The law reports – March 2019

March 1st, 2019
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Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

January 2019 (1) South African Law Reports (pp 1 – 326); [2018] 4 All South African Law Reports December (pp 615 – 919); [2019] 1 All South African Law Reports January (pp 1 – 289)

This column discusses judgments as and when they are published in the South African Law Reports, the All South African Law Reports and the South African Criminal Law Reports. Readers should note that some reported judgments may have been overruled or overturned on appeal or have an appeal pending against them: Readers should not rely on a judgment discussed here without checking on that possibility – Editor.

Abbreviations

ECG: Eastern Cape Division, Grahamstown

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Company law

Requirements of application for orders declaring dissolution of company void:  The appellants in De Villiers and Others v GJN Trust and Others 2019 (1) SA 120 (SCA) were De Villiers; the Cape Veterinary Wholesalers CC (the CC), of which De Villiers was the sole member; and the Francois de Villiers Share Trust (the Share Trust), of which De Villiers was a trustee. De Villiers and the CC were creditors of the company Cape Animal Health Brokers (Pty) Ltd (the company). The Share Trust was the sole shareholder of the company. De Villiers successfully applied for the liquidation of the company. The company was afterwards dissolved in terms of s 419 of the Companies Act 61 of 1973 (the Act).

Subsequently, the first respondent, the GJN Trust, also a creditor of the company, successfully sought an order in the WCC declaring the dissolution of the company to have been void in terms of s 420 of the Act, on the grounds of impropriety on the part of the appellants. In the court a quo the appellants sought the setting aside of the s 420 order, in terms of r 42(1)(a), on the grounds that it had, erroneously, been made without any notice to any of them. The court a quo refused the rescission application.

On appeal to the SCA against the refusal the critical question for decision was whether the appellants had established locus standi to bring an application under the rule. Thus, did the appellants have a legal interest in the subject-matter of the action or application, which could be prejudicially affected by the order in that action or application? In answering this question, Van der Merwe JA considered the relevant background, in particular the ambit of s 420 of the Act, and the purpose and effect of an order granted in terms of s 420 of the Act. The court referred with approval to the decision in Ex parte Liquidator Natal Milling Co (Pty) Ltd 1934 NPD 312 in concluding that s 420 of the Act provided a court with the discretion to avoid the dissolution of a company in any circumstances where the interests of justice warranted such a cause. The discretion was wide, and defied precise definition.

It further held that the effect of an order under s 420 was to revive the company and to restore the position that existed immediately prior to its dissolution. Thus, the company was recreated as a company in liquidation, with the rights and obligations that existed on its dissolution. Property of the company that passed to the state as bona vacantia was automatically reinvested in the company by operation of law. An order under s 420 was only retrospective in this sense and did not validate any corporate activity of the company, which may have taken place during the period of its dissolution. The effect of an order in terms of s 420 had, therefore, to be contrasted with the effect of the reinstatement of a company in terms of s 82(4) of the (new) Companies Act 71 of 2008 after its deregistration by the Companies and Intellectual Property Commission in terms of s 82(3) thereof. The steps taken during the prior liquidation, up to the time of dissolution, remained in place.

As a result, so the court reasoned, it had to reject the appellants’ argument that the s 420 order adversely affected their interests in that they were not afforded the opportunity to respond to the serious allegations of impropriety that had been made in the s 420 application. The prosecution of these claims would take place by due process, during which the appellants would be afforded the full opportunity to protect their rights.

The appeal was thus dismissed with costs.

Civil procedure law

Consumer foreclosure debts must be lodged in local magistrate’s or regional court:  In re: Nedbank Limited v Thobejane and related matters [2018] 4 All SA 694 (GP) involved a number of cases where banks lodged their claims for foreclosure on mortgage agreements subject to the National Credit Act 34 of 2005 with the GP, even though the quantum of the claims fell within the jurisdiction of either the magistrate’s court or regional court. The Judge President became concerned about the court rolls of the GP becoming clogged up with matters, which properly belonged elsewhere and caused delays in matters that properly belonged before the High Court and denying the litigants involved proper access to justice.

The Judge President issued a directive for the following issues to be addressed:

First, why should the High Court entertain matters falling within the jurisdiction of the magistrate’s court? Secondly, is the High Court obliged to entertain such matters because it has concurrent jurisdiction? Thirdly, is the Provincial Division obliged to entertain matters falling within the jurisdiction of a Local Division, that is, the GJ? Finally, is there an obligation on financial institutions to consider the implications of and access to justice of financially distressed consumers when considering which forum to use?

Appearing before the Full Court were the financial institutions that brought the default applications. The court requested the Pretoria Society of Advocates to assist the unrepresented defendants. The South African Human Rights Commission (SAHRC) and the Department of Justice and Constitutional Development were granted leave to be admitted as amici curiae.

Tolmay J pointed out that the financial institutions raised a number of arguments on why they choose to lodge matters with the High Court instead of the magistrates’ court, mostly dealing with the inefficiency and uncertainty experienced in magistrates’ courts and their reluctance to order properties specially executable.

The SAHRC highlighted the plight of distressed impecunious consumers who stood to lose their homes, often on the basis of small defaults and their inability to properly defend these actions. The Minister of Justice, in turn, highlighted the lack of designated interpreters in the High Court, in contrast to the magistrates’ courts where there are sufficient numbers and the denial of justice this may cause in the High Court. Statistics show that there has been an enormous increase in the number of matters lodged in Pretoria. The extra workload makes it difficult for judges to write judgments, causing delays in matters being finalised, delaying justice even further for the litigants.

Due to the new Uniform Rule 46A, foreclosure matters require a lot more scrutiny, further adding to the workload of the judges.

The current practice poses a threat to the right of access to justice and the sustainability of the workload of the GP.

In principle, a plaintiff has the right to choose any court, which has jurisdiction in the dispute, but this choice should not be at the expense of access to justice. Courts should not be overburdened where matters can conveniently be dealt with by other courts as it impacts on the access to justice and may be an abuse of process. If impecunious litigants are denied proper access to justice and the High Court is unnecessarily overburdened, it constitutes an abuse of process.

The High Court has the discretion to regulate its own processes and even if this discretion is to be used sparingly, this is a matter where the principle of access to justice requires it. In terms of Uniform Rule 39(22) a High Court may transfer a matter on its own account to an appropriate court, either the magistrate’s court or a Local Division.

The most practical way to discourage the current practice is to require a plaintiff in a matter properly belonging in a magistrate’s court to make a formal application providing reasonable grounds why the matter should be heard in the Provincial Division. Inefficiency of the magistrates’ court or the convenience of the plaintiff does not constitute such grounds. The court confirmed that litigants in all matters have an obligation to consider the question of access to justice when exercising their right to choose the court within which to litigate.

To promote access to justice, as from 2 February, civil actions and/or applications where the monetary value claimed is within the jurisdiction of the magistrates’ courts should be instituted in the latter court, unless the High Court has granted leave to hear the matter in the High Court.

No costs order was made.

Constitutional law

Equality – objective test for hate speech: In South African Human Rights Commission v Khumalo 2019 (1) SA 289 (GJ); [2019] 1 All SA 254 (GJ) the applicant (the SAHRC) instituted proceedings in the High Court, sitting as an Equality Court, against the respondent (Khumalo) following complaints that his social media posting, that ‘we [black people] must act [against white people] as Hitler did to the Jews’, constituted hate speech. However, this happened only after a different complaint relating to the same media posting had already been heard by a magistrates’ court sitting as an Equality Court, and that court had made an order after settlement was reached between the complainant in that case and Khumalo. Khumalo subsequently made further, and even more abusive comments on social media, which allegedly amounted to hate speech. The present case in the GJ concerned a number of procedural aspects, including that of res judicata and estoppel. The question in this matter was whether Khumalo’s comments constituted hate speech as contemplated by s 10 of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (the Equality Act).

Sutherland J held that in order to achieve alignment with s 16(2)(c) (which provides for freedom of expression) of the Constitution, s 10(1) of the Equality Act must be read conjunctively rather than disjunctively. As a result, the factor of ‘incitement’ must be present in the prohibited utterances. The test for hate speech was whether Khumalo’s utterances ‘could be reasonably construed to demonstrate a clear intention to incite harm’. It postulated what a reasonable reader could think about the speech. If a reasonable person reading the text could understand it to mean an incitement to cause harm, the test was met. And because the objective test of the reasonable reader applied, it was the effect of the text and not the intention of the author that was assessed. It must, therefore, be asked if ‘harm’ could be incited by the effect of the utterances on readers.

The ‘harm’ envisaged derived from interracial hostility and was not to be limited to physical harm to the category of persons against whom the hatred was directed. The risk of harm existed in several forms, including conduct that would harm social cohesion, and so undermining the nation-building project.

Khumalo’s comments aimed to repudiate whites as unworthy and that they ought deservedly to be hounded out, marginalised, repudiated and subjected to violence in the eyes of a reasonable reader. This comment could indeed incite the causation of harm in the form of reactions by blacks to endorse those attitudes, reactions by whites to demoralisation, and ratchet up the invective by responding in like manner. Thus, by such developments, on a large enough scale, the transformation of South African society may be derailed.

The court made the following order: First, that Khumalo’s utterances be declared hate speech in terms of s 10(1) of the Equality Act. Secondly, that he be interdicted from repeating the utterances. Thirdly, he had to remove all references to the utterances from any social media or other form of public communication. Fourthly, he had to publish a written apology, within 30 days of the court’s order being made, directed at all South Africans in which he acknowledges that the utterances were hate speech, that he was wrong to utter them, and undertakes never again to utter any remarks prohibited by s 10(1) of the Equality Act.

Khumalo was ordered to pay the costs of the SAHRC.

Defamation

Mere listing as a ‘politically exposed person’ does not constitute defamation: The facts in Kassel v Thompson Reuters (Markets) 2019 (1) SA 251 (GJ) were as follows: The applicant (Kassel) was listed as a ‘politically exposed person’ (PEP) in Thompson Reuters World-Check, a subscription-based database. Politically exposed persons are persons who perform prominent public functions. The listing is intended to warn financial institutions of the enhanced due diligence many countries, including South Africa, require when business dealings with PEPs are scrutinised. It forms part of the efforts of the Financial Action Task Force on Money Laundering (the Task Force) to combat money-laundering and the financing of terrorism. The Task Force is an international organisation of which South Africa is a member. The Task Force publishes a loose definition of PEPs to include senior politicians, judicial and military officials and managers of state-owned enterprises. World-Check listed Kassel as a PEP because he had, until October 2014, been an official of a Zimbabwe state-owned diamond-mining company. Kassel argued that his continued listing was defamatory because it conveyed the implication that he was someone to whom an enhanced risk of involvement in money-laundering and the financing of terrorism still attached. He approached the court for an interdict directing Thompson Reuters to delist him.

Unterhalter J held that the mere listing of someone as a PEP did not constitute defamation. The World Check is a highly specialised publication. The reasonable reader of the World-Check would understand the regulatory purpose behind the listing and that it did not imply corruption or wrongdoing, but occupancy of high office, which was a wide class which included the good and the great.

Neither was the post-2014 retention of Kassel’s listing defamatory, while those who vacated their offices became less exposed over time, the diminishing utility of their listing did not render it defamatory. If the occupation of high office by a PEP, for all the risks of exposure, is not defamatory of the person who occupies that office, how does vacating that office and still referencing their exposure to risk become defamatory? The answer appears to be that Kassel, on resigning his directorship, was not politically exposed. Assuming that is so, why is it defamatory to say of Kassel that he was once a director of a state-owned enterprise and remains a PEP? The mere listing of someone as a PEP entails no attribution of wrongdoing. To continue to be listed as such, after vacating an office of state, adds nothing that would now give rise to such an attribution. At worst, the continued listing of Kassel was an incorrect assessment of political risk, which was a matter of judgment.

The application was dismissed with costs.

Eviction – employee

Termination of employment does not automatically terminate the right to housing: In Monde v Viljoen NO and Others [2018] 4 All SA 665 (SCA) Viljoen applied for an eviction order in the magistrates’ court. He averred that Monde derived his right to residence exclusively from his employment in terms of a contract. Monde was dismissed from his employment when he was found guilty of being absent from work without permission. Viljoen claimed that his right of residence terminated on the date his employment terminated.

Monde alleged that he was employed in 1988 and was given a single room on the farm in 1992, which he still occupied. He denied that he concluded the employment contract and said that it was never shown to him. He alleged that he had worked on the farm in terms of an oral employment contract; and he had not waived or limited his right of residence. He also denied that the respondents had adopted a policy that only workers who worked on the farm could reside on it. The court of first instance found that on the facts this was unlikely. Monde asserted that he also occupied the house based on the connection to his mother, who was an occupier with a right of residence.

Schippers JA held that Monde had a negative impact on the occupiers on the farm, and his employment record was poor. There had been a fundamental breach in the working relationship. But, there are still provisions in the Extension of Security of Tenure Act 62 of 1997 (ESTA) that must be complied with before a person can be evicted.

The termination of the employment was fair, but the right of residence did not flow from the employment contract. The clause that linked the housing and employment was struck through and initialled by the party. The contract also provided that benefits existing before the signing of the contract would continue thereafter. The parties, therefore, did not have any intention to agree that the right of occupancy flowed from the contract.

ESTA does not require a person to occupy the land in terms of a contract, it merely requires consent by the owner, which consent is assumed if a person lives on the land for more than one year. Consent in this case also has a wider meaning than a person being a direct party to an agreement (that is, tacit consent).

In this case the right to occupy existed independently from the contract and was established prior to the contract. The right to residence must be terminated separately from the termination of employment and a case must be made for eviction. When making a case that eviction is just and equitable, the probation officer’s report required in terms of s 9(3) of ESTA is mandatory. Viljoen failed to show that the termination of Monde’s right of occupancy was just and equitable.

The appeal was upheld. No costs order was given.

Legal practice

Validity of contingency fee agreements: In Mathimba and Others v Nonxuba and Others [2018] 4 All SA 719 (ECG) the first applicant (Mathimba) instituted two actions for damages against the Road Accident Fund and the Member of the Executive Council for Health, Eastern Cape. The second respondent (Nonxuba Inc) represented by the first respondent (Nonxuba) acted as attorney of record for Mathimba in both actions. The third respondent (Dutton) was the first applicant’s counsel in one of the matters. It was common cause that Nonxuba Inc financed the entire cost of both actions.

After receipt of the amounts awarded to Mathimba in both matters, Nonxuba Inc deducted the fees and disbursements that it considered due to it. Mathimba disputed that the fees and disbursements deducted were reasonable. He alleged further that it came to his knowledge that first and second respondents were claiming fees based on a contingency agreement. He contended that the alleged contingency agreement concluded with Nonxuba Inc was invalid for want of compliance with the Contingency Fees Agreements Act 66 of 1997 (the Act).

The first issue for determination by the court was whether a settlement agreement was concluded between the applicants and first and second respondents concerning all disputes between them. The settlement agreement was disputed by the applicants, who claimed that interest should have been included therein.

Lowe J held that the evidence suggested that interest was never discussed during the negotiations preceding the agreement. The applicants attempted to rely on iustus error in that regard, but the facts did not support that contention as it could not be found that the inclusion of interest had been contemplated but erroneously omitted.

Secondly, regarding the validity of the contingency fee agreement, the applicants relied on a number of grounds. Essentially, Mathimba sought an order that the agreement be declared invalid and void. In the event that such relief were granted, he sought an order that the total fees of first and second respondent together with the fee of third respondent should not exceed 25% of the capital amount awarded in the action. The court found that there were two contingency fee agreements in the matter. One was for the attorney’s fees and the other for Counsel’s fees. That was impermissible. The Act makes no provision for an advocate to sign a contingency fee agreement separately from the attorney; and it is not proper for an advocate to conclude a contingency agreement directly with a client. Matters with both an attorney and counsel on contingency, the globular fee must be assessed to see whether the agreement complies with the statutory 25% cap.

The agreement in this case did not comply with the Act in various respects, and was set aside. The respondents were ordered, jointly and severally, to pay first applicant’s costs on a party and party scale.

Payments – tender

Whether tender of payment amounts to performance in terms of a contract: The crisp question in Origo International (Pty) Ltd v Smeg South Africa (Pty) Ltd 2019 (1) SA 267 (GJ) concerned the validity and legal effect, in a contractual setting, of a tender to pay in lieu of actual payment. The facts were as follows: The parties had entered an agreement in terms of which the respondent (Smeg) appointed the applicant (Origo) as its exclusive retailer in respect of certain of its products. Smeg later demanded from Origo payment of the sum of R 419 000 (in respect of goods sold by the latter), which in terms of the agreement had become due and owing. The letter of demand added that, failing payment by the specified date, the agreement would be cancelled. Origo’s response was to write a letter to Smeg in which it disputed the correctness of the amount claimed. It acknowledged that it was indebted to Smeg for a lesser amount based on its own reconciliation which it attached; and tendered to pay such lesser admitted amount, ‘which payment would be effected upon confirmation [by Smeg] of this amount constituting full and final settlement of the dispute’. Smeg subsequently cancelled the agreement (not receiving the payment demanded by the specified date), and instituted action (which was pending) against Origo for the amount originally claimed.

In the present application Origo sought an order declaring Smeg’s purported cancellation as invalid. Origo argued that the tender in lieu of payment was properly made, and that Smeg was not entitled to cancel the agreement. Smeg, in turn, disputed that a proper tender had been made, and that, in any event, a tender for payment did not constitute payment, which was what Origo was required to do in order to avoid cancellation of the agreement pursuant to the demand.

Van Oosten J held that in order to qualify as a proper tender for payment, a tender must be unconditional, for the full amount owing, and made ‘met openbeurs en klinkende munt’. The present tender was unconditional. It could not, however, be conclusively said, on the papers, that it was ‘for the full amount owing’. In Nkengana and Another v Schnetler and Another [2011] 1 All SA 272 (SCA) the court held that a tender for payment of money must be for payment of the full amount owing. Here the quantum was still in dispute and would only be finally determined in the pending action instituted by the respondent.

The court further held that the tender did not constitute performance in terms of the contract: The agreement required a payment; the tender was merely an undertaking or promise to pay.

However, the tender was not without legal effect. Should it be found in the pending action that the admitted amount (or the lesser amount subsequently paid) was in fact the true amount owing, Origo would be protected from the consequences of non-compliance set forth in the demand for payment, which was cancellation of the agreement. In this regard the court referred with approval to National Bank of SA Ltd v Leon Levson Studios Ltd 1913 AD 213, where the lessee’s tender for payment of rental due, in the circumstances of that case, was held sufficient to prevent cancellation of the lease.

As a result, the court granted no order in respect of the Origo’s application. The costs of the present application and counter-application would be costs in the action.

Practice – access to information by third parties

Preconditions for order that third parties must provide information about crime being committed: The application in Nampak Glass (Pty) Ltd v Vodacom (Pty) Ltd and Others 2019 (1) SA 257 (GJ) was novel. The applicant (Nampak) sought the assistance of the court to gain access to information, held by third parties (the respondents), in advance of any litigation having been instituted, in order to determine the identity of prospective defendants. There was a robbery at Nampak’s premises. Nampak approached the court for an order that a number of cellular telephone operators (the respondents) provide it (Nampak) with information regarding cellular telephone records of some of their (the respondents’) clients. Nampak did so on the basis that access to this information will permit it to identify wrongdoers who committed the robbery, and then take appropriate legal action against the perpetrators. The cellphone operators did not oppose the relief sought.

Unterhalter J pointed out that in House of Jewels & Gems and Others v Gilbert and Others 1983 (4) SA 824 (W) an application for an order similar to the present one, was dismissed. However, House of Jewels was decided before the Constitution came into force. The Constitution introduced a Bill of Rights, including the right to access to the courts. There is also a constitutional imperative to develop the common law. If a person has been harmed by another whose identity is unknown, that harm cannot be remedied by the application of law until the defendant is identified. As a matter of principle, it is hard to see why procedures (including common-law procedures) should not be adopted to assist in identifying the defendant because such procedures serve to make it possible to bring the claim of the injured person before the courts so as to have the dispute resolved.

The court held that the relief in question should be recognised. It reasoned that it would seem a matter of common sense that there may be circumstances in which an applicant needs the assistance of the courts, not simply to preserve evidence, but to obtain information for the purposes of determining the identity of wrongdoers so that proceedings may be brought against them. In granting the order the court listed a number of preconditions before such order could be granted –

  • the order was needed to enable an action to be brought against the wrongdoers;
  • a wrong must have been committed; and
  • the third party against whom the order was sought must be mixed up in the wrongdoing so as to have facilitated it; and must be able or likely able to provide the information.

However, even where these preconditions are met, it (the court) retains a discretion to refuse the order, or to grant it on certain terms.

The order was granted.

Tax law

Effect of change in shareholding does not postpone tax liability: In Commissioner for the South African Revenue Service v Digicall Solutions (Pty) Ltd [2018] 4 All SA 647 (SCA) the facts were as follows: In March 2003, the respondent (Digicall) was purchased by Selldirect Marketing (SDM). At that time Digicall suffered an assessed loss. This loss was not utilised by SDM. On 25 November 2003, Digicall was transferred to Nutbridge Investments. A portion of the consolidated assessed losses was set-off against Digicall’s income during the 2004 year of assessment. The balance was set-off against Digicalls income during the 2005 to 2008 years of assessment. The commissioner raised additional assessments in terms of s 103(2) of the Income Tax Act 58 of 1962 (the Act) in which the set-off of the assessed losses was denied.

Both the Tax Court and the High Court ruled in favour of Digicall in that s 103(2) did not find application. This is so because the second change in shareholding served as an intervening event breaking the chain of events. The income against which the assessed losses were set-off was not income deriving from the first change in shareholding but the second change in shareholding.

It was against these judgments that the commissioner appealed.

Swain JA pointed out that s 103(4) of the Act provides that when it is proved in terms of s 103(2) that a change in shareholding has occurred which results in the avoidance, or the postponement of liability for payment of any tax, or its reduction, it will be presumed that the change in shareholding was entered into, or effected solely or mainly for the purpose of utilising the assessed loss, in order to avoid liability for the payment of any tax on income. Accordingly, the onus rests on the taxpayer (Digicall) to show that it was not the main purpose of the change in shareholding to utilise an assessed loss.

On the facts, Digicall was unable to show that its main purpose was not to utilise the assessed losses. Both the Tax Court and the High Court incorrectly applied the rules of the law of delict in taxation. Section 103(2) is clear that it prohibits the set-off of any assessed losses against any income. The direct or indirect receipt of income by Digicall does not have to occur in the same year as the change in shareholding. It may occur in any year of assessment, provided it results directly or indirectly from the change in shareholding. The commissioner was correct to disallow the set-off of the assessed losses.

The appeal was thus allowed with costs.

Trade marks

Protection of well-known trade mark: The facts in Truworths Ltd v Primark Holdings 2019 (1) SA 179 (SCA) were as follows: The appellant (Truworths) was a long-established and well-known fashion retailer in South Africa (SA). It wished to register the mark PRIMARK in class 25 (clothing, boots, shoes and slippers) of the Trade Marks Register. Primark Holdings (Primark), an international discount fashion retailer had registered the same mark in the same class in SA in 1976 but had never since opened a store here. Truworths brought an application for the removal of Primark’s mark from the register on the grounds of non-use in terms of s 27(1)(a) and (b) of the Trade Marks Act 194 of 1993 (the Act). It was unsuccessful in the GP. It appealed to the SCA. Primark’s principal defence was that PRIMARK was a trademark entitled to protection under the ‘Paris Convention’ as a ‘well-known mark’ (in SA) as intended in s 35(1) of the Act. This meant that, in terms of s 27(5) of the Act, Truworths could not rely on the ground of ‘non-use’ for the mark’s removal from the register.

The crisp question in the SCA was whether PRIMARK was a ‘well-known mark’ in SA.

Wallis JA noted that the mark in question as per s 35(1A) did not need to be known among the whole population of SA, but merely in the ‘relevant sector’, that is, the sector of the public interested in the goods or services to which the mark related. The task of the court was to identify the relevant sector or sectors of the public and to determine whether the mark was well-known within those sectors. In doing so it considered the Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks of the World Intellectual Property Organisation (WIPO). Article 2(2)(a) of WIPO provided that relevant sectors of the public shall ‘include, but shall not necessarily be limited to:

(i) actual and/or potential consumers of the type of goods and/or services to which the mark applies;

(ii) persons involved in channels of distribution of the type of goods and/or services to which the mark applies;

(iii) business circles dealing with the type of goods and/or services to which the mark applies.’

Truworths identified the only relevant sector of the public in SA as ‘all South Africans interested in clothes and accessories’, which it regarded as being the ‘actual and/or potential consumers of the type of goods and/or services to which the mark applies’ as per art 2(2)(a)(ii) of the Recommendation. It submitted that the mark was not well-known in this group. Primark argued that potential customers were instead limited to the better educated and more affluent of society, who would have been familiar with the mark. It introduced a further relevant sector of the public, that is, those people involved in the design, distribution, marketing and retail of inexpensive fashion clothing, among whom, it insisted, the PRIMARK mark was well-known.

The court held that in terms of art 2(2)(b) of the Recommendation, that if a party established that its mark was well-known in any relevant sector of the public, the mark had to be taken to be a well-known mark entitled to protection. The fact that it was not well-known in other relevant sectors was irrelevant.

The court further held that when dealing with a mark applied to goods, such as fashionable but relatively inexpensive clothing, sold in the retail market to a wide body of consumers, those potential consumers would constitute one relevant sector of the public. The relevant market would comprise much of the middle-to-lower-income groups. In such groups, the evidence did not suggest that the mark PRIMARK was well-known.

Suffice it to mention here that Primark’s reliance on ss 35(1) and 27(5) of the Act had thus to fail because its mark was not well-known in the only relevant sector of the public.

The appeal was thus upheld with costs. The court granted an order expunging PRIMARK mark from the register.

Other cases

Apart from the cases and topics that were discussed or referred to above, the material under review also contained cases dealing with: Administrative law, advocates, civil procedure, company law, constitutional law, criminal justice system, criminal law and procedure, environmental law, immigration, labour law, land ownership, local authorities, motor-vehicle accidents, practice and reviews.

This article was first published in De Rebus in 2019 (March) DR 21.

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