Polaris Capital (Pty) Ltd v Registrar of Companies and Another

• Jurisdiction: South Africa
• Judge: Brusser AJ
• Judgment Date: 25 July 2008
• Citation: 2009 (3) SA 207 (C)
• Docket Number: 11607/2005
• Hearing Date: 13 March 2007
• Counsel: AR Sholto-Douglas SC for the applicant. No appearance for the first respondent. A de Vos SC (with RW Tainton) for the second respondent.
• Court: Cape Provincial Division

Brusser AJ:

I [1] Where a party complains that another party is illegitimately using (or has illegitimately used) an identical or similar name to that which the complainant is using the law provides a remedy. The scope of the remedy is largely determined by the interests that would probably be affected thereby. (See Cilliers 'Similar Company Names: A Comparative Analysis And Suggested Approach' Part 1 1998 (61) THRHR 582 and J Part 2 1999 (62) THRHR 57 at 585.)

Brusser AJ

[2] Where the problem is that the complainant's individual proprietary A interests are being (or have been) unlawfully and deleteriously affected, then the remedy will seek to protect these proprietary interests by enabling the complainant either to recover, by way of a pecuniary claim, such damages that the complainant can prove that it has sustained as a consequence of the other party's violation of its legally protectable rights, B or by way of an interdict that will prevent the offending party from violating the complainant's legally protectable rights.

[3] These remedies would include any statutory protection of trade marks, delictual claims for breaches of a party's intellectual property rights (like the common-law remedies relating to passing-off) and prohibitory or mandatory interdicts. C

[4] Plainly these remedies are fashioned to protect an owner's legally protectable commercial interests and, where appropriate, to compensate him for any consequent loss. As such, the scope of these remedies is determined by this object. D

[5] With such remedies proof of the complainant's legally protectable rights and the harm caused by such breach (whether pecuniary or otherwise) is a sine qua non.

[6] Where the interests at issue are not the individual commercial proprietary rights of a party, but the interests of the general public, for E example, in the maintenance and promotion of the good governance and administration of corporate entities, the scope of the remedy will be different.

[7] Such a remedy is aimed at protecting and advancing, not an owner's legally protectable commercial interest, but more generally the public F interest and as such the scope of this remedy is determined by this latter object.

[8] Originally s 45(2) of the Companies Act 61 of 1973 restricted the Registrar of Companies' power to determine objections to the registration or amendment of a company name to those where the objector H could demonstrate that the name concerned was 'calculated to cause damage to the objector'. However, in terms of s 1 of Act 18 of 1990, s 45(2) was amended by the insertion of the words 'or is undesirable', after the words 'calculated to cause damage to the objector'.

[9] The provision in the section requiring proof that the adoption of the name is 'calculated to cause damage to the objector' usually resolves itself into the same inquiry as the common law of passing-off. See Peregrine Group (Pty) Ltd and Others v Peregrine Holdings Ltd and Others 2001 (3) SA 1268 (SCA) para 9 at 1274; Hollywood Curl (Pty) Ltd v Twins Products (Pty) Ltd (2) 1989 (1) SA 255 (A); Reckitt & Colman SA (Pty) Ltd v SC Johnston & Sons SA (Pty) Ltd 1993 (2) SA 307 (A) I at 315A - C; and Webster & Page South African Law of Trade Marks at 16.7.

[10] The requirement 'calculated to cause damage to the objector' is aimed at providing statutory recognition for an owner's legally protectable commercial interests. J

Brusser AJ

[11] The amendment inserting undesirability as a further jurisdictional ground had the effect of broadening the registrar's discretion in terms of s 45(2). See Kredietbank van Suid Afrika Bpk v Rigistrateur van Maatskappye en Andere 1978 (2) SA 644 (W) at 651G - H.

[12] The purpose of this amendment was to expand an aggrieved party's B ability to forestall any possible future harm by providing a statutory remedy where the issue is not so much the protection of its legally protectable commercial interests and, where appropriate, a claim for compensation for any consequent loss, but that the use of the company name is such that it does, or might, deleteriously affect the registrar's role C in maintaining and promoting the good governance and administration of corporate entities in the interests of the general public.

[13] The remedy provided for in s 48 read with s 45(2) of the Companies Act therefore is just such a remedy.

[14] These two types of remedies are, of course, not mutually exclusive, D as they are aimed at achieving very different ends. However, in determining the scope of the two separate remedies, it is important to bear in mind the object of such remedy. See Daimler Motor Car Co Ltd v British Motor Traction Co Ltd (1901) 18 RPC 465.

[15] If the party's object is to recover damages from the offending party E or to prevent such offending party from harming it, then the former remedies are apposite. If the party's object is to advance the good governance and administration of corporate entities, then the latter remedy would be apposite.

[16] This is not to say that a private party wishing to utilise the statutory F remedies must have purely altruistic intentions. It is sufficient if this was the basis of the registrar's order.

[17] Of course there is no reason why a party might not wish to achieve both objects, in which case such party would pursue both remedies. See Charmfit of Hollywood Inc v Registrar of Companies and Another G 1964 (2) SA 739 (A) at 764A - C.

[18] On this aspect in general the legal position in England is set out in Daimler Motor Car Co Ltd v British Motor Traction Co Ltd (1901) 18 RPC 465. In that case, departing from the former position in North Cheshire and Manchester Brewery Co v Manchester Brewery Co [1899] AC 83, in H which it was held that the issue to be decided for passing-off and an action under s 20 of the Companies Act of 1862 were the same, Buckley J held that there indeed was a difference between the two actions. Whereas the latter was available to prevent, at the registration stage, a prospective wrong from occurring, the former was designed to stop or I compensate an entity that had been wronged.

[19] It also appears that the courts in New Zealand are taking a leading role in this area. By s 31(4) of Act 63 of 1955, the concept of undesirability was introduced into New Zealand law as a basis for the registrar to disallow a name. In interpreting the words 'calculated to deceive' employed in s 31(1)(a) of the Act, the court, in South Pacific J Airlines of New Zealand v Registrar of Companies [1964] NZLR 1 at 5, held

Brusser AJ

that these words meant 'likely to deceive' and that the likelihood of A deception should be limited to deception resulting solely from the similarity in names and that the wide discretion conferred on the registrar by this section would (or should) canvass the consideration of whether the name might mislead the public or a recognised section of the public, or be likely to cause confusion amongst the public. B

[20] This aspect of the decision of the court in the South Pacific Airlines case supra was followed in Finbanco International Ltd v Registrar of Companies Wellington HC A384/77 where the court held that the purpose of s 31(4) was to enable the registrar to guard against the possibility of the public being misled in whatever way by the registration C of a particular company name.

[21] An equally strong expression of the role of the statute and the registrar in s 31(4) is to be found in Vicom New Zealand Ltd v Vicomm Systems Ltd [1987] 2 NZLR 600 (CA). At 605 of the judgment the court accepted that where the registrar considered that there was 'a serious risk D of confusion' of the public or at least a section of the public by the use of the company name, this was a proper exercise of his powers under the Act.

[22] In South Africa the decision in the South Pacific Airlines case supra has been quoted with approval both in Deutsche Babcock SA (Pty) Ltd v E Babcock Africa (Pty) Ltd and Another 1995 (4) SA 1016 (T) at 1023D - 1024I and in Peregrine Group (Pty) Ltd v Peregrine Holdings Ltd 2000 (1) SA 187 (W) at 198E - J.

[23] The above emphasises the difference in the role that the registrar is called upon to play by the Act as opposed to the common-law actions. In F relation to the registration and approval of a changed name of a company, it is quite proper for the registrar to exercise his administrative powers, inter alia, to prevent a possible prospective wrong from occurring. It is no answer to say that in any case a wronged party can claim compensation for a wrong that has been done.

[24] In this particular application applicant seeks an order in terms of G s 48 of the Companies Act to set aside the order of first respondent that applicant change its name.

[25] Accordingly, proof of either applicant's or second respondent's legally protectable rights and the harm allegedly caused by any such H breach, is not a sine qua non.

The facts

[26] Applicant is a South African-registered financial-services company which describes itself as specialising in the management of South African equity portfolios. Prior to the applicant changing its name it was I registered as African Harvest Growth Asset Managers (Pty) Ltd.

[27] Second respondent is a company registered in the United States of America carrying on business as an asset manager in that country. The second respondent is not registered in South Africa with the Companies Office or the first respondent. J

Brusser AJ

A [28] From applicant's registration number, 2000/008606/07, it appears that it was registered in 2000 under the name African Harvest Growth Asset Managers (Pty) Ltd.

[29] Some three years later, on 26 May 2003, applicant passed a special B resolution to alter its name to Polaris Capital (Pty) Ltd.

[30] Pursuant to applicant's application...