Constantaras v BCE Foodservice Equipment (Pty) Ltd (208/06) [2007] ZASCA 86; [2007] SCA 86 (RSA) ; 2007 (6) SA 338 (SCA) (1 June 2007)

Constantaras v BCE Foodservice Equipment (Pty) Ltd (208/06) [2007] ZASCA 86; [2007] SCA 86 (RSA) ; 2007 (6) SA 338 (SCA) (1 June 2007)

The Supreme Court of Appeal held that section 23(2) of the Close Corporations Act is peremptory and imposes personal liability on the signatory of a cheque issued on behalf of a close corporation if the cheque does not contain the prescribed particulars, regardless of the parties' intentions or the holder's knowledge. The defence of rectification is not available to defeat statutory liability, as the liability arises ex lege and is not contractual. The court further held that a defendant whose plea is struck out on exception is entitled, as a matter of course, to an opportunity to amend the plea before judgment is granted. The appeal against the finding of liability was dismissed, but the...

Citation
[2007] ZASCA 86
Parties
Appellant: Michael Constantaras; Respondent: BCE Foodservice Equipment (Pty) Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
1 June 2007
Case Number
208/06
Procedural Posture
Civil Appeal / Appeal From Exception and Judgment in the Court a Quo
Outcome
Appeal dismissed as to liability; order amended to grant defendant leave to file an amended plea within one month; costs awarded to respondent.
Judges
Farlam, Brand, Heher, Jafta, Hancke
Legal Topics
Close Corporations Act, Personal Liability of Signatory, Rectification, Exception and Striking Out, Statutory Compliance, Cheque Liability
Commercial and Corporate Civil Procedure Close Corporations Act Personal Liability of Signatory Rectification Exception and Striking Out Statutory Compliance Cheque Liability

Case Brief

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Parties

Michael Constantaras

Appellant

BCE Foodservice Equipment (Pty) Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From Exception and Judgment in the Court a Quo

Legal Issues

  1. 1 Whether a signatory to a cheque on behalf of a close corporation is personally liable under s 23(2) of the Close Corporations Act when the cheque does not contain the prescribed particulars.
  2. 2 Whether the defence of rectification is available to a signatory to avoid statutory liability under s 23(2).
  3. 3 Whether a defendant whose plea is struck out on exception is entitled to an opportunity to amend before judgment is granted.

Ratio Decidendi

The Supreme Court of Appeal held that section 23(2) of the Close Corporations Act is peremptory and imposes personal liability on the signatory of a cheque issued on behalf of a close corporation if the cheque does not contain the prescribed particulars, regardless of the parties' intentions or the holder's knowledge. The defence of rectification is not available to defeat statutory liability, as the liability arises ex lege and is not contractual. The court further held that a defendant whose plea is struck out on exception is entitled, as a matter of course, to an opportunity to amend the plea before judgment is granted. The appeal against the finding of liability was dismissed, but the...

Court Disposition

Appeal dismissed as to liability; order amended to grant defendant leave to file an amended plea within one month; costs awarded to respondent.

Orders

  • The appeal against paragraph 1 of the order of the court a quo is dismissed except as set out below.
  • Paragraph 2 of the order of the court a quo is set aside and replaced: 'The defendant is given leave, if so advised, to file an amended plea. The costs of the proceedings on exception are to be paid by the defendant.'