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[1988] ZASCA 132
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Hollywood Curl (Pty) [1988] ZASCA 132; [1989] 4 All SA 30 (AD) (30 September 1988)
CASE NO 281/87 /CCC
IN THE SUPREME COURT OF SOUTH (APPELLATE
DIVISION)
In the matter between
HOLLYWOOD CURL (PTY)
LIMITED
APPELLANT
and
TWINS PRODUCTS (PTY) LIMITED
RESPONDENT
CORAM
: CORBETT, SMALBERGER, MILNE, KUMLEBEN JJA et, NICHOLAS, AJA
DATE HEARD
: 22 AUGUST 1988
DATE DELIVERED
: 30 SEPTEMBER
1988
JUDGMENT
NICHOLAS, AJA
:
2/
2.
The facts of this matter are set out in the judgment of
CORBETT JA. The question for decision is whether the Registrar of Companies
was
right in refusing to make an order in terms of s.45(2) of the
Companies
Act
, 1973 ("the Act") , at the instance of Twins Products (Pty) Ltd,
("Twins"), that Hollywood Curl (Pty) Ltd ("the appellant") change
its name. The
court a
quo
held that the Registrar was incorrect, and made an order
setting aside the refusal and directing that the appellant change its name
forthwith.
S.52(l) of the Act provides that the memorandum of a company, in
addition to stating the purpose for which it is to be formed and
incorporated,
shall state the name of the company.
S.41 provides that no memorandum containing a name for a company to be
incorporated shall be registered if in the opinion of the Registrar
the name is
undesirable.
S.45 contains provisions empowering the
3/
3.
Registrar to order a company to change its name. Omitting
words
which are not material for present purposes, the section reads:
"45. (1) If within a period of one year after the registration of any
memorandum, ... it appears that the name contained in the memorandum
... is in
the opinion of the Registrar undesirable, he shall within such period order the
company concerned ... to change the name
... concerned.
(2) If within a period of one year after the registration of any memorandum, ...
any person lodges an objection in writing with the
Registrar against the name
contained in the memorandum ... on the grounds that such name ... is calculated
to cause damage to the
objector, the Registrar may, if he is satisfied that the
objection is sound, order the company concerned ... to change the said name
...
(3) If, at any time, the Registrar is of the opinion that the name of a company
... gives so misleading an indication of the nature
of its activities as to be
calculated to deceive the public, he may order the company concerned to change
its name..."
There were provisions
corresponding to s.41
and s.45 in s.10 of the Companies Act, 1926 ("the 1926 Act").
Ss.(l), (2) and (4) of s.10 of the 1926 Act (as amended) provided
as follows:
4/
4.
"10. (1) A company may not be registered by a name identical
with that by which a company or a foreign company is already registered,
or so
nearly resembling that name as to be calculated to deceive, except where the
already registered company is in the course of
being dissolved and signifies its
consent to the registration in such manner as the Registrar requires.
(2) The Registrar may, except upon an order of the
Court, refuse to
register a company by a name which, in
his opinion, is calculated to mislead
the public or to
cause annoyance or offence to any person or class
of
person or is suggestive of blasphemy or indecency or a
name
representing an occupation or profession for which
personal qualifications
are required.
(3)
(4) (a) If a company through
inadvertence or
otherwise has been registered in conflict with
the
provisions of sub-section (1), (2) or (3) the
Registrar shall order
the company to change its name:
Provided that
(b) Wherever a registration in conflict with
the provisions of sub-section
(1) or (2) is calculated
to cause damage to any company or other person,
such
company or other person may call upon the Registrar to
order a change
of name.
(c) "
Under s.41 of the Act, which was taken over from s.17 of the English
Companies Act, 1948, the Registrar has a wide discretion: he
may refuse to
register a memorandum if, in
5/
5.
his opinon, the name is undesirable. The word "undesirable"
in
s.41 no doubt comprehends, though it is not limited to, the
ob-
jectionable names referred to in s.l0(l) and (2) of the
1926 Act.
Ss.(4)
of s.10 of the 1926 Act corresponded
to s.45(2) of the Act. Under ss.(4) the jurisdiction of the
Registrar
arose when registration of a company was in conflict
with the provisions of
ss.(l) or (2), and such registration was
calculated to cause damage to any
company or person. Under
s.45(2) all that is required is an objection
"... on the grounds that such name is calculated to cause damage to the
objector."
The decision of this appeal depends
largely on the proper
interpretation of these words.
Two problems arise:
(a) Because a name does not in itself have potential to cause
damage, it is plain that there is here an ellipsis which has
to be supplied. In my opinion the words are to be
understood as if they read:
6/
6.
"... on the grounds that the registration of the company by such name is
calculated to cause damage to the objector
..."
(It is not strictly correct to talk of the registration of a
company by a name. What is registered is the memorandum,
which contains the name of the company, but the expression
is a convenient shorthand one. Compare the opening words of
ss.(l) of s.10 of the 1926 Act:
"10(1) A company may not be registered by a name identical with that by which a
company or foreign company is already registered
...")
(b) It was said in
Link Estates (Pty) Ltd v
Rink Estates (Pty)
Ltd
, 1979(2) S A 276(E) at 278 H that it is clear from ample
authority that "calculated" as used in s.45(2) means
"likely". The statements in decided cases that
"calculated" means "likely", were made with reference to
which of two possible meanings of "calculated" (
viz
.
"likely" and "intended") was the proper one in the context.
(See, for example,
American Chewing Products Corporation v
7/
7.
American Chicle Company
, 1948(2) S A 736(A) at 741;
Amoils
v Johannesburg City Council
1943 TPD 386
at 389.) The
words
"calculated" and "likely" are not exactly synonymous.
"Calculated" in this
context means "inherently likely"; or
"of a nature or character proper or
likely to" (Oxford
English Dictionary; see
Brink v Lichtenburg
Liquor
Licensing Board
,
1944 TPD 161
at 171). In
Johannesburg
Liquor Licensing Board and Another v Short
,
1946
AD 713
,
TINDALL JA said at 722
in fin
to p. 723:
"The expression 'calculated to cause substantial prejudice' means 'likely in
the. ordinary course of things to cause substantial
prejudice'.
"
In
Ouvah Ceylon Estates Limited v Uva Ceylon Rubber
Estates
Limited
(1910) 103 L.T.R. 416
(CA), COZENS-HARDY M.R.
said
at 417 that the phrase "calculated to deceive" means
"... according to the proper use of language, calculated in the ordinary sense
of business ... with one's knowledge of affairs how
it is to be carried
on."
(See also
In re Lyndon's Trade-mark
(1886) 32
Ch.D.
8/
8.
109(C.A.) at 119 per BOWEN L.J., quoted in
Rex v Lord
1926 CPD 262
at
264.)
The registration of a company by a name cannot, in the
nature of
things, by itself cause damage to the objector.
Actual damage can be caused
only if the company carries on
activities in the course of which it uses its
name. But in
the ordinary course of things a trading company is likely
to
carry on activities, and hence the registration of a company
may be
calculated
to cause damage to the objector. Compare
ss.4(b)of s.10 of
the 1926 Act:
"Wherever a registration in conflict with the provisions of sub-section (1) or
(2) is calculated to cause damage to any company or
other person
..."
Registration of a company by a name identical with that
by
which a company is already registered may serve as an
example. Plainly such a registration is calculated to cause
damage to the latter company. It is calculated to cause
confusion between the businesses conducted by the two
9/
9.
companies; or to affect the latter company in its business
by diverting customers to the new company; or to affect the
credit or goodwill of the latter company.
What s.45(2) contemplates is not a factual but an abstract
inquiry - not an inquiry whether damage has occurred or will
occur, but an inquiry whether "in the ordinary course of
things", "in the ordinary sense of business", and having
regard to any relevant circumstances, the registration of
the company by the name concerned is likely to cause damage
to the objector. If damage has in fact occurred, that would
be relevant only in so far as it may tend to show that it
was a likely result,
Twins' contention in this
case, as set out in
the heads of argument submitted on its behalf, is this:
"(The) activities which are carried on by the Appellant under its name HOLLYWOOD
CURL infringe the Respondent's common law rights
and constitute a passing-off.
The Appellant's passing-off renders its name HOLLYWOOD CURL undesirable as
contemplated by the provisions
of Section 45(1) of the Companies Act and the
passing-off
10/
10.
is likely to cause damage to the Respondent as contemplated by the provisions of
Section 45(2) of the Companies Act."
The judge a
quo
appears to have accepted this contention. He said
in his judgment:
"On the basis then that I have found above that the applicant has proved a
passing off and that the respondent's name 'H0LLYW00D
CURL' is calculated (in
the sense of 'is likely') to cause damage to the objector, it follows that the
applicant is entitled to the
relief sought in this
regard."
A connection between the activities of a
company and damage to an objector does not bring a case within s.45(2). What is
requisite
under s.45(2) is a causal connection between the registration of a
company by the name concerned, and likely damage to an objector.
The passing off was the result of the
totality of the appellant's activities, some of which antedated
its incorporation on 14 August 1984 (Vida Kannike, the Vice-
President of Kannike Martins Associates Inc., the parent company
of the appellant, said in her affidavit that Kannike Martins
11/
11.
started advertising its products in South Africa under the
trade-mark Hollywood Curl in February 1981, and acquired premises in Soweto
to
set up a team of instructors to train aspirant hairdressers in the art of using
such products in the treatment of hair.) There
is no evidence that the
appellant's name was even a contributory cause to the passing off. In none of
the affidavits filed by Twins
is there any suggestion of a causal connection
between the registration of the appellant by the name Hollywood Curl (Pty) Ltd
and
any damage to Twins by reason of passing off. From these affidavits it
appears that the appellant carries on business under the style
Hollywood Curl in
premises in Soweto, Field Street, Durban, and Hoek Street Johannesburg, and it
has applied in its company name
for trading licences in respect of the premises
in Durban and Johannesburg. It uses the trademark Hollywood Curl on its goods
and
on advertising material such as posters, and on T-shirts and plastic carrier
bags. If the appellant had been incorporated, by the
name Kannike Martins
12/
12.
(S A) (Pty) Ltd, the position in regard to passing off would
have been no different.
In my opinion, therefore, Twins did not show that the
registration of the appellant company by the name Hollywood Curl (Pty) Ltd was
calculated to cause damage to Twins. It follows that the decision of the
Registrar of Companies was right, and that the court a
quo
erred in
setting it aside.
I would uphold the appeal with costs,
including the costs of two counsel, and direct that the order of the court a
quo
be set aside and that there be substituted therefor: "The application
is dismissed with costs including the costs of two counsel."
NICHOLAS,AJA
KUMLEBEN, J A - CONCURS