Van Wyk Van Heerden Attorneys v Gore NO and Another

Brandstock Exchange (Pty) Ltd, whose sole director was Bruce Philp, made three payments into the trust account of Van Wyk Van Heerden Attorneys in February and April 2018. At the time, the attorneys acted for Philp and another entity, BRP Livestock CC, but did not know of Brandstock’s existence. Brandstock was provisionally and finally wound up in July and August 2018 respectively. Of the three deposits, R1.25 million was paid onward to Utexx Trust as purchase price under a cession and sale agreement of claims against Philp and BRP, while two smaller amounts (R75 000 and R200 000) were used by the attorneys to settle their professional fees and disbursements. Brandstock’s liquidators applied under s 26(1)(b) of the Insolvency Act to set aside all deposits as dispositions without value. The High Court held that all deposits constituted impeachable dispositions to the attorneys and ordered repayment. The attorneys appealed.

The appeal was partially upheld. The order of the High Court was set aside insofar as it related to the R1.25 million payment. The payments of R75 000 and R200 000 were declared dispositions without value under s 26(1)(b) of the Insolvency Act and set aside. The attorneys were ordered to repay R275 000 to the liquidators, with costs including the costs of two counsel.

The judgment clarifies South African insolvency law regarding attorney trust accounts, confirming that deposits into such accounts are not automatically dispositions to attorneys. The case establishes that the correct test under s 26(1)(b) is whether the attorney benefited from the disposition, thereby limiting the exposure of attorneys who act merely as conduits while confirming liability where trust funds are applied to their own fees.