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.
At the hearing of the matter, the
first and second respondents took a point in limine,
objecting to the jurisdiction of this court.
Mr Tawona
for the respondents argued that the matter was before the third
respondent to whom a letter of objection had been addressed by the
applicants and who to all intents and purposes, was still seized with
the matter. He argued that the process started by the parties before
the third respondent should be completed before the court exercises
its jurisdiction in the matter.
On the turn, I dismissed the
point in
limine and
indicated that my reasons would follow.
The jurisdiction of this court over all matters and people in
Zimbabwe is a power inherent in the court as the only superior court
in the land with unlimited jurisdiction at first instance.
It is not ousted save by the clearest language in a statute.
In instances where this court has concurrent jurisdiction with other
bodies and tribunals set up by law, this court may, in its
discretion, withhold its jurisdiction to allow the inferior tribunal
to complete its processes. The court has at times withheld its
jurisdiction to allow domestic and statutory remedies to be
exhausted. The test as to when this court will withhold its
jurisdiction is in my view well settled.
In a judgment that has since been
endorsed by the Supreme Court, MTAMBANENGWE J observed in Tutani
v Minister of Labour & Ors
1987 (2) ZLR 88 (H), at 95D that where domestic remedies are capable
of providing effect redress in respect of the complaint and the
unlawfulness alleged has not been undermined by the domestic remedies
themselves, a litigant should exhaust his domestic remedies before
approaching the courts unless there are good reasons for not doing
so. (See Girjac
Services (Pvt) Ltd v Mudzingwa
1999 (1) ZLR 243 (S)).
Mr Mushuma,
correctly in my view, observed that the third respondent in this
matter has shown a clear disinclination to deal with the matter.
He has been seized with the complaint since November 2008 and all he
has done is to address a single letter to the first respondent.
When served with this application, he did not oppose it or at least
indicate to the court that he is actively dealing with the matter and
requires time to complete his processes. Thus, the statutory remedies
have proved incapable of providing redress in the matter and the
machinery set up to effect redress at the domestic level may have
compounded the cross-complaints brought by the parties about the two
registrations.
On the basis of the above, I therefore held that the applicant had a
good reason for approaching the court without first exhausting the
statutory remedy.
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 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 Act or by way
of review at common law.
It is trite in my view that the
registration of names in terms of the 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 Act but
also judiciously. It is thus a quasi judicial exercise that confers
not only corporate status on the company so registered bit 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 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 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 Act:
(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 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 further its nest from the good will 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 at page 102 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 trade mark, 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 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
Act 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 Mr
Tawona's 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, Mr
Tawona 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 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 6 weeks of the date of this
order.
2. The first respondent shall
bear the applicant's costs.
Mushuma Law Chambers, applicant's legal practitioners
Muza & Nyapadi, respondents' legal practitioners
