Link Estates (Pty) Ltd v Rink Estates (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Kannemeyer J, Stewart J and Howie AJ
• Judgment Date: 19 October 1978
• Citation: 1979 (2) SA 276 (E)
• Hearing Date: 07 August 1978
• Court: Eastern Cape Division

Howie AJ:

The appellant and the respondent carry on business in G competition with one another as estate agents in Port Elizabeth.

The appellant has carried on business under its registered name or as "Link Estates" since it was incorporated on 24 February 1971. Until approximately early 1972 it confined its activities to selling new houses H built by an associate company but since then it has conducted business as an estate agent in the fullest sense.

The respondent began carrying on its business in 1969 but before October 1974 it bore the name and conducted its business as Corlett Drive Estates (Port Elizabeth) (Pty) Ltd. On 10 October 1974 it changed its name to Rink Estates (Pty) Ltd and has carried that name ever since.

On 17 October 1974 the Registrar of Companies certified registration of the change in the respondent's name. Despite the change, the respondent, from March 1975 until September 1975, traded as "Pandora" or "Pandora

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Property Sales". Until June 1975 it used these names with the added rider "in association with Rink Estates (Pty) Ltd", whilst, after June, that phrase was omitted.

A But for the period March-September 1975 the respondent has, from 17 October 1974 to date, traded exclusively under its existing name or simply as "Rink Estates".

On 30 September 1975 the appellant wrote to the Registrar objecting to the B use by the respondent of its new name. The upshot was that on 3 March 1976 the Registrar, acting in terms of s 45 of the Companies Act 61 of 1973, ordered the respondent to change its name.

In the Court a quo the respondent applied to EKSTEEN J to have the Registrar's order set aside on review. The appellant intervened in the proceedings and cross-applied for an order confirming the Registrar's decision and restraining use by the respondent of its present name or the C name "Rink Estates". The Registrar abided the Court's decision and, apart from addressing a letter to the Court setting out brief reasons for his order, did not participate in the proceedings. In addition, the respondent applied in limine to strike out certain passages in the appellant's papers.

D The result of the proceedings a quo was that EKSTEEN J made an order allowing the respondent's review application with costs and dismissing the appellant's counter-application with costs. The striking-out application succeeded in part and failed in part and the costs of that application were included in the costs to be paid by the appellant.

E The appellant has now appealed against the aforesaid order and the respondent, pursuant to the grant of condonation for being out of time, has cross-appealed in respect of that portion of the striking-out application which failed.

The essence of the appellant's complaint has throughout been that the respondent's registered name and the name "Rink Estates" are so strikingly F similar to its own registered name and to the name "Link Estates" that the public is thereby likely to be confused or deceived and accordingly that the respondent's use of thse names is "calculated to cause damage" to the appellant within the meaning of s 45 (2) of the Companies Act and at the same time amounts to a passing off at common law. In addition the G appellant alleged in the Court a quo that confusion had actually resulted from the similarity of names.

Section 45 (2), omitting wording presently irrelevant, reads thus:

"If within a period of one year... after the date of... a certificate of change of name... referred to in s 44 (2), it appears that the name to which the company has changed its name... is calculated to cause damage to any other company or person, such other company or person may within such H period call upon the Registrar to order the company concerned to change such name...".

It was common cause and is clear from ample authority that "calculated" here means "likely".

In the case of Capital Estate and General Agencies (Pty) Ltd and Others v Holiday Inns Inc and Others 1977 (2) SA 916 (A) it was said at 929C - D:

"The wrong known as passing off consists in a representation by one person that his business (or merchandise, as the case may be) is that of another, or that it is associated with that of another, and in order to determine whether a representation amounts to a passing off one enquires whether there is a reasonable likelihood that members of the

Howie AJ

public may be confused into believing that the business of the one is, or is connected with, that of another".

In the letter explaining his order the Registrar stated that the parties' names resemble each other so closely that they are "calculated to deceive" A and he pointed out that in terms of s 48 of the Companies Act it was open to the Court a quo to consider on its merits the question whether the resemblance was such as to be "calculated to mislead". From his use of the quoted phrases it would seem that the Registrar was guided by the wording of s 10 (1) and (2) of the repealed Companies Act which used the phrases "calculated to deceive" and "calculated to mislead the public" and that he B did not determine whether the names were "calculated to cause damage" to the appellant. However, any possible misdirection by the Registrar in this regard was not taken as a point in its favour by the respondent either in the Court a quo or on appeal. In any event the hearing in the Court below was not a review stricto sensu but one on the wide basis afforded by s 48. C Accordingly, whatever the Registrar's reasoning, if his order was, because of the likelihood of damage to the appellant, ultimately correct in the light of the evidence before the Court below, then his order ought to have been upheld.

In his judgment EKSTEEN J considered that the enquiry whether the D respondent's name is calculated to cause the appellant damage is the same as the enquiry in passing-off cases, namely, whether the respective names of competing litigants are likely to confuse or mislead the public into believing that the business of the one is the business of the other. Mr Jones, for the appellant, adopted that approach and submitted that the statutory and common law bases for the appellant's complaint fell to be E assessed according to the same criteria. However Mr Morris, for the respondent, argued, but not strenuously, that the difference in wording between s 10 (1) and (2) of the old Companies Act and s 45 (2) of the new Act, the former, he said, being the forerunner of the latter, indicates a legislative intention now to require more of an objector than proof of the F elements of passing-off.

The phrase "calculated to cause damage" has been on the statute book since 1952 when ss (4) (b) was inserted into s 10 of the old Act. In terms of that sub-section whenever a registration of name in conflict with ss (1) and (2) was calculated to cause damage to any company or other person, the G latter could call upon the Registrar to order a change of name. It was therefore s 10 (4) (b) of the repealed Act which was the forerunner of the present s 45 (2) and not s 10 (1) or (2). As far as I can establish there has not since 1952 been any reported judicial interpretation of the phrase "calculated to cause damage" as used in either of the Companies Acts. One H can readily envisage situations wherein the similarity of company A's name to the name of company B is such that it will inevitably confuse or deceive the public and thereby undoubtedly result in damage to company B. On the other hand one can equally readily imagine situations wherein, by reason of weaker similarity, any deception or confusion that might result would probably be momentary only or at any rate sufficiently brief for the representee to realise his mistake in time to avoid acting under the influence of his initial confusion. In the latter instances damage to company B will not result. Then there are in-between situations wherein confusion

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and resultant damage are not inevitable but nonetheless likely; or wherein confusion is probable but resultant damage is not.

In s 10 (1) and (2) of the repealed Act the phrases "calculated to A deceive" and "calculated to mislead" were not limited by words or by context to instances of deception resulting or likely to result in injury or damage to another. On the face of it any deception fell within the ambit of those sub-sections. However, the judicial interpretation placed B upon those phrases was that which accorded with the degree of deception or confusion required to be proved in common law passing off actions (Slabbert v Airways Booking Office (Pty) Ltd 1933 WLD 204; Henochsberg The Companies Act 2nd ed at 36, footnote 1 quoting PRICE J (as he then was) in Barclays Bank (DC and O) v Volkskas Bpk 1951 (4) SA 630 (W) at 634). In the latter case the learned Judge said at the cited page:

"In such actions a plaintiff must prove actual or probable injury to his business or reputation. He need not show actual deception in order to C obtain an interdict, all he need show is the likelihood of deception or confusion occurring in the normal course of business".

This statement was approved when the matter went to appeal (Volkskas Bpk v Barclays Bank (DC and O) 1952 (3) SA 343 (A) at 347).

The words "calculated to cause damage" approximate the common law D requirement for passing-off more closely than the phrases "calculated to deceive" or "mislead" (the latter are no longer used and find no place in the present s 45 (1)) and are to my mind intended to emphasise that before relief under s 45 (2) will be afforded the objector must show not only E that confusion or deception is likely but that if either ensues it will probably cause him damage. On analysis this is essentially the same case that must be established by a plaintiff in a passing-off matter (see Burnkloof Caterers (Pty) Ltd v Horseshoe Caterers (Green Point) (Pty) Ltd 1976 (2) SA 930 (A)...