGE OF APPEAL

13 In terms of the Insolvency Amendment Act 122 of 1993.
14 See Fundstrust (Pty) Ltd (In liquidation) v Van Deventer 1997 (1) SA 710 (A) at 732B.
15 See Shalom Investments (Pty) Ltd & Others v Dan River Mills Incorporated 1971 (1) SA 689 (A) at
701B-C.
16 Therefore the decision in De Jongh Ontwikkelings (Pty) Ltd & Another v Kilotech Investments (Pty) Ltd
& Others 2021 (4) SA 492 (GP) para 6.3.7 and 6.3.8 should not be followed.

Appearances:

For appellant:

F H Terblanche SC (with P W T Lourens)
Instructed by:

Susan Strydom Inc., Pretoria

Symington & De Kok Attorneys, Bloemfontein

For first respondent:
C M Eloff SC
Instructed by:

Bowman Gilfillan Attorneys, Sandton

McIntyre Van der Post Attorneys, Bloemfontein

For second, third and
fourth respondents:

J Muller SC (with K Reynolds)

Instructed by:

Edward Nathan Sonnenbergs, Cape Town

Matsepes Inc., Bloemfontein