THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

REPORTABLE
Case no:  208/06

In the matter between
MICHAEL CONSTANTARAS

APPELLANT
and
BCE FOODSERVICE EQUIPMENT (PTY) LTD

RESPONDENT

Coram:
FARLAM, BRAND, HEHER, JAFTA JJA and HANCKE AJA

Heard:
23 MAY 2007

Delivered: 1 JUNE 2007

Summary: Close Corporations Act 69 of 1984 s 23 – purpose of – cheque signed
on behalf of corporation not containing prescribed information – personal
liability of signatory on non-payment by corporation – defence of rectification
not available to meet claim under the Act.
Practice – exception – striking out of plea – defendant entitled to opportunity to
amend before granting of judgment.

Neutral citation:
This case may be cited as Constantaras v BCE Foodservice
Equipment [2007] SCA 86 (RSA).
____________________________________________________________________

HEHER JA

HEHER JA:
[1] This judgment concerns the personal liability of the representative of a close
corporation who signed and issued a cheque on its behalf at a time when the
correct particulars of the corporation did not appear on the cheque. Such liability
arises by reason of the provisions of s 23(2)1 of the Close Corporations Act 69 of
1984 (‘the Act’).

[2] The plaintiff sued the defendant for payment of two amounts of R65 229,25
being the face value of two cheques dated 3 October 2004 and 3 November 2004
respectively drawn in its favour and dishonoured by non-payment. Each cheque
reflected the printed description of the drawer as ‘Cater-Mart (Pty) Ltd
2000/001852/07’ and was signed by the defendant without an indication that he did
so in a representative capacity.

[3] The plaintiff alleged that the defendant was personally liable because he failed
to indicate that he was signing for and on behalf of the corporation. In the alternative,
and in the event that court should find that he did act in a representative capacity on
behalf of the corporation, the plaintiff averred that he was nevertheless personally

1 S 23 provides as follows:
‘
(1)
Every corporation-
(a)
shall display its registered full name (or a registered literal translation thereof into any one other official
language of the Republic) and registration number in a conspicuous position and in characters easily legible on
the outside of its registered office and every office or place in which its business is carried on;
(b)
shall have that name (or such translation thereof) and registration number mentioned in legible characters in all
notices and other official publications of the corporation, including notices or other official publications in
electronic format, and in all bills of exchange, promissory notes, endorsements, cheques and orders for money,
goods or services purporting to be signed by or on behalf of the corporation, and all letters, delivery notes,
invoices, receipts and letters of credit of the corporation; and
(c)
shall use a registered shortened form of that name only in conjunction with that name or such literal translation
thereof.
(2)
If any member of, or any other person on behalf of, a corporation-
(a)
issues or authorizes the issue of any such notice or official publication of the corporation, or signs or authorizes
to be signed on behalf of the corporation any such bill of exchange, promissory note, endorsement, cheque or
order for money, goods or services; or
(b)
issues or authorises the issue of any such letter, delivery note, invoice, receipt or letter of credit of the
corporation,
without the name of the corporation, or such registered literal translation thereof, and its registration number being
mentioned therein in accordance with subsection (1) (b), he shall be guilty of an offence, and shall further be liable to
the holder of the bill of exchange, promissory note, cheque or order for money, goods or services for the amount thereof,
unless the amount is duly paid by the corporation.

(3)
Any corporation which fails to comply with any provision of subsection (1) shall be guilty of an
offence.’

liable in terms of s 23(2) for the amount of the cheque because in signing the cheque
the defendant did so without ensuring that the registered full name and registration
number of Cater-Mart appeared on the face of the cheque.

[4] The defendant pleaded that he signed the cheque in his capacity as the
authorized signatory of Cater-Mart CC registration number 2002/020821/23 and
therefore did not incur personal liability on the cheque. Alternatively the defendant
pleaded rectification in the following terms:
‘[I]t was the common continuing intention of the parties to the cheque, that, by signing the cheque
as the duly authorized signatory of the corporation, the defendant was merely completing the
signature of the corporation and was not binding himself to be personally liable thereon, and that,
accordingly, should it be held by reason of his signature of the cheque that the defendant thereby
incurred personal liability, this was a mistake common to the parties which justifies rectification of
the cheque:
8.3.1 to reflect the words “for and on behalf of” before the words Cater-Mart” and/or
8.3.2 to substitute the words “CC 2002/020821/23” for the words “(Pty) Ltd 2000/001852/07”.

[5] The defendant also pleaded an estoppel which plea was set aside on exception
and with which it is unnecessary to deal further.

[6] The plaintiff excepted to the defendant’s plea on the grounds that s 23(2) is
peremptory in its terms and that rectification would circumvent the statutory
provision and defeat the legislative intention and was therefore not a remedy upon
which the defendant was entitled to rely. The court a quo (Tshiqi J) agreed. Following
Epstein v Bell and Another2 the learned judge held the defendant’s liability arose from
the

2 1997 (1) SA 483 (D)

punitive provisions of the statute and was not contractual in origin and that
rectification could therefore not assist the defendant. She accordingly upheld the
exception and granted judgment in favour of the plaintiff. With her leave the
defendant appealed to this Court.

[7] Counsel for the defendant submitted in support of the appeal that once rectified
to reflect a signature in a representative capacity, the close corporation would stand
alone as the drawer. Rectification, he contended, would not defeat the purpose of s
23(2). Therefore it furnished a permissible remedy. Epstein v Bell was, he submitted,
wrongly decided in so far as Magid J had followed distinguishable English authority.

[8] Alternatively, so counsel argued, the description of the drawer on the cheque
was merely out-dated. The company bearing that name and number had been
converted to a close corporation. That was an alteration in legal status without the
creation of a new or separate corporate identity and was, in his submission, irrelevant
to s 23(2) of the Act (or to 50(3) of the Companies Act 61 of 1973 which contains
equivalent provisions in relation to officers and agents of companies). Counsel
referred to the terms of s 27(5)3 of the Act to emphasise his submission that s 23(2)
was complied with in substance if not strictly in form. He maintained that ‘a simple
search’ in the office of the Registrar of Companies would have revealed (if the
respondent did not already know of the fact) that the company had converted to a
close corporation.

[9] The plaintiff’s claim arose ex lege as a remedy created by s 23(2) of the Act.
The defendant relied on the defence of rectification to provide himself with an answer

3 ‘(5) (a) On the registration of a corporation converted from a company, the assets, rights, liabilities and obligations of
the company shall vest in the corporation.
(b)
Any legal proceedings instituted by or against the company before the registration may be continued by or
against the corporation, and any other thing done by or in respect of the company shall be deemed to have been done by
or in respect of the corporation.
(c)
The conversion of a company into a corporation shall in particular not affect-
(i)
any liability of a director or officer of the company to the company on the ground of breach of trust or
negligence, or to any other person pursuant to any provision of the Companies Act; or
(ii)
any liability of the company, or of any other person, as surety.
(d) The juristic person which prior to the conversion of a company into a corporation existed as a company, shall

to the statute: the cheque duly rectified would ex tunc be regarded as complying with
its terms. If the statute does not permit of reliance on such a defence rectification will
serve no purpose. The question is accordingly one of interpretation.

[10] The whole of s 23 of the Act is relevant. According to its plain wording the
principal purpose of ss (1) is to ensure that in its contact and dealings with the public
a close corporation discloses in unmistakable terms
(i)
its corporate status;
(ii)
the fact of its registration as a close corporation;
(iii)
the full name under which it is registered;
(iv)
the number allotted to it on registration.
The purpose is achieved, in the first instance, by requiring such disclosure by the
corporation
(a)
on the outside of its registered office and every office in which the business of
the corporation is carried on; and

(b)
on all notices and official publications of the corporation and in all bills of
exchange, promissory notes, endorsements, cheques and orders for money,
goods or services purporting to be signed by or on behalf of the corporation,
and on all letters, delivery notes, invoices, receipts and letters of credit of the
corporation.

[11] The language is peremptory. A failure to comply constitutes an offence. It is
clear that the offence is committed irrespective of whether any member of the public
has actually seen a relevant document or whether such a person has been misled by
any such document or been aware of the absence of the required particulars or their
inaccuracy. The section protects the public by ensuring that it is not exposed to the
risk of being misinformed or misled by requiring objective compliance in the
documents themselves. It follows that where a member of the public is involved it is
irrelevant that he does or does not know the true facts relating to the company.

notwithstanding the conversion continue to exist as a juristic person but in the form of a corporation.’

[12] Section 23(2) reinforces ss (1) by imposing criminal and civil sanctions on
members of the corporation and its representatives who issue or authorise the issue of
the said documents and who sign on its behalf the bills, notes, endorsements, cheques
and orders specified therein. The purpose is achieved by requiring compliance before
or at the time the document in question is issued or signed. Here also it is apparent
that the criminal offence which ss (2) creates is committed by the objective failure to
comply without the need for communication to a third party.

[13] The personal liability to holders which ss (2) imposes on members and
representatives of the corporation who contravene its terms depends upon the same
default as does the offence. The only additional factum probandum is that the
corporation has not duly paid the amount of the bill, note, cheque or order. The state
of mind of the holder, his knowledge or intention, does not suddenly become
relevant; the mere fact of authorising or issuing a defective document in a specified
category creates the liability4. In these circumstances, according to its terms the
section creates a statutory civil penalty for non-compliance which arises
independently of any contractual relationship which may exist between the holder of
any document in the specified categories, the authoriser or signatory and the
company.

[14] Counsel for the appellant conceded that s 23(2) does not expressly render the
state of mind of the holder of the instruments to which it relates relevant to the
imposition of personal liability on the person who issues, authorises or signs the
document. But, he submitted, there must be read into the section the qualification that
in order for personal liability to arise the holder must be unaware of the true facts

4 It is not necessary to consider the possibility of raising an estoppel against the holder.

relating to the status, registration, name and number of the corporation at the time of
receiving the defective instrument. (He did not explain why rectification should be
necessary to establish such awareness.) He submitted that the consequences of an
interpretation which excluded such a qualification would be arbitrary, bear no relation
to the degree of fault on the part of the holder and may result in an obligation to pay
very great amounts of money. He did not, however, contend that the result would be
absurd.

[15] The structure of s 23 suggests that the legislature had in mind that the relatively
light criminal sanctions of themselves would not be sufficient to procure compliance
with the obligations of a corporation. It therefore added the weight of personal
liability as a penalty likely to increase the effectiveness of the protection afforded to
the public. There is an obvious correlation between the amount of the instrument, the
degree of responsibility of the person authorising, signing, or issuing it and the loss
suffered by the holder who must rely in the first instance on the corporation to pay the
amount. Moreover the responsible member or representative can be expected to have
an insight into the ability of the corporation to meet its debt which the holder will
usually not possess. Thus, although the section may bear hard and even at times
unfairly upon the responsible persons I do not agree that an implication of awareness
on the part of the holder is necessary in order to give proper effect to the legislative
purpose.

[16] It follows that rectification of a document, which is an equitable remedy which
requires proof of the common intention of all parties to a contractual instrument in
order to place them in the relationship to each other that they intended, cannot and
does not provide a defence against the claim of a holder who relies on the liability
created by s 23(2).

[17] That really is an end of the matter. But reference to the decided cases dealing
with companies bears out the interpretation.

[18] In Cotona Oil & Cake Ltd v Gangut and Another5 Hefer J said of s 50(3)(b) of
the Companies Act, in his usual incisive manner,
‘The Legislature has seen fit to impose personal liability upon directors of companies who sign
cheques in the form in which the present one was signed, and, in my view, the fact that the receiver
of such a cheque is aware of the fact that it was intended to be signed on behalf of a company is
irrelevant. The defendant’s defence is accordingly completely untenable.’

[19] In Abro v Softex Mattress (Pty) Ltd6 a promissory note and written orders were
signed by the excipient in which the name of his principal was furnished as
‘Henwoods’. In fact Henwoods was a trading name of a company Libertas (Andries
Street) (Pty) Ltd which name was not disclosed in the order. When the company
failed to pay the respondent sued the recipient personally relying on s 58 of the
Companies Act 46 of 1926 (a predecessor of s 50 of the 1973 Act). An exception on
the ground that the note and orders did not purport to be signed by or on behalf of the
company was dismissed. Henning J construed the statute. He recognised that its terms
were imperative and found the language neither obscure nor ambiguous. He
concluded that any misdescription of a company’s name or any omission therefrom
was intended to render the section operative.

[20] In Sadler v Nebraska (Pty) Ltd and Another7 the name of the drawer printed on
the cheque was that of the respondent in the citation whereas the registered name of
the company was Nebraska Manufacturing Co (Pty) Ltd. Goldstone AJ following
Abro v Softex Mattress accepted the law to be that the section is to be strictly and
literally interpreted and that any misdescription of the name of a company would
render the signatory guilty of a criminal offence and personally liable to pay the
holder in the event of non-payment by the company (at 722 F-H).
[21] In Epstein v Bell8 two directors of South African Unlisted Securities Market
Exchange (Pty) Ltd signed five cheques drawn on that company’s account. Each

5 1977 (1) PH A26 (N)
6 1973 (2) SA 346 (D)
7 1980 (4) SA 718 (W)
8 1997 (1) SA 483 (D)

reflected the drawer as ‘SA Unlisted Sec Market Exchange (Pty) Ltd T/A USM
Investments’. It was common cause that the directors were not responsible for the
printed description and were unaware of the legal effects of signing a cheque bearing
an abbreviated name of the drawer company. The company was identified by its
registered number on the cheque. In an application for summary judgment against
them, the directors relied on a right to rectification. Magid J granted judgment. He
held that they were not sued as drawers of the cheques and their liability was not
contractual but statutory. Accordingly rectification was not open to them. The learned
judge did not rely on Blum v OCP Repartition SA9 (as submitted by counsel for the
appellant) but found that the conclusion arrived at in that case coincided with his
view10. He referred to the dictum of Hefer J in Cotona quoted above. In relation to a
defence that mens rea was an element of the offence Magid J found that (i) the
language of the prohibition was peremptory; (ii) the intention of the section was both
strict and penal in its effect (referring in this regard11 to Scottish and Newcastle
Breweries Ltd v Blair and Others12); the low penalty provided for the offence was an
indication that mens rea was excluded; absence of mens rea would provide too easy
and obvious an escape route and frustrate the statutory objective; even if mens rea
were an element of the criminal offence, it did not follow that lack of the necessary
mental element would entitle a director to escape civil liability, a consequence which
the learned judge found to be at odds with the legislative intention. In my view all
these findings are borne out by an analysis of s 23. Although Magid J did not say so,
his conclusion regarding the exclusion of mens rea as an element in the offence must
of itself have rendered rectification (which depends on proof of the subjective

9 1988 Palmer’s Company Cases 416 ([1988] BCLC 170 CA)
10 at 487C
11 at 489F
12 1967 SLT 72 at 73

intention of the parties) inapplicable.

[22] In Van Lochen v Associated Office Contracts (Pty) Ltd and Another13 Malan J
noted the cases which had required strict compliance with the section (or its
equivalent in other legislation). He cited Atkins & Co v Wardle14 in which it was said
that the provisions were enacted ‘with the intention of ensuring the strictest accuracy
in this respect for the protection of the public’. The learned judge also referred to the
history of the provision as set out by J T Pretorius ‘Die Aanspreeklikheid van
Maatskappye in die Wisselreg’ in (1983) 100 SALJ 240 at 256-7.

[23] Of the considerable number of English cases dealing with equivalent legislative
provisions I propose to refer only to three. Counsel submitted that Blum v OCP
Repartition SA15 was distinguishable. It seems to me, however, that, far from being so
on grounds of differences between South African and English principles of
rectification, the judgment serves to identify the essence of the weaknesses in the
appellant’s argument.

[24] In Blum the signatory to the cheque was a director of a company, Bomore
Medical Supplies Ltd. The word ‘Limited’ was omitted from the drawer’s name on
the instrument. The Court of Appeal (May and Balcombe LJJ) accepted that the
intention of all concerned (the plaintiff payee, the defendant director, the bank joined
as a third party by the defendants and the company itself) was that the cheques should
be limited company cheques, paid by the company to the plaintiff on the company’s
account with the bank in part settlement of the company’s liability to the defendant.
May LJ pointed out that the claim based on the personal liability of the defendant was
a claim on the statute and not a claim arising on the cheque16. (The defendant was not
sued as a party to the cheque or the contract for which it was given.) The consequence
was twofold: the liability of the defendant had to be determined in accordance with

13 2004 (3) SA 247 (W)
14 (1889) 58 LJQB 377 at 381
15 supra, fn 8
16 at 175e-g

the statutory provisions; rectification was inapposite because the parties to the
cheque, the company and the plaintiff had no need of rectification to give effect to
their common intention17 and the only purpose of applying for rectification was the
(forlorn) attempt to relieve the director of his statutory liability18.

[25] The reasoning in Blum seems to me to be unexceptionable even in the context
of South African law. Counsel submitted that it conflicted with established principles
enunciated in, inter alia, Dickinson v SA General Electric Co (Pty) Ltd19 which afford
the signatory of a cheque the right to apply for its rectification to reflect his
representative capacity. But there is no conflict. Such a signatory is sued on the
cheque because ex facie the cheque he is the drawer and the equitable defence of
rectification permits him the opportunity to show that according to the common
continuing intention of the parties he signed in a representative capacity. If however
the signatory is sued on the statute the underlying assumption is that he indeed acted
in a representative capacity but is not entitled by reason of non-compliance with its
terms
to rely on that capacity. So rectification cannot assist him. And because, as I have
pointed out earlier, the knowledge and intention of the holder is likewise irrelevant,
both props necessary to maintain a rectification defence have no significance in the
determination of his liability.

[26] In Penrose v Martyr20 (a judgment delivered two years after the enactment of
the Joint Stock Companies Act 1856 (19 & 20 Vic c 47) which, in s 31, first imposed
personal liability on company signatories) Crompton J said,
‘I think that intention of the enactment plainly was to prevent persons from being deceived into the
belief that they had a security with the unlimited liability of common law, when they had but the
security of Company limited; and that, if they were so deceived, they should have the personal
security of the officer.’ (My emphasis.)

17 at 173g-i
18 at 174a; see also Rafsanjan Pistachio Producers Co-operative v Reiss [1990] BCLC 352 (QBD) at 361a-363e
particularly at 363c.
19 1973 (2) SA 620 (A) at 629H-630A
20 (1858) EB & E 499

The first part of this passage has often been quoted with approval. The portion I
have italicized does not, for the reasons I have given earlier seem correctly to reflect
the anticipatory purpose inherent in s 23(2) which penalizes the authorisation, issue or
signing of the specified documents without regard to the actual effect of those acts on
any person.

[27] In the Scottish and Newcastle Breweries case21, supra, Lord Hunter reached
substantially the same conclusion. He said,
‘It was submitted by counsel for the compearing defenders that it was necessary to the operation of
the statutory provisions in the present case that the pursuers should have been deceived or misled by
the failure to mention the correct name of the Company in the said bill, and that, in the absence of
any averment to that effect, the pursuers’ case was irrelevant. I can find nothing in the language of
the statutory provisions which lends any support to such an argument, and the only shadow of
support for it to be found in the authorities cited to me is one sentence in the judgment of Crompton,
J., in Penrose v. Martyr (supra) at p. 503. I am far from clear that the sentence to which I have
referred necessarily supports counsel’s submission, and in any event no trace of such a view is to be
found in either of the other judgments in that case. The ration of the decision in Penrose v. Martyr
appears to me to be that the defendant signed a bill on behalf of the Company without their name
being mentioned on it. (See per L. Campbell, C.J., at p. 503.) I notice that the author of Gower on
the Principles of Modern Company Law, 2nd edition, at p. 187, expresses the following opinion:-“It
seems clear that it makes no difference that the third party concerned has not been misled by the
misdescription”. With that opinion, having regard to the terms of the statutory provisions and to the
authorities cited to me, I agree.’22

21 supra, fn 12, at 74
22 cf Gower’s Principles of Modern Company Law, 6ed (1997) by Paul L Davies, at 158:
‘It might be a useful reform to amend the subsection [s 349 (4) of the United Kingdom Companies Act 1985] by
affording the signatory a defence if he could establish that the holder had not been misled by the misdirection; the recent
decisions display a marked disinclination to apply the provision when that is so.’
(citing Lindholst & Co A/S v Fowler [1998] BCLC 166 (CA) and Rafsanjan, supra, fn 18)

[28] I also do not accept the argument that there has, in the circumstances of this
case, been compliance with the terms of the section. In the first place the terms of
s 23(1) and (2) are peremptory in so far as they lay down the information which the
company, its officers and agents are to furnish for the benefit of the public. The
deviations from the requirements of the section were of such a nature as to deprive the
public entirely of the prescribed details of the status and registration of the
corporation. It is no answer to say that the defendant’s obligation would have been
met if the plaintiff had made reasonable enquiries.

[29] In the result it seems to me that the court a quo was correct in concluding that
the defendant’s plea of rectification raised no sustainable defence to the plaintiff’s
claim.

[30] I have treated the argument relating to the sufficiency of compliance as one
bearing on the question of the plaintiff’s knowledge of the true facts behind the
corporation. In argument it was accepted by counsel that compliance with the statute
in the absence of rectification was neither pleaded nor properly formed a component
of the answer to the exception. Counsel then relied on in a different context. At the
hearing the learned judge was asked, in the event that she upheld the exception and
struck out the defence, to grant the defendant leave to amend his plea. She refused to
do so remarking that no real basis had been made for the indulgence. The defendant
appealed against her refusal. In argument counsel submitted that the rule is that a
party whose pleading is struck down on exception is afforded such an opportunity as
a matter of course.

[31] That is certainly true of a successful exception to a summons: Group Five
Building Ltd v Government of the Republic of South Africa (Minister of Public Works
and Land Affairs 1993 (2) SA 593 (A) at 602I-603J. Such a rule is both
understandable and necessary. Such an exception can never put an end to the dispute
if a plaintiff has a viable alternative basis for its claim; even though the original claim

is struck down without leave to amend, the plaintiff can always issue a new
summons in which the alternative is pleaded. So refusing an amendment is merely a
waste of costs. But the plaintiff may be blocked by prescription. In such a case said
Corbett CJ in Group Five Building supra at 603A ‘it would be contrary to the general
policy of the law to attach such drastic consequences to a finding that the plaintiff’s
pleading discloses no cause of action’. Neither of these considerations is relevant to
the striking down of a plea in its entirety. Prima facie the defendant no longer has an
answer to the claim and the plaintiff is entitled to judgment. Whether that
consequence is the correct one is considered in what follows.

[32] In an obiter dictum in Princeps (Edms) Bpk en ‘n Ander v Van Heerden NO en
Andere 1991 (3) SA 842 (T) at 845 Harms J said that in the Supreme Court an
unsuccessful pleader is given the opportunity to amend his so-called plea, even when
that plea has been set aside because it does not disclose a defence. The rationale
seems to be that although the defence contained in the pleading may be bad the
pleading as such continues to exist. In the Group Five Building case (at 603F-H)
Corbett CJ quoted with approval from Johannesburg Municipality v Kerr 1915 WLD
35 at 37 in which Bristowe J said that although the quashing of an entire declaration
on exception means that it is an absolute bar to any relief being obtained on it, that
‘does not take the declaration off the file or place the case in the same position as
though no declaration had been delivered’. Despite the distinctions between the
effects of the striking down of a particulars of claim and a plea to which I have earlier
referred, it seems to me that, in principle, fundamentally defective pleadings
emanating from a plaintiff and defendant should be dealt with on an equal footing.
Since the rule referred to above is firmly established in relation to the defective
pleading of claims we should therefore apply it mutatis mutandis to the flawed
pleading of defences. That being so, Tshiqi J was wrong to treat the defendant’s
application for time to consider an amendment of his plea as the seeking of a
indulgence. In the absence of reason to believe the request was merely a ploy to delay
the inevitable, such an opportunity should have been included in her order upholding

the exception as a matter of course (even if no application had been made). Para 2
of the order made by the learned judge in which she granted judgment in favour of the
appellant requires amendment in consequence of this conclusion. The respondent has,
however, achieved substantial success and is entitled to the costs of the appeal
including the costs of the application for leave to appeal (which were reserved).

[33] The following order is made:
1.
The appeal against paragraph 1 of the order of the court a quo is dismissed
save as hereinafter set out.
2.
Paragraph 2 of the order of the court a quo is set aside and replaced with the
following:
‘2.
The defendant is given leave, if so advised, to file an amended plea.
3. The costs of the proceedings on exception are to be paid by the defendant.’
3.
The filing of the amended plea for which provision is made in paragraph 2 is to
take place within one month of the making of this order failing which the
plaintiff may set the matter down for judgment.
4.
The costs of appeal are to be paid by the appellant.

___________________
J A   HEHER

JUDGE OF APPEAL

FARLAM JA
)Concur
BRAND JA
)
JAFTA JA
)
HANCKE AJA
)

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
Friday 1 June 2007
Status:
Immediate

The Supreme Court of Appeal delivered judgment on 1 June 2007 in the matter of
M Constantaras v BCE Foodservice Equipment (Pty) Ltd (208/06).

The appeal involved s 23 of the Close Corporations Act which requires a
corporation to include on its cheques (and certain other categories of documents)
details of its correct name, description and registration number. It imposes personal
liability on the signatory of a cheque on behalf of a corporation which does not
contain such details, if the corporation does not pay the amount of the cheque to the
holder.

The appellant signed such a cheque. The respondent sued him relying on the
statutorily-created liability. The appellant pleaded that he and the respondent were
both aware that he was signing on behalf of the corporation and that both intended
that the cheque should reflect the name of the corporation and the prescribed details
but had mistakenly overlooked their absence at the time of signing and receiving
the cheque. The appellant claimed rectification of the cheque to reflect the correct
details. The respondent successfully excepted to the plea as disclosing no defence
to the claim.

On appeal the SCA held that the claim was brought under the statute the terms of s
23 are peremptory and require strict compliance by the corporation and its
signatories; such liability arises independently of the knowledge of the holder of
the cheque and is unaffected by such knowledge. Rectification is relevant to an
action on the cheque or in contract but does not provides a defence to a claim under
the statute. The appeal was accordingly dismissed.
--ends--