Interesting Judgment: CJ Pharmaceutical Enterprises (Pty) Ltd and others v Main Road Centurion 30201 CC t/a Albermarle Pharmacy and another

15 January 2021

1. The applicants sought an order declaring the transfer of the first respondent’s pharmacy to the second respondent to be “null and void”, setting it aside and ordering the business to be “transferred back” to the first respondent and that the first respondent be placed under business rescue and supervision in terms of Section 131 of the Companies Act.
2. The applicants relied on the provisions of Section 34 (1) of the Insolvency Act and on the common law because there had been “fraudulent collusion between the respondents in order to detrimentally prejudice the rights the rights of the applicants and others as creditors of (the first respondent) by, inter alia, wilfully diminishing the first respondent’s asset base.”
3. The Court found against the applicants regarding the provisions of Section 34(1) in that the word “void” in this context did not bear an absolute meaning.
4. The requirements for the common law “Actio Pauliana” were also not satisfied as the applicants did not establish that the first respondent made the transfer with the intention of defrauding its creditors and that the second respondent was a party to that fraud.
5. The applicants' contention that the first respondent be placed under business rescue was predicated on the business being transferred back to the first respondent. As such transfer is not void in the absolute sense and it was not established that the first respondent had sufficient assets to be rehabilitated under the control of a business rescue practitioner, this order could not be granted.

This judgment was kindly sent to us by George Nell.

  Judgment - 21 December 2020: CJ Pharmaceutical Enterprises (Pty) Ltd and others v Main Road Centurion 30201 CC t/a Albermarle Pharmacy and another