IN THE COMPANIES TRIBUNAL OF SOUTH AFRICA, PRETORIA

CASE NO:	CT010Jul2018

In the matter between:

Value Logistics Limited
(1920/000560/06)	Applicant

and

Value-Ad Logistics (Pty) Ltd
(2014/17 4332/07)	Respondent

Presiding Member of the Tribunal: Delport P.A.
Date of Decision	: 17 September 2018

Decision

INTRODUCTION

[1]	The applicant applies for a default order that the first respondent be ordered to change its name because it does not comply with, inter alia, s 11(2)(a)(iii) and (b)(i) of the Companies Act 71 of 2008 (“Companies Act”/“Act”).
[2]	Regulations 142 and 153 of the Companies Act (GNR 351 of 26 April 2011) (“Companies Act regulations”/“regulations”) regulate an application to the Companies Tribunal (“Tribunal’) as well as the application for a default order under certain circumstances.

[3]	The jurisdiction of the Tribunal in this matter is as determined in s 160 of the Companies Act.

BACKGROUND
[4]	Applicant is Value Logistics Limited (1920/000560/06).

[5]	Respondent is Value-Ad Logistics (Pty) Ltd (2014/17 4332/07).

[6]	The affidavit in support of the CTR 142 in terms of reg 142 was deposed by Gina Luzzatto, the group legal advisor of the applicant, who was authorised thereto by a resolution of the board of the applicant dated 11 May 2018.

[7]	The applicant served form CTR 142 and the supporting affidavit at the registered address of the respondent on 17 July 2018 while the supporting affidavit for the application for a reg 153 default order and form 142 indicates that the application was lodged on 6 June 2018, although it was apparently only lodged with the Tribunal on 13 July 2018.

[8]	The service should be as required by reg 142(2) and not within 5 business days after notification by the Tribunal (para 2.3 of said reg 153 supporting affidavit). The Tribunal has no role and/or function in this regard.

[9]	No answering affidavit was apparently filed (para 3.2 of reg 153 supporting affidavit), and the applicant applies for a default order.

[10]	The order applied for in the CTR 142 and para 4.1 of the reg 153 supporting affidavit is for :
“4.1.1. ordering the Respondent to change its company name to one which does not incorporate and is not confusingly similar to the "VALUE LOGISTICS" trade marks; and/or
4.1.2. ordering the Companies Office to deregister the Respondent's company
name; and
4.1.3. ordering the Respondent to pay the costs of this application; and
4.1.4. further and/or alternative relief.”

[11]	The applicant further avers in paras 8 and 9 of the CTR 142 founding affidavit that it has “good cause” as required by section 160(2)(b) to bring the application. The basis of the application is because the respondent’s name is in contravention of section 11(2)(a) of the Companies Act (para 9.2 of the founding affidavit). No mention is made of s 11(b)(i) as per the CTR 142 and it is not clear if it was abandoned by the applicant. The references to the particular purported section are in any case wrong.

[12]	The applicant based its application on the following provisions of the Companies Act (para 7.3 of the CTR 142 founding affidavit):
“11(2)(a)(iii) not be the same as, or confusingly similar to a registered trade mark belonging to a person other than the company, or a mark in respect of which an application has been filed in the Republic for registration as a trade mark or a well-known trade mark as contemplated in Section 35 of the Trade Marks Act, 1993; and 11(2)(b)(i) not falsely imply or suggest, or be such as would reasonably mislead a person to believe incorrectly, that the company is part of or associated with, any other person or entity.”

[13]	Section 11(2)(a) was amended by the Companies Amendment Act 3 of 2011 and does not provide what the applicant contends.

APPLICABLE LAW
[14]	Section 160, which is the basis for applications like these, provides, as far as it is relevant for the present matter, as follows:
“160.	Disputes concerning reservation or registration of company names.—(1) … 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, …, 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.”

[15]	Section 11, as far as it is relevant for the present matter, provides as follows
“(2) The name of a company must—
(a) not be the same as—
...
(iii) a registered trade mark belonging to a person other than the company, or a mark in respect of which an application has been filed in the Republic for registration as a trade mark or a well-known trade mark as contemplated in section 35 of the Trade Marks Act, 1993 (Act No. 194 of 1993), unless the registered owner of that mark has consented in writing to the use of the mark as the name of the company;
...
(b) not be confusingly similar to a name, trade mark, mark, word or expression contemplated in paragraph (a) unless—
(iii) in the case of a name similar to a trade mark or mark referred to in paragraph (a) (iii), the company is the registered owner of the business name, trade mark, or mark, or is authorised by the registered owner to use it; or; [emphasis added]
...”

[16]	As stated above in para [13], the sections on which the applicant based its application are different after the amendment of the Companies Act. I will therefore adjudicate the matter as per the correct sections, as the intention of the application is clear, although the sections are clearly wrong: see however Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others 2004 (4) Sa 490 (CC)

[17]	It is, however, inexcusable that the applicant does not know about an amendment to the Act that has been in operation for some 7 years and therefore wastes the Tribunal’s time and resources in this manner. The application should have been refused on this basis alone.

EVALUATION
[18]	An application in terms of s 160, is qualified by sub-s (2) that provides:
“(2) An application in terms of subsection (1) may be made—
…
(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.”

[19]	The Act does not define what is meant by “good cause” in terms of s 160(2)(b) and it is not clear whether it refers to substantive grounds (such as eg in s 11) or whether it refers to the period of time within which the application should be launched.

[20]	Based on the context of s 160(2), it would seem that the only sensible interpretation will be that it refers to the period within which to launch the application.

[21]	The substantive law is already covered in eg s 11, and “good cause” cannot refer to this.

[22]	The reason for the requirement that there must be good cause shown why the application was launched at a particular date would appear to be that the person doing business under a particular name, that has been registered by the Companies and Intellectual Property Commission, is not prejudiced by a belated challenge which could affect the goodwill built up in using the name. See also Comair Limited vs Kuhlula Training, Projects and Development Centre (Pty) Limited CT007Sept2014 of 27 February 2015.

[23]	To interpret s 160 in such a manner that an application such as this one is not subject to some restriction as to the time within which it should be lodged, will in my opinion, lead to “…insensible or unbusinesslike results…”: Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 18.

[24]	However, in The Highly Nutritious Food Company (Pty) Ltd v The Companies Tribunal and Others (91718/2016) [2017] ZAGPJHC ( 22 September 2017) the Court said (para 18) that: “...Section 160(2)(b) allows any person and at any time to bring an application on good cause shown. This does not refer only to the delay in bringing the application but to show good cause as to why the application must be entertained. The section requires the applicant to furnish a reasonable explanation as to why the application should be entertained by the Tribunal. It does not require an explanation only as to the delay in bringing the application but refer (sic) to the merit of the application as well. It is section 160(1) that prescribes, for a particular category of persons, to launch an application within the period of three (3) months after they became aware of the registration of the name. [19] It is my respectful view therefore that to evaluate good cause, the Tribunal was obliged to look at the whole matter including the merits to determine whether it was in the interests of justice to entertain the application.”

[25]	It may be possible that the merits of the application form part of the “good cause” requirement in this context. However, sub-s (2) (a) refers to the period in respect a notice is delivered in terms of the Act and is the alternative to sub-s (2) (a), due to the disjunctive “or”. Subsection (2)(b) refers to applications other than under sub-s (2) (a), ie where there was no s 160 (1) notice. Subsection (2) (a) does not require and there is no implication to that effect, that the merits should be addressed. Subsection (2) therefore only regulates the respective time periods. To require that the merits of the application, which must in any case be addressed in the CTR 142 as provided for in reg 142 in respect of both subsections, to be only evaluated in sub-s (2) (b) in addition to the explanation for the time lapse under “good cause”, is superfluous and unnecessary. The merits will be evaluated by the Tribunal to make a ruling, and if there were no merit in bringing the application, it should be addressed at the ruling/decision stage. The Court also did not, as is clear from paras 18 and 19 of the judgment, require that “good cause” means reasons which justify the granting of the relief sought in the application launched in terms of section 160(1) (as opposed to entertaining the application): see however Highly Nutritious Food Company (Pty) Ltd v Eat Right Catering Services (Pty) Ltd and Another (CT014Apr2016) [2017] COMPTRI 101 (24 November 2017) para 24. In addition, s 160 (1) does not prescribe a period of 3 months to bring the application as stated by the Court (para 18). If that were the position, the reasoning may have been more persuasive. Be that as it may, the law now is that the “good cause” requirement does not only refer to the time period, but also the merits, and these would be the “relevant factors” that the Tribunal should take into account in the granting of the relief sought in the application (para 20).

[26]	In respect of the elapsed time period, as a factor in the merits, it is in interest of the respondent company and its creditors and possible prejudice to these parties. If the respondent company was not trading, the possibility of prejudice falls away (para 20) and the dictum in the Highly Nutritious Food Company (Pty) Ltd case supra is therefore authority under these circumstances, and not if the company was indeed trading, which would mean that there should be “good cause” shown for the period elapsed since incorporation and an application in terms of s 160. In this respect it should also be noted that the name of the respondent was approved and registered by the Companies and Intellectual Property Commission and it complied therefore, at least prima facie, with s 11. The respondent in an application under s 160 has, due to the notice of the application in terms of reg 142 (2), knowledge of the application. Failure to respond would, therefore, also be a factor that needs to be taken into account in respect of the determination of “good cause” in the case of a effluxion of time since registration of the company with the offending name and the lodging of the application by the applicant.

[27]	The respondent was incorporated in 2014 and applicant commenced a process in March 2017 to indicate that it deems the name of the respondent to be in contravention of s 11 of the Act.

[28]	This process was initiated some 3 years after registration of the respondent.

[29]	As stated above the effluxion of time should be evaluated against possible prejudice to the respondent in determining “good cause”.

[30]	The reason for effluxion of time from registration of respondent and the time that the applicant became aware of the offending name is not addressed and there is not “good cause” shown therefor.

[31]	Contrary to what is quoted in the supporting affidavit the dictum of Highly Nutritious Food Company (Pty) Ltd v Eat Right Catering Services (Pty) Ltd and Another (CT014Apr2016) [2017] COMPTRI 101 (24 November 2017) does not apply, as the respondent company is in business. (see discussion of the Highly Nutritious Food Company (Pty) Ltd case supra)

[32]	However, the Tribunal must take into account that the respondent, on whom the application was properly served, had an opportunity to indicate why an order as prayed for should not be granted, inter alia due to prejudice to the company being in business since 2014 and, if it is possible, also prejudice to creditors.

[33]	On balance therefore, it is the opinion of the Tribunal that on all the merits in considering the application, there was “good cause”.

[34]	The applicant submitted extensive, and superfluous, information of the “mark” used by the applicant and registration thereof in terms of the Trade Marks Act 194 of 1993.

[35]	Company names, on the other hand, consist only of words and certain symbols, and the unique features of a “mark” is not of significance in respect of s 11 of the Companies Act.

[36]	Section 11(2)(a) refers to a name that is the “same”. The name of the respondent is not the same as that of the applicant as contemplated in s 11(2) (a) of the Companies Act. “Same” is exactly identical: See eg Williams v Janse van Rensburg (3) 1989 (4) SA 884 (C); Century City Apartments Property Services CC and Another v Century City Property Owners Association [2010] 2 All SA 1 (SCA).

[37]	In respect of s 11(2)(b)(i) it is required that a name must not be “confusingly similar to a name, trade mark, mark, word or expression contemplated in paragraph (a)”. The test, which would be the same as “reasonably mislead”, 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. Whether there is such a reasonable likelihood of confusion or deception is a question of fact to be determined in the light of the particular circumstances of the case.” Adidas AG and Another v Pepkor Retail Limited (187/12) [2013] ZASCA 3 (28 February 2013) para 28. It is not necessary to find that all or most consumers would be confused. It is enough that a substantial number of them are likely to be confused: PepsiCo v Atlantic Industries (983/16) [2017] ZASCA 109 (15 September 017) para 30 and Lucky Star Ltd v Lucky Brands (Pty) Ltd and Others 2017 (2) SA 588 (SCA).

[38]	With fancy or “created” names, ie names not consisting of everyday words, it will be easier to prove confusion. However, in respect of a word in everyday use, and the possible confusion, it was said in Bata Ltd v Face Fashions CC & Another 2001 (1) SA 844 (SCA) para 10: “It is an ordinary word in everyday use, as distinct from an invented or made-up word, and it cannot follow that confusion would probably arise if it is used in combination with another word.”: See also Lucky Star Ltd v Lucky Brands (Pty) Ltd and Others (164/2015) [2016] ZASCA 77 (27 May 2016) para 10.

[39]	“Value” and “Logistics” are ordinary everyday words, but in combination the words are sufficient to be unique and to be a distinguishing feature: Bata Ltd v Face Fashions CC & Another 2001 (1) SA 844 (SCA) para 11.

[40]	In Orange Brand Services Ltd v Account Works Software (Pty) Ltd (970/12) [2013] ZASCA 158 (22 November 2013) the Supreme Court of Appeal said (para 10), with reference to Kerly’s Law of Trade Marks and Trade Names (14th ed para 17–23) that whether there is a likelihood of deception or confusion is a question of fact, and for that reason decided cases in relation to other facts are of little assistance, except so far as they lay down any general principle.”

[41]	“Value-ad “Logistics”, will be confusingly similar for the reasonable person to the trade mark “Value Logistics” and would therefore not comply with s 11(2)(b)(i). This obviously only applies in respect of the words, and not the logo’s, where the design and colour would play a significant role.

ORDER
[42]	The respondent’s name does not comply with s 11(2)(b)(i) of the Companies Act.

[43]	The respondent is directed in terms of s 160(3)(b)(ii), to choose a name which does not consist of, or incorporate, words that contain “Value Logistics”;

[44]	The respondent is to file a notice of an amendment of its Memorandum of Incorporation, within 60 days of receipt of this order in order to change its name as per para [43] above.

[45]	The Tribunal cannot order the Companies Office to deregister the Respondent's company name, purely for the reason that that “office”, actually the Companies and Intellectual Property Commission, was not cited in this application.

[46]	There is no order as to costs

Prof P.A. Delport

COMPANIES TRIBUNAL: MEMBER
17 September 2018