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[2010] ZAGPJHC 82
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First Rand Bank v National Stadium South Africa (27000/2010) [2010] ZAGPJHC 82 (11 August 2010)
Links to summary
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
CASE NO: 27000/2010
In the matter between:
DATE
:
11/08/2010
In the matter between
FIRST RAND BANK Applicant
and
NATIONAL STADIUM SOUTH
AFRICA Respondent
JUDGMENT
VICTOR J:
[1] This is an
urgent application concerning the naming rights of the sports stadium
where the recent successful 2010 FIFA World
Cup™ was hosted by
South Africa. The forthcoming international events which are to take
place at this stadium, namely the
South African Bafana Bafana and
Ghana game today and the tri-nations rugby game between the South
African Springboks and the New
Zeeland All Blacks on 21 August 2010,
are all features which have to be addressed and are relevant to the
question of urgency.
The applicant’s concern is that the
tickets will not refer to the stadium as the First National Bank
Stadium, but some other
name. The commercial implications are vast
and important to all the parties.
[2] As will become
evident from the facts in the judgement, the application is urgent as
also the handing down of this judgement,
despite the fact that novel
points of law have been raised regarding naming rights in South
African law. At this stage of the
proceedings neither the court, nor
the parties have had the benefit of time to be more expansive on this
novel point. I am assured
by senior counsel appearing that there is
no reported South African case authority directly in point.
[3] The applicant
seeks to interdict, restrain and prohibit until 6 July 2014 or until
6 July 2016 the first and second respondents,
(“the
respondents”), from publishing, marketing, disseminating or in
any way referring to the said stadium situated
on Portion 4 of the
Farm Rand Skou, 324, Registration Division, IQ, the Province of
Gauteng, held by the third respondent (the
State) under Deed of
Transfer no T3762/2008, by any other name other than the
First
National Bank Stadium
or
FNB
Stadium
.
[4] It also seeks
to interdict the respondents from purporting to sell or otherwise
dispose of the applicant’s naming rights
to the Stadium to any
third party and an order directing and compelling the respondents
until 6 July 2014 or until 6 July 2016
from utilising the name
First
National Bank
or
FNB
Stadium
when referring to the Stadium in question, be it by way of
publication, advertisement, marketing campaign, website, article or
other means. The fourth respondent, the City of Johannesburg (The
City) does not acknowledge the applicant’s entitlement
and
opposes the relief.
[5] The various
contracts concluded between the parties and the execution thereof is
not in dispute. In dispute is the proper application
and the meaning
of the rights emerging from the contracts and whether the servitude
registered by the applicant in respect of its
naming rights is good
in law. The question of a restriction on an owner’s right to
alienate, sell and deal with n
aming
rights
per
se
is novel. I am of the view that despite the points being
res
nova
and that legal principles pertaining to ownership may have to be
reconsidered in time
1
to cope with the rapid changes in commerce, the law and facts
pertaining to ownership as raised in this application can be
determined
upon a proper application of first principle.
RELEVANT
BACKGROUND FACTS.
[6] On 31 January
2007 the applicant concluded a written agreement with several
parties, in particular the third respondent, the
Republic of South
Africa acting through the Department of Public Works, (the State) in
terms whereof it granted the applicant rights,
by way of contract and
a subsequent registration of a personal servitude to name the
Stadium. Clause 4.2 provides,
4.2. For the sake of clarity the
state, the trust and Soccer City hereby grant to First National Bank,
the exclusive right to name
the stadium (First National Bank
Stadium), or FNB Stadium or by any other such name as may be chosen
by First National Bank from
time to time. The state, the trust and
Soccer City shall take steps and do all things necessary to ensure
and procure that First
National Bank acquires and retains such rights
for the period as set out above.”
[7]
In
addition clause 4.4.5 provides,
“
4.
4.5.
In compliance with the requirements as specified by the Federation
International Football Association for the stadium to be
elected and
the venue for the competition.
4.4.5.1. First
National Bank consents to the name and or the logo of the stadium
being changed
for
a period commencing 3 months prior to the opening of the competition
and concluding 1 week after the last match and or event
or the
competition to be held at the stadium.”
[8] Clause 7.2
provides that the applicant would be entitled to register a personal
servitude against the property in respect of
its rights. The right
of cession as described in the contract was not carried through into
the wording of the servitude, as registered.
The property was duly
transferred to the State on 17 April 2008 and the applicant’s
personal servitude was registered at
the same time.
[9] Clause 2.1 and
clause 2.1.1 of the servitude provides,
“
2.1. That with the effect
from the signature date the state hereby grants as a personal
servitude to First National Bank the right
to name the stadium and
erect naming boards therein, as more fully set out in the agreement,
which right shall endure for a period
of 10 years from 7 July 2004.”.
“
2.2.1. The stadium shall be
known as First National Bank Stadium or such other names may be
designated from First National Bank
from time to time in agreement
with the state.”
THE 1988 AGREEMENT
[10]
Historically
the Stadium, except for the period during the 2010 FIFA World Cup™,
was known as the First National Bank Stadium.
The applicant has a
long history with this facility, dating back to 26 October 1988. At
that stage the applicant agreed to fund
the building of the first
phase of the previous Stadium, hire certain advertising space at the
previous stadium and commissioned
a work of art for the previous
Stadium. It agreed to make an amount of R15 million available for
its construction. As a consideration
for this the applicant obtained
naming rights over the previous Stadium. The 1988 agreement provided
that the applicant would
receive the maximum positive publicity and
exposure through media coverage and agreed to pay R5 million as
advertising revenue.
THE 2004
AGREEMENT
[11] A further
agreement was concluded o
n
7 July 2004 and provided that the applicant waived its right to be
paid any amounts then outstanding and waived other conditions,
provided that the naming rights recorded in the facility agreement
endured for a further 10 years and that it was entitled to renew
the
naming rights for a further period of 2 years upon the payment of R10
million and prior to the renewal period could renew the
naming rights
for a further 10 years at a market-related price to be agreed between
the parties.
[12] In clause 5.2
of the 2004 agreement the State expressly undertook not to give a
right to anyone else to name the stadium for
the duration of the
agreement. There is a non variation clause in 13.2 of the 2004
agreement. Some 2 weeks after the World Cup
ended and on 24 June
2010 the applicant confirmed this fact by way of releasing a press
statement confirming its rights to name
the Stadium, following the
completion of the 2010 FIFA World Cup™.
[13] On 30 June
2010 in response to the press statement the respondents posted an
article on their website, alleging that they had
acquired the full
management rights to the Stadium, including naming rights and had
the right to sell the naming rights of the
Stadium and that their
plans were in an advanced stage to sell the naming rights. The
respondents’ article claimed that
no relationship existed
between the Stadium and the applicant and that the Stadium would
officially be referred to as the National
Stadium. This claim was
carried in the most widely read South African daily newspapers.
[14] It is the
applicant’s contention that the first respondent “
brazenly
advertised the second respondent’s purported entitlement to
sell the naming rights to the stadium and more importantly,
that it
was in an advanced stage to do so.”
Such
conduct was alleged to be reckless. The applicant alleged the first
and second respondents had been furnished with a copy of
the
agreement, as well as the servitude and had as at date of the
application being argued, not acknowledged the applicant’s
right to name the Stadium and retract the statements made by them in
the article. The applicant contends that the respondents’
knowledge of the applicant’s rights was known to them well
before the publication of the article and before the first respondent
concluded an agreement with the City.
[15] The applicant
claims that it will suffer irreparable harm if the said Stadium
should be advertised by any other name. The
prejudice which the
applicant claims it will suffer is irreparable, for example the
stadium can accommodate at least 90 000 spectators
and high
attendance is anticipated for the forthcoming rugby match. The
applicant is concerned that in the interim the Stadium
could be
renamed by a third party, creating confusion in the marketplace.
[16] The
respondents contend that the marketing of the tickets under the name
National Stadium is impossible to reverse. No persuasive
detail
together with technical data was given for this contention.
THE EVIDENCE OF THE RESPONDENTS’
EXPERT ON SPORTS MARKETING.
[17]
I accept the aspects of the affidavit deposed to on behalf of the
respondents by one Mr. Graham Jenkins, an expert in the sports
marketing business, where he highlights the commercial implications
of naming rights. He drew attention to the fact that the historical
nature of the events hosted at this Stadium ranged from sporting
events, political events, religious, cultural gatherings, musical
concerts and the like and this constitutes a component of the value
of the naming rights.
[18]
During
the build up to the 1994 elections political rallies took place there
and it was the venue where former President Nelson
Mandela presented
his first speech after being released from prison in 1994. It also
hosted football for many years and recently
of course, the opening
and closing ceremony of the 2010 FIFA World Cup™.
[19] The location
of the Stadium adds value to the naming rights, because it is in the
centre of South Africa’s economic and
industrial hub. The city
also has the highest population demographic in South Africa. There
is an excellent road and rail infrastructure
and it is in close
proximity to Soweto. The status of the Stadium is perceived by the
local and international community as a major
contribution to the
value of the naming rights. It is the largest stadium in Africa and
holds world class facilities. It resembles
a calabash, a unique
South African symbol and is recognisable as Soccer City throughout
the world. For these reasons it has achieved
iconic status. The
Professional Soccer League, (PSL) according to Mr. Jenkins have
committed to using the new Stadium to host
their cup final matches.
None of the features I have mentioned in Mr. Jenkins’ affidavit
have been disputed by any of the
parties. It is clear that high
profile events will take place at the Stadium, attracting the entire
spectrum of the community
and the media.
[20]
He
also referred to various examples of the value of naming rights in
respect of international stadia, for example The City Group
Inc. paid
an amount of US $400 000 000, for a 20 year right to name the New
Mets stadium. The price for the local Coca Cola Park
Stadium,
previously known as Ellis Park, commenced at R7 million per annum
and escalated over a 5 year period to R12 million per
annum.
THE
STADIUM
MANAGEMENT AGREEMENT
[21] T
he
legal relationships between all the respondents are as follows. The
City has concluded a lease with the State to lease the Stadium,
in
turn the City has concluded an agreement with the respondents to
manage the Stadium. The agreement is known as the stadium management
agreement. The respondents contend that there is great commercial
value attaching to the naming rights of the new Stadium. Their
contention is that they should have the naming rights in order to
comply with their obligations to manage the new Stadium under
the
stadium management contract. According to the respondents they did
not know of the naming rights granted to the applicant
under the
servitude and in any event the applicant has not paid a proper
financial consideration for the naming rights in respect
of the
previous stadium.
[22] It is the
respondents’ case that the applicant is claiming rights granted
to it beyond those contained in the registered
servitude. It is also
the respondents’ case that the wording of the interdictory
relief sought by the applicant seeks to
use the respondents’
resources to do its marketing. The respondents also contend that in
order for the first respondent
to achieve its financial commitments
set out in the service level agreement concluded with the City, the
naming rights would be
a major component of the new Stadium’s
potential revenue. Without it the City would be hard pressed to meet
the maintenance
costs of the new Stadium. In addition the respondents
contend that the right to name the Stadium constitutes an important
material
term of the stadium management agreement.
[23] I find that
the respondents were aware that the applicant was the holder of
certain naming rights in respect of the Stadium
albeit that they
assumed that these rights referred to the Stadium prior to it being
demolished and rebuilt. It is curious that
the first respondent
contends that despite diligent attempts it could not assess the
validity or the extent of the applicant’s
naming rights. No
detail is given. The undisputed facts do not support this. Of
importance is the fact that at the time of concluding
the stadium
management agreement in January 2009, the respondents clearly and in
anticipation of this potential problem and before
signing the stadium
management agreement, held a meeting with the applicant’s brand
director, Mr. Derrick Carstens, in order
to obtain an understanding
of the applicant’s naming rights. The applicant’s brand
director was adamant that the applicant
had the naming rights of the
Stadium and it was contended by the respondents that the applicant
refused to explain the ambit of
the applicant’s rights and
refused to give documentation supporting the rights.
[24] Notwithstanding
the respondents’ apparent lack of knowledge or understanding of
the applicant’s naming rights they
ensured that there was a
built in protection clause. The built-in protection clause refers to
the fact that the City would be obliged
to pay each year to the first
respondent the sum of R8 million, the reason being that the sum of R8
million was far less than the
value of the annual revenue derived
from the naming rights. The first respondent was confident that the
naming rights’ revenue
would be between R15 million and R20
million per year. This clause was inserted based on the respondents’
understanding
after reading the Servitude and the rights granted to
the applicant.
[25] Despite the
fact that the first respondent contends that it was only on 7 July
2010 that it first became aware of the details
in the signed
agreements between the applicant and the State, I find based on what
appears above that the applicant, represented
by Mr Carstens did hold
a meeting with the respondents represented by Mr Stephens in August
2008 and the question of the naming
rights was traversed.
[26] According to
Mr. Carstens an invitation was given to Mr. Stephens to raise the
issue with the applicant’s attorney and
this was not taken up.
During August or September 2009 the position was again explained to
an advertising salesperson appointed
by the respondents and according
to the applicant, the advert was prepared on the basis that it
referred to the First National
Bank Stadium and this was emblazoned
on the advert. The advert did not refer to the sale of the naming
rights of the Stadium, but
to the naming rights of the precinct.
THE LAW
[27] I
n
the light of the above the respondents knew of the applicant’s
rights. It is a question of how they interpreted those rights
in law.
One of the basic concepts of private law of ownership is that it
confers control over the
res,
it is the most comprehensive real right a person can have in the
thing….This apparently unfettered freedom is, however
a half-
truth.”
2
.
The contents of the right of ownership are extensive and embrace the
power to use and enjoy the
res
.
The applicant submits that the State as owner of the land was
legally entitled to grant the applicant naming rights in the manner
described, the right to name being unfettered. The respondents on
the other hand contend that there is no legal basis for this.
There
is no doubt that the traditional concept of ownership imbedded in the
Roman Dutch tradition and the rights flowing are in
a state of
evolution.
[28] Authors and
jurists have commented that compelling commercial considerations and
statute, the most important of which in South
Africa, is inter alia
Section 25 of the Constitution
,
places
the traditional methodology of categorising ownership rights under
scrutiny and have called for these categories to be expanded
and
possibly redefined to keep in line with its constant expansion.
[29] Authors
3
opine
that the concept of property is developing far beyond the classical
meaning attached to it by the common-law. The focus on
a corporeal
object is the traditional principle where the dominance of ownership
as a real right still prevails. The fragmentation
of real rights of
ownership into incorporeal saleable items has become a commercial
reality.
[3
0]
Davis
J in Qualidental Laboratories (Pty) Ltd V Heritage Western Cape and
Another
4
“
A balance must be struck
between the protection of ownership and the exercise of entitlements
of the owner regarding third parties
on the one hand, and the
obligations of the owner to the community on the other. See in this
regard A J van der Walt and G J Pienaar
Introduction to the Law of
Property 4 ed at 50. See also the manner in which the Constitution
(which includes environmental rights)
has shaped the nature and
protection of ownership, in the judgment by Langa ACJ (as he then
was) in President of the Republic
of South Africa and Another v
Modderklip Boerdery (Pty) Ltd (Agri SA and Others, Amici Curiae)
[2005] ZACC 5
;
2005
(5) SA 3
(CC)
(2005 (8) BCLR 786).
”
[3
1] Whilst
the concept that rights arising out of ownership can and have been
enforced, historically it has not been considered absolute.
Ownership is not absolute, there are limitations. The question for
determination is whether the State as owner of the property
could
fragment or sever an aspect of its ownership eg. naming rights in
favour of the applicant. Authors in other jurisdictions
in the field
of law on property and ownership have commented extensively.
Vandevelde
5
commentary on US law of property has commented on what he terms the
dephysicalisation
of property law where intangible aspects of property law such as
goodwill are severable.
[32] Professor Sjef
van Erp
6
suggests that in the same way that there was a movement from the
classical model of contract law driven by considerations of modern
case law, commerce and other compelling considerations led to the
concept of “dynamics of contract”
7
.
Similarly in the field of property law and ownership a more
appropriate model for the development of property law is called for
in an era characterised by global and economic integration hence
supporting the concept of
dephyisicalisation
of
property and ownership.
[
33] In
my view the concept of severing naming rights from the right of
ownership may well constitute the
dephysicalisation
of
property and an acceptable form of fragmentation of ownership. Whilst
our South African jurisprudential writers refer to entitlements
which
an owner can dispose of, the owner retains the reversionary right.
Once the entitlement is extinguished, the ownership becomes
unencumbered again
8
.
Upon a proper interpretation of the applicant’s contractual
rights as well as the registered servitudinal right, I am of
the view
that the personal right of naming the Stadium is good in law. Whilst
various legal principles may apply the proper interpretation
of the
naming rights can nonetheless be done on first principle combining
various fields of law. In
Makhanya
vs. University of
Zululand
9
Nugent
JA in dealing with the law of precedent made the following
observation:
“
[8]
The
law does not exist in discrete boxes, separate from one another.
While its rules as they apply in various fields are often collected
together under various headings, that is, for convenience of academic
study and treatment that should not be allowed to disguise
the fact
that the law is a seamless web of rights and obligations that impact
upon one another across those fields.
”
THE ISSUES IN
DISPUTE.
[34] The first and
second respondents’ first attack on the applicant’s case
is that the right to name a Stadium is not
a personal right capable
of registration in terms of The Deeds Registry of Act 7 of 1937.
Secondly, even if it could be registered,
the right to name the
Stadium came to an end when the old Stadium was demolished and the
new one built. Thirdly, the respondents
have no contractual
nexus
with the applicant and consequently no right to the relief sought,
the same being for the City. Fourthly, no case has been made
out in
the founding affidavit, nor have the necessary allegations been made
in the affidavits to justify the interdictory relief.
[35] The City
attacks the applicant’s case on similar grounds. No new facts
are alleged. It does however attack the applicant’s
locus
standi
to bring these proceedings and submits that it is only the State that
can do so, since the applicant has a contract with the State.
The
first and second respondents also raise this argument.
[36] A court should
not demure from enforcing contractual rights that are first in time
and good in law because a claimant claims
that the current contract
in operation does not enjoy the optimal commercial reward for the
City and the public based on the reasoning
that the first respondent
could have sold the naming rights and added millions of rand to the
City’s coffers for the administration
of the Stadium.
[37] In this case
the respondents have made no counterclaim to set aside the
contractual and servitudinal rights granted by the
State to the
applicant. The validity of the 2004 contract and the registered
servitude stand unchallenged at this stage, it is
only their meaning
and applicability that is challenged and it is for this reason that
despite the fact that naming rights are
res
novo
,
the court can decide the issues raised on a proper application of
first principle
THE SERVITUDE
[38] The applicant
relies on a contractual provision in the contract it concluded with
the State. It was granted a personal right
and the servitudinal
right to name the Stadium. The basis of the applicant’s case
is that these rights are conjunctive.
The applicant’s
submission that the right to name a property is a competent component
of ownership and this question as
to whether it is capable of
registration finds resonance in a range of statutes and the
common-law. The applicant gave examples
for this submission, such as
the Local Government Ordinance 17 of 1939, read together with the
Town Planning and Township Ordinance
15 of 1986, Transvaal, which
provide that the owner of the township has to name the township and
all the streets in the township.
In addition a further example is
that the first members of a company have to give the company its name
and a further example is
that the owner of a business must name it in
terms of the
Business
Names Act 27 of 1960
.
In addition, if a right diminishes the owner’s dominium over
the
res
it confers on the holder of those rights certain powers against the
whole world. In other words, by registering the servitude
there is a
subtraction of the owner’s dominium. The subtraction test is
augmented by the intention test, which the applicant
contends can be
clearly adduced from the contract. In other words no one else can
alienate or sell the naming right component for
a period of 10 years.
The respondents submit that the
placing of signage referred to in the servitude amounts to a duty
placed on the State to publish
and market the Stadium and is an
aspect which is fatal to the registration of the servitude. This
fact is described as the “fatal
missing link” in the
applicant’s case. Upon a proper analysis of the wording of the
servitude and the rights which
the respondents enjoy in terms of
their contract with the City, both the applicant and the respondents
are entitled to advertise
their respective clients’ branding.
These features are congruent. The only difficulty for the
respondents of course, is
that they will not be able to sell the
naming rights of Stadium for the duration of the period and the
extension period.
[39]
In
order to find whether the personal servitude registered in favour of
the applicant is good in law, the principle of
servitus
in faciendo consistere non potest
is applicable. The servient tenement may be required to tolerate
something to be done to it or refrain from doing something means
the
benchmark is passivity. On a proper application of this principle I
find that the State’s role is characterised by acquiescence
in
that it has to tolerate the dominant serviens to name the stadium.
It also has to tolerate the applicant displaying advertising
boards.
The State does not have to do so, it is the applicant who has to put
up the boards. Fagan J in
Van
der Merwe v Wiese
10
interpreted the principle of acquiescence in the
Dig.
8.1.15.1
as a useful guide only. The criticism of acquiescence as a useful
guide was criticised by the author, Van der Merwe
11
.
However Van der Merwe
12
postulates two requirements for the registration of a servitude: the
servitude must not be too onerous and that the servient tenens
must
bring some advantage to the dominant tenens. Upon a proper
application of these two principles and the “useful guide”
of acquiescence, the personal servitude was properly registered. A
further requirement is that a personal servitude may not be
alienated
to a third party. In this case the wording of the registered personal
servitude does not include the right to cede the
naming right, as
provided for in the contract between the State and applicant.
[40]
The
respondent’s submission that the underlying principle of a
servitude is that a real right confers on the owner of the
dominant
tenant a direct right to use and enjoy an aspect of the thing on
which it vests. The dominant tenens must be able to control
the
physical aspect of the property directly. According to the
respondents the naming right does not fall into such a category.
Section
63 of the Deeds Registry Act
provides
that a condition in a Deed which does not restrict the exercise of
any right of ownership in the respect of the immovable
property shall
not be capable of registration. Once there is acceptance that a
fragmentation of rights arising out of ownership
is possible or the
dephysicalisation
of ownership allows for rights to be severed then that particular
fragment of ownership is a real right capable of registration.
I find
that the naming right component of ownership is capable of
registration as a personal servitude.
[41] There is no
statutory limitation on the registration of the servitude in
question. The two statutes dealing with the stadium
in question and
indeed all the stadia which were constructed for the World Cup, in
particular, on 7 September 2006
the
2010 Fifa World Cup of South Africa Special Measures Act 11 of 2006
and the second statute,
2010
Fifa World Cup South Africa Special Measures Act 12 of 2007
,
do not assist in adjudicating whether the applicant’s rights
are capable of registration or not and only serve to claim
the naming
of the stadium for the duration of the World Cup. In the result I
find that the said statutes do not interfere with
any aspect
contracted for by the applicants.
[42] The applicant’s rights in
the material Deed of Servitude are spelt out in clause 2.1.
"2.1 With effect from the
signature date, the state hereby grants as a personal servitude to
FNB the right to name the stadium
and erect naming boards therein as
they are fully set out in the agreement which right shall endure for
a period of 10 (ten) years
from 7 July 2004.
2.2 The rights referred to above
are those set out in the agreement and shall inter alia be on the
following terms and conditions.
2.2.1 The stadium shall be knows as
the FNB stadium or such other name as may be designated by FNB from
time to time in agreement
with the State.
2.2.2 In keeping with the FNB
Rights the name “FNB Stadium” shall be prominently
displayed on all outer perimeter entrances
and exits of the Stadium
and on not less than four prime sky board sites in the Stadium. FNB
accepts that during periods of reconstruction
of the Stadium, the
skyboards may not be able to be displayed and that any re-design may
require the sky boards to be relocated.
In the latter event, FNB
shall be granted a preferent right to choose the sites for its
relocated sky board. The parties agree
that any relocation of the
skyboards shall take place in consultation with FNB in an effort to
facilitate the placement of the
skyboards in the Stadium so as to
afford to FNB similar exposure as previously provided to FNB prior to
any relocation of the skyboards.
2.2.3 FNB may, at any time, in its
discretion, terminate the naming rights by written notice to SAFA, in
which event SAFA shall
be obliged and FNB shall be entitled, to
forthwith remove all signs time, lettering or hoardings from the
\Stadium and its environs
which reflect the name “FNB Stadium”
or any other name substituted therefor pursuant to clause 2.2.1 and
any logos
or distinctive marks associated with those names.”
DEMOLITION OF THE STADIUM
[43] The further defence relied on by
the respondents is that the old Stadium was demolished and if indeed
there was any such right,
it came to an end when it was demolished.
Upon a careful reading of the agreement it is clear that the
applicant agreed to the
destruction of the stadium. The context amply
demonstrates that the reconstruction of the Stadium was foreseen and
was the
causa
for the 2004 agreement in the first place. It is important to note
that the rights set out in the notarial Deed of Servitude,
read
together with the rights flowing from the 2004 agreement, are clearly
spelt out. The draftsperson of the 2004 agreement was
well aware
that the Stadium would be reconstructed during the period of the
servitude and that there would be skyboards and other
signs
reflecting the name FNB Stadium and that these would have to be
removed during reconstruction.
[44] The applicant relies on the
Oxford English Dictionary of ‘reconstruction’ meaning:
the action or process of reconstructing,
rebuilding or reorganising
something’. According to the respondents the fact that the
Stadium was rebuilt, meant the extinguishment
of the servitude. The
principle of the Roman Maxim
superficio
solo quedit and omne quad ed idificato solo quedit
has
to be considered
.
In
an article by Lewis
1979 SALJ 94
, now Lewis JA in the Supreme Court
of Appeal she considered the various conflicting dicta in a number of
judgments and opined that
it is now beyond doubt that a building
annexes to the land in particular if regard be had to the test laid
out by Van Vincent AJA
in the case of
Theatre
Investments (Pty) Limited v Butcher Brothers
13
.
Prior to that there was some debate about the ambit of the test to
be utilised in assessing whether a building annexes to the
land. The
learned author then submitted that the approach of Van Vincent AJA
supra
is
the sound one. In accordance with this principle the “
professed
intention of the owner/annexor is to be inferred from a number of
factors even if it conflicts with the imputed intention.
This is a
much more equitable test and one which excludes a consideration of
the annexor’s ipse dixit save where physical
features are
equivocal”.
[45] Accordingly upon a proper
application of the Roman maxim referred to, the professed intention
was quite clearly foreshadowed
in the agreement that the Stadium
would be reconstructed and that notwithstanding the reconstruction,
the applicant would retain
its servitude as registered.
[46] The submission by the respondents
that the servitude did not revive, is without merit.
Voet
Commentaries
8.6.4 has the following to say:
“
Servitudes
ended by
(ii)
destruction of either tenement.– A servitude is also wiped out
by the destruction of the dominant or of the servient
tenement.
Flooding nevertheless is by no means to be classed as destruction,
inasmuch as the right of servitude is nonetheless
in violate when
that happens.
Servitude revives on restoration of
tenement.– But if the property which had persisted is restored,
as when a servient or
dominant house has been replaced, or a farm
which had at first been washed away by the erosion or onset of a
river is brought back
to its former state by alluvion, it is fair
that a servitude should revive or be renewed. Hence also the owner
of a servient house
can only replace it, after it has fallen down or
been burnt out or being taken down, on terms that the servitude may
be inviolate
over the house put in its place in like manner as the
servitude was performed.
”
[47] The respondents place reliance
on the comment by
Van der
Merwe
14
on
Voet
supra
that a personal
servitude is not lightly assumed to survive the reconstruction of the
servient property. In
De
Miellon v Mont Clair Society of the Methodist Church
15
De Villiers CJ held that the owner of a servient tenement cannot be
compelled to rebuild it, hence the servitude is extinguished.
The
applicant did not abandon the Stadium during its reconstruction.
16
On a proper application of the wording of the servitude and the
entire undisputed factual matrix I find that the servitude did
survive the re-construction /demolition.
[48] The applicant relies on this
principle of the Roman Dutch writers that even if there was a
temporary suspension of its rights,
it nonetheless revived when the
stadium was reconstructed. Van Rooyen AJ in
Kidson
supra
refers to Van der
Kesel who opined that the only time a servitude cannot be revived, is
if there has been a total mutation of the
land itself. In other
words, if the land itself becomes incapable of supporting any
structure that can be utilised as a dwelling
and for this, he found
support in the Digest under the principle
'Rei
mutatione interire usum fructum placet.'
The land itself has not become mutated. The applicant’s
servitude was registered against the land, the land itself is capable
of supporting a structure and in fact a structure (the Stadium) has
been erected and thus the applicant did not lose its servitude.
THE CONTRACTUAL PROVISIONS OF THE
CONTRACTS CONCLUDED BETWEEN STATE, CITY AND THE RESPONDENTS
[49] The applicant submits that the
nemo plus juris ad alium
transferre potest quam ipse haberet
applies. The lease concluded between the State and the City does not
deal with the question of naming rights. The State could not
deliver
rights it did not have. The State specifically undertook not give
away the naming right and thus the City could not have
acquired it.
[50] The City relies on all the legal
submissions made by the first and second respondents in regard to
their rights. The City however
goes on to contend that when the State
entered into a long lease with it and thereby the State gave away the
naming right to it
in the contract. The lease does not give the
City the right to name the Stadium. In any event the applicant’s
right was
first in time by virtue of the contract together with the
registered personal servitude.
[51] As to the legal interpretation
of the naming right, the respondents sought to compare a naming right
with a liquor licence
which in essence is an intangible or immaterial
thing such as goodwill which can be sold and is thus moveable
incorporeal property
and cannot be registered.
17
.
They also contend that a naming right does not give physical control
over the
res
and thus cannot be registered. I have found that the fragment which
was severed from the right of ownership can be registered and
that
physical control is a concept capable of symbolic application when it
comes to naming rights.
[52] Careful consideration should also
be given to the manner in which the stadium management agreement has
been drawn up. Reference
has already been made to the finding that
the stadium management agreement foreshadowed the very naming
problem. In particular
clause 9.6.1, 9.6.2, 9.6.3, 9.6.4.
THE INTERDICTORY RELIEF
[53] The applicant contends that the
City saw fit to join these proceedings but placed no further facts
before the court, only legal
argument. The City in supporting the
respondents on the naming rights question is impliedly giving away
rights it did not have.
In joining in these proceedings and by
supporting the respondents in the claim to have naming rights it
becomes a co-wrongdoer
and also requires restraint. The City has
made itself complicit in breaching the applicant’s rights
[54] In Iir South Africa BV
(Incorporated In The Netherlands) T/A Institute For International
Research v Hall (Aka Baghas) and another
18
the following is referred to.
"17.2 Crucial to Goldstein J’s
decision was his finding that the interdict against the fourth and
fifth respondents was
based on the delict of intentionally assisting
in breaching the undertaking. This finding is echoed in Atlas
Organic (supra) at
202 G-H where it is said that a delictual remedy
is available to a party to a contract who complains that a third
party has intentionally
and without lawful justification induced
another party to the contract to commit a breach thereof. See also
Corbett J, as he then
was, in Dunn and Bruidspriet (Pty) Limited v SA
Merchants Combined Credit Bureau (Cape) (Pty) Limited
1968 (1) SA
209
(C) where it is was held that a rival trader was liable in
damages where it had knowingly furthered its business by unfairly
using
confidential information of the competitor.”
[55]
In
Lanco Engineering CC v Aris Box Manufacturers (Pty) Ltd
19
confirmed
the principle:
“
that to
show an interference with a contractual relationship neither a breach
nor an inducement is necessary. In
Godongwana
v Mpisana
1982 (4) SA 814
(Tk) , both because it shows that neither a
breach nor an inducement is a requirement, and because it fully
supports the plaintiff's
claim. In that case the applicant had
obtained a kraal site certificate in his favour from the
administrative authority but could
not take occupation of the kraal
because the respondent had refused to vacate it. In granting an
ejectment order Van Coller J assumed
that a kraal site certificate
did not confer a real right, and said (at 816E-H):
'This allegation, read with the
averment that appellant is the holder of a kraal site certificate in
respect of the property, can
be interpreted to mean that appellant
relies, as basis for the relief claimed, upon an unlawful
infringement by respondent of appellant's
rights arising out of the
contract between him and the grantor of the certificate. In the case
of an inducement to commit a breach
of contract, there is a direct
interference with the contractual rights and obligations. Where a
third person takes possession
of the thing to which contractual
rights relate, as alleged in the present case, there is no such
direct interference with the
contractual rights as such. The
contractual relationship between the two contracting parties remains
intact. The contract, however,
imposes a duty on the grantor to give
possession to the certificate-holder, or to allow him to take
possession. A corresponding
right and duty is conferred upon the
certificate-holder to accept performance on the part of the grantor.
By remaining unlawfully
in possession of the kraal site, the
respondent is interfering with the respective rights and obligations
of the contracting parties
relating to performance. He interferes, in
my view, directly with the execution of the contract, and it is in
that sense that he
infringes the rights of the contracting parties.'
The significance lies, however, in the question of unlawfulness.
features which
must be thrown into the scales when a Court considers
whether public policy, or the boni mores, or the criterion of
reasonableness,
will regard any particular interference in a
contractual relationship as unlawful or not. Indeed, they are
important considerations,
so important that in a given case their
absence might make it difficult for a Court to conclude that the
interference concerned
was unlawful. I emphasise however that each
case must depend upon its own facts. “
[56] Upon a proper application of the
tests set out in the above cases it is quite clear that the
respondents, as well as the City,
have interfered in the contractual
relationship between the applicant and the State. The founding
affidavit outlines this position
sufficiently. The relevant portions
on unlawful interference have already been referred to.
[57] However, the case law suggests
that additional considerations should also apply as to whether this
interference in the contractual
relationship between the applicant
and the State. These considerations require the application and
scrutiny of public policy, bona
mores and the criterion of
reasonableness.
[58] In applying these principles, it
is important to note that there was a
quid
pro quo
between the
applicant and the State for the naming rights. Accordingly the
additional features which play a role and required
to be addressed
are: public policy, reasonableness and bona mores.. Despite the
lucrative financial considerations which the respondents
could enjoy,
the applicant’s rights must be upheld.
[59] The question is whether an
interdict is justified in these circumstances to prevent an ongoing
infringement of those contractual
rights. The applicant has made out
a case that the first and second respondents conduct is such that it
infringes on its goodwill
and it is unlawful in this regard, relies
on the case of G A Fichardt Ltd v The Friend Newspapers Ltd
20
On
the other hand the respondents contend that because there is no
contractual nexus between the applicant and the respondents,
therefore the applicant has no right to interdict the respondents.
The law recognises that an interference with contractual rights
may
give rise to a delictual liability. In this regard, the respondents
contend that the applicants have made out their case in
their heads
of argument, regarding the question of delictual liability. On a
proper construction of the founding affidavit this
is not so.
[61] In
Smit
v Sipem
21
our law recognised a delictual remedy against the interference by a
third party with contractual rights. The question as to whether
the
respondents conduct is to be found in the realm of a delict, can be
inferred from the facts. The respondents knew of the
applicant’s
rights, there had been a debate that had taken place as early as
2008, again in 2009 but nonetheless the respondents
responded to the
applicant’s article on the website as already described.
INTERDICTORY RELIEF AGAINST AN
ORGAN OF STATE
[62] A further question to be
considered is whether an interdict, should be granted against the
City. The remedies sought are not
only prohibitory in nature but the
fourth interdict is a mandatory interdict. In the matter of
Redland
Bricks Limited v Morris
1969 (2) All England 576H at 59D to 581H, Lord Upjohn confirmed that
the court has an inherent power to grant mandatory relief.
This
principle was followed in
Cape
Town Municipality v Abdullah
22
as
also
James v Magistrate
Wynberg
23
.
Pretoria City Council v
Osmond Ohmar (Pty) Limited
24
.
[63] However there has to be caution
when a court exercises its discretion to grant this mandatory relief
against an organ of state.
The mandatory interdict will only be
exercised sparingly and with caution, but in a proper case
unhesitatingly. The applicant
contends that the City has not
adopted a neutral stance in this case. The City submitted that as
an organ of state, it nonetheless
enjoys the right of freedom of
expression and of course this is correct. However in enjoying that
right to freedom of expression,
the City also has to take into
account that its failure to adopt a neutral stance in this matter and
actively promote the interests
of its stadium manager to whom it
could not confer a naming right, means that the court has to curtail
its conduct. Its stated
position is that it cannot be interdicted
from referring to the Stadium by any name it chooses.
[64] In other words, the City contends
that it is like the man in the street that cannot be interdict from
referring to the Stadium
as the World Cup Stadium or Soccer City.
In the absence of a neutral stance and in the absence of an
undertaking to abide the
court’s decision, in regard to any
order it makes I find the City is not a man in the street and
therefore has constitutional
obligations. This is an unusual stance
adopted by the City and therefore the structured interdict or the
mandatory interdict should
be granted against it.
[65] I find the court does have the
jurisdictional power to exercise this right. Under the prayer
further or alternative relief
(clause 6 in the amended notice of
motion) a court has discretion to decide to issue an order. In the
light of the attitude adopted
by the City, it is important to avoid
further litigation using rate payers money and I am accordingly of
the view that an order
against the City in the form of a declarator
is appropriate.
[66] Further defences raised by the
respondents are that the application is to be determined, in terms of
the
Plascon Evans rule
and
thus on the respondents’ version. Except for the legal
principles emanating from the applicant’s founding affidavit
and the affidavits as a whole, there are no substantial disputes of
fact. The fact of the publication and the knowledge by the
respondents of the applicant’s rights prior to the publication,
whether correctly interpreted or not, are not disputed.
Therefore
there is no need for an application of the
Plascon
Evans rule
on the facts
upon which this judgment is based.
[67] The respondents also contend that
the effect of the interdicts which the applicant seeks is really when
stripped of the non
essential verbiage, placing an obligation on the
respondents to promote the Stadium, by using the applicant’s
trade name
and in this way the applicant will in fact receive free
advertising coverage. This is incorrect. All that the respondents
are
required to do is when referring to the location of any event
taking place at the Stadium, the location name will be the FNB
Stadium.
The applicant has its other rights, regarding the signage to
which I have already referred and spelt out in great detail.
[68] A further attack on the validity
of the servitude and the agreement is that the agreement as well as
the servitude does not
contain sufficient detail. The respondents
rely on two articles published on the internet by the solicitors, in
the United Kingdom.
The articles refer to the fact that a contract
in respect of naming rights is a complex one and that there are many
essential
elements which ought to be included. Upon a proper reading
of those two articles, it is quite clear that those articles are
really
aimed at assisting solicitors in drawing up contracts and do
not purport to suggest that the features suggested by them should,
amount to legal principles.
[69] The respondents also rely on the
case of
Lowater Property
(Pty) Limited and Another v Walu Sand CC
25
,
where a successor in title is not obliged to recognise a personal
right and they rely on that principle. The respondents contend
that
they are successors in title and neither the City nor they are
obliged to recognise the personal right as registered. That
that
submission has no merit based on the entire conspectus of facts
before the court, coupled with the absence by the respondents
and the
City to counterclaim for the setting aside of the contract and the
servitude which was validly concluded and registered
as between the
applicant and the State. There might well be an argument based on
public policy or any other right that the respondents
can rely upon,
to impugn the current and existing contract between the State and the
applicant, but it has not done so.
[70] A further consideration as to
whether the interdict as claimed can be granted, I place reliance on
the case of Malan and Another
v Aard Canal Investments (Pty)
Limited
26
:
"
In
the present case the respondent’s right is clear, namely a
registered servitude and the second appellant’s activities
constitute an unlawful infringement thereof. In a long line of
cases our courts have in similar instances granted prohibitory
interdicts to protect registered servitudes against the continuance
of unlawful infringement as well as the perpetration of future
infringements where there has been no proof of damage or injury.”
[71] In this matter I have found that
the failure by the City and also the refusal by the respondents to
retract publicly their
contention that they have a right to sell the
name in the face of the applicant’s registered servitude,
constitute such an
infringement which justifies the grant of an
interdict.
[72] On the question of urgency. I
find that the application is clearly one of urgency and cannot be
dealt with in the normal
course. Commercial urgency is trite law.
The effect of the respondents’ claim to their being entitled to
name the Stadium,
is clearly detrimental to the applicant’s
position in the market place and justifies the matter be resolved
expeditiously.
It is not necessary to spell out all the features
that justify the commercial urgency in this application; they have
been dealt
with in detail. The continued high profile programme of
events, which are to follow, is a further urgent factor requiring the
resolution of confusion in the market place.
The order that I would make is:
That the application is urgent.
That until 14 July 2014 or 14 July
2016 (the period) and should the applicant extend its rights as
provided for in clause 5 of
the agreement, annexure DNC1 to the
founding affidavit, the first, second and fourth respondents are
interdicted and restrained
and prohibited from:
Referring to the Stadium on Portion
4 of the farm Randskou 324 (reg Div IQ) Gauteng Province by any
other name other than “FNB”
Stadium”;
. Purporting to sell or dispose of
the right to name the Stadium during the period.
The following declaratory order is
made:
The applicant has the sole right to
name the stadium during the period:
The applicant has chosen the name
“FNB Stadium”:
For the duration of the period, the
name of the stadium is the FNB stadium.
The first, second and fourth
respondents do not have the right to name the Stadium during the
period.
The first, second
and fourth respondents are ordered to pay the applicant’s
costs including the cost of two counsel jointly
and severally the
one paying the other to be absolved.
The costs of the two appearances
during the week of 22 July 2010 shall be costs in the cause.
_____________________
VICTOR J
1
Silberberg
and Schoeman’s THE LAW OF PROPERTY 5
th
edition Badenhorst, Pienaar Mostert pg 5
2
Gien v
Gien 1979 (2)SA1113T T 1120C
Also
commentary by Siberberg and Schoeman supra at page 91
3
Van
der Walt, A. J. van der Walt and C. J. Pienaar,
Inleiding
tot Sakereg
4
2007 (4) SA 26
(C)
5
K.J.
Vandevelde, The new property of the 19
th
Century: development of the modern concept of property Buffalo Law
Review 1980.p 325ff
6
From
Classical to Modern European Law, University of Maastricht
7
See P.
S. Atiya, the Rise and Fall of Freedom of Contract (Oxford
University Press), 1979
8
Silberberg
and Schoeman
supra
at page 94 referring to Lewis now Lewis JA 1985 Acta Juridica 257
9
2010 (1) SA 62
(SCA)
10
1948 (4) SA 8
(C)
11
Van
der Merwe’s sake reg.474
12
Van
der Merwe supra 468 referring to Van Oewen
Leerboek
143
13
1978 (3) SA 682
AD
14
op cit
at p 535
15
1979 (3) SA 1365
(D) at 1371G-H.
16
Kidson and Another v Jimspeed Enterprises CC And Others
2009 (5) SA
246
(Gnp)
17
Slims (Pty) Limited v
Morris
1988 SA 715A
727-729 and
Jacobs
v The Minister of Agriculture
1972 (4) SA 608 (W) 621
18
2004 (4) SA 174
(W)
19
Lanco
Engineering CC v Aris Box Manufacturer
s
(Pty) Ltd
1993 (4) SA 378
(D)
20
1916 AD 1
at 6
21
1974 (4) SA 918 (A) 926-7
22
1974 (4) SA 428
(C)
437B-D
23
1995 (1) SA 1 (C) 22
24
1959 (4) SA 439
(T)
25
1999 (1) SA 655
(SE) 663
B-C
26
1988 (2) SA 12
(A)