Company or Business Trade Name Protection and Change of Name

HH150-09 : SOUTHBAY REAL ESTATE (PVT) LTD vs SOUTHBAY PROPERTIES (PVT) LTD and G RATISSO and CHIEF REGISTRAR OF COMPANIES
Ruled By: MAKARAU JP

On 7 January 2009, the applicant filed this application seeking an order compelling the first respondent to change its name within six weeks of the granting of the order.

In its founding affidavit, the applicant averred that it was duly registered by the third respondent on 26 October 2006. On 12 November 2008, it came to its attention that the third respondent had registered the first respondent, whose name is identical to its own.

The applicant further averred, that, on 14 November 2008, it wrote to the third respondent objecting to the registration of the first respondent on the basis that their two names were identical and pointing out that the first respondent's main line of business was also real estate.

No response was elicited by this letter, although, in consequence to a follow up on the letter, the third respondent wrote to the first respondent bringing to its attention the objection and the basis of the objection and gave a copy of this letter to the applicant.

In opposing the application, the second respondent deposed to an affidavit on behalf of the first respondent and also on his own behalf.

In the affidavit, the first respondent indicated, by way of giving a historical background to the dispute, that, as far back as 2001, the promoters of the first respondent had registered a company by the name Southbay Investments (Private) Limited. The promoter was therefore the first to use the prefix “Southbay”.

In 2006, the applicant changed its name from Vineyard Real Estate to its current name with the full knowledge of the existence of Southbay Investments (Private) Limited. Objections were raised to the proposed change of name to no avail.

Regarding the merits of the application, the first and second respondents argued that the applicant did not have goodwill in the name “Southbay”; denied that the first respondent had misrepresented to the public or caused any confusion in the public as to the distinction between the two companies as the first respondent was not trading as a real estate agency and had made no moves to be registered as such with the Estate Agents Council; finally, the respondent argued that there is a big difference between the two companies such that the public will not be confused by the two registrations.

In the main, the second respondent argued that since it was incorporated as a subsidiary to Southbay Investments (Private) Limited, it was not meant to carry out real estate business but to manage the property portfolio of the parent company.

The third respondent did not oppose the application....,.

I now turn to the merits of the application.

Section 24(2) of the Companies Act [Chapter 24:03] provides:

“No name shall be reserved and no company shall be registered by a name which is identical with that for which a reservation is current or with that of a registered company or a registered foreign company or a private business corporation registered under the Private Business Corporations Act [Chapter 24:11] or which so nearly resembles any such name as to be likely to deceive unless the registered company or registered foreign company or private business corporation, as the case may be, is in liquidation and signifies its consent to the registration in such manner as the Registrar may require.”

The applicant argues, firstly, that the registration of the first respondent was unlawful as it was done in contravention of this section. In other words, the applicant is arguing that the third respondent erred at law in registering the first respondent in contravention of the specific language used in the section.

In my view, once the Registrar makes a decision to register a name in terms of the Companies Act, such an exercise, being a juristic act, cannot be impugned by this court save by way of an appeal in terms of section 24(11) of the Companies Act or by way of review at common law.

It is trite, in my view, that the registration of names in terms of the Companies Act is a function in the exclusive discretion of the third respondent: such discretion to be exercised not only in terms of the guidelines set out in the Companies Act, but also judiciously. It is thus a quasi judicial exercise that confers not only corporate status on the company so registered but also creates a new legal persona.

Thus, the decision by the third respondent is not one that can be set aside by this court exercising its own discretion in the matter outside the appeal process set out in the Companies Act and/or outside the inherent powers of this court to review and set aside, in appropriate cases, decisions of inferior tribunals and quasi-judicial authorities.

The application before me is neither an appeal in terms of section 24(11) of the Companies Act nor a review at common law. I therefore cannot set aside the decision of the Registrar on any ground outside the above two processes.

It has not been argued before me that a registration in contravention of the section is void ab initio such that any person can approach this court for the registration to be set aside: see Musara v Zinatha 1992 (1) ZLR 9 (H).

It does not appear to me that it was the intention of the legislature to deem void a registration in violation of the section 24(2) of the Companies Act [Chapter 24:03]:

(i) Firstly, there is no clear language to this effect in the law.

(ii) Secondly, the law provides processes and remedies for redressing grievances arising out of registrations done in contravention of the section.

On the basis of the above, I decline to determine this issue in the present application.

Secondly, the applicant argues, that, in seeking an order from this court to compel the first respondent to change its name, it has approached this court not under the common law of passing off but under the provisions of section 24(13) of the Companies Act which provides that:

“(13) The court may, at any time, on application by any person, order a company to change its name within such period as may be specified by the court on the grounds that the name of the company —

(a) Is likely to mislead the public or gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public; or

(b) Is likely to cause damage to any other person.”

The principles of the law of passing off are well settled in my view. They seek to protect business from unfair competition where one business entity seeks to feather its nest from the goodwill and reputation built up by the plaintiff business enterprise through confusing the public.

The requirements of the delict were well researched upon and discussed by GILLESPIE J in FW Woolworth & Co (Zimbabwe) (Pvt) Ltd v The W Store and Another 1998 (1) ZLR 93 (HC) where…, he describes the delict in the following terms:

“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 public may be confused into believing that the business of one is, or is concerned with, that of another: per RABIE JA in Capital Estate & General Agencies (Pty) Ltd & Ors v Holiday Innes Inc & Anor 1977 (2) SA 916 (A) at 929.

The 'representation' referred to may be any act by one trader that is calculated to deceive or cause confusion between his goods or business and those of a rival. The act might include the adoption of a trademark, a get-up, or any distinguishing sign or slogan. Where a trader does use a mark so closely resembling that of another as is calculated to cause confusion, 'a trader may be held to have impliedly represented that his goods are those of his rival or that they are connected in some way with his rival. If such conduct causes or is calculated to cause his rival damage, either in the form of diversion of custom or damage to or misappropriation of his goodwill, then the delict of passing-off is committed…,.:' per CORBETT CJ in Royal Beech-Nut (Pty) Ltd v United Tobacco Co Ltd 1992 (4) SA 118 (A) at 122D.”

See also Kellogg Co v Cairns Foods Ltd 1997 (2) ZLR 230 (SC).

In my view, the statutory remedy of compelling a competitor company to change its name under section 24 of the Companies Act is akin to but not the same with the delict of passing off.

The right to protect a name under the delict of passing-off arises only when the name has acquired a reputation. Thus, it is a requirement, under the delict, for the applicant to establish a reputation or goodwill in the name.

It appears to me that, under the statute, all that the applicant needs to prove is that the respondent's name is likely to mislead the public or gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public or is likely to cause damage to any other person.

My reading of the section is that such an applicant need not prove that it has a reputation or goodwill or a clientele that will be confused by the similarities in names. The emphasis of the section appears to me to be the protection of the public from being misled rather than the protection of the applicant company's good name and business against competition.

I am fortified in my belief by the wording of section 24(13) of the Companies Act [Chapter 24:03] which gives the right to any person to approach the court to compel a change of name on the grounds listed in the section.

In my view, in terms of the section, a member of the public could approach the court under the section.

Now, it would be absurd to require such an applicant to satisfy the requirements of a passing off action by showing that they have a reputation or goodwill to protect.

It is on the basis of the above that I do not agree with counsel for the respondents submission that the applicant cannot succeed because it did not show that it had goodwill in the name sought to be protected.

In casu, the plaintiff has argued that the similarities in names between the applicant and the first respondent are such that the public will be misled into believing that one is the other.

I tend to agree.

The two names have the same root name “Southbay.” This is not a common name in this country as it does not denote a place, a location, or anything familiar with the populace. It is an alien name which can only be recognized in connection with the business connected to it. Both companies are in the real estate business and the public are likely to confuse one for the other. The situation may have been different had the two companies been in very disparate businesses such that one would stand alone distinctly from the other.

In defence of the registration of the first respondent, counsel for the respondents has also submitted that the registration is unlikely to mislead as the first respondent is not registered to deal with the public but to manage the property portfolio of it parent company. In this regard, he relied on the fact that the first respondent has not sought to register with the Estate Agents Council and has not traded with the public.

In a passing off action, it is yet another requirement of the delict that the public be misled to such an extent that they mistake one business venture for the other and take away the business of the reputation-holder to the imposter.

I do not read such a requirement in section 24(13) of the Companies Act. I do not even think that such a requirement is necessary.

As I have pointed out above, it appears to me that the section is primarily enacted for the protection of the public. Thus, if it is proved that the public is likely to be misled, the application to compel the respondent should succeed even if the respondent has no intention of engaging the public.

In casu, I hold that the public is likely to be misled because the respondent has actually placed a notice with its name in the street, outside its offices in the city centre. This can only be for the information of the public for its holding company requires no such notice of its existence.

On the basis of the foregoing, I am of the view that the registration of the first respondent is likely to mislead the public and must be changed.

In the result, I make the following order:

1. The first respondent be and is hereby ordered to change its name within six (6) weeks of the date of this order.

2. The first respondent shall bear the applicant's costs.

HB20-14 : VELD CLIFF ENGINEERING (PVT) LTD T/A FIREMATIC CONSULTING ENGINEERS (represented by WATSON MURUVIWA) vs FIREMATIC CONSULTING ENGINEERS (PVT) LTD and VENSON GAMBIZA and NOMTHANDAZO NGWENYA
Ruled By: MOYO J

This is an application wherein the applicant seeks an order in terms of Section 24(13) of the Companies Act [Chapter 24:03]. The applicant is Veld Cliff Engineering (Pvt) Ltd t/a Firematic Consulting Engineers. The first respondent is Firematic Consulting Engineers (Pvt) Ltd. The second and third respondents are Directors in the first respondent. The facts of ...

This is an application wherein the applicant seeks an order in terms of Section 24(13) of the Companies Act [Chapter 24:03].

The applicant is Veld Cliff Engineering (Pvt) Ltd t/a Firematic Consulting Engineers. The first respondent is Firematic Consulting Engineers (Pvt) Ltd. The second and third respondents are Directors in the first respondent.

The facts of the matter, which are not in dispute, are that the first respondent used to be a Director in the applicant. The third respondent used to be an employee and a Branch Manager in the applicant.

Since January 2005, the applicant's company used the trading name Firematic Consulting Engineers. On 17 July 2012, the first respondent was registered. On 18 July 2012, the third respondent resigned from the applicant. On 30 August 2012, the second respondent resigned from the applicant. From 2005, the applicant company used the trading name Firematic Consulting Engineers for all purposes, as evidenced by Annexure A, being the VAT registration certificate with the Zimbabwe Revenue Authority. The applicant's case is that the second and third respondents registered a company in a name that the applicant company is trading in and they are engaged in exactly the same business that the applicant company is engaged in.

The applicant contends that the first respondent's name is thus likely to mislead the public and cause economic harm to the applicant.

On the other hand, the respondents contend that section 24(13) of the Companies Act [Chapter 24:03] provides that “the court”, meaning the applicant, should have proceeded by way of a court application not a chamber application.”

This view is incorrect as the definition of court is not given in the Companies Act [Chapter 24:03]; and in the High Court Rules, Order 1 Rule 3 thereof, the Rules specifically state that “in these rules”, so that meaning cannot be extended to a situation beyond the High Court civil rules. It is in these Rules that the definition of a court application and a chamber application are given.

The respondents further contend that the applicant has alternative remedies in the form of either instituting an action of passing off, or proceeding in terms of Section 24(7) as read with Section 24(10) of the Companies Act [Chapter 24;03]. The respondents further contend that the applicant is not registered as Firematic Consulting Engineers but that the first respondent is, therefore, the applicant has no claim whatsoever to a name they did not protect through registration with the Companies office.

Section 24(13) of the Companies Act [Chapter 24:03] provides as follows:-

“The court may, at any time, on application by any person, order a company to change its name within such period as may be specified by the court on the grounds that the name of the company -

(a) Is likely to mislead the public or gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public; or

(b) Is likely to cause damage to any other person.”

The respondents contend that the applicant has an alternative remedy, either through the common law action of “passing off” or in terms of Section 24(7) of the Companies Act [Chapter 24:03].

Section 24(7) of the Companies Act [Chapter 24:03] provides as follows:-

If the Registrar, after due enquiry and considering any evidence that may be placed before him, considers that a company is registered whether originally or by reason of a change of name, by a name which:-

(a) In his opinion, is likely to mislead the public or to cause offence to any person or class of persons or is suggestive of blasphemy or indecency; or

(b) He considers to be in conflict with the provisions of this Section, or undesirable for any other reason, he may order the company, in writing, to change its name, and the company shall thereupon do so within a period of six weeks from the date of the written order or such longer period as the Registrar may see fit to allow:

Provided that the Registrar may not make such an order if a period of more than 12 months has elapsed since the date of the registration of the company or the change of name of the company, as the case may be.”

The first respondent was registered on 17 July 2012. This application was brought on 15 January 2013 - well within the 12 months given to the Registrar to act in terms of Section 24(7) of the Companies Act [Chapter 24:03].

HH791-15 : NUVERT TRADING (PRIVATE) LIMITED t/a TRIPLE TEE FOOTWEAR vs HWANGE COLLIERY COMPANY
Ruled By: MATHONSI J

By a certificate of change of name, Form C2, dated 8 November 2004 the name Wankie Colliery Company Limited was changed, following a special resolution, to Hwange Colliery Company Limited.

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Law Portal
Zimbabwe

Company or Business Trade Name Protection and Change of Name

HH150-09 : SOUTHBAY REAL ESTATE (PVT) LTD vs SOUTHBAY PROPERTIES (PVT) LTD and G RATISSO and CHIEF REGISTRAR OF COMPANIES
Ruled By: MAKARAU JP

HB20-14 : VELD CLIFF ENGINEERING (PVT) LTD T/A FIREMATIC CONSULTING ENGINEERS (represented by WATSON MURUVIWA) vs FIREMATIC CONSULTING ENGINEERS (PVT) LTD and VENSON GAMBIZA and NOMTHANDAZO NGWENYA
Ruled By: MOYO J

HH791-15 : NUVERT TRADING (PRIVATE) LIMITED t/a TRIPLE TEE FOOTWEAR vs HWANGE COLLIERY COMPANY
Ruled By: MATHONSI J

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Law Portal Zimbabwe

Company or Business Trade Name Protection and Change of Name

HH150-09 : SOUTHBAY REAL ESTATE (PVT) LTD vs SOUTHBAY PROPERTIES (PVT) LTD and G RATISSO and CHIEF REGISTRAR OF COMPANIES Ruled By: MAKARAU JP

HB20-14 : VELD CLIFF ENGINEERING (PVT) LTD T/A FIREMATIC CONSULTING ENGINEERS (represented by WATSON MURUVIWA) vs FIREMATIC CONSULTING ENGINEERS (PVT) LTD and VENSON GAMBIZA and NOMTHANDAZO NGWENYA Ruled By: MOYO J

HH791-15 : NUVERT TRADING (PRIVATE) LIMITED t/a TRIPLE TEE FOOTWEAR vs HWANGE COLLIERY COMPANY Ruled By: MATHONSI J

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Law Portal
Zimbabwe

HH150-09 : SOUTHBAY REAL ESTATE (PVT) LTD vs SOUTHBAY PROPERTIES (PVT) LTD and G RATISSO and CHIEF REGISTRAR OF COMPANIES
Ruled By: MAKARAU JP

HB20-14 : VELD CLIFF ENGINEERING (PVT) LTD T/A FIREMATIC CONSULTING ENGINEERS (represented by WATSON MURUVIWA) vs FIREMATIC CONSULTING ENGINEERS (PVT) LTD and VENSON GAMBIZA and NOMTHANDAZO NGWENYA
Ruled By: MOYO J

HH791-15 : NUVERT TRADING (PRIVATE) LIMITED t/a TRIPLE TEE FOOTWEAR vs HWANGE COLLIERY COMPANY
Ruled By: MATHONSI J