The law reports – December 2014

December 1st, 2014
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David Matlala BProc (University of the North) LLB (Wits) LLM (UCT) LLM (Harvard) HDip Tax Law (Wits) is an adjunct professor of law at the University of Fort Hare.

October 2014 (5) South African Law Reports (pp 317 – 633); [2014] 3 All South African Law Reports September no 1 (pp 529 – 652) and no 2 (pp 653 – 730); 2014 (3) Butterworths Constitutional Law Reports – March (pp 251 – 371) and 2014 (5) May (pp 511 – 640)

Abbreviations:

CC: Constitutional Court

ECM: Eastern Cape Local Division, Mthatha

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

KZP: KwaZulu-Natal Division, Pietermaritzburg

SCA: Supreme Court of Appeal

Attorneys

No readmission of attorney who is on parole: In Mtshabe v Law Society of the Cape of Good Hope 2014 (5) SA 376 (ECM) the applicant, Mtshabe, was a practising attorney who was struck off the roll of attorneys because of a criminal record. In the course of his practice as an attorney the applicant defrauded the state by overcharging and billing his client, the Minister of Defence, for work not done. In this application, the applicant admitted that he lied during his evidence before the court. He was found guilty and sentenced to eight years of imprisonment. After serving three years and seven months of his term he was released on parole, which was to expire in 2015. While still on parole he applied for readmission as an attorney in terms of s 15(3) of the Attorneys Act 53 of 1979 (the Act). The application was dismissed with no order as to costs as the respondent law society, the Cape Law Society, did not oppose the application.

Goosen J (Griffiths J concurring) held that in terms of s 16 of the Act any person who applied to court to be admitted or readmitted and enrolled as an attorney was obliged to satisfy the society of the province when he applied, inter alia, that he was a fit and proper person to be so admitted or readmitted and enrolled. In considering whether the onus had been discharged a court was called on –

  • to have regard to the nature and degree of the conduct which occasioned his removal from the roll;
  • the explanation afforded by him for such conduct;
  • his actions in regard to an inquiry into his conduct and proceedings consequent thereon, including the proceedings to secure his removal;
  • the lapse of time between his removal and application for reinstatement;
  • his activities subsequent to removal; and
  • the expression of contrition by him and its genuineness as well as his efforts at repairing the harm that his conduct could have occasioned to others.

When the status of a person on parole is considered, it would be wholly contrary to public policy that a person in that position could be regarded as being a fit and proper person to be admitted as a legal practitioner. Although parole appeared to be an absolute bar to readmission there could well be circumstances in which a person on parole could still be fit to hold office as an attorney. However, in the present case, taking into account the nature of the offence for which the applicant was convicted and the reasons for him having been struck off the roll of attorneys, his status as a person on parole precluded his readmission as an attorney.

 

Refusal to register articles of clerkship if the applicant is on parole: Section 4(b) of the Attorneys Act 53 of 1979 (the Act) provides among others that ‘(a)ny person intending to serve … articles of clerkship shall submit to the … society … proof to the satisfaction of the society that he or she … is a fit and proper person’. However, the Act does not define the expression ‘fit and proper’. In Thukwane v Law Society, Northern Provinces 2014 (5) SA 513 (GP) the respondent, Law Society of the Northern Provinces, rejected the application of Thukwane for registration of articles of clerkship, taking the view that the applicant was not a ‘fit and proper’ person to register as a candidate attorney. That was so as the applicant was serving parole after conviction of murder, robbery and illegal possession of a firearm. He also had a conviction for failure to report loss of a firearm. For all these convictions he was sentenced to an effective period of imprisonment for sixteen years. The murder he was convicted of was a very violent one in which he shot his young girlfriend at point-blank range in the face after an argument. His application for review and setting aside of the decision of the respondent was dismissed with costs.

Rabie J (Makgoba and Kubushi JJ concurring) held that the Act specifically required that a person should be fit and proper in order to serve under articles of clerkship and also to be admitted as an attorney. The sole purpose of registering such a contract of articles of clerkship was to allow that person, after other requirements have been complied with, to enter the attorney’s profession. For that reason alone the core principles and considerations relating to admission, striking-off and readmission of attorneys applied with equal force. The applicant in the instant case had been convicted of serious crimes involving among others, murder, violence and dishonesty. There could be no doubt that those crimes were of such a disgraceful character that a person committing them could not be admitted to an honourable profession. By committing those crimes the applicant showed serious character deficiencies that would clearly disqualify him as a fit and proper person to have his contract of articles of clerkship registered unless he could at least prove to the satisfaction of the respondent that he had undergone a complete and permanent reformation in respect of such conduct and accompanying character defects, which caused him to commit the crimes in the first place. The granting of parole was not an indication that the applicant should be regarded as a ‘fit and proper’ person as envisaged by the Act.

Companies

Setting aside a shareholder’s frivolous, vexatious or unmeritorious demand: Section 165 of the Companies Act 71 of 2008 (the Act) abolishes a shareholder’s common law derivative action and in its place provides that a person may serve a demand on a company to commence or continue legal proceedings or take related steps to protect the legal interests of the company. In subs (3) of the section it is provided that ‘(a) company that has been served with a demand may apply within 15 business days to a court to set aside the demand only on the grounds that it is frivolous, vexatious or without merit’. The application of the section fell to be decided in Amdocs SA Joint Enterprise (Pty) Ltd v Kwezi Technologies (Pty) Ltd 2014 (5) SA 532 (GJ) where a group of companies, Amdocs, had contracts with Telkom Ltd (Telkom), a state-owned company, in terms of which the group supplied Telkom with telecommunications related software and services. As required by law Telkom adopted a procurement policy and said that they would not renew the contracts with companies unless they became Black Economic Empowerment (BEE) complaint. To do this the applicant company, Amdocs SA, was formed, with Amdocs holding 51% of the shares and the rest held by other shareholders, including the respondent, Kwezi. The founders’ agreement on the basis of which the applicant was established provided among others that the applicant was required to generate business (purchase orders) with South African companies in the amount of at least US$40 million within 12 months of its establishment, failing which it would be disbanded. In other words if the applicant Amdocs SA were to be successful in generating business to the minimum value indicated it would be given the opportunity to do business with Telkom while at the same time Amdocs would also continue doing business with Telkom. The applicant failed to do the required business with South Africa companies but it was not disbanded. When the five year contracts between Telkom and Amdocs expired they were not renewed because of lack of BEE partners on the part of Amdocs. This notwithstanding Telkom and Amdocs continued doing business as before since the former needed products and services offered by the latter.

Thereafter, the respondent made a demand on the applicant, requiring it to institute proceedings against Amdocs to recover income, profits and benefits that should have accrued to it from Telkom contracts. The applicant considered the demand frivolous, vexatious and without merit and accordingly requested the respondent to withdraw it. As no withdrawal was forthcoming the applicant approached the court for an order setting aside the demand. The application was granted with costs.

Myburgh AJ held that an applicant for relief in terms of s 165(3) was entitled to succeed if he was able to demonstrate that the demand was without merit in the sense that it could not succeed. The correct approach was to consider the demand in the light of evidence placed before court. If it appeared that the demand was misdirected in the sense that it was either bad in law or was at odds with the facts to the extent that the proposed action could not succeed then it could properly be set aside. The applicant bore the onus and the absence of merit should be clearly demonstrated. In the instant case there was nothing in the papers from which it could be inferred that it was unlawful for any of the Amdocs companies to have competed with the respondent. Shareholders were at liberty to conduct themselves relative to their shares and, in their dealings with the company generally, were free to deal with it as they saw fit subject only to the provisions of the founding statute or any shareholders’ agreement that could be there.

Constitutional law

Abstract challenge to provisions of Prevention of Organised Crime Act: Section 2 of the Prevention of Organised Crime Act 121 of 1998 (POCA) deals with, among others, the ‘pattern of racketeering activity’, ‘enterprise’ and penalises a person who ‘ought reasonably to have known’ that it was unlawful to engage in any of the list activities. The constitutionality of the provisions of s 2 were challenged in Savoi and Others v National Director of Public Prosecutions and Another 2014 (5) SA 317 (CC); Savoi and Others v National Director of Public Prosecutions and Another 2014 (5) BCLR 606 (CC) where the applicants, Savoi and others, were charged with, among others, racketeering, fraud and corruption relating to unlawful conduct concerning tenders. Criminal proceedings were stayed pending finalisation of constitutional challenges to the provisions of the section. The challenges to the section were that the definition of ‘pattern of racketeering activity’ and ‘enterprise’ were vague and overbroad; that the provisions of the section violated the right to a fair trial by accommodating acceptance of hearsay evidence, similar fact evidence and previous conviction if such evidence would not result in the trial being unfair and also that the provisions had retrospective operation. The KZP held that the words ‘ought to have reasonably known’ were unconstitutional and struck them out, although the applicants had not asked for such order nor was the issue raised in evidence so that the respondent, National Director of Public Prosecutions, could deal with it. The other challenges to the constitutionality of the section were dismissed by Madondo J. As a result the applicants sought an order confirming the unconstitutionality of the phrase ‘ought to have reasonably known’ and appealed against dismissal of other grounds of the challenge. The respondent cross-appealed and opposed confirmation of the invalidity order, doing so mostly on the ground that the issues raised by the applicants were abstract as criminal proceedings had not started and the applicants had not shown how they would be affected by the impugned provisions. Leave to appeal was granted, the applicants’ appeal dismissed, the respondents’ cross-appeal upheld and the order of unconstitutionality not confirmed. The court made no order as to costs.

Reading a unanimous judgment of the CC, Madlanga J held that unless an applicant’s claim to standing was truly unmeritorious, courts should be slow to shut the door on them. That did not, however, make it irrelevant that the challenge to statutory provisions was brought in the abstract. Courts would generally treat abstract challenges with disfavour. For that reason the applicants bore a heavy burden of showing that the provisions they sought to impugn were constitutionally unsound merely on their face.

There was no vagueness in the words ‘pattern of racketeering activity’. That the list of activities envisaged could possibly incorporate offences which, when viewed individually, could not be expected to fall under the sort of notions that readily came to mind when one thought of organised crime did not necessarily translate to vagueness. What the concept of ‘pattern of racketeering activity’ sought to prohibit were the connections between conduct that would normally seem disparate but were in fact linked through the orchestrated activities of an organised criminal enterprise. It would be idle to attack the definition ‘pattern of racketeering activity’ by isolating individual offences, forming an opinion on how relatively minor they were individually and concluding that they were therefore unsuited to the notion of organised crime. Doing so would be shutting one’s eyes to how organised crime worked.

A challenge to the possibility of using hearsay evidence, similar fact evidence and evidence of previous convictions could not be sustained because s 2(2) of POCA itself provided that such evidence could be used only if it would not render the trial unfair. It was therefore the task of the trial court to guard against possible unfairness. Furthermore the provisions of POCA did not have retrospective operation as they criminalised only those activities of racketeering, which were committed after coming into operation of POCA and not before. On the ‘ought reasonably to have known’ issue it was held that a statute creating a criminal offence could not be invalidated simply on the ground that it identified negligence for the fault element. As that choice lay within the purview of the legislature’s competence, Parliament had to be given the necessary leeway.

 

Unreasonable delay in challenging unlawful action: In Khumalo and Another v MEC for Education, KwaZulu-Natal 2014 (5) SA 579 (CC); Khumalo and Another v Member of the Executive Council for Education: KwaZulu-Natal 2014 (3) BCLR 333 (CC) the Department of Education in KwaZulu-Natal advertised the post of ‘chief personnel officer’ in March 2004, specifying the requirements as among others ‘… 2 or more years of supervisory experience at level 6 of 7…’. The first applicant, Khumalo, did not meet the requirements as he had experience at level 5. He was nevertheless shortlisted for the post and eventually appointed. On the other hand the second applicant, Ritchie, met the requirements in that he had level 7. He was nevertheless not shortlisted. The second respondent having referred the dispute to arbitration at the bargaining council, the matter was settled, which settlement agreement was made an arbitration award of the bargaining council. In terms of the settlement agreement, the second applicant was granted a ‘protected promotion’, meaning that he was promoted without affecting the appointment of the first applicant. After complaints by other employees a task team was set up to investigate and it filed a report indicating that the appointment of the first applicant and the ‘protected promotion’ of the second applicant were ‘unfair’. The respondent, the MEC, did nothing about the report. Only after 20 months did she apply to the Labour Court for an order declaring the appointment and protected promotion unlawful so that they could be set aside.

The Labour Court held that both the appointment and protected promotion were unlawful and accordingly set them aside. An appeal to the Labour Appeal Court was dismissed. Also dismissed was petition to the SCA for special leave to appeal. As a result the applicants approached the CC for leave to appeal, which was granted and the appeal itself upheld with costs.

The majority judgment was read by Skweyiya J (with Zondo J dissenting and Jafta J concurring in the dissenting judgment) who held that despite trying to do the right thing the respondent delayed reprehensibly in taking her application to the Labour Court and did not seek in any way to explain the delay. It was a long-standing rule that a legality review should be initiated without undue delay and that courts had the power (as part of their inherent jurisdiction, to regulate their own proceedings) to refuse a review application in the face of an undue delay in initiating proceedings or to overlook the delay. However, that discretion was not open-ended and had to be informed by the values of the Constitution. While a court would be slow to allow a challenge to the lawfulness of an exercise of public power, that did not mean that the Constitution had dispensed with the basic procedural requirement that review proceedings had to be brought without undue delay or with the court’s discretion to overlook a delay. In the instant case, considering the typically short time frames for challenges to decisions in the context of labour law, the respondent’s delay of some 20 months was significant in itself. Furthermore, in the absence of any explanation, the delay was unreasonable.

Consumer credit agreements

Default does not include minor, unwitting and excusable defaults: Section 88(3) of the National Credit Act 34 of 2005 (the NCA) provides among others that a credit provider who receives notice of court proceedings for debt rearrangement may not exercise or enforce by litigation or other judicial process any right or security under that credit agreement until the consumer defaults on any obligation in terms of a rearrangement agreed between the consumer and credit provider or ordered by the court or the tribunal. In Nedbank Ltd v Thompson and Another 2014 (5) SA 392 (GJ) the court sanctioned a debt rearrangement agreement in terms of which the consumers, the respondents, the Thompsons, were declared over-indebted and payment of their debts rearranged. As a result the debt counsellor appointed a payment distribution agency to make monthly distribution to various creditors, including the applicant Nedbank to whom the respondents were indebted in an amount of some R 949 000 in respect of a mortgage bond. The alleged ‘default’ in the instant case arose due to the error of the payment distribution agency when it made preferential payment for legal fees, which it was not supposed to do. Because of that error the bank received less than as stipulated in the debt rearrangement agreement, the shortfall being in a small amount of some R 441. Because of that default the applicant approached the High Court for recovery of the total contract amount of some R 949 000, together with interest and an order declaring the mortgaged property specially executable. The court rejected the request and dismissed the application with costs.

Gautschi AJ held that although s 7 of the National Payment Systems Act 79 of 1998 referred to actions of the payment distribution agency as making payment on behalf of the consumer to a third party to whom that payment was due, that did not create a relationship of agency between the national payment distribution agency (NPDA) and the consumer. It was the debt counsellor who appointed the payment distribution agency in order to receive the consumer’s contributions and pay them to persons to whom payment was due. In the absence of agreement between the payment distribution agency and the consumer that the former would act as the latter’s agent, it could not be held that the payment distribution agency acted as an agent of the consumer, and that its actions or inactions would bind the consumer. The respondents did not have any contractual relationship with the NPDA and had no control over or any say in its actions. Errors of the NPDA could not be laid at the door of the respondents. Accordingly, the ‘default’ was not a default by the respondents, this having the result that the requirements of s 88(3) had not been met.

Even if the above approach were to turn to have been wrong, the court was still not inclined to grant judgment against the respondents for an amount of some R 949 000 with interest and declare the property executable because of an inadvertent default by a payment distribution agency in a relatively insignificant amount of some R 441 at the time when the application was launched, after which the respondents continued making payment to the extent that subsequent to the launching of the proceedings they were in advance with payment. Section 3 included as a purpose of the NCA the protection of consumers by ‘promoting equity in the credit market by balancing the respective rights and responsibilities of credit providers and consumers’. Therefore, the word ‘defaults’ in s 88(3) had to be interpreted to exclude minor, unwitting and excusable defaults of the nature that occurred in the present case. For that reason too the requirements of s 88(3) had not been met.

Income tax

Apportionment of a deduction that has dual purpose: For the tax years 2001 – 2004 the taxpayer in Commissioner, South African Revenue Service v Mobile Telephone Networks Holdings (Pty) Ltd 2014 (5) SA 366 (SCA), being the respondent MTN Holdings, deducted from its gross income a certain amount in respect of auditors fees paid. The taxpayer derived its income from two sources, namely, dividends in respect of shares held in subsidiaries and interest on loans made to some of the subsidiaries. However, the bulk of its income was in the form of dividends, part of which was tax exempt as provided for in the Income Tax Act 58 of 1962. Because of the tax exempt status of part of the dividend income, audit fees deductions had to be apportioned between taxable dividend income and the non-taxable part thereof. The taxpayer duly did apportionment but the thorny issue became the percentage thereof. The appellant Commissioner allowed a deduction of 2% – 6% of the audit fees, which the Tax Court increased to 50% and was further increased to 94% on appeal to the full Bench of the GJ (per Victor J, with Horn and Wepener JJ concurring). On further appeal the SCA reduced the apportionment to 10% of the audit fees.

Ponnan JA (Shongwe, Wallis JJA, Van Zyl and Legodi AJJA concurring) held that where expenditure was laid out for a dual or mixed purpose the courts in South Africa and in other countries had in principle approved of an apportionment of such expenditure. Apportionment, which had to be fair and reasonable, was essentially a question of fact depending on the particular circumstances of each case. In the instant case the audit function concerned involved auditing the taxpayer’s affairs as a whole, the major part of which concerned the consolidation of the subsidiaries’ results into the taxpayer’s results. It followed therefore that any apportionment had to be heavily weighted in favour of the disallowance of the deduction given the predominant role played by the taxpayer’s equity and dividend operations as opposed to its more limited income-earning operations. On the facts of the present case a 50/50 apportionment of the audit fees, as ordered by the Tax Court, was too far generous to the taxpayer. Instead, it would be fair and reasonable that only 10% of the audit fees claimed by the taxpayer for each of the years in question should be allowed. As a result an appeal against the decision of the full Bench was upheld with costs.

Land reform

Regional land claims commissioner is not allowed to reopen investigation after rejecting land claim because criteria for acceptance not met: The facts in Manok Family Trust v Blue Horison Investments 10 (Pty) Ltd and Others 2014 (5) SA 503 (SCA); The Manok Family Trust v Blue Horison Investment 10 (Pty) Ltd and Others [2014] 3 All SA 443 (SCA) were that in 1998 Kgoshi (chief) Manok lodged a land claim with the regional land claims commissioner in respect of a farm in Lydenburg district in Mpumalanga. In 2000 after conducting research relating to the history of the farm the regional commissioner advised Kgoshi Manok that there was never dispossession of any rights in the farm and that the claim was accordingly precluded by the Restitution of Land Rights Act 22 of 1994 (the Act). However, in 2007 one Moleke, acting on behalf of the descendant of Kgoshi Manok and the Manok community, and in the name of the appellant Manok Family Trust, being supported by the relevant MEC: Department of Agriculture and Land Administration, Mpumalanga in Provincial Government, requested the regional commissioner to revive the old claim, alleging discovery of new facts. The regional commissioner duly obliged and the claim was published in the Gazette. As a result the respondents, Blue Horison and others, being owners of the farm and who were developing it into residential and industrial units, approached the Land Claims Court (LCC) for an order setting aside the decision of the regional commissioner to revive the claim. The order was granted, hence the present appeal to the SCA. The appeal was dismissed with no order as to costs.

Mpati P (Maya, Bosielo, Leach JJA and Mocumie AJA concurring) held that when deciding to reopen the process on revival of the land claim brought by Moleke on behalf of the appellant, the regional commissioner simply ignored the previous decision to not process it for the reason that doing so was precluded as there had been no dispossession. The Act made provision for withdrawal or amendment of a notice of claim that had been published in the Gazette in terms of s 11(1). The regional commissioner had the power, conferred by the Act, to change his or her original decision that the criteria set out in s 11(1) had been met. But, the Act made no provision for a reversal by the regional commissioner of a decision, taken in terms of s 11(4), that the criteria set out in paras (a), (b) and (c) of s 11(1) had not been met and thereby in effect declining to process the claim any further. It followed that the regional commissioner, in reversing his initial decision and deciding to reopen investigations into the land claim at the instance of Moleke and the interference of the MEC, acted in a manner that was inconsistent with the Constitution. As a result, his conduct in doing so was invalid. The absence, in the Act, of a provision that empowered a regional commissioner to reverse a decision made in terms of s 11(4) led one to the conclusion that such decision, though not a dismissal of the claim, was final and could not be reversed.

Res judicata

Exception to res judicata: In Hyprop Investments Ltd and Others v NSC Carriers and Forwarding CC and Others 2014 (5) SA 406 (SCA); Hyprop Investments Ltd and Others v NSC Carriers and Forwarding CC and Others [2014] 2 All SA 26 (SCA) the appellant, Hyprop, entered into two contracts of lease with the first respondent NSC and the second respondent’s representative, Costa, who also signed a deed of suretyship in respect of the leases. After the respondents failed to pay rental the appellant cancelled the leases and sought a High Court order confirming cancellation of the leases, ordering ejectment of the respondents from the premises and payment of arrear rental. The respondents raised a defence that the leases had been induced by fraudulent misrepresentations. The GJ held per Mokgoatlheng J that there had not been any fraudulent misrepresentation and granted the orders sought by the appellants. Leave to appeal was denied by both the High Court and the SCA.

Thereafter the respondents instituted a claim for damages against the appellants based on fraudulent misrepresentation. A special plea of res judicata was raised, the appellants contending that the issue of fraudulent misrepresentation had been decided during the ejectment application before Mokgoatlheng J. Sutherland J dismissed the special plea, holding that it would be inequitable to uphold the special plea as the issue of fraudulent misrepresentation that arose before Mokgoatlheng J had been decided on the papers alone without the benefit of cross-examination. The appellants appealed to the SCA against the decision of Sutherland J, which appeal was dismissed with costs.

Lewis JA (Theron, Willis JJA, Van der Merwe and Meyer AJJA concurring) held that the SCA had previously pointed out that the plea of res judicata, which was to the effect that the same matter had already been decided, was available where the dispute was between the same parties, for the same relief or on the same cause of action. Over the years the requirements were relaxed and where there was no absolute identity of the relief and cause of action, the attenuated defence has become known as issue estoppel. In the instant case Sutherland J’s discretion not to apply issue estoppels had been exercised judicially. Mokgoatlheng J not only made a finding on the absence of fraudulent misrepresentation where the evidence had not been properly tested but also considered that reliance on fraudulent misrepresentation was precluded by the terms of the contract, which was not a correct principle of the law as fraudulent misrepresentation was always actionable regardless of the provisions of the contract. If that ruling on fraudulent misrepresentation were to bind the respondents and prevent them from suing for loss suffered as a result of the misrepresentation, issue estoppels would operate most inequitably. It would be inequitable if the respondents were not entitled to have their claims in delict adjudicated in terms of the correct principles of law. In any event, it would be patently inequitable and unfair to hold the respondents bound to inappropriate findings in another forum.

Note: Res judicata and issue estoppel were also dealt with by the SCA in Royal Sechaba Holdings (Pty) Ltd v Coote and Another 2014 (5) SA 562 (SCA).

Trademarks

Removal of a trademark from the register due to lack of good faith and unethical conduct in its registration: Section 10 of the Trade Marks Act 194 of 1993 (the Act) provides, among others, that a trademark shall not be registered but if already registered it shall be liable to be removed from the register if the applicant for registration has no bona fide claim to proprietorship or the application for registration was made mala fide. In Reynolds Presto Products Inc t/a Presto Products Co v PRS Mediterranean Ltd and Another 2014 (5) SA 353 (GP) the applicant Presto applied for removal from the register of trademarks a certain trademark, namely GEOWEB, which was registered in the name of the respondent PRS. The application was granted with costs and the registrar of trademarks ordered to remove the trademark from the register. That was after the applicant, the proprietor of the trademark, had entered into a licensing agreement in terms of which the respondent was allowed to use it for five years ending in 2001. A further agreement was entered into in 2001 and extended the licence for another five-year period, which ended in 2006. In 2003, while the licensing agreement was in operation the respondent started appropriating the trademark and in 2007, after termination of the licensing agreement, had the trademark registered in its name. The applicant contended that the respondent was not the bona fide proprietor of the trademark and that the conduct of the respondent in registering it was mala fide. The court agreed.

Murphy J held that the word ‘proprietorship’, which was not defined in the Act, did not import common-law ownership of the trademark but was used in the sense of a person who had exclusive right or title to the use of a trademark. The concept of good faith was a public policy consideration of circumscribed application in legal relationships arising from commercial activity. Accordingly, the requirement of a bona fide claim to proprietorship involved an ethical value judgment, as did the determination of whether an application for registration of a trademark was made mala fide. In the instant case while the respondent could have gained reputation and goodwill in relation to its goods using the trademark concerned, any claim by it to proprietorship of the trademark was tainted by the element of unethical dealing. Bad faith in relation to claims to proprietorship and trademark registration did not necessarily involve breach of a legal obligation. It was sufficient if the court was of the view that the conduct was unethical.

The respondent was contractually bound not to appropriate or adopt the trademark when it did so during the currency of the contract in 2003. Any use of the trademark other than in accordance with the contract was in breach of contract and consequently undermined the bona fides of its claim to proprietorship. It was commercially unethical for the respondent to seek to appropriate the trademark without authorisation during the currency of a contractual relationship premised on the supposition that the applicant was the proprietor of the trademark.

Other cases

Apart from the cases and material dealt with or referred to above, the material under review also contained cases dealing with arrest of associated ship, cancellation of servitude by abandonment, concurrent jurisdiction of local division, deemed discharge from public service, deregistration of a company that is in liquidation, dispute of fact in motion proceedings, duty to disclose record of review, failure of court to postpone hearing mero motu, failure to first exhaust internal remedies before seeking review of administrative action, municipal rates, negligence, ratification of contract, rehabilitation of an insolvent, rei vindication, rescission of default judgment, review of administrative action, sale of business, unbreakable deadlock among company directors, temporary asylum seeker permit and unconstitutionality of exclusion of claim against the Road Accident Fund.

This article was first published in De Rebus in 2014 (Dec) DR 31.