K2013046547/07 (South Africa) (Pty) Ltd and Others v Hyde Construction CC and Another

Blue Cloud Investments 40 (Pty) Ltd owned immovable property in Plettenberg Bay, developed into a sectional title scheme comprising a shopping centre and residential units. Hyde Construction CC performed renovations on the shopping centre and later obtained judgments against Blue Cloud arising from unpaid amounts. In April 2014, Blue Cloud sold the shopping centre (section 1) to K2013046547/07 (South Africa) (Pty) Ltd, financed by Investec Bank Limited, which registered a mortgage bond over the property. Hyde Construction sought to set aside the transfer and bond under s 34(3) of the Insolvency Act 24 of 1936, alleging Blue Cloud was a trader and that the transfer prejudiced its ability to enforce its claim.

The appeal was upheld with costs. The order of the Western Cape High Court was set aside and replaced with an order dismissing Hyde Construction CC’s application with costs, including costs of two counsel where employed.

The case clarifies the interpretation of 'trader' under the Insolvency Act and reinforces that s 34 applies only where trading in property forms part of the debtor’s core business at the relevant time. It confirms that investment and rental enterprises are not automatically traders and that a company’s core business may evolve over time.