Deutsche Babcock SA (Pty) Ltd v Babcock Africa (Pty) Ltd and Another

• Jurisdiction: South Africa
• Judge: Mynhardt J
• Judgment Date: 25 October 1994
• Docket Number: 2359/94
• Hearing Date: 30 August 1994
• Court: Transvaal Provincial Division
• Citation: 1995 (4) SA 1016 (T)

Mynhardt J:

This is an application in terms of s 48 of the Companies Act 61 of 1973 ('the Act') for an order, firstly, declaring that the applicant's name, Deutsche Babcock SA (Pty) Ltd, is not undesirable or calculated to cause damage as envisaged by s 45 of the Act and, secondly, G that the second respondent enter the applicant's said name in the register of companies.

On 6 January 1994 the second respondent ordered the applicant in writing to change its said name within a period of two months from the date of the order. That order was made by the second respondent in terms of s 45(2) H of the Act after he had considered an objection by the first respondent against the applicant's said name, and after he had also considered the contentions that were advanced by the applicant as to why the first respondent's objection ought not to be sustained. The second respondent, however, came to the conclusion that the objection was sound and therefore he made the said order. The applicant then launched this application in I order to obtain the relief sought in the notice of motion.

Many of the relevant facts in this case are either common cause or not really in dispute, and may be thus stated. The first respondent was incorporated in South Africa on 26 August 1960 as ABC Component J Manufacturers (Pty) Ltd. On 11 October 1960 the first respondent's

Mynhardt J

A name was changed to Babcock and Wilcox of Africa (Pty) Ltd. Since that date the first respondent has always traded in the Republic of South Africa under a name which includes the name, or word, 'Babcock'. On 3 May 1979 the first respondent's name was once again changed to its present name. This was done in order that the Babcock and Wilcox name be simplified, as up to that stage it was part of the name of the group of B companies which carried this name throughout the world. At all times the first respondent has been a wholly owned subsidiary of a company which is presently known as Babcock International Group plc. This company is a British company. It is also the proprietor of the registered trade mark 'Babcock' in South Africa and in respect of which the first respondent is a registered licensee. The principal business undertaking carried out by C the first respondent is the business of boiler construction and general mechanical engineering.

The first respondent's holding company, Babcock International Group plc, has, apart from trading in various overseas countries, been trading in D South Africa on a fairly large scale for approximately 70 years through various subsidiaries, of which the first respondent is one. All these companies include the word 'Babcock' in their names. These subsidiaries comprise the South African Babcock Group of Companies ('the Babcock Africa Group') and all of them are controlled by Babcock International Group plc. E It can therefore be said, with justification, that the name or word 'Babcock' has become distinctive to the first respondent and its holding company in the fields of boiler construction and mechanical engineering in the Republic of South Africa.

In 1970 a company, DB Thermal (Pty) Ltd, was incorporated in South Africa. The letters or acronym 'DB' were an abbreviation for 'Deutsche Babcock' F and were understood to mean, and were synonymous with, 'Deutsche Babcock' in the relevant market. This company was one of the members of the Deutsche Babcock Group. The ultimate holding company of DB Thermal (Pty) Ltd was Deutsche Babcock AG, a company which is incorporated and based in Germany. Deutsche Babcock AG is a large multinational company, which had G a turnover in excess of DM 8 billion in 1993. It has a number of overseas subsidiaries, many of whom also incorporate the name or words Deutsche Babcock or Babcock in their names.

As from 1 October 1992 DB Thermal (Pty) Ltd has changed its name to Deutsche Babcock (SA) (Pty) Ltd, which is in fact the applicant in this H matter. The change of name was registered on 15 June 1992. Since 1 October 1992 the applicant has traded under its new name in South Africa.

The applicant has always been a representative of Deutsche Babcock AG in the Republic of South Africa. It has imported and sold that company's I products here. Deutsche Babcock AG is also the holder of an unregistered trade mark, 'Deutsche Babcock', and that trade mark has been utilised in South Africa for the sale of the applicant's holding company's products.

The main object of the applicant is to carry on the business of manufacturers, installers, maintainers, consultants and designers of and J concerning thermal heating, cooling, condensing and heat exchanging

Mynhardt J

A appliances, machinery, systems and apparatus of every kind and description. This includes boiler construction and general mechanical engineering. Accordingly, a part of the business activities of the applicant overlap with those of the first respondent. The two companies therefore trade to some extent in direct competition with each other.

B In 1975 Babcock International Group plc sold its shareholding in a company, incorporated in Germany, and known as Deutsche Babcock GmbH. Pursuant to that sale, the Deutsche Babcock Group became an independent and separate group of companies which traded world-wide and in competition with the (British) Babcock International Group of companies.

C In January 1980 a subsidiary of Deutsche Babcock Beteilligungs GmbH, known as DB Construction (Pty) Ltd, changed its name to Babcock Borsig (Pty) Ltd. It thereafter traded under that name in the engineering field. It did not, however, conduct business of any substance in the Republic of South Africa or in competition with the business of the first respondent. D In 1981 Babcock Borsig (Pty) Ltd once again changed its name to Deutsche Babcock (Pty) Ltd. The company still exists and continues to trade under its new name in the engineering field.

On 12 February 1993 the first respondent, through its attorneys, Messrs Webber Wentzel of Johannesburg, lodged an objection with the second respondent against the change of name of the applicant to Deutsche Babcock E (SA) (Pty) Ltd. The second respondent was requested to order the applicant to change its name in terms of s 45(1) and (2) of the Act. After a lengthy exchange of correspondence between the applicant, the first respondent and the second respondent, the second respondent upheld the objection and on 6 January 1994 ordered the applicant to change its name. F

The second respondent was apparently not asked to furnish reasons for his said order in terms of s 47(2) of the Act and no reasons for that order have been furnished by him in response to the application to Court. The second respondent has also not taken part in the proceedings and he apparently abides the decision of the Court.

G On the papers there is a dispute about the ambit of the applicant's activities in South Africa, and the reason(s) why the applicant has changed its name. The applicant alleges that it has a fairly small number of customers, approximately 25 in all, of which not more than 15 have requirements for its services offered and which are available in competition with the services offered by the first respondent. Included H amongst its customers are companies and institutions such as Sasol Ltd, Escom, Genref, Mosref and Natref. The first respondent alleges that it has a diverse and large base of customers. The applicant alleges that within that fairly small group of customers for whose requirements it and the first respondent cater, confusion because of the similarity between the respective names of the applicant and the first respondent will not I arise, because those customers are aware of the separate identities of the two companies. The applicant further alleges that it does not intend to make further inroads into the boiler construction market in South Africa. The undertaking of boiler construction, it will be remembered, is part of J the first respondent's main or principal business.

Mynhardt J

A For present purposes it is to me not crucial to resolve the dispute as to the fairly limited number of customers that the applicant and the first respondent may or may not have and to what extent they compete in the boiler construction industry and the general mechanical engineering field. B It is common cause that the applicant and the first respondent do compete with each other in these fields. In my view it cannot be ruled out that in future the extent of the competition, especially in the general mechanical engineering field, might increase. I think it is also clear that the areas in which the two companies do compete are fairly lucrative areas and that the customers which they have in common require and make use of sophisticated and expensive products and services.

C As far as the dispute about the reason(s) for the change of name by the applicant is concerned, the first respondent alleges that there was no need for the applicant to change its name. The first respondent points out that the applicant has traded for many years under its previous name. The first respondent says that the real reason why the applicant has D changed its name is related to the applicant's intention to expand its activities in the industry relating to boilermaking and general mechanical engineering in South Africa. These allegations are denied by the applicant. The applicant says that it has always been known as a Deutsche Babcock company and in changing its name it has merely given formal recognition to the de facto market situation in South Africa. The E applicant also alleges that the continuous user of the (unregistered) trade mark Deutsche Babcock, in relation to products sold by it in South Africa, has vested the right in it to use the trade mark as part of its trading style.

In September 1992 a letter was sent out to its customers, and...