Polaris Capital (Pty) Ltd v The Registrar of Companies and Another (425/08) [2009] ZASCA 131; 2010 (2) SA 274 (SCA) (30 September 2009)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2009
>>
[2009] ZASCA 131
|

|

Polaris Capital (Pty) Ltd v The Registrar of Companies and Another (425/08) [2009] ZASCA 131; 2010 (2) SA 274 (SCA) (30 September 2009)

Links to summary

THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No: 595/08
In the matter between :
POLARIS CAPITAL (PTY)
LTD
Appellant
and
THE REGISTRAR OF COMPANIES First
Respondent
POLARIS CAPITAL MANAGEMENT
INC Second Respondent
Neutral citation:
Polaris
v The Registrar of Companies
(595/08)
[2009] ZASCA 131 (30 September 2009)
Coram: STREICHER, BRAND, SNYDERS
JJA, LEACH and BOSIELO AJJA
Heard: 25 AUGUST 2009
Delivered:
30
SEPTEMBER 2009
Summary: Companies Act 61 of
1973 – s 45(2) – new company name will cause confusion –
name undesirable.
ORDER
On appeal from: High Court, Cape of Good Hope (Brusser
AJ sitting as court of first instance).
The appeal is dismissed with costs including the costs
of two counsel.
JUDGMENT
STREICHER JA (
BRAND, SNYDERS JJA,
LEACH and BOSIELO AJJA
concurring)
[1] On 26 May 2003 the appellant, a South African
registered company, formerly known as African Harvest Growth Asset
Managers (Pty)
Ltd, by special resolution, changed its name to
Polaris Capital (Pty) Ltd. The Registrar of Companies, the first
respondent, registered
the name change on 3 June 2003 but the second
respondent, Polaris Capital Management Inc, a corporation
incorporated in the USA,
in terms of a letter dated 29 January 2004,
objected to the name change. On 14 October 2005 the registrar upheld
the objection
and ordered the appellant to change its name within 60
days. The appellant thereupon applied to the High Court, Cape of Good
Hope
Provincial Division, for the setting aside of the registrar’s
order. Brusser AJ dismissed the application but granted leave to
the
appellant to appeal to this court.
[2] In terms of s 44(1) of the Companies Act 61 of 1973
any company may by special resolution change its name to a name which
is
not, in the opinion of the registrar, undesirable. Provision is
then made in s 45(2) for an objection against such a name change.
The
section provides as follows:
‘If within a period of one year after . . . the date of . . . a
certificate of change of name . . . any person
lodges
an objection in writing with the Registrar against the name contained
in . . . the last-mentioned certificate, on the grounds
that such
name . . . is calculated to cause damage to the objector or is
undesirable, the Registrar may, if he is satisfied that
the objection
is sound, order the company concerned . . . to change the said name .
. ..’
[3] The second respondent objected to the name change on
the ground that it is both undesirable and calculated to cause it
damage
as contemplated in s 45(2). The registrar upheld the objection
on the ground that the name is undesirable. In reasons for his
decision
subsequently furnished by the registrar, he stated that the
name of the second respondent is wholly incorporated into the
appellant’s
name and that its business activities are identical to
the business of the second respondent. He stated, furthermore, that
the
second respondent had built a reputation and goodwill to its name
since 1996, long before the appellant adopted its name Polaris

Capital in 2003. He concluded that ‘since the names are almost
identical, and since the parties are engaged in the same activities,

confusion is likely to occur’ and ordered the appellant to change
its name.
[4] The appellant thereupon applied in terms of s 48 for
the registrar’s order to be set aside. The section provides that
any
company or person aggrieved by an order of the registrar in terms
of, amongst others, s 45(2), may ‘within one month after the
date
of such . . . order apply to the Court for relief, and the Court
shall have power to consider the merits of any such matter,
to
receive further evidence and to make any order it deems fit’. The
registrar did not oppose the application.
[5] Being an application for final relief the
Plascon
Evans
-rule applied and the matter had to be
decided on the facts stated by the second respondent and the facts
stated by the appellant
in so far as those facts were admitted by the
second respondent or not denied in a manner that raises a real,
genuine or
bona fide
dispute of fact. Approached on this basis the facts on which the
application had to be decided are as follows.
[6] On 3 June 2003 the appellant resolved to change its
name from African Harvest Growth Asset Managers (Pty) Ltd to Polaris
Capital
(Pty) Ltd and in July 2003 it commenced trading. The
appellant carries on business within South Africa. It provides an
investment
service for a predominantly South African clientele
consisting of institutional clients, private companies, public
companies and
individuals. It advises South African investors and
invests their funds both within South Africa and overseas. It is
licensed as
a Financial Services Provider in terms of
s 8
of the
Financial Advisory and Intermediary Services Act 37 of 2002
. The
second respondent became aware of the appellant’s use of the name
Polaris Capital during September 2003 and discussed the
matter with
the appellant but the appellant persisted in using the name. The
second respondent thereupon lodged an objection with
the registrar on
29 January 2004.
[7] The second respondent was incorporated in 1993 in
the USA and is registered as an investment advisor with the US
Securities
and Exchange Commission. It has been trading continuously
since 1995 as a global and international equity manager. Since 1996
it
has marketed itself and made sales representations in South Africa
to numerous major commercial banks, investment and merchant banks,

asset management funds, life assurance companies, public companies,
attorneys firms, the South African Reserve Bank, national airlines,

government departments and auditing firms. Mr Bernard Horn jr, the
president and portfolio manager of the second respondent attended
an
international investors’ conference organised by Deutsche Bank
Securities in Cape Town and Johannesburg during which he met
with
various representatives of South African companies and after the
conference he made representations to them on behalf of the
second
respondent. Since 1996 the second respondent’s representatives have
on numerous occasions been contacted telephonically
and via e-mail by
South Africans interested in equity management.
[8] The second respondent was one of the managers of the
Iscor Pension Fund in South Africa from 1996 until 2000, a fact that
was
publicised in a publication ‘Pensions and Investments’ on 29
September 1997 and 3 April 2000. In December 2000 it concluded
an
investment advisory agreement with Oasis Global Management Company
(Guernsey) Limited in terms of which it was appointed to
manage the
interests of that company’s South African clients. In March 2003 it
concluded a further investment advisory agreement
with the South
African registered company Oasis Asset Management Limited and two
related Irish companies.
[9] Since the commencement of its business in 1995 the
second respondent has featured extensively in the international
financial
press in articles available to South African readers.
[10] Included in equity funds managed by the second
respondent are substantial shareholdings in South African companies
traded on
the Johannesburg Stock Exchange. Second respondent’s
current holdings include Sappi, Sasol, Impala Platinum, Metorex and
BHP
Billiton.
[11] The second respondent contends that as a result of
the aforegoing it became known in the Republic to those interested in
equity
investment and to equity managers. The appellant denies that
that is the case and attached affidavits by a number of people
interested
in equity investment to the effect that the second
respondent is unknown to them. However, there may well be many people
who do
not know about the second respondent but it does not follow
that there are not many to whom it is known. If the evidence of
contacts
made with South Africans is accepted, as it has to be, the
second respondent must be known to many South Africans and South
African
companies, more so in the light of its contracts with Iscor
and the Oasis companies.
[12] ‘Polaris Capital’ is the dominant part of the
second respondent’s name and that is the name by which it became
known.
Although the appellant denies that it knew about the existence
of the second respondent at the time when it changed its name, a

simple internet search would have revealed its existence. The second
respondent’s web-site is frequently accessed by South Africans
and
such access frequently results in South Africans making use of the
services provided by the second respondent. As a result
of the
internet, customers and potential customers in South Africa have
direct access to details of the second respondent’s products
and
services, details of the performance of the second respondent’s
various funds and to management reports in respect of second

respondent’s various funds.
[13] The court below held that a risk of confusion could
not reasonably be discounted and that it could for that reason not be
concluded
that the registrar improperly exercised his discretion in
terms of
s 45.
However, the question that had to be decided by the
court below was not whether the registrar had exercised his
discretion correctly.
In terms of
s 48
the court to which application
is made has power to consider the merits of the matter, to receive
further evidence and to make
any order it deems meet. The court
below, therefore, had the power to deal with the matter as a court of
first instance ie the
proceedings before it was in the nature of a
rehearing.
1
[14] In an article by JB Cilliers entitled
Similar
company names: A comparative analysis and suggested approach
–
Part 2
1999
(62)
THRHR
57 at p 68 – 69 the author states:
‘In terms of sections 45(2A) and 48 of the Companies Act 1973 (SA),
the court must decide the matter
de novo
, unfettered by the
decision reached or opinion formed by the Registrar. The merits to be
considered by the courts are whether,
on a balance of probability and
on the evidence before it, the existing company has such vested
rights in its name or particular
words in its name that the
registration of the new company or the amended name of another
company is undesirable, or whether the
existing company has shown not
only that confusion or deception is likely, but that if either ensues
it will probably cause it
damage. This distinction clearly delineates
the two pillars of the protection against the registration of similar
company names
under the Companies Act 1973(SA).’
The suggested approach was adopted by this court in
Peregrine Group (Pty) Ltd and others v
Peregrine Holdings Ltd and others
2001 (3) SA
1268
(SCA).
[15] The appellant submitted that its name is not
undesirable, that the registrar erred in finding it to be undesirable
and that
the registrar’s decision should for that reason be set
aside. As to the circumstances under which a company name may be
found
to be undesirable, this court, in the
Peregrine
-case,
approved the following statement by Lazarus AJ in his judgment
against which the appellant in that case appealed:
2
‘In my view it is inappropriate to attempt to circumscribe the
circumstances under which the registration of a company name might
be
found to be “undesirable”. To do so would negate the very
flexibility intended by the Legislature by the introduction of
the
undesirability test in the section and the wide discretion conferred
upon the Court to “make such order as it deems fit”.
For the
purposes of the present matter it suffices to say that, where the
names of companies are the same or substantially similar
and where
there is a likelihood that members of the public will be confused in
their dealings with the competing parties, these
are important
factors which the Court will take into account when considering
whether or not a name is “undesirable”.’
[16] In
Vicom New Zealand Ltd v
Vicomm Systems Ltd
[1987] 2 NZLR 600
(CA) at
605(10) the New Zealand court of appeal, per Cooke P stated in
respect of a company name that was contended to be undesirable:
‘[A] serious risk of confusion of the public or a section of the
public is well recognised as a head of undesirability when the

registration of a company name is in issue: see the judgment of
McGregor J in
South Pacific Airlines of New Zealand Ltd v
Registrar of Companies
[1964] NZLR 1
, 5, a passage which has been
followed more than once in the High Court and should now, we hold, be
approved by this Court.’
[17] In
Deutsche Babcock SA (Pty)
Ltd v Babcock Africa (Pty) Ltd and another
1995 (4) SA 1016
(T) at 1022G-1024G Mynhardt J referred to South
African cases in which the likelihood of confusion was considered to
render the
registration of a new company name undesirable. He also
referred to New Zealand cases including the
Vicom
-case
and concluded at 1024H:
‘From the aforegoing review of cases it appears that when there is
a likelihood that the public, or a section thereof, might
be misled
by the similarity of the names under consideration, or that there is
“a serious risk of confusion of the public”,
then it ought to be
held that a name is undesirable.’
[18] It would seem that the phrase ‘a serious risk of
confusion’ was meant to mean no more than a probability of
confusion.
That would be in line with the South African cases
referred to by Mynhardt J which he would seem to approve. He himself
said at
1025D:
‘If the similarity between the two names is likely to lead to
confusion of customers or potential customers of either the applicant

or the first respondent, then the change of name cannot be permitted
. . ..’
If that is how ‘a serious risk of confusion’ is to
be understood I agree save that I would add that the degree of
confusion
will no doubt be a factor to be taken into account in
deciding in terms of s 48 whether or not a company name is
undesirable.
A company name will be confusing when, in doing business
with the company, the public or a section of the public would be
confused
into thinking that they are doing business with another
company or would be confused into thinking that the company is
associated
in some way with the other company.
[19] The dominant part of the second respondent’s name
is Polaris Capital. It is not merely a descriptive name. Until the
appellant
changed its name to Polaris Capital, no company had been
registered in South Africa by that name and although there are other
companies
registered in South Africa with the word ‘Polaris’ as
part of their names, ‘Polaris Capital’ cannot be said to have
lost
its distinctiveness as part of a company name. None of these
other companies with the word ‘Polaris’ as part of their names

trades as equity managers. Being the first company to use the name
Polaris Capital it must be accepted, in the light of the evidence

referred to above, that the second respondent became known to a
substantial number of influential people in South Africa ie that
the
second respondent acquired a reputation in South Africa as an
international equity manager. Having established that reputation
in
South Africa the second respondent acquired vested rights in its name
entitling it to object against the adoption of the name
Polaris
Capital by the appellant.
[20] The appellant contends that although it adopted the
dominant part of the second respondent’s name as its name such
adoption
has not and will not lead to confusion because ‘the
appellant’s customer base falls within a limited and educated group
of
financial services experts.’
[21] It is clear that in determining whether there would
be confusion regard has to be had to the nature of the business and
customer
base of the respective companies.
3
Both the appellant and the second respondent trade as equity managers
but the one conducts its business in the USA and the other
conducts
its business in South Africa. Both of them invest in South African
equities and foreign equities.
[22] The appellant’s submission that its customer base
consists of an educated group of financial service experts is not
correct.
In a supplementary affidavit filed by the appellant it is
stated that the appellant invests in South African equities on behalf

of, amongst others, individuals. There is no reason to assume that
the individuals concerned are financial services experts.
[23] In the light of the fact that the name adopted by
the appellant is for all practical purposes almost identical to that
of the
second respondent and the fact that the appellant and the
second respondent both conduct business as equity managers I am of
the
view that people who know about the second respondent may well
think that there is an association between the two. The appellant

contended that if that was the case the second respondent should have
been able to produce evidence of confusion four years after
the
second respondent started doing business under the name ‘Polaris
Capital’ and that it failed to do so.
[24] The only evidence tendered by the second
respondent as to actual confusion was an e-mail communication
directed to ‘…@polariscapital.com’
(the second respondent’s
e-mail address) instead of to ‘…@polariscapital.co.za’ (the
appellant’s e-mail address) and
an allegation by Horn that the
second respondent ‘is frequently contacted by many of the South
African companies whose equity
funds they manage (such as Sappi,
Sasol, Impala Platinum, Metorex and BHP Billiton) who are confused by
the existence of the [appellant]
and continuously question whether
[second respondent] and the [appellant] are related or the same
entity’.
[25] The sender of the wrongly directed e-mail deposed
to an affidavit in which he explained that he made a clerical error
by inadvertently
typing the wrong e-mail address, that it was not as
a result of any confusion on his part as he was at no time under the
impression
that Polaris Capital (Pty) Ltd was associated in any way
with an entity by the name Polaris Capital Management Inc.
[26] The statement that the second respondent is
frequently contacted by South African companies whose equity funds
they manage
such as Sappi, Sasol, Impala Platinum, Metorex and BHP
Billiton cannot be correct as the second respondent did not manage
equity
funds of any of these companies. Horn probably meant to say
that the second respondent is contacted by companies in which it has

invested to enquire whether the appellant was associated with the
second respondent. What the reason for the enquiries was we do
not
know. But the enquiries do indicate that the enquirers were at least
wondering whether the appellant and the second respondent
were in
some way or other associated with one another. Such uncertainty is
undesirable and is at least a factor to be taken into
account in
deciding whether a new company name is undesirable. In cases
concerning trade marks, where the issue was whether a trade
mark had
been infringed by the use of a mark so nearly resembling a registered
trade mark ‘as to be likely to deceive or cause
confusion’, it
has been held that infringement will be proved if there is a
likelihood that a substantial number of people who
are interested in
the relevant product will be or are likely to be confused or
deceived. Confusion would according to these cases
exist when a
person is confused as to the existence or non-existence of a
connection between the product being marketed under the
disputed mark
and the owner of the registered trade mark.
4
That is to say that confusion will exist when people wonder whether
there is such a connection.
5
[27] The fact that there had been many enquiries as to
whether the appellant and the second respondent are associated with
one another
strengthens my view that a substantial number of people
who knew about the second respondent and who associated the name
‘Polaris
Capital’ with the second respondent would have assumed
that there was an association between the second respondent and the
appellant
which was conducting a similar business to that of the
second respondent. The second respondent would not necessarily have
come
to know of such people and the fact that no evidence has been
tendered of instances of such confusion does not prove that there

have not been such instances. My view is further strengthened by the
fact that the registrar, who is experienced in the field,
came to the
same conclusion.
6
[28] The position is of course not static. The second
respondent’s objection itself indicated that it was still
interested in
the South African market and that it could in the
future expand its activities in South Africa. Should that happen
there can be
no doubt that confusion will result.
[29] At least one of the purposes of the Act in so far
as it provides that a company may be ordered to change its name if it
is
undesirable is clearly to protect the public from being confused
as to the entity it is dealing with. In view of my finding that
a
substantial number of people will be so confused if the appellant is
allowed to retain its name I conclude that the court a quo
correctly
dismissed the appellant’s application for an order setting aside
the registrar’s decision that its name is undesirable.
[30] The appeal is therefore dismissed with costs
including the costs of two counsel.
__________________
P E STREICHER
JUDGE OF APPEAL
A
ppearances
:
For Appellant: A R Sholto-Douglas SC
M C Seale
Instructed by
Brian Bacon & Associates Inc, Cape Town
Webbers, Bloemfontein
For 2
nd
Respondent: A de Vos SC
R Tainton
Instructed by
Adams & Adams Attorneys, Cape Town
Honey Attorneys Inc, Bloemfontein
1
See
Krediet Bank van Suid-Afrika Bpk v Registrateur van
Maatskappye en andere
1978 (2) SA 644
(W) at 650C-D.
2
At 1274C-G par 8.
3
See
American Chewing Products Corporation v American Chicle
Company
1948 (2) SA 736
(A) at 743.
4
Oude Meester Groep Bpk and another v SA Breweries Ltd; SA
Breweries Ltd and another v Distillers Corporation (SA) Ltd and
another
1973 (4) SA 145
(T) at 160F-H;
Adidas
Sportschuhfabriken Adi Dassler KG v Harry Walt & Co (Pty) Ltd
1976 (1) SA 530
(T) at 533C-E.
5
Hack’s Application
(1941) 58 RPC 91
at 106.
6
Vicom New Zealand Ltd v Vicomm Systems Ltd
[1987] 2 NZLR 600
(CA) at 604 (10-15).