BCE Foodservice Equipment (Pty) Ltd v Constantaras (6736/05) [2009] ZAGPJHC 57 (15 October 2009)

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[2009] ZAGPJHC 57
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BCE Foodservice Equipment (Pty) Ltd v Constantaras (6736/05) [2009] ZAGPJHC 57 (15 October 2009)

6736/05-
D
K DE JAGER
JUDGMENT
2009-06-09
LOM Business
Solutions t/a Set LK Transcribers/
IN THE SOUTH GAUTENG HIGH COURT
JOHANNESBURG
CASE NO
:
6736/05
2009-06-09
In the matter
between
BCE FOODSERVICE EQUIPMENT (PTY)
LTD PLAINTIFF
and
MICHAEL CONSTANTARAS DEFENDANT
_________________________________________________________
J U D G M E N T
_________________________________________________________
VAN OOSTEN, J
:
There are two applications before me, firstly, an exception raised
by the plaintiff against the defendant’s amended plea and
secondly,
by the defendant to amend his amended plea. Both applications are
opposed and were heard together.
The
background facts relevant to the applications are these: The
plaintiff sues the defendant for payment on three claims in the

amount of R65 229,25 each, being the face value of three cheques
dated 3 December 2004, 3 January 2005 and
3 February
2005 respectively, drawn in its favour by Cater-Mart (Pty) Ltd and
dishonoured by non-payment. Each cheque bears the
printed description
of the drawer as follows: Cater-Mart (Pty) Ltd 2000/001852/07
(S/HILL) 001533134 as well as the signature of
the defendant without
an indication that he did so in a representative capacity. The three
claims are identical. At the heart of
the claims lie two corporate
entities with similar names: Cater-Mart (Pty) Ltd and Cater-Mart CC.
The plaintiff relies on a number
of alternative causes of action,
only one of which is relevant for present purposes, which is the
defendant’s alleged personal
liability in terms of
s 23(2)
of the
Close Corporations Act 69 of 1984
. The basis for the defendant’s
alleged liability under this section is that he signed the cheques
without ensuring that the registered
full name and registration
number of Cater-Mart CC on whose behalf he in fact signed the
cheques, appeared on the cheques.
The defendant has raised a number of
defences in his plea. The plaintiff noted an exception to the
defendant’s plea in response
to which the defendant amended his
plea. The plaintiff again noted an exception to the defendant’s
amended plea which is the exception
we are now concerned with. The
defendant in response filed a notice of intention to amend his
amended plea to which the plaintiff
objected. The proposed amendment
in effect seeks to introduce a further alternative defence as a
separate new defence. The new
defence reads as follows:
1. The defendant
signed the cheque in his capacity as the authorised signatory of
the corporation (
ie
Cater- Mart CC). The defendant admits that the cheques
reflected the drawer as the company (
ie
Cater-Mart (Pty) Ltd).
The defendant signed
the cheques as a duly authorised signatory on behalf of the
corporation unaware and without knowledge that
the company appears,
ex facie,
as the
drawer.
When the defendant signed the
cheques, he was unaware of the fact that the cheques did not comply
with
Section 23(1)(b)
(of the
Close Corporations Act).
In
the premises, the defendant denies that he is personally liable in
terms of
section 23(2)(8)
(sic) of the Act.
The
plaintiff objects to the proposed amendment contending that the
amendment, if allowed, will render the defendant’s plea excipiable.
The parties to this action were
previously involved in another action where the plaintiff sued the
defendant on two cheques for
the similar amounts as the cheques in
the present matter. The issues in that action were similar to those
in the present action.
There the defendant raised a plea of
rectification to which the plaintiff raised an exception. The
exception was upheld by this
court. An appeal to the Supreme Court of
Appeal was unsuccessful (see
Constantaras v BCE Foodservice
Equipment (Pty) Limited
,
2007 (6) SA 338
(SCA)). In consequence
the defendant in the present action abandoned a similar plea of
prescription.
I turn
now to the defendant’s application to amend. Counsel for the
defendant sought to rely on the judgment in
Stafford t/a Natal
Agricultural Co v Lions River Saw Mills (Pty) Limited
,
1999 (2)
SA 1077
(N) as authority for the basis of the proposed amendment. The
reliance in my view is clearly misplaced. In
Stafford
the
defendant authorised a third person, a certain Ms Thomas, to sign an
order form on behalf of a close corporation. The order
form contained
no reference at all to the close corporation or its registration
number. The order form according to the defendant
formed part of “the
old stationery” which did not reflect the particulars of the close
corporation and which “had been put away”.
The court (
per
McLaren J, Kondile J concurring) held (at 1083C-D) that where the
member of a close corporation is unaware of the fact that the
order
does not comply with
s 23(1)(b)
, it cannot be said that he authorised
the signature thereof within the meaning of that expression in
s
23(2)(a).
The present matter is clearly distinguishable. Here we are
concerned with a party who himself signed and issued the cheques. His

lack of knowledge which the proposed amendment seeks to introduce, in
my view, therefore does not avail him. I find support for
this
conclusion in
Constantaras
, where Heher JA dealt with this
aspect as follows (para [13]):
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 liability.
The
proposed amendment accordingly, if allowed, will render the
defendant’s plea on this aspect excipiable. It follows that the

defendant’s application for amendment cannot succeed.
Next, the plaintiff’s exception to
the defendant’s amended plea. The exception concerns two portions
of the amended plea. In its
particulars of claim, under claim A, the
plaintiff pleads the cause of action as follows:
8.1 The plaintiff is
the holder of a cheque dated 3 December 2004, drawn in
the amount of R65 229,25 on the
bank by “Cater-Mart (Pty)
Limited 2000/001852/07” and signed by the defendant. Copies of
the front and reverse sides of the
cheque are annexed hereto
marked “A1” and “A2” (“the cheque”).
The plaintiff duly
presented the cheque for payment on 3 December 2004 and it was
dishonoured by non payment, payment thereof
having being
countermanded.
Notice of dishonour is
dispensed with in terms of section 48(2)(c) of the Bills of
Exchange Act, 34 of 1964 (as amended), payment
thereof having being
countermanded.
The defendant is
personally liable to the plaintiff for the amount of the cheque by
virtue of the fact that, in signing it,
he did not indicate that he
was doing so for and on behalf of “Cater-Mart (Pty) Limited
2000/001852/07” or in a representative
capacity.
In
response hereto, the defendant pleads as follows:
8.1 The payee on the
cheque is
“BCE Foodservice Equipment”
and not BCE Foodservice Equipment (Pty) Limited.
The defendant signed
the cheque on behalf of the corporation.
Defendant admits that
the company appears
ex facie
the cheque, as the drawer.
Defendant admits that
his signature on the cheque is not qualified by the words “for
and on behalf of” the corporation, but
contends that on a proper
construction of the cheque, it is apparent that he signed the
cheque in a representative capacity.
The
plaintiff exception to the plea is based on the following grounds:
1. The plaintiff’s
claim is based upon the peremptory provisions of
section 23(2)
of the
Close Corporations Act, 69 of 1984
which provides that the
defendant shall be personally liable for the amounts stated on the
cheques in circumstances where:
The defendant signs
the cheques on behalf of a corporation;
without the name of
the corporation and its registration number being mentioned on the
cheque, in accordance with
section 23(
1)(b); and
The amount is not paid by the
corporation.
It
is common cause on the pleadings that the above three requirements
have all been met.
In paragraph 8.4 of his
plea the defendant relies on the contention that
“on
a proper construction of the cheque it is apparent that he signed in
a representative capacity”.
This does not
constitute a defence but merely an admission of one of the
jurisdictional facts relied upon by the plaintiff.
The
exception is short lived: it is premised on a wrong understanding of
the true nature of the plaintiff’s claim. The claim as
rightly
pointed out by counsel for the defendant, is not based on the
provisions of
s 23(2)
of the
Close Corporations Act but
on s 24 of
the Bills of Exchange Act 34 of 1964. The nub of the plaintiff’s
claim is the defendant’s failure to indicate that
he was signing
the cheque on behalf of the company which in terms of the section
would render him liable. The cheques upon which
the plaintiff relies,
bear the printed company name and underneath it there is a space for
signature. The defendant contends that
the company’s name,
supplemented by the defendant’s signature constitutes the composite
signature of the company. Reliance was
placed on the judgment in
Schmidt and Another v Jack Brillard Printing Services CC
2000 (3) SA 824 (W) where I concurred in the
judgment of Joffe J holding that the signature above the company’s

printed name without qualifying words, was sufficient for the
reasonable man to construe the cheque as having been signed on behalf

of the company.
Applied to the facts of the present
matter, the mere fact of the defendant’s signature appearing below
the printed name of the
company without qualification is sufficient
to show that he signed the cheque on behalf of the company. The
defendant’s contention
is unassailable and the exception on this
ground accordingly must fail.
The plaintiff’s second ground of
exception is raised against the defendant’s plea of estoppel.
Estoppel is pleaded as follows in
the defendant’s plea:
8.8 The plaintiff conducted
business with the company with effect from its formation in the
year 2000 and continued to do
so at all material times thereafter.
The company to the
knowledge of the plaintiff, converted to the corporation in
December 2002.
The plaintiff was at
all material times aware that the corporation continued to use the
same bank account as the company had
used prior to the conversion.
The plaintiff was at all material
times after the conversion aware of the fact that the account on
which the cheques were drawn
was an account conducted by the
corporation.
Since the conversion
the plaintiff has accepted payment from the corporation by way of
cheques, which reflected the company
as the drawer, in the
knowledge that the true of the drawer of the cheques was always the
corporation.
The plaintiff expressly,
alternatively impliedly, further alternatively tacitly,
alternatively by its conduct as aforesaid,
represented to the
defendant that:
Cheques drawn by the
corporation and tendered to the plaintiff, which reflected the
company as the drawer and which bore the
defendant’s unqualified
signature, were acceptable to the plaintiff in that form;
The plaintiff would
not rely on any failure by the defendant to qualify his signature
to reflect the representative capacity
in which he signed the
cheques in order found personal liability on the part of the
defendant;
The plaintiff would
not rely on the failure to reflect the corporation as the drawer,
in order to hold the defendant personally
liable on the cheque,
whether in terms of
section 23
of the
Close Corporations Act, or
otherwise.
8.14 Acting
on the correctness of the aforesaid representations, the defendant
continued to make use of the cheques, which
reflected the company
as the drawer, duly signed the cheque in question without
qualifying his signature and delivered same
to the plaintiff.
8.15 But for the
aforesaid representations, the defendant would have caused the
corporation to procure cheques accurately
reflecting the
corporation as the drawer and accurately reflecting the
representative capacity in which he signed the cheques
and he
would not have signed the cheque in question in the manner and
form in which he did.
8.16 In signing the
cheque as aforesaid, the defendant acted to his detriment in that
he rendered himself potentially liable
for the amount of the
cheque, in the event that the corporation failed to honour the
cheque.
8.17 The plaintiff made the
aforesaid representations negligently, alternatively
intentionally.
8.18 The aforesaid
representations were made on behalf of the plaintiff by
Mr Grant Henegan, alternative Mr Seelan
Naidoo,
alternatively duly authorised representative of the defendant.
8.19 In the premises,
the plaintiff is estopped from relying on the defendant’s
unqualified signature and/or the failure accurately
to reflect the
details of the corporation as the drawer of the cheque, in order
to found personal liability on the cheque.
The
grounds of exception are stated as follows:
5.1 In paragraph 8.8
to 8.19 of the plea the defendant relies upon estoppel as a
defence.
The defendant pleads in paragraph
8.13 that three representations were made by virtue of the
allegations contained in paragraphs
8.8 to 8.12.
The representation contended for in
paragraph 8.13.1 of the plea does not assist the defendant in
establishing a defence of
estoppel, as the alleged representation
does not imply that the plaintiff would not rely on the statutory
provision in the
event of the amount not being paid by the
corporation.
The representation
contended for in paragraph 8.13.2 of the plea, cannot be inferred
from the allegations of fact upon which
the defendant relies.
Furthermore, a defence of estoppel based on this alleged
representation is not available to the defendant,
as the plaintiff,
in order to rely on the statutory provision, specifically relies on
the fact that the defendant signed in
a representative capacity.
For this claim the plaintiff is thus not relying on the failure by
the defendant to qualify his
signature.
The representation contended for in
paragraph 8.13.3 of the plea cannot be inferred from the
allegations of fact upon which
the defendant relies.
In the premises the
defendant’s reliance upon estoppel must fail.
I must
confess to having considerable difficulty in understanding the
grounds of exception. The representations pleaded by the
defendant
in para 8.13.2 and 8.13.3 quoted above, clearly imply that the
plaintiff would not rely on the statutory provision, in
the event of
the amount not being paid by the corporation. I agree with counsel
for the defendant that the representations pleaded
clearly establish
the defence of estoppel. Whether the defendant will be able to prove
those allegations at the trial of course
is another consideration
with which I am not concerned with now. It follows that there is no
merit in the exception and that it
falls to be dismissed. As to the
costs of the applications, I propose to apply the normal rule of
costs following the result.
In the result I make the following
order:
The plaintiff’s exception to the
defendant’s amended plea is dismissed with costs.
The defendant’s application to
amend is dismissed with costs.
---oOo---
Counsel
for the plaintiff Adv A Bester
Counsel for the defendant
Adv SS Cohen