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IN THE COMPANIES TRIBUNAL OF SOUTH AFRICA

Case No: CT012JUL2018

In the matter between:

RISING SUN TV

(REG. NR: 2016/074900/07)                                                                              APPLICANT

and

RISING SUN TV (PTY) LTD

(REG. NR: 2017/667157/07)                                                                         RESPONDENT

Presiding Member of the Companies Tribunal: ISHARA BODASING

Date of Decision: 30 AUGUST 2018

DECISION (Reasons and an Order)

1.    INTRODUCTION

1.1.       Applicant is Rising Sun TV, a company duly incorporated in accordance with the company laws of South Africa, with registration number 2016/074900/07, and having its registered address at Cnr. Cowen Ntuli and Viljoen Streets, Middelberg, Mpumalanga.

1.2.       Respondent is Rising Sun TV (Pty) Ltd., a company duly incorporated in accordance with the company laws of South Africa, with registration number 2017/667157/07, and having its registered address at 32 Bell Street, Caltex Building, Nelspruit, Mpumalanga, 1200.

1.3.       This is an application for a determination order:

a.    that Respondent’s name does not satisfy the requirements of section 11(2) of the Companies Act 71 of 2008 (“the Act”), and

b.    that 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 16 July 2018 Applicant approached this Tribunal for relief. On 19 July 2018, Applicant hand delivered a copy of the application on Respondent, which was signed for by W. Magagula, Respondent’s Director.

2.2.       The Respondent did not file an answering affidavit within twenty (20) business days, following which, on 22 August 2018 Applicant applied for a default order in terms of Regulation 153 of the Companies Regulations (the Regulations).[1]

2.3.       Sbongile Malaza, a Director of the Applicant, duly authorised by a resolution, 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 Respondent’s name does not satisfy the provisions of section 11(2) of the Act in that Respondent’s name is the same as Applicant’s name.

3.2      Applicant’s company was first registered with the Companies and Intellectual Property Commission (CIPC) on 29 February 2016. In her affidavit, Ms Malaza describes the Applicant’s core business as the establishment and management of a television channel.

3.3      On 21 September 2017, two former Directors of Applicant, Tim Zulu and Philip Mogola, were removed as Directors by a resolution taken by Applicant’s four other Directors.

3.4      On 4 April 2018, Tim Zulu and Welcome Magagula then registered Respondent with the CIPC. Ms Magagula alleges that notification of their application to register Respondent was erroneously sent to other people by the CIPC.

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

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

ii.    there are false implications that the Applicant’s and Respondent’s core business is one and the same or directly associated with each other;

iii.    the confusion has resulted in delays to process Applicant’s registration with the Independent Communications Authority of South Africa (ICASA) and the obtaining of a TV license to continue its operations.

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         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 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 Respondent. The doctrine of imperfect recollection has been explained by our courts[2]: 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."

5.2         It can therefore be also be concluded that Respondent’s name will reasonably mislead the reasonable person to believe incorrectly that there is a direct association with the Applicant’s business. 
The fact is that the two businesses 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. 


5.3         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.”[3] 
Thus permitting the Respondent to keep its 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 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 Respondent has transgressed Section 11(2): its name is the same and falsely implies, or could reasonably mislead a person to believe incorrectly, that the 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 Respondent change its name to one which does not incorporate the words “Rising Sun TV”, as it is in contravention of Section 11(2) of the Act.

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

7.3         The 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 Respondent, as the matter has not been opposed. The Respondent is hereby exempt from the requirement to pay the prescribed fee for filing the notice of amendment. 


7.5         Since the 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 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 Respondent to file an amended Memorandum of Incorporation using a satisfactory name.

7.7         Should the 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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