Peregrine Group (Pty) Ltd and Others v Peregrine Holdings Ltd and Others

• Jurisdiction: South Africa
• Judge: Lazarus AJ
• Judgment Date: 30 June 1999
• Citation: 2000 (1) SA 187 (W)
• Docket Number: 98/21088
• Counsel: P B Hodes SC (with him A R Sholto-Douglas) for the applicants. M D Kuper SC (with him P Levenberg) for the respondents.
• Court: Witwatersrand Local Division

Lazarus AJ :

[1] The first to seventh applicants seek an order directing I the first to eighth respondents to change their names so as to exclude the word 'Peregrine' therefrom and interdicting and restraining such respondents from passing off their business as that of or associated in the course of trade with the first and/or second and/or third applicants. In the replying affidavit the applicants stated that they no longer seek relief against the ninth, tenth and eleventh respondents on the basis that those respondents do not currently trade. The applicants tendered the wasted costs J

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occasioned by the joinder of the ninth, tenth and eleventh respondents in A the application. A reference to 'the respondents' is intended as a reference to the first to eighth respondents unless the contrary appears from the context.

[2] The applicants claim relief both in terms of s 45(2A) of the Companies Act 61 of 1973 (the Companies Act) and on the grounds of common-law passing off. B

[3] The first applicant has traded under its present name from 1 August 1994, the second applicant from 24 September 1993, the fourth applicant from 13 October 1993, the sixth applicant from 26 August 1994 and the seventh applicant from 24 August 1994. The third applicant was incorporated on 8 November 1993 and traded C under the name 'Peregrine Properties No 4 (Pty) Ltd'. On 18 May 1998 the third applicant changed its name to 'Peregrine Project Finance (Pty) Ltd'. The fifth applicant was incorporated on 8 November 1993. It traded under the name of 'Peregrine Properties No 3 (Pty) Ltd' until 18 August 1994 when it changed its name to 'Peregrine Properties Share Block No 3 (Pty) Ltd'. The fifth D applicant has made application to change its name to the name by which it was previously known. This application was still pending at the time of the hearing of this matter. As at August 1994 all of the applicant companies were registered under names in respect of which the word 'Peregrine' was both the first and dominant word. None of the applicants holds any shares in any of the other applicant companies. E They all conduct business from the same offices, utilise the same staff and share a commonality of directors. The applicants maintain that they are perceived of by those with whom they come into contact as 'a group of companies'. The applicants concede that they do not constitute 'a group of companies' as that term is understood in law within the meaning of Schedule 4 para 4(q) of the Companies Act. F According to the applicants the principle business undertakings carried out by them are property development, the furnishing of financial advice and expertise associated in particular with property developments and the provision of structured finance packages. G

[4] The respondents constitute 'a group of companies' within the meaning of Schedule 4 para 4(q) of the Companies Act. The second respondent (the original holding company in the respondent group) was incorporated more than two years prior to the launching of the application on 18 March 1996 under the name H 'Peregrine Holdings (Pty) Ltd'. The ninth, tenth and eleventh respondents were also incorporated under the 'Peregrine' name on 18 March 1996. The third to twelfth respondents (except for the eighth respondent) are wholly-owned subsidiaries of the second respondent. The second respondent owns 50 per cent of the issued share capital of the eighth respondent. The second respondent was I the holding company of the respondent group until 29 April 1998. On that date, in order to facilitate the stock exchange listing of the respondent group, a shelf company called 'Fernel Investment Holdings (Pty) Ltd' changed its name to 'Peregrine Holdings Ltd' (the first respondent) and the second respondent became a wholly-owned subsid- J

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iary of the first respondent. The third to twelfth respondents (excluding A the eighth respondent) remained wholly-owned subsidiaries of the second respondent. When the second respondent became a wholly-owned subsidiary of the first respondent, the second respondent changed its name from 'Peregrine Holdings Ltd' to 'Peregrine Financial Services Holdings Ltd'. The second respondent has used the word 'Peregrine' as part of its name for more than two years prior to the date on which this B application was launched. The second respondent changed its name in order to distinguish it from the first respondent, which is the ultimate holding company of the respondent group. The first and second respondents are holding companies and do not carry on business as trading entities. The first respondent was listed on the Johannesburg Stock Exchange on 10 June 1998. The principle C business undertakings carried out by the respondents are stated in the first respondent's prospectus to be the provision of specialised financial expertise to the leading financial institutions and corporations in South Africa, including the provision of structured financial packages for the acquisition and development of commercial property. The mainstay of the respondents' group's business is D derivative-based financial structuring and corporate structuring. The derivative structuring business and the corporate structuring business are divisions of the third respondent. The derivative-based financial structuring and corporate structuring accounts for more than 90% of the business of the respondent group as a whole. Derivative structuring is an extremely specialised form of financial service, E which involves rendering advice to clients concerning the use of derivatives to modify their risk profile and exposure in various financial markets. A derivative is an instrument of trade which derives its existence from an underlying equity, bond or like recognised financial instrument. Derivatives frequently involve options to purchase or sell equities, bonds and the like at certain prices in the F event of certain future events occurring. They are often used to permit financial institutions to 'hedge' their risks in financial markets. The respondents' corporate structuring division provides a corporate advisory service to its client base of emerging, high growth listed and unlisted companies. According to the first respondent's prospectus, the respondent group's property finance structuring G division is housed in the business of the third respondent. The applicants maintain that the services undertaken by this division form a negligible part of the first respondent's business. The applicants maintain that the respondents have sought to minimise the extent of the property finance structuring division of the third respondent in an endeavour to avoid the conclusion that there is direct H competition and that there will, in the future, be increased competition between the applicants and the respondents in the field of property finance structuring. I

[5] It is relevant to examine the extent to which the activities of the applicants and the activities of the respondents overlap. The fourth applicant trades from time to time as a property developer. The fifth, sixth and seventh applicants carry on the business of holding investments in immovable properties from time to time, usually whilst such proper- J

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ties are being developed. On the applicants' own version there are no common A activities engaged in between the fifth, sixth and the seventh applicants, on the one hand, and the respondents on the other. In the founding affidavit it is said that the first applicant trades in the field of property development and the furnishing of financial advice and expertise associated in particular with property developments. No information is provided in regard to the nature and extent of the financial advice provided by the first applicant, whether B in regard to property developments or any other type of commercial transactions. I do not find that there is any common field of activity engaged in between the first applicant and any of the respondents. This is a product of the manner in which the applicants have elected to present their evidence. The applicants have, in the main, not differentiated between the activities engaged in by each applicant C company and have chosen to present their case as though they were each individually entitled to rely on the collective activities of the applicant group in seeking redress. In the founding affidavit the business of the second applicant is described as that of a property developer. In the replying affidavit it is said that the second applicant has, together with the third applicant, put in place a D structured financial package in relation to existing buildings. No distinction is sought to be made between the role played by the second applicant and that played by the third applicant in respect of the provision of these services. What is presented by the applicants is a typical transaction in which 'the applicants' would be involved in the course of offering their structured financial package in relation E to existing buildings. This typifies the manner in which the applicants have elected to present their evidence, namely on the basis that there is no need to distinguish with any clarity the individual activities attributable to each company within the applicant group as opposed to the activities conducted by the group as an amorphous whole. The main object of the third applicant was originally stated to be the business F of an investment company. On 18 May 1998 the third applicant changed its main object so as to enable it to operate as a finance company. According to the applicants the third applicant conducts business as the provider of structured finance packages to its various clients and to other applicant companies. In the replying affidavit and in a supporting affidavit there is evidence adduced by the...