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IN THE COMPANIES TRIBUNAL OF SOUTH AFRICA

Case No: CT018AUG2017

In the matter between:

HOUSEMASTERS SOUTH AFRICA (PTY) LTD                                               APPLICANT

and

HOUSEMASTERS BUILDING

CONSTRUCTION (PTY) LTD                                                            FIRST RESPONDENT

COMPANIES AND INTELLECTUAL PROPERTY

COMMISSION (CIPC)                                                                   SECOND RESPONDENT

Presiding Member of the Companies Tribunal: ISHARA BODASING

Date of Decision: 25 APRIL 2018

DECISION (Reasons and an Order)

1.    INTRODUCTION

1.1.       Applicant is Housemasters South Africa (Pty) Ltd., a company duly incorporated in accordance with the company laws of South Africa, with registration number 2013/121454/07, and having its registered address at 123F, Soshanguve, Pretoria, 0152.

1.2.       First Respondent is Housemasters Building Construction (Pty) Ltd., a company duly incorporated in accordance with the company laws of South Africa, with registration number 2017/257558/07, and having its registered address at House Nr. 406, Moletjie Chebeng, Polokwane, Limpopo, 0700.

1.3.       Second Respondent is the Companies and Intellectual Property Commission (“CICP), a juristic person established in terms of section 185(1) of the Companies Act 71 of 2008 (“the Act”).

1.4.       This is an application for a determination order:

a.    that First Respondent’s name does not satisfy the requirements of section 11(2) of the Act, and

b.    that First Respondent be directed to choose a new name as provided for in terms of section 160, read with section 14(2) of the Act.

2.    BACKGROUND

2.1.       On 25 August 2017 Applicant approached this Tribunal for relief. On 29 August 2017, Applicant served a copy of the application on the First Respondent via registered mail.

2.2.       First Respondent did not file an answering affidavit within twenty (20) business days, following which, on 10 April 2018 Applicant applied for a default order in terms of Regulation 153 of the Companies Regulations (the Regulations).[1]

2.3.       There was some delay between the Form CTR 142 application and Form CTR 145 lodgement, due to defects in Applicant’s initial papers, which were amended. These defects were not material, and simply entailed a requirement that Applicant separate his actions against two different respondents.

2.4.       Godfrey Madubanya, the Director of the Applicant, deposed to the founding affidavit and to an affidavit in support of the application for default judgment.

3.    ISSUES

3.1      Applicant requests the Tribunal to make a finding that the First Respondent’s name does not satisfy the provisions of section 11(2) of the Act. It submits that the inclusion of the word HOUSEMASTERS in the First Respondent’s name infringes its registered trademarks.

3.2      Applicant’s business was first registered in 2009 as a closed corporation (Housemasters South Africa CC). In his affidavit, Mr Madubanya describes the Applicant’s core business as the construction of houses, with a national footprint.

3.3      Applicant contends that the dominant and memorable part of the First Respondent’s company name is “HOUSEMASTERS”, which is therefore confusingly and deceptively similar to the Applicants’ registered name and is in contravention of Section 11(2)(b) and (c)(i) of the Act.

3.4      Applicant has underscored the prejudice it will suffer if denied relief, especially as:

i.    it does not have control over the quality of products or services of the First Respondent;

ii.    there may be false implications that the Applicant’s and First Respondent’s core business is connected as defined in the Housing Consumers Protection Measures Act 95 of 1998;

iii.    financial service providers would, when applying the “know your customer” and other vetting and screening requirements as per the Financial Intelligence Centre Act or the Prevention of Organised Crime Act, mistakenly believe that Applicant and First Respondent are one and the same, or closely connected.

4.    APPLICABLE LAW

4.1         Section 11 of the Act provides as follows: “11. Criteria for names of companies. —

(1)....
(2) The name of a company must— (a) not be the same as—

(i)  the name of another company, domesticated company, registered external company, close corporation or co-operative;

...

(b) not be confusingly similar to a name, trade mark, mark, word or expression contemplated in paragraph (a) unless—

(i)  in the case of names referred to in paragraph (a) (i), each company bearing any such similar name is a member of the same group of companies; …

 (c) not falsely imply or suggest, or be such as would reasonably mislead a person to believe incorrectly, that the company—

(i) is part of, or associated with, any other person or entity;”

4.2         Section 160 of the Act deals with disputes concerning reservation or registration of company names and enunciates the jurisdiction of the Companies Tribunal as follows:

(1) A person to whom a notice is delivered in terms of this Act with respect to an application for reservation of a name, registration of a defensive name, application to transfer the reservation of a name or the registration of a defensive name, or the registration of a company’s name, or any other person with an interest in the name of a company, may apply to the Companies Tribunal in the prescribed manner and form for a determination whether the name, or the reservation, registration or use of the name, or the transfer of any such reservation or registration of a name, satisfies the requirements of this Act.

(2) An application in terms of subsection (1) may be made— (a) within three months after the date of a notice contemplated in subsection (1), if the applicant received such a notice; or (b) on good cause shown at any time after the date of the reservation or registration of the name that is the subject of the application, in any other case.

(3) After considering an application made in terms of subsection (1), and any submissions by the applicant and any other person with an interest in the name or proposed name that is the subject of the application, the Companies Tribunal –:

(a) must make a determination whether that name, or the reservation, registration or use of the name, or the transfer of the reservation or registration of the name, satisfies the requirements of this Act; and

(b) may make an administrative order directing-

(i) the Commission to

(aa) reserve a contested name, or register a particular defensive name that had been contested, for the applicant;

(bb) register a name or amended name that had been contested as the name of a company;

(cc) cancel the reservation of a name, or the registration of a defensive name; or

(dd) transfer, or cancel the transfer of, the reservation of a name, or the registration of a defensive name; or

(ii) a company to choose a new name, and to file a notice of an amendment to its Memorandum of Incorporation, within a period and on any conditions that the Tribunal considers just, equitable and expedient in the circumstances, including a condition exempting the company from the requirement to pay the prescribed fee for filing the notice of amendment contemplated in this paragraph.”

4.3         Companies Regulation 153 of 2011 provides for default orders:

(1) If a person served with an initiating document has not filed a response within the prescribed period, the initiating party may apply to have the order, as applied for, issued against that person by the Tribunal.

5.    EVALUATION

5.1          “Similar” in section 11(2)(b) would be “having a marked resemblance or likeness” and that the offending name should immediately bring to mind the well-known trade mark or other name.[2] The test for “confusingly similar” is, as in the case of passing-off: “...a reasonable likelihood that ordinary members of the public, or a substantial section thereof, may be confused or deceived into believing that the goods or merchandise of the former are the goods or merchandise of the latter or are connected therewith. Whether there is such a reasonable likelihood of confusion or deception is a question of fact to be determined in light of the particular circumstances of the case.” [3]

5.2         “Confusingly similar” in Section 11(2)(b) has to be examined carefully to determine if this is in fact so in casu. In considering case law on the concept, it must be as alike in a manner that will confuse the “ordinary reasonable careful man, i.e. not the very careful man nor the very careless man.”[4] The “reasonable man” has been further qualified: “A rule of long standing requires that the class of persons who are likely to be the purchasers of the goods in question must be taken into account in determining whether there is a likelihood of confusion or deception.”[5]

5.3         As to the requirement for confusingly similar, the test, as in the case of passing-off, should be: “...a reasonable likelihood that ordinary members of the public, or a substantial section thereof, may be confused or deceived into believing that the goods or merchandise of the former are the goods or merchandise of the latter or are connected therewith.”

5.4         In line with what was stated in Ewing t/a The Buttercup Dairy Company v Buttercup Margarine Corporation Ltd 1917 (34) RPC at 232 and 238, it can be concluded that confusion and/or deception may arise from the side-by-side use of the Applicant’s and the First Respondent’s name, which can lead to injury of the Applicant’s business, especially since it has no control whatsoever over the quality of services rendered by the First Respondent. The doctrine of imperfect recollection has been explained by our courts[6]: there is a probability that a substantial number of people will be at least confused, if not deceived, given the fact that an individual does not have the two marks before him, side by side and that memory is often imperfect. In Cowbell AG vs ICS Holdings 2001 (3) SA 941 (SCA), the court said: "the decision involves a value judgment and that the ultimate test is whether, on a comparison of the two marks it can properly be said that there is a reasonable likelihood of confusion if both marks are to be used together in a normal and fair manner, in the ordinary course of business."

5.5         It can therefore be also be concluded that the word “HOUSEMASTERS” in First Respondent’s name will reasonably mislead the reasonable person to believe incorrectly that there is an association with the Applicant’s business. 
The fact is that the two businesses can clearly have similar or overlapping activities in respect of their corporate branding, and this will, as under section 11(2)(b), include the likelihood/possibility that the reasonable person will be misled. 


5.6         Finally, in the case of Polaris Capital (Pty) Ltd v The Registrar of Companies and Polaris Capital Management Inc. (unreported judgment, Case No. 11607/2005, CPD), the learned judge commented on undesirability in terms of Section 45 (2) of the 1973 Companies Act: 
“It is submitted that by allowing the close corporation name to remain on the register, in addition to causing deception and confusion, its registration will hinder the registrar’s role in maintaining and promoting good governance and administration of corporate entities in the interest of the general public.”[7] 
Thus permitting the First Respondent to keep the name HOUSEMASTERS in its company name will create confusion and hinder the Registrar from maintaining and promoting good governance and administration of a corporate entity in the interest of the general public. It is evident therefore that the name HOUSEMASTERS as incorporated in the First Respondent’s company name falls within the ambit of Section 11(2) as argued.

6.    FINDINGS

6.1         I find that the balance of convenience favours the Applicant.

6.2         Applicant has shown that First Respondent has transgressed Section 11(2): its name is confusingly similar and falsely implies, or could reasonably mislead a person to believe incorrectly, that the First Respondent is part of, or associated with the Applicant. Hence it is entitled to an order as claimed in terms of Section 160 of the Act.

6.3         The Applicant’s application is granted as set out below.

7.    ORDER

7.1         An administrative order is made in terms of Section 160(3)(b)(ii) that First Respondent change its name to one which does not incorporate the word HOUSEMASTERS as it is in contravention of Sections 11(2)(b) of the Act.

7.2         This order must be served on the Respondents by the Tribunal’s Recording Officer (Registrar).

7.3         The First Respondent is hereby ordered to change its name within 60 (calendar) days of date of receipt of this order and to file a notice of amendment of its Memorandum of Incorporation.

7.4         There is no order of costs against the First Respondent, as the matter has not been opposed. The First Respondent is hereby exempted from the requirement to pay the prescribed fee for filing the notice of amendment. 


7.5         Since the First Respondent is a profit company, in accordance with Section 11(1)(b) and (3)(a) of the Act, it can use its registration number as its company name immediately followed by the expression “ South Africa”, should it not be in a position to use another name.

7.6         The Registrar of CIPC is directed to inform the First Respondent forthwith of the decision of the Tribunal and to ensure that the name is changed within the requisite time period as aforesaid; and to invite the First Respondent to file an amended Memorandum of Incorporation using a satisfactory name.

7.7         Should the First Respondent not comply with the order of the Tribunal within the 60 day (calendar days) period, the Registrar of CIPC is directed to change the Respondent’s name to its registration number without the Respondent’s consent in terms of Sections 160(3) and 14(2) of the Act. 


___________________________

ADV. ISHARA BODASING

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