THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 1245/2019
In the matter between:

MASIBUYISANE SERVICES (PTY) LTD

APPELLANT
and
EQSTRA CORPORATION (PTY) LTD

RESPONDENT

Neutral citation: Masibuyisane Services (Pty) Ltd v Eqstra Corporation (Pty) Ltd
(1245/2019) [2020] ZASCA 159 (1 December 2020)
Coram:
MAYA P, DLODLO and NICHOLLS JJA and MATOJANE and
SUTHERLAND AJJA
Heard:

2 November 2020
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives by email, and by publication on the Supreme Court of
Appeal website and release to SAFLII. The time and date for hand down is deemed
to be 10h00 on 1 December 2020.

Summary: Consequences of conversion of a close corporation into a company in
terms of s 29C(1) of the Companies Act 61 of 1973 and vice versa, in terms of the
Close Corporation Act 69 of 1984 – validity of suretyship concluded by company
after it had converted from a close corporation – company cited in suretyship as a
close corporation – absence of any hiatus or interruption of juristic personality upon
conversion – appeal dismissed.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Unterhalter J,
sitting as court of first instance):
The appeal is dismissed with costs.

JUDGMENT

Sutherland AJA: (Maya P, Dlodlo and Nicholls JJA and Matojane AJA
concurring):

Introduction
[1] The controversy, in this case, is one that only lawyers could appreciate. It
concerns the consequences of a close corporation (CC) converting itself into a
company. What happens if after that conversion a contract is concluded by the
directors of the company in which contract the company is described as a close
corporation? Can the company repudiate it on the grounds that it was concluded with
an entity, ie the CC, that ‘no longer exists’?

[2] The case originated when the respondent, Eqstra Corporation (Pty) Ltd
(Eqstra), obtained, on 22 September 2014, a default judgment against the appellant,
Masibuyisane Services (Pty) Ltd, wherein it was cited as Masibuyisane CC, in
respect of a suretyship in the respondent’s favour. The appellant wants the judgment

to be rescinded. The basis for the rescission application is the proposition that the
suretyship is invalid, for the reason mentioned. The court a quo refused to rescind
the judgment, hence the appeal to this Court with the former’s leave.

The material common cause facts
[3] Masibuyisane Services CC, was incorporated on 3 November 1998. This CC
was converted into a company on 12 January 2006.

[4] On 23 October 2007 a document was brought into being which bore the
masthead: ‘Masibuyisane Services CC’. It stated:
‘The members of Masibuyisane Services Close Corporation (1998/06325/23) hereby confirm that
by resolution taken on Thursday 23 October 2007. Joseph Vusi Motha … is authorised to sign all
documents in connection with the above company’.
It is notable that this memorial of the resolution referred to ‘the above company’
although what is earlier described is a CC not a company. The author ostensibly was
comfortable by using such terms interchangeably. It is signed by three individuals.
The first is Mr Andries Maseko, who plays a major role in the unfolding saga, not
least as the deponent to the founding affidavit and replying affidavit in the rescission
application. The second signatory is Mr Eric Nkosi. The third is Mr Joseph Motha,
since deceased, the person who was authorised to sign the documents. Each is
described identically as ‘Member Masibuyisane’. It is common cause that all three
were members of the CC and subsequently members and directors of Masibuyisane
Services (Pty) Ltd.

[5] Maze Products (Pty) Ltd (Maze), was the principal debtor in a contract styled
‘Full Maintenance Leasing Master Agreement’. Its terms are unimportant to the
controversy. Two suretyships are concluded for the benefit of Maze.  One was given
by two individuals, Mr Zenzo Khanye and Ms Stenny Winifred Mathe.  The other
was given by ‘Masibuyisane CC’.

[6] The suretyship by Masibuyisane CC was given on the same day as the
resolution referred to above. The document is a template containing standard
contractual terms, with blanks for the contracting parties to fill in details. The
contracting party qua surety was described as ‘Masibuyisane CC’ of ‘35 Botha
Avenue Witbank’. It is signed by Mr Motha. Among the several standard terms is
clause 16, which chooses a domicilium citandi et excutandi at the address given in
the document, ie 35 Botha Avenue Witbank. Notably, on 23 October 2007, the form
of the appellant was that of a company and not a CC.

[7] On 20 August 2009 Masibuyisane (Pty) Ltd re-converted itself into a CC.
On 5 July 2013 Masibuyisane CC re-re-converted itself into a company.

[8] On 6 May 2014 Eqstra sued Maze and its sureties.  Eqstra cites ‘Masibuyisane
CC’ as the fourth defendant. On 15 May 2014, service was effected on the
domicilium stated in the suretyship. The sheriff tacked the summons to the principal
door.

[9] On 11 June 2014, Eqstra made the first attempt to secure a default judgment.
The registrar referred it to open court and judgment was granted on 22 September
2014. The order described the fourth defendant as ‘Masibuyisane CC’.

[10] The writ of execution subsequently issued, dated 7 October 2014, describes
the party to be served as ‘Masibuyisane CC’. The sheriff issued a nulla bona return
of service dated 3 November 2014. In the return, it is stated that it was served at 35
Botha Avenue Witbank and that it was served on ‘Mr Maseko.’ The sheriff recorded
that he was told that the ‘Business has changed to Masibuyisane (Pty) Ltd’.

[11] On 14 April 2016, the writ was re-issued. It now directed the sheriff to execute
on ‘Masibuyisane (Pty) Ltd’. No evidence of its fate is on record.

[12] On 3 May 2018, the writ was again re-issued. The party stated to be subject
to execution was now described as ‘Masibuyisane (Pty) Ltd, (previously
Masibuyisane CC)’. The execution of the writ was effected.

[13] In response, the appellant launched a rescission application on 30 May 2018.

The statutory framework concerning conversions
[14] The legislation concerning the conversion of corporate identity includes the
Close Corporations Act 69 of 1984 (CC Act), the Companies Act 61 of 1973 (1973
Companies Act) and the Companies Act 71 of 2008 (2008 Companies Act). These
statutes regulate the manner and legal consequences of conversions by a CC into a
company and vice versa. The corresponding provisions in the relevant statutes
addressing conversion all reflect the singularity of juristic personality and the
absence of any multiple identities in consequence of a conversion one way or the
other. The relevant provisions are these:
(a)
Section 2(2) of the CC Act, which reads:

‘A corporation formed in accordance with the provisions of this Act is on registration in terms of
those provisions a juristic person and continues, subject to the provisions of this Act, to exist as a
juristic person notwithstanding changes in its membership, or its conversion to a company in terms
of Schedule 2 of the Companies Act, until it is deregistered or dissolved –

(a)   in terms of this Act; or
(b)   in terms of the Companies Act, in the case of a juristic person that has been converted to a
company.’
(b)
Section 29D(1) of the 1973 Companies Act, which reads :
‘(a) On the registration of a company converted from a close corporation, all the assets, liabilities,
rights and obligations of the corporation shall vest in the company.
(b) Any legal proceedings instituted before the registration by or against the corporation, may be
continued by or against the company, and any other thing done by or in respect of the corporation,
shall be deemed to have been done by or in respect of the company.
(c) The juristic person which existed as a close corporation before the conversion shall
notwithstanding the conversion continue to exist as a juristic person, but in the form of a company.’
(c)
Item 2(2) of Schedule 2 of the 2008 Companies Act, which reads:
‘On the registration of a company converted from a close corporation –
(a)   the juristic person that existed as a close corporation before the conversion continues to exist
as a juristic person, but in the form of a company’.

The validity of the suretyship
[15] On appeal before us, it was fairly conceded on behalf of the appellant that if
the suretyship was held to be valid the appellant’s case collapsed. It is therefore
appropriate to dispose of this issue at the outset.

[16] The critical propositions advanced on behalf the appellant were articulated
thus:

(a) Although a single juristic person indeed continues to exist throughout when a CC
converts into a company, the form of that juristic person carries paramount
significance as regards its dealings in contract.
(b) Conversion of a CC into a company extinguishes the CC’s existence.
(c) Accordingly, a contract describing a contracting party as a CC when the CC no
longer exists is invalid and unenforceable against the company.

[17] It is plain that these contentions are self-contradictory and lack cogency, as is
illustrated hereafter.

The judgment a quo
[18] Unterhalter J, after considering the statutory provisions, held thus:
‘The language and purpose of these provisions is to my mind clear. The conversion of a close
corporation into a company does not bring into existence a different juristic person. The same
juristic person continues, but simply in another form, now as a company rather than as a close
corporation. The question that arises in this matter is whether the juristic person that had the form
of a company could undertake the suretyship obligation when it signed the suretyship and provided
a resolution in the name of the close corporation from which it had been converted. In my view
the suretyship binds the company. The juristic person that is undertaking the obligations of the
suretyship is not a different person, it is the same person but simply in a different corporate form.
When the resolution was given by a member of Masibuyisane Services CC in order to enter the
suretyship and when Mr Motha then signed the suretyship he acts to bind the very entity that does
exist, that is to say the company, even though they are giving expression to their agreement in the
corporate form of a close corporation, that is now in the corporate form of a company. That does
not prevent the same juristic person from assuming the obligations of the suretyship simply
because the assent to be bound is given in the form of a close corporation rather than a company,
which close corporation has been converted into a company.’

[19] This conclusion was reached in the face of a contention, on behalf of the
appellant, that the decision in Townsend Productions (Pty) Ltd v Leech and Others1
was authority for the proposition that a CC and a company were two distinct persons
and that, in consequence, the suretyship concluded under the circumstances
described, was with a non-existent person. The facts in Townsend were that an
employer had concluded restraint of trade agreements with two employees. The first
restraint was concluded at a time when the employer was a company. Thereafter it
was converted into a CC. A second restraint agreement was concluded with another
employee thereafter in a document which nevertheless incorrectly described the
employer as a company. The first restraint was held to be valid because of
s 29D(1)(b) of the 1973 Companies Act, which provides that whatever was done
prior to conversion remains binding. The second restraint was held to have been
concluded with a ‘non-existent’ company and was invalid.

[20] The passage in Townsend relied on by the appellant is at 45F-46B:
‘Mr Dickerson's further argument that para (c) [i.e. s 29D(1)(c) of the 1973 Companies
Act] perpetuates the existence of the same legal entity, only under a different name, cannot be
sustained. In Mörsner v Len 1992 (3) SA 626 (A) it is made clear that the Close Corporations Act
69 of 1984 “het 'n nuwe soort regspersoon daargestel”2 (at 631A). The purpose of the insertion of
s 29D into the Act was to provide continuity where one kind of juridical person is converted into
another kind of juridical person:
“Juis omdat 'n ander soort regspersoon (met die onderskeidende kenmerke waarop reeds gewys is)
in die lewe geroep is, was dit nodig ter wille van kontinuïteit om die bepalings van art 29D(1) tot
die Maatskappywet by te voeg.”3

1 Townsend Productions (Pty) Ltd v Leech and Others 2001 (4) SA 33 (C); [2001] 2 All SA 255 (C).
2 In translation: ‘establish a new sort of juristic person’. (My translation.)
3 In translation: ‘precisely because a different sort of juristic person (with the distinguishing characteristics to which
reference has already been made) it was necessary, in the interests of continuity, to include the provisions of section
29D(1) to the Companies Act.’ (My translation.)

(Mörsner v Len (supra at 631H).)
The very provision for continuity reinforces the distinctive identity of the juridical persons.
The restraint relied upon by the applicant is, ex facie the written instrument in which it is
embodied, a restraint in favour of a legal entity which is not the applicant.
The applicant's claim against the second respondent accordingly falls to be dismissed on the
ground that the applicant has failed to prove that the second respondent is in breach of a restraint
agreement between herself and the applicant’.

[21] In response, Unterhalter J thereupon stated:
‘. . . [the judgment in Townsend] understands [ss 29D(1)(b) and 29(1) of the 1973 Companies Act]
to indicate that there are distinctive juristic persons that come about upon the conversion from a
close corporation into a company or vice versa. That interpretation of the relevant provisions of
the Companies Act does not, with respect, appear to me to be correct. The very same entity
continues to exist. The form of the entity, as the language, makes plain in section 29D[(1)](c),
changes, but the entity that is capable of undertaking obligations is the same. Insofar as the
Townsend decision comes to a different view as to the consequences of conversion, I am in
respectful disagreement . . . Mr Heyns . . . for the applicant, stressed the language in s 29D[(1)](c):
“But in the form of a company”. That language, however, does not seem to me to alter the essential
point which is this: a juristic person that has a continued existence may assume an obligation even
when the expression which is given to the assumption of that obligation takes place in the form of
a now superseded CC.’ (Emphasis added.)

[22] I agree with the view taken by Unterhalter J.

[23] The passage in Townsend itself invokes the earlier authority of Mörsner v Len4
for the proposition that the function of s 29D of the 1973 Companies Act is to
acknowledge that there are two distinct juristic entities and that precisely because of

4 Mörsner v Len 1992 (3) SA 626 (A); [1992] 2 All SA 57 (A).

that material difference between a CC and company, statutory intervention was
necessary to provide ‘continuity’.

[24] However, in my view, read correctly, Mörsner does not support what is stated
in Townsend nor does it support the appellant’s case. The causus belli in Mörsner
was the proper meaning of a clause in an agreement of sale of an interest in a CC.
Control of the CC was transferred before full payment had been made. The seller
had cancelled the agreement alleging a breach of its clause 10, which provides:
‘Die partye plaas op rekord dat die koper nie die reg sal hê om sy belang in die beslote korporasie,
wat hiermee verkoop word, te vervreem of te verpand of te sedeer of op enige ander wyse daarvan
ontslae te raak tensy die verkoper skriftelik toestemming daartoe gee of tensy hy die verkoper
uitbetaal, welke toestemming in geen geval onredelik weerhou sal word nie.’5

[25] What was the breach? The buyer converted the CC into a company without
the seller’s consent and gave 49 per cent of the shares to a stranger.

[26] The Court held this conduct did breach clause 10, whose function, it was held,
was to preserve the merx (i.e. the member’s interest in the CC) until full payment
was made. In addressing this controversy, at 631A-I, the Court also described the
legislative scheme of the Close Corporations Act. It held thus:
‘Die Wet op Beslote Korporasies 69 van 1984 het 'n nuwe soort regspersoon daargestel. Die
doelstelling was om 'n eenvoudiger en goedkoper ondernemingsentiteit in die lewe te roep.
Daardeur sou klein besighede die voordele van regspersoonlikheid kon geniet sonder dat hulle aan
die ingewikkelde voorskrifte van die Maatskappywet 61 van 1973 hoef te voldoen. Sekere

5 In translation ‘The parties place on record that the purchaser shall not have the right to alienate or to pledge or to
cede or in any other way to dispose of his interest in the close corporation which is hereby sold, unless the seller gives
written permission thereto or unless the [the purchaser] pays out the seller, which permission shall in no circumstances
be unreasonably withheld.’ (My translation.)

kenmerke is tipies van en eie aan 'n beslote korporasie. Om maar net enkeles te noem. Minimale
formaliteit geld vir die administrasie en bedryf van 'n beslote korporasie. Soos wel bekend, word
aandele nie uitgereik en geen aandeelkapitaal vereis nie. Alle lede het gelyke seggenskap in die
bestuur en geen voorsiening vir die aanstelling van direkteure word gemaak nie. Die rekenkundige-
en openbaarmakingsverpligtinge is in die geval van 'n beslote korporasie minder omvangryk.
Die betekenis en omvang van klousule 10 moet aan die hand van die appellant se optrede, en teen
die agtergrond van hierdie kenmerkende verskille, bepaal word. Die bewoording van hierdie
bepaling kon nouliks meer omvattend gewees het. Die sinsnede 'ontslae te raak’ behels
enige handeling waardeur die beheer en besit van die koopsaak permanent ontneem word:
vanselfsprekend sluit dit dan die tot niet maak daarvan ook in. Die oogmerk was heel duidelik om
die merx te bewaar - deur inter alia ontdoening daarvan te belet - totdat die prys betaal is.
Vir die stelling dat die omskepping van die beslote korporasie in 'n maatskappy nie deur klousule
10 verbied word nie, het die appellant op arts 29C(1) and 29D(1) van die Maatskappywet gesteun.
Eersgenoemde artikel maak voorsiening vir sodanige omskepping. Artikel 29D(1) :… aldus die
betoog, dui aan dat so 'n omskepping nie van wesenlike belang is nie en dat so 'n vervorming dus
nie deur die verbod in klousule 10 getref word nie. Maar hulle is eerder bewys tot die teendeel.
Juis omdat 'n ander soort regspersoon (met die onderskeidende kenmerke waarop reeds gewys is)
in die lewe geroep is, was dit nodig ter wille van kontinuïteit om die bepalings van art 29D(1) tot
die Maatskappywet by te voeg.
Daar kan dus met sekerheid gesê word dat die omskepping van die beslote korporasie in 'n
maatskappy sonder toestemming (of betaling van die koopprys) deur klousule 10 belet word.’6

6 In translation: ‘The Close Corporations Act 69 of 1984 established a new type of juristic person. The objective was
to create a simpler and cheaper business entity.  By such means, small businesses could enjoy the advantages of juristic
personality without them having to comply with the complex requirements of the Companies Act 61 of 1973.  Certain
features are typical of and exclusive to a close corporation.  To name just a few.  Minimal formalities apply to the
administration and operation of a close corporation.  As is well known, no shares are issued, and no share capital is
required. All members have equal say in the management and no provision is made for the appointment of directors.
The accounting and disclosure obligations in the case of a close corporation are less extensive.
The meaning and scope of clause 10 should be determined by the appellant’s conduct and against the background of
these distinguishing characteristics. The wording of these provisions could hardly have been more comprehensive.
The phrase ‘dispose of’ encompasses any transaction by which the control and possession of the merx can be
permanently alienated:  self-evidently, it also includes the extinguishing thereof.  The purpose was entirely clear to
preserve the merx – by inter alia forbidding the extinction thereof – until the price was paid.
For the proposition that the conversion of the close corporation into a company is not prohibited by clause 10, the
appellant placed reliance on section 29C(1) and 29D(1) of the Companies Act.  The first mentioned section provides
for such conversion.  Section 29D(1)…
So ran the argument, indicates that such a conversion is not of material importance and that such a transformation is
not impacted by the prohibition in clause 10.  But rather, it is proof to the contrary.  Precisely because another type of

[27] Can these dicta support the conclusion in Townsend? In my view, they cannot.
Much of what that Court stated about a CC being a new sort of legal persona was
related to the uncontroversial fact that the legislation intended two materially
distinctive types of juristic entity to exist.  However, that does not support a
conclusion that upon conversion, a new persona is conceived. The reason why the
court was at pains to describe the different characteristics of a CC and a company
was to demonstrate that the alienation of the interest in the CC that had been sold
extinguished the merx and replaced it with a shareholding unlinked to the seller;
plainly, an act which was incompatible with the terms of clause 10 of their
agreement. In Townsend, the reading of Mörsner was incorrect.

[28] In argument on appeal, in addition to the unhelpful reliance on Townsend and
the misreading of Mörsner, the decision in Brodsky Trading 224 CC v Cronimet
Chrome Mining SA (Pty) Ltd and Others [2016] ZASCA 175; 2017 (4) SA 610
(SCA) was offered as a precedent for the appellant’s key contention. However, that
contention, too, is misplaced.

[29] The controversy in Brodsky was whether the business had complied with the
Estate Agency Affairs Act 112 of 1976 to have a valid current fidelity certificate
entitling it to trade. Section 26 of that statute forbade trading by any person without
a valid certificate:
‘26. Prohibition of rendering of services as estate agent in certain circumstances

juristic person (with the distinguishing features already referred to) was brought into being, it was necessary in the
interests of continuity to include the provisions of section 29D(1) to the Companies Act.
It can thus be said with certainty that the transformation of the close corporation into a company without permission
(or payment of the purchase price) is prohibited by clause 10.’ (My translation.)

No person shall perform any act as an estate agent unless a valid fidelity fund certificate has been
issued to him or her and to every person employed by him or her as an estate agent and, if such
person is –
(a) a company, to every director of that company; or
(b) a close corporation, to every member referred to in paragraph (b) of the definition of “estate
agent” of the corporation.’

[30] The relevant facts in Brodsky were that although a certificate had been issued
for 2005 to the company, when the conversion to a CC took place in March 2006,
no certificate was issued by the Estate Agency Board for 2006, and in 2007 a
certificate was issued in the name of the company and its directors despite the fact
that the company had already been converted to a CC, the result of which was that
no certificate had been issued in the name of the CC or in the names of its members.

[31] The object of the analysis conducted by the Court in Brodsky was, therefore,
to address the application of the provisions of the Estate Agency Affairs Act. The
litigation had been triggered when an estate agency business located in a CC had
been sold. The sale was repudiated and cancelled on the basis that the merx, i.e. the
business, could not lawfully trade as an estate agency because it had not been issued
with a certificate by the Estate Agency Board to entitle it to do so. The defence
proffered was that a certificate had been issued but, in error, the certificate was
applied for at a time when the company had converted to a CC but the form of
application was styled a company, its former guise and the certificate obtained
misdescribed it.

[32] It was held that this did not overcome the peremptory requirements of the
Estate Agency Affairs Act. The Court stated that the ‘company did not exist’ and a

certificate in the company’s name was null and void. These remarks must be
understood in that context, i.e. the effect of the provisions of the Estate Agency
Affairs Act.  The Court, at paras 20 to 22 stated as follows (all allusions therein to
‘the Act’ are references to the Estate Agency Affairs Act):
‘[20] Section 16(4) provides that no certificate shall be issued unless and until the provisions of
the Act are complied with. As from the date of conversion, being 20 March 2006, the company no
longer existed. When the application was made for a renewal of the certificates in 2007, it must
have been made in the name of the company, because Mr Maree conceded that he had not told the
Board of the conversion. The application was accordingly made by a nonexistent company,
Brodsky Trading 224 (Pty) Ltd, which no longer qualified as an “estate agent” in terms of the Act.
The certificate therefore purported to certify compliance with the requirements of the Act by a
nonexistent company, in the guise of an “estate agent”.
[21] Section 16(4) of the Act provides that any certificate issued in contravention of the Act shall
be invalid. The issue of the certificate to the nonexistent company was accordingly invalid. In
addition, the issue of a certificate to Mr Maree in his capacity as a director of the non-existent
company, and not in his capacity as a member of the appellant, did not comply with s 16 of the
Act and was also invalid. In terms of s 26 of the Act, every director of a company and every
member of a close corporation, is required to have a valid certificate. In their absence the company
or close corporation concerned is not entitled to receive any remuneration in terms of s 34A of the
Act. On this additional ground the appellant is precluded from recovering any remuneration.
[22] This is not simply an issue of nomenclature, or a misdescription in the name of the certificate
holder, but one of substance. The objectives of the Act are not fulfilled by the issue of invalid
certificates by the Board as they play a central role in ensuring that estate agents comply with its
provisions. There was accordingly no basis for the court a quo to conclude that the appellant had
substantially complied with its requirements.’

[33] The problem presented in this matter is quite different. In addition to the
traverse of the common cause facts set out above, it must be noted that important
information to explain why the resolution and the suretyship alluded to the CC when

the persons responsible for creating the documents knew full well that the CC had
been converted into a company were not put on record. Indeed, it is plain that the
rationale for that conduct has been deliberately obscured. That is apparent in two
respects.

[34] In seeking rescission, Mr Maseko, who could have explained all, refrained
from telling the court anything useful. First, he omitted to disclose that he had
personally met the sheriff when the initial writ was presented in 2014 and chose to
assert that the first the appellant knew of the judgment was in 2018. This statement
is a dissembling sleight of hand. The appellant’s counsel, in a valiant effort to guard
his honour, was driven to contend that although Mr Maseko knew the appellant
company did not know, because as at the time, Mr Maseko was not acting for the
company when he engaged the sheriff. This simply cannot be cogent.

[35]  Similarly, in the second respect, Mr Maseko denied the authority of Mr
Motha to sign the suretyship of behalf of the company and omitted to disclose the
resolution which alludes to both the CC and the company interchangeably.  These
facts were only put on record in the answering affidavit to rebut the denial of
knowledge of the order and the denial of authority to conclude the suretyship set out
in the founding affidavit. In reply, despite an opportunity to explain, these
revelations were ignored.

[36] Therefore, bereft of a proper account of what happened, an explanation for
why the appellant’s directors acted as they did on 23 October 2007 must be inferred
from the known facts. The most generous interpretation of the facts suggests that the
directors of the company, Mr Maseko and the others, were slack in their paperwork

and either they, or an unenlightened staff member, drew the documents which they
then signed without due care to precision of thought or of word. Thus, the upshot is
that they made a mistake. Their mistake does not matter much because the statutes
make provision for an absolute absence of any hiatus or interruption of juristic
personality upon conversions one way or the other.

[37] The emphasis in argument on behalf of the appellant on the form of the
corporate identity as having the effect of immunising a particular juristic person from
accountability for its acts, when erroneously draping itself with the mantle of its
former corporate guise, is wholly unmeritorious.  There can be only one, and
whichever cloak is donned, the person within remains extant. The singularity of
identity is nowhere more trenchantly stamped on the appellant, despite its several
incarnations, than by the fact that the tax number and the VAT number of the
business remained unchanged throughout all these years, a fact usefully put on
record by the appellant itself when it attached the CIPRO records of the corporate
changes. Moreover, the P O Box address remained the same. The physical address
too, remained ‘35 Botha Avenue’ save for a rather odd change, perhaps more
apparent than real, when in 2006, it was briefly ‘35 President Street’, but without a
change of postcode.

Conclusions
[38] Accordingly,

(1)
The juristic persona remains the same regardless of the corporate form upon
conversion from CC to company or vice versa.
(2)
An incorrect description of the juristic persona is not a ground to compromise
a contract concluded between it and another person.

(3)
The suretyship is valid and enforceable.

[39] The contention that the order a quo had been in error, within the contemplation
of rule 42(1)(a) of the Uniform Rules of Court, on the grounds that the ‘defendant’
did not exist, axiomatically evaporates.

[40] The attempt to bring a case within the bounds of rule 31(2)(b) on the grounds
that the appellant learnt of the judgment after the fact, is scuttled by two issues. First,
the application is out of time because the Appellant’s director, Mr Maseko had
knowledge of the order in November 2014, not only in 2018 upon the effective
service of the writ of execution. It must follow that the appellant too had knowledge
at that time in 2014 because to suggest a director could have knowledge in a ‘private
capacity’ and the company did not thereby become aware is an unsustainable
contention. Second, even ignoring that quibble, the appellant’s defence of not being
bound by the suretyship fails, as addressed above.

[41] The service of the summons on the domicilium stipulated in the suretyship is
not denied. Service was, therefore, effective.

[42] No reason exists to rescind the order.

The Order
[43] The appeal is dismissed with costs.

_______________________
ROLAND SUTHERLAND
ACTING JUDGE OF APPEAL

Appearances:
For appellant:

G F Heyns SC
Instructed by:

Krügel Heinsen Incorporated, Witbank

Phatshoane Henney Attorneys, Bloemfontein

For respondent:

C J Bresler
Instructed by:

Bouwer & Olivier Incorporated, Randburg

Symington De Kok Attorneys, Bloemfontein.
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

1 December 2020

STATUS

Immediate

Masibuyisane Services (Pty) Ltd v Eqstra Corporation (Pty) Ltd (Case no 1245/2019) [2020]
ZASCA 159 (1 December 2020)

Please note that the media summary is intended for the benefit of the media and does not form part of the judgment
of the Supreme Court of Appeal.

Today the Supreme Court of Appeal (the SCA) dismissed the appeal of the appellant, Masibuyisane Services (Pty)
Ltd, against the decision of the Gauteng Division of the High Court, Pretoria (the High court)
The respondent, Eqstra Corporation (Pty) Ltd (Eqstra), obtained in 2014 a default judgment against the appellant,
wherein the appellant was cited as Masibuyisane CC, in respect of a suretyship in the respondent’s favour. The
appellant approached the SCA for the rescission of the default judgment on the basis that the suretyship, on the
strength of which the default judgment was granted, was invalid because no Close Corporation existed, the
appellant having prior to the judgment having converted itself into a company.
Masibuyisane Services CC, a close corporation (CC), was incorporated in 1998 then converted into a company in
2006. On 23 October 2007 a resolution was brought into being which bore the masthead: ‘Masibuyisane Services
CC’ and authorised one of the members to sign all documents in relation to ‘the above company’ although what
was earlier described was a CC not a company. On the same day, ‘Masibuyisane CC’ signed a suretyship in favour
of Maze Products (Pty) Ltd (Maze). Notably on that date the form of the appellant was that of a company and not
a CC. In 2009 Masibuyisane (Pty) Ltd re-converted itself into a CC; and subsequently in 2013 Masibuyisane CC
re-re-converted itself into a company. Thereafter Eqstra sued Maze and its sureties. Eqstra cited ‘Masibuyisane
CC’ as the fourth defendant and service was effected on the domicilium stated in the suretyship. Default judgment
was granted and a writ of execution was issued citing ‘Masibuyisane CC’. The sheriff issued a nulla bona return
of service dated which recorded that it was served at the domicilium stated in the suretyship but the sheriff was
told that the ‘Business has changed to Masibuyisane (Pty) Ltd’. In 2018, the writ was again re-issued now citing
‘Masibuyisane (Pty) Ltd, (previously Masibuyisane CC)’. The execution of the writ was effected. The appellant
then launched a rescission application which was dismissed by the High Court.
The SCA held that the legislation governing the conversion of corporate identity includes the Close Corporations
Act 69 of 1984, the Companies Act 61 of 1973 (1973 Companies Act) and the Companies Act 71 of 2008. These
statutes regulate the manner and legal consequences of conversions by a CC into a company and vice versa, all of
which reflect the singularity of juristic personality and the absence of any multiple identities in consequence of a
conversion one way or the other. The SCA further upheld the findings of the High Court that upon the conversion
of a CC to a company and vice versa, the very same entity continues to exist. The form of the entity, as the
language, makes plain in s 29D(1)(c) of the 1973 Companies Act, changes, but the entity that is capable of
undertaking obligations is the same. The language in s 29D(1)(c): ‘But in the form of a company’ does not seem

to alter the essential point which is this: a juristic person that has a continued existence may assume an obligation
even when the expression which is given to the assumption of that obligation takes place in the form of a now
superseded CC.’
The SCA held that it must be noted that important information explaining why the resolution and the suretyship
alluded to the CC when the persons responsible for creating the documents knew full well that the CC had been
converted into a company were not put on record. Indeed, it was plain that the rationale for that conduct has been
deliberately obscured. Nonetheless, whether or not their conduct was attributable to a mistake on the part of the
appellant or its directors and/or members, does not matter much because the statutes make provision for an
absolute absence of any hiatus or interruption of juristic personality upon conversions one way or the other.
The SCA, therefore, held that the juristic persona remains the same regardless of the corporate form upon
conversion from CC to company or vice versa. An incorrect description of the juristic persona is not a ground to
compromise a contract concluded between it and another person. The suretyship was therefore valid and
enforceable. In the circumstances, the appeal was dismissed with costs.