Oilwell (Pty) Ltd v Protec International Ltd and Others

• Jurisdiction: South Africa
• Judge: Harms DP, Lewis JA, Ponnan JA, Malan JA and Theron JA
• Judgment Date: 18 March 2011
• Citation: 2011 (4) SA 394 (SCA)
• Docket Number: 295/10
• Hearing Date: 08 March 2011
• Counsel: EW Dunn SC (with I Joubert) for the appellant. P Ellis SC (with AP Ellis) for the first and second respondents.
• Court: Supreme Court of Appeal

Harms DP (Lewis JA, Ponnan JA, Malan JA and Theron JA concurring): C

[1] The trademark 'Protec' (sometimes with a device) is registered in many countries but this judgment is concerned only with the South African registration (1987/10291). This word mark is presently D registered in the name of the second respondent, Protec Auto Care Ltd (Auto Care), a company incorporated in the United Kingdom. The appellant, Oilwell (Pty) Ltd (Oilwell), is a local company and seeks an order for the rectification of the trademark register to reflect Oilwell instead of Auto Care as proprietor. Oilwell relies on s 24(1) of the Trade Marks Act 194 of 1993, E which, in brief, provides that, in the event of an entry wrongly made in the register, or of any error in any entry in the register, any interested person may apply to court for the desired relief, which would include rectification.

[2] Oilwell wishes in effect to reverse an assignment of the trademark, F which took place during 1998, when, in terms of a comprehensive agreement between many parties, this trademark, as well as the foreign Protec marks and pending trademark applications, were assigned to the first respondent, Protec International Ltd (International).

[3] During the intervening years relations between the parties (or some G of them) soured. Oilwell and some associates refused to respect the rights of International and a number of orders were made against them in the USA relating to trademark infringement and contempt of court. Locally there is a final order granted during 2002 against Oilwell, interdicting it from infringing the trademark. On the other hand, H International ran into financial difficulties and, as part of what appears to be a settlement, the South African trademark was assigned to Auto Care during 2007.

[4] Oilwell discovered a judgment of Jajbhay AJ in Couve and Another v Reddot International (Pty) Ltd and Others 2004 (6) SA 425 (W). The I judgment concerned, inter alia, the validity of an agreement to assign rights to patent applications by a South African entity to a foreign company, which was entered into without the prior consent of the SA Reserve Bank, the agent of the Treasury. Couve held that within the meaning of reg 10(1)(c) of the Exchange Control Regulations a patent application and, a fortiori, a patent are 'capital' and that such an J assignment amounts to the 'export' of capital. The regulation provides

Harms DP (Lewis JA, Ponnan JA, Malan JA and Theron JA concurring)

that 'no person shall, except with permission granted by the Treasury and in accordance with such conditions as the Treasury A may impose . . . enter into any transaction whereby capital or any right to capital is directly or indirectly exported from the Republic'. [1]

[5] Relying on this judgment and the fact that International was B registered in Guernsey, Oilwell applied during September 2008 to the North Gauteng High Court for the relief mentioned. Prinsloo J, who heard the case, came to the conclusion that Couve was wrongly decided, principally because intellectual property rights are not 'capital' within the meaning of the term as used in the regulation, and he dismissed the application with costs. He subsequently granted the necessary leave to C appeal to this court.

[6] Two main issues crystallised as the case unfolded. The first is whether the transaction was covered by reg 10(1)(c) and the second concerns the effect of non-compliance with the provision. The third, D prescription, does not arise in the light of what follows. But before these issues are addressed in any detail, it is necessary to refer to the empowering Currency and Exchanges Act 9 of 1933, which was adopted during the Great Depression. Its title, referring to currency and exchanges, gives a general idea of the scope of the Act, as does the long E title: 'To amend the law relating to legal tender, currency, exchanges and banking.' The term 'exchanges' refers to what is better known as 'exchange rates'. This appears from the Afrikaans text which speaks of 'wisselkoerse'. Much of the Act has been repealed, but the important s 9 remains. It empowers the head of State to make regulations 'in regard to any matter directly or indirectly relating to or affecting or having any F

Harms DP (Lewis JA, Ponnan JA, Malan JA and Theron JA concurring)

A bearing upon currency, banking or exchanges' (s 9(1)). This is the empowering provision under which the Regulations were promulgated. [2]

[7] Turning then to the meaning of reg 10(1)(c), Jajbhay AJ pointed out [3] that the term 'capital' is not defined and he adopted the views of B Prof AN Oelofse [4] that, considering the wide wording of the provision and the general objects of the Regulations, 'capital' is anything (or everything) with monetary value. The court below, while disagreeing with this view because the interpretation did not take account of the general scheme of the Regulations in the light of the terms of the Act, did not reach any firm conclusion as to its meaning. I, too, do not intend to C define 'capital' in this context comprehensively, but will confine myself to the question whether trademarks are within this framework 'capital'. My conclusion will by parity of reasoning obviously apply to patents, designs and copyright.

[8] As a glance at any number of dictionaries will show, and as D Latham CJ once said, 'it is impossible to say that capital has a single technical meaning which prima facie should be attributed to the word in any statutory provision', and that 'the significance of the word [capital] in a particular case depends on the context in which it is used'. [5]

E [9] Oilwell's counsel submitted that the term 'capital' includes 'anything with a monetary value'. But, when asked whether the term in the present context has been used as an economic, financial or accounting concept, counsel readily accepted that it was used in a financial sense. This must be so because the Regulations are supposed to deal with matters relating to currency (banking and exchange rates, the other two matters referred F to in s 9, do not feature). The Encarta World English Dictionary (sv 'capital') distinguishes between these meanings and states that the meaning of 'capital' in a financial context is 'cash for investment[,] money that can be used to produce further wealth'. As Chitty J explained in another context, capital is not the thing that for the time being represents capital 'in the sense of being things in which the capital has G been laid out'. [6]

[10] But how does that particular dictionary definition fit in with the Regulations? Perfectly, I would suggest. It appears, for instance, from the definition of 'affected person' in reg 1 that the Regulations do not H regard 'capital' and 'assets' as synonymous concepts, which is what

Harms DP (Lewis JA, Ponnan JA, Malan JA and Theron JA concurring)

Oilwell's argument boils down to. [7] 'Capital' in this definition in any A event refers to share capital. It also defines the term 'goods', which includes 'any immovable goods or security' and consequently movables also. There are also other textual indications in reg 10(1) where paras (a) and (b) deal with the export of 'goods', while para (c) speaks of the export of 'capital'. This means, according to ordinary rules of interpretation, B that there must be a difference between 'capital' and 'goods' and that the terms do not overlap. Further support for this interpretation is to be found in reg 11, which deals with 'capital issues' — all about raising money.

[11] Serious anomalies would arise if 'capital' in context were to mean C everything with monetary value. Immovable property would then be capital and, although it cannot be 'exported', the purchase of such property by a foreign company would amount to the export of the right to capital, something covered by para (c). This would be all the more so when the property is an income-producing property. But it is common D cause that the sale of immovable property to a foreign company is not covered by the provision. The example can be extended to movables with monetary value. A 'foreigner' who purchases a movable in South Africa, on Oilwell's argument, buys a capital item and exports the right to that capital item from the Republic on leaving. This...