Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd and Another

• Jurisdiction: South Africa

Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd and Another
1998 (3) SA 938 (SCA)

1998 (3) SA p938

Citation	1998 (3) SA 938 (SCA)
Case No	393/95
Court	Supreme Court of Appeal
Judge	Smalberger JA, Harms JA, Marais JA, Schutz JA, Plewman JA
Heard	May 11, 1998
Judgment	May 28, 1998
Counsel	CE Puckrin (with him JN Cullabine) for the appellant; MJD Wallis (with him GR Thatcher) for the respondent

Flynote : Sleutelwoorde

Trade and competition — Trade — Passing-off — Requirements for jurisdiction not to be combined with elements of delict of passing-off — Reputation only component of goodwill protected by passing-off — Though locality of business may I under certain circumstances be component of goodwill, goodwill not existing only at place where business located — Question to be asked was whether plaintiff had, in practical and business sense, sufficient reputation amongst substantial number of people who were either clients or potential clients of his business — Locality of business and extent of its reputation relevant in determining existence of potential clients and whether business harmed by misrepresentation as well as probability of J

1998 (3) SA p939

deception — Reputation must have been in existence when defendant entered market and when misrepresentation A committed.

Trade and competition — Trade — Passing-off — Ambit of action — Semble: Passing-off action cannot be used to protect misapprehension or false reputation.

Appeal — To Supreme Court of Appeal — Heads of argument — Object of earlier practice direction on appeals to B Supreme Court of Appeal twofold, viz to enable Chief Justice to estimate how much reading matter to allocate to particular Judge and to assist Judges in preparing appeal without wasting time in reading irrelevant matter.

Appeal — To Supreme Court of Appeal — Heads of argument — Function of — Practitioners to comply with spirit of C requirement of Rules of Supreme Court of Appeal and non-observance unacceptable — Operative words 'main', 'heads' and 'argument' — 'Main' referring to most important part of argument, 'heads' meaning 'points', not 'dissertation', and 'argument' involving process of reasoning that must be set out in heads — Recital of facts and quotations from authorities not amounting to argument — Failure to give proper attention to practice direction and heads may result in D disallowance of fees.

Headnote : Kopnota

The Supreme Court of Appeal practice direction on heads of argument reported at 1997 (3) SA 345 required of the practitioner who is to argue the appeal to indicate which parts of the record were in his opinion irrelevant to E the determination of the appeal. The object of the direction was essentially twofold: first, it enabled the Chief Justice in setting the roll to estimate how much reading matter was to be allocated to a particular Judge; and, second, it assisted Judges in preparing the appeal without wasting time and energy in reading irrelevant matter. Failure to comply with the spirit of this requirement would frustrate its objects and lead to a longer waiting time F for other matters. (Paragraph [36] at 954H--J.)

The Rules of the Supreme Court of Appeal require the filing of 'main heads of argument'. The operative words are 'main', which refer to the most important part of the argument; 'heads', which means 'points', and not a dissertation; and 'argument', which involves a process of reasoning which has to be set out in the heads. A recital G of the facts and quotations from authorities does not amount to argument. Practitioners must note that a failure to give proper attention to the requirements of the practice note and the heads could result in the disallowance of part of their fees. (Paragraphs [37] and [38] at 955B--G.)

The appellant, Caterham, had unsuccessfully claimed exclusivity for its Caterham Super Seven sports car in a H Local Division and alleged that the Birkin Seven, first respondent's car, was being passed off as Caterham's. Both cars were replicas of the Lotus Seven Series III, which Lotus had stopped making in 1972. On appeal Caterham limited the relief sought to an interdict restraining the first respondent, Birkin, from manufacturing, selling and exporting from South Africa a sports car having this shape and configuration and which used in I relation thereto the numeral 'Seven' in either alphabetic or numeric form. The application of the principles concerning passing-off in relation to a get-up shorn of a distinctive name did not form part of Caterham's case on appeal because Lotus had acquiesced in the copying of the Series III by others for many years and this had had the effect of first diluting and then destroying the distinctiveness of the car. Caterham's argument on appeal was essentially that the use of the J

1998 (3) SA p940

numeral 'Seven' had become distinctive of a car having the shape and external configuration of the original Lotus A and that the use of 'Seven' in relation to a sports car having this shape and configuration identified the car as emanating from Caterham or its predecessor, Lotus, which in 1988 had assigned to Caterham the alleged rights to goodwill and reputation in the shape plus the unregistered trade mark 'Seven'. Birkin's replica of the Super B Seven, the 'Birkin Seven', had been marketed and sold in South Africa since 1983. It was also exported to Japan. The Court a quo accepted as correct a statement to the effect that, since the ordinary rules relating to jurisdiction applied to an action for passing-off, it was essential for a plaintiff to prove that the goodwill it sought to protect extended to the area of jurisdiction of the Court in which he had sued. This, according to the Court a C quo , meant that it had been incumbent on Caterham to prove the existence of goodwill 'generated by sales' within the area of jurisdiction of the Court. The Court a quo dismissed Caterham's claim on the basis that Lotus had stopped making the car before 1973 and that there was accordingly no goodwill that could have been assigned in 1988. In an appeal,

Held , that the above-mentioned statement of law in effect conflated two different matters, namely the elements of D the delict of passing-off and the requirements for jurisdiction. The Court a quo had had jurisdiction because the defendants resided within its area. An unrelated but germane question concerned the elements of the wrong, viz the 'classical trinity' of reputation (or goodwill), misrepresentation and damage. (At 946I--947A/B.)

Held , further, that the only component of the goodwill that could be damaged by means of a passing-off was E reputation and that the first requirement for a successful passing-off action was therefore proof of the relevant reputation. Misrepresentations concerning other components of goodwill were protected by other causes of action and it was thus incorrect to equate goodwill and reputation or to suggest that the need for some reputation or secondary meaning to be shown was not a principle or rule of our law. (At 947I--948B/C.) F

Held , further, as to whether it was necessary to localise goodwill for the purposes of passing-off, that the fact that the locality of a business might under certain circumstances be a component of goodwill did not mean that goodwill could only exist where the business was located. Decisions of our Courts to the opposite effect could no longer be considered good in law. (At 949E/F--F and H/I--I/J.) G

Held , further, that in general terms the correct question to ask was whether the plaintiff had, in a practical and business sense, a sufficient reputation amongst a substantial number of persons who were either clients or potential clients of his business. As far as the 'location' of reputation was concerned, it had to subsist where the H misrepresentation complained of caused actual or potential damage to the drawing power of the plaintiff's business - otherwise the misrepresentation would be made in the air and without any consequences. The locality of the plaintiff's business was, however, not rendered irrelevant: it remained an important consideration in determining whether the plaintiff had potential clients and whether the alleged misrepresentation caused his I business any harm. Likewise the extent of a business's reputation and the scope of its activities were relevant to the probability of deception and to damages. (At 950A/B--D/E.)

Held , further, that the reputation relied on must have been in existence when the defendant entered the market: a plaintiff was not entitled to rely upon a reputation that overtook the business of the defendant. The reputation also had to exist when the misrepresentation was committed. (At 950H/I--I/J.)

Held , further, that the evidence did not support Caterham's argument that, J

1998 (3) SA p941

although it could no longer rely on the distinctiveness of the shape and configuration of the car, the use of the A name 'Seven' made all the difference because a Lotus replica with the name 'Seven' used in relation to it had the effect of exclusively identifying it as a product licensed by Lotus or made by its successor in title, Caterham: because 'Seven' referred to four different cars in the Lotus series, it had not been distinctive of the car even in the hands of Lotus. It was accordingly difficult to conceive of an extant goodwill in the hands of Lotus in 1988. (At 952C--G.) B

Held , further, that Caterham's submission that Lotus had a goodwill in 1988 as the result of Caterham's endeavours which had enured to the benefit of Lotus had to be rejected because Caterham never had a licence from Lotus to build the car and use the numeral Seven in relation thereto. (At 952G/H--H.) C

Held , further, that, although it could be accepted that Caterham had a reputation in...