Disposition For Snow Value At All - Brenna Reichenberg

In the recent judgment of Strydom N.O. and Another v Snowball Wealth (Pty) Ltd and Others, the Supreme Court of Appeal considered the meaning of the phrase “not made for value” as envisaged in section 26(1) of the Insolvency Act (the Act) and found that it means for no value at all.

This is troublesome in that, for example, property may be sold for an amount of R1.00 when in reality it is valued at a significantly higher amount. Such a transaction, certainly in the above example, cannot be set aside under section 26(1) of the Act if sold for R1.00 and the R1.00 is considered as ‘value’.

A trustee or liquidator faced with a situation of a disposition made for such insignificant value will likely be unsuccessful in applying section 26(1) of the Act as even the smallest of amounts are now considered ‘value’. In the alternative to section 26(1) of the Act, the trustee of liquidator should consider utilising sections 29 and 31 of the Act, being voidable preferences and collusive dealings before sequestration, respectively.