Cooper, Brian St Clair and Another v Merchant Trade Finance Limited

Cat Quip CC granted a notarial general mortgage bond over its movable property to Merchant Trade Finance Ltd in April 1990. After Cat Quip defaulted on bills of exchange in November 1992 and its sole member died, the respondent’s representative obtained possession of all Cat Quip’s movable assets on 26 January 1993 when the widow handed over the keys to the premises. This occurred one day before an urgent application for the provisional liquidation of Cat Quip was filed, and shortly before liquidation was granted. The liquidators contended that the handing over of the movables constituted a voidable preference under section 29(1) of the Insolvency Act 24 of 1936.

According to Zulman JA, the appeal should be dismissed and the disposition should not be set aside as a voidable preference. (This reflects the dissenting view; the final outcome of the appeal is not expressly stated in the provided extract.)

The case is important for its detailed exposition of South African law on voidable preferences under section 29(1) of the Insolvency Act. It reaffirms the subjective nature of the inquiry into intention to prefer, the role of probabilities and inference in civil cases, and the distinction between the effect of a transaction and the debtor’s dominant intention.