The law reports – May 2015

May 1st, 2015
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Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

March 2015 (1) South African Law Reports (pp 1 – 328); [2015] 1 All South African Law Reports February no 1 (pp 261 – 392); and no 2 (pp 393 – 524);2015 (2) Butterworths Constitutional Law Reports – February (pp 127 – 182)

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:

CC: Constitutional Court

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Company law

Winding-up of company: In Engen Petroleum Ltd v Goudis Carriers (Pty) Ltd (in liquidation) [2015] 1 All SA 324 (GJ) the court was asked to interpret the provisions of s 341(2) of the Companies Act 61 of 1973 (the Act).

The facts that led to the present decision were as follows: The applicant, Engen, supplied fuel to the respondent, Goudis, since October 2002. Goudis had a credit account. On 14 September 2012, a creditor of Goudis filed a winding-up application. Engen was ignorant of this occurrence. On 23 October 2012 a final winding-up order was granted, establishing concursus creditorum on 14 September. Again, Engen was ignorant of this occurrence and continued to supply fuel to Goudis up to 30 November 2012. Engen learnt of the order on 10 December 2012. The proof of the appointment of a liquidator was given to Engen on 12 December 2012. Goudis had made several payments to Engen. One payment on 11 September 2014, four days before the winding-up application was filed. Between 14 September and 23 October no payments were made. Between 23 October and 10 December payments were made on 31 October, and 16 November. After 10 December 2012, payments were made on 14 December 2012 and on 7, 10 and 14 January 2013.

Section 341(2) deals with dispositions and share trans fers after winding-up. It provides that ‘[e]very disposition of its property (including rights of action) by any company being wound up and unable to pay its debts made after the commencement of the winding-up, shall be void unless the court otherwise orders’.

The ‘commencement’ of a winding-up, is, in terms of s 348 of the Act, the date the application was filed or presented to court.

At stake was the liability of Engen to repay to Goudis the sums paid after 23 October 2012. Put differently, the dispute concerned whether a disposition made by the company, Goudis, after the date on which the final winding-up order was made was subject to s 341(2) of the Act.

Sutherland J held that the effect of s 348 of the Act is a retrospectively effective date for establishing a concursus creditorum. The effect is to convert what were valid and binding dispositions into void dispositions. The so-called ‘s 341(2) order’ is effective and binding on creditors, the company being wound up and on the recipient of the payment, which payment, but for the winding-up, would have been uncontroversial. However, the court is not empowered to convert an unlawful, invalid or unauthorised transaction into a valid one. The disposition had to enjoy the attributes of validity at the moment it occurred. This original status of validity is critical to the function performed by the section.

Section 341(2) further applies only to dispositions that a company could validly effect. After the final winding-up order a company cannot effect valid transactions precisely because of the concursus, from which moment, the control of the company is removed from its office bearers. Section 341(2) cannot apply beyond the final winding-up order because there cannot be a valid and binding disposition by the company from that date.

The court thus held that s 341(2) confers a power on a court to intervene in respect of dispositions, which a company may lawfully make during the period between the date on which the application for a winding-up has been presented and the date on which the final winding-up order is granted.

The court ordered Engen to repay the payments received from Goudis after 23 October 2013.

Contract law

Effect of arbitration agreement: The facts in Stieler Properties CC (Registration number 2003/014057/23) v Shaik Prop Holdings (Pty) Ltd (Registration number 2001/028696/07) [2015] 1 All SA 513 (GJ) were as follows: The applicant, Stieler, purchased immovable property situated in a Johannesburg residential estate from the first respondent, Shaik. Transfer of the property was delayed due to the requirement that the estate’s homeowners’ association had to approve the sub-division of the property.

Stieler applied for a declaration that the contract was void ab initio due to impossibility of performance, occasioned by inability to sectionalise and effect tra-ns-fer. In the alternative, Stieler sought an order that it had validly cancelled the agreement. Shaik contended that it was not a requirement for the validity of a contract for the sale of land, that transfer take place on the date of sale, and that the inability to effect transfer on the date of sale, did not constitute impossibility of performance. It contended that Stieler was always aware of the process, and that Stieler had brought the application prematurely. It, therefore, sought a stay of proceedings so that the dispute could be resolved by means of arbitration as provided for in clause 16 of the agreement.

In considering the application, Mosikatsana AJ held that the allegation of impossibility of performance was not sustainable. The alleged impossibility was subjective, and not absolute. It, therefore, did not render the contract void ab initio, but possibly voidable.

There is no automatic right of cancellation of a contract on the basis of the debtor’s mora. Cancellation is an extraordinary remedy. Restitution is not part and parcel of the act of rescission, but a consequence of it.

The court held that the application was brought prematurely, and that the dispute should have been referred to arbitration. Stieler’s application for a stay of proceedings, pending arbitration, was granted. The court made no order as to costs.

Formalities: In Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash and Another 2015 (2) SA 118 (SCA) the court confirmed that e-mails generally have the same legal status in law as paper-based documents and conventional ‘pen on paper’ signatures.

The two parties, Wilberry and Spring Forest, entered into several agreements in terms of which Spring Forest leased from Wilberry its Mobile Dispensing Units for use in its car wash business. At stake was the validity of the cancellation, of a number of agreements between the parties, by exchange of e-mails. The agreements contained clauses providing that the agreements may only be cancelled in writing and signed by the parties. Spring Forest was not able to meet its rental commitments and the parties met and agreed orally to cancel their agreements. The terms of the cancellation were recorded in a subsequent e-mail exchange where the names of the parties appeared at the foot of each e-mail. Spring Forest then entered into an agreement with another entity to conduct the same business. In response, Wilberry instituted proceedings to interdict Spring Forest from continuing its business on the grounds that this was in breach of their agreements. It alleged Spring Forest was in breach because the amendments (which were only recorded in e-mail exchanges) did not satisfy the non-variation clause requirement that amendments are only valid if ‘in writing and signed’ by both parties. Wilberry also claimed that only ‘advanced’ electronic signatures referred to in s 13(1) of the Electronic Communications and Transactions Act 25 of 2002 (the ECT Act) can satisfy a signature requirement where the parties to an agreement require a signature for something to be valid.

Section 13(1) of the ECT Act provides that where a signature is required by law and the law does not specify the type of signature to be used, this requirement is met only if an ‘advanced electronic signature’ is used. Wilberry thus argued that the reference in s 13(1) to ‘required by law’ is not limited to statutory law, but also includes where parties require a signature in terms of a contract.

Cachalia JA held that where parties to an agreement require amendments to be made ‘in writing and signed’, e-mail does satisfy the ‘writing’ requirement and a party’s name at the foot of an e-mail may qualify as a signature.

The test is whether the method of the signature used fulfilled the function of a signature to authenticate the identity of the signatory. Where the parties to an electronic transaction require a signature, but they have not specified the type of electronic signature to be used, the requirement is met if a method is used to identify the person and to indicate the person’s approval of the information communicated.

The typewritten names of the parties at the foot of the e-mails, which were used to identify the users, constituted ‘data’ that was logically associated with the data in the body of the e-mails – as envisaged in the definition of an ‘electronic signature’. They therefore satisfied the requirement of a signature, and had the effect of authenticating the information contained in the e-mails.

Finally, the court held that s 13(1) – which deals with ‘advanced’ e-signatures – is only applicable where a signature is required by statutory law, not by contract.

The appeal was accordingly upheld with costs.

• See (Jan/Feb) DR 57.

Criminal law

Dolus eventualis: The incident that led to the prosecution of the accused in S v Maarohanye and Another 2015 (2) SA 73 (GJ) enjoyed a lot of media attention. The appellants (the accused), one of whom is a well-known South African musician, caused a motor vehicle accident in which four pedestrians were killed and two maimed. All the charges arose from a single incident, which took place in March 2010 in Mdlalose Street, Soweto. The accused lost control of their vehicles while racing each other in Mdlalose Street, while being under the influence of drugs.

The trial court convicted the accused of murder based on intention in the form dolus eventualis, for ‘(r)ecklessly disregarding the rules of the road, subjectively foreseeing that they might cause the death or injuries to (pedestrians) and still (persisting) in their conduct despite such foresight’.

On appeal to a full Bench of the High Court, Mlambo, Maluleke and Pretorius JJ in a joint judgment, held that the determination of dolus eventualis was in essence a subjective value judgment that was reliant on inferential reasoning, and based on what the person thought, not on what he should have foreseen. The court confirmed that for a conviction of murder to be reached based on dolus eventualis, the test is twofold –

(a) did the accused subjectively foresee the possibility of the death of the victims ensuing from their conduct; and

(b) did they reconcile themselves to that possibility.

Once the trial court made its finding about the effect of drugs on the faculties of the accused, that is, that the drugs induced a sense of euphoria which led them to believe that they would not cause any collision and that other road users would give way to them, dolus in any form, especially dolus eventualis, was eliminated from the equation. In this context there could be no suggestion that the accused foresaw that their escapade could result in death and serious injury to pedestrians and had reconciled themselves to that eventuality.

Their mental make-up must, therefore, have been the opposite of causing death or injury. Rather, their disposition was that no collision, let alone a life-threatening one, would take place. There having been no foresight of the possibility of a collision resulting in death or serious injury, coupled with a reconciliation to that eventuality and a persistence in their course despite that reconciliation, there could be no dolus eventualis. Both conditions required for dolus eventualis were clearly absent. This was the conclusion that should have been arrived at by the trial court and the result was that the murder and attempted-murder convictions could not stand.

The only conviction that was confirmed by the present court was the one for driving a motor vehicle while under the influence of a drug having a narcotic effect in terms of s 65(1)(a) of the National Road Traffic Act 93 of 1996.

The appeals against the remaining seven convictions, including that of murder, and sentences imposed by the trial court were upheld. The convictions of murder were replaced by ones of culpable homicide. The accused’s sentence was changed to ten years’ imprisonment, two years of which were suspended on condition that the accused were not convicted of similar offences within five years of these convictions.

Minimum sentence: The facts that led to the decision in S v Brown [2015] 1 All SA 452 (SCA), and especially the trial in the WCC, attracted a great deal of media attention as well as an outcry from the general public. At the centre of the criminal trial stood the accused, J Arthur Brown, the master mind behind the Fidentia Asset Management investment scheme. Brown pleaded guilty to two counts of fraud. He was sentenced on each count to a R 75 000 fine or a suspended sentence of 18 months’ imprisonment. In terms of s 316B of the Criminal Procedure Act 51 of 1977 (the Act), the State appealed against the sentence imposed on Brown.

The two offences relevant to the matter involved, first, a misrepresentation to an investor that assets in excess of R 200 million were being managed in accordance with the mandate given by the investor to Brown. It also involved in the second place, a misrepresentation to shareholders of an entity that administered pension funds that the purchase price for that entity would be paid from the cash resources of Brown’s own company. In reality, the balance of purchase price amounting to tens of millions of Rands was paid for with funds under administration by the seller of that entity.

One of the issues that arose during the proceedings before the court a quo was whether s 112(1)(b) of the Act applied when a plea of guilty is raised beyond the beginning of a trial. At the time that the plea was tendered and accepted, the High Court took the view that s 112 did not find application when a plea of guilty was tendered in medias res. The court considered it to only apply when a plea was tendered at the commencement of a trial.

In imposing the sentence it did, the High Court reasoned that the plea of guilty on the two counts was limited and was based on dolus eventualis and potential rather than actual prejudice.

On appeal to the SCA, Navsa ADP referred with approval to earlier case law in which it was held that the High Court was obliged, when the plea was tendered, to consider whether the plea ought to be accepted, with particular regard being paid to the effect of the evidence led up until that stage. The High Court relinquished that responsibility, and the plea was accepted by both the court and the State. In deciding on an appropriate sentence, the court below ought not to have restricted itself to the bare facts contained in the plea. The tendered plea did not provide context nor did it present enough of a picture for the court to properly fulfil its sentencing function.

Evaluating the evidence consistent with Brown’s plea, the High Court looked at the definition of dolus eventualis. A person acts with intention in the form of dolus eventualis if the commission of the unlawful act or the causing of the unlawful result is not his main aim, but he subjectively foresees the possibility that, in striving towards his main aim, the unlawful act may be committed or the unlawful result may be caused and he reconciles himself to this possibility. While Brown’s primary object might have been optimising investment returns by investing in a range of asset classes contrary to the mandate, he ignored the most basic regulatory rules directed at ensuring that the funds were safeguarded and treated as trust funds. During his testimony, it was clear that his primary concern appeared to be his own interests and comfort, and he continuously downplayed and minimised his moral and legal blameworthiness. Therefore, the conclusion by the High Court that the two counts of fraud on which Brown had been convicted were not that serious and that his moral blameworthiness was limited, was entirely unjustified.

The High Court thus erred in holding that the minimum sentencing provisions in s 51(2)(a) of the Criminal Law Amendment Act 105 of 1997 were inapplicable. Finding to the contrary, the SCA proceeded to consider whether there were substantial and compelling circumstances justifying a departure from the prescribed minimum sentence of 15 years’ imprisonment. Brown’s personal circumstances were not such that, by themselves, they compelled a departure from the prescribed minimum sentence. Taking all other factors into account, the SCA held that the sentence imposed by the High Court tended toward bringing the administration of justice into disrepute.

The SCA accordingly set aside the sentences imposed by the High Court and substituted them with the prescribed minimum sentence of 15 years’ imprisonment on each count of fraud. It ordered the two sentences to run concurrently.

Delict

Res ipsa loquitur: The facts in Goliath v MEC for Health, Eastern Cape 2015 (2) SA 97 (SCA) were not unique. The appellant, Goliath, underwent a routine hysterectomy at a provincial hospital in Port Elizabeth. It was trite that the hospital fell under the respondent’s (the MEC) auspices and control. A surgical swab was left in Goliath’s abdomen during the surgery performed as part of the hysterectomy. It resulted in infection. Further surgery at another provincial hospital was required to remove the swab. Goliath sued the MEC in delict, alleging negligence on the part of the doctors and nursing staff that performed the hysterectomy. The High Court dismissed the claim despite the fact that the MEC did not adduce any evidence. In holding that Goliath failed to discharge the onus of establishing negligence, the High Court pointed out that it was precluded by precedent from applying the res ipsa loquitur (the case speaks for itself) doctrine in the medical-negligence field.

On appeal to the SCA, Ponnan JA pointed out that the inquiry was whether Goliath discharged the onus to prove her case, namely that the damage she sustained was caused by the negligence of the doctors and nursing staff in allowing the swab to be left in her.

The court referred with approval to earlier case law in which it was held that a ‘medical practitioner is not expected to bring to bear on the case entrusted to him the highest possible degree of professional skill, but he is bound to employ reasonable skill and care’ (see Mitchell v Dixon 1914 AD 519 at 525 and Castell v De Greef 1993 (3) SA 501 (C) where the court held (at 512A–B) that ‘(t)he test remains always whether the [medical] practitioner exercised reasonable skill and care or, in other words, whether or not his conduct fell below the standard of a reasonably competent practitioner in his field’). The reasoning in the Castell case was referred to with approval in Buthelezi v Ndaba 2013 (5) SA 437 (SCA).

Res ipsa loquitur is a convenient Latin phrase used to describe the proof of facts that are sufficient to support an inference that a defendant (here: the MEC) was negligent and thereby to establish a prima facie case against him. It was not a magic formula and did not entail a ‘shifting’ of the onus or a suspension of common sense. Specifically, the maxim should not tempt a court to first draw an inference of negligence from the occurrence itself and then decide whether it was rebutted by the defendant’s explanation. Moreover, in the Buthelezi case the court pointed out that the maxim res ipsa loquitur ‘could rarely, if ever, find application in cases based on alleged medical negligence’.

In the present case the High Court’s focus on the applicability of the maxim to medical negligence suits had diverted it from the obvious inference of negligence dictated by Goliath’s evidence of the left-behind swab. In failing, without explanation, to adduce any countervailing evidence whatsoever, the MEC took the risk of judgment being given against him.

The SCA, by way of an obiter dictum, suggested that the time may have come to jettison the res ipsa loquitur maxim from our legal vocabulary.

The court accordingly upheld the appeal with costs. The MEC was ordered to pay Goliath the sum of R 250 000 plus interest a tempore morae.

Wrongful life: In H v Fetal Assessment Centre 2015 (2) SA 193 (CC); H v Fetal Assessment Centre 2015 (2) BCLR 127 (CC) the court considered the potential development of the common law to recognise a claim for wrongful life.

Prospective parents can obtain medical advice during pregnancy to ascertain whether their child will be born in good health. If the parents are told that the child will probably suffer from a serious medical condition or congenital disability, the mother may, in terms of s 12(2)(a) of the Constitution and the Choice on Termination of Pregnancy Act 92 of 1996, choose not to give birth to the child. Our law also recognises a claim by the parents for patrimonial damages in circumstances where that kind of medical advice should have been given to them but, was negligently not provided. The scenario is generally referred to as ‘wrongful life’. Until now, our law has denied the child any claim in those circumstances. The question that arose for decision in the present case was whether that should change.

The appellant, H, was a boy with Down’s Syndrome. He was represented in the present proceedings by his mother. H sued the respondent, Fetal Assessment Centre (the centre) for his damages flowing from the centre’s alleged failure to warn his pregnant mother that there was a high risk of him being born with Down’s Syndrome. H alleged that had his mother been informed of the risk she would have terminated the pregnancy. The damages he claimed were for his past and future medical expenses, for disability and for loss of amenities of life. The centre excepted to the claim as not disclosing a cause of action. The WCC upheld the exception and dismissed H’s claim. H then appealed directly to the CC. In issue was whether the common law might be developed to recognise the child’s claim.

Froneman J held that the common law might indeed be developed to recognise a claim for wrongful life. In acknowledging the possibility of such recognition, the court reasoned that earlier authority in which the possibility of such a claim was barred, did not take into account the right of a child as entrenched in s 28(2) of the Constitution, nor other constitutional rights. The court confirmed that the elements of the law of delict could accommodate the claim. It further referred with approval to foreign authority that provides for such a claim.

In the final instance it held that it remained for the High Court to determine whether the claim did exist, and if so, in what form?

The CC accordingly upheld the appeal, set aside the order of the High Court, and replaced it with an order granting H leave to amend his particulars of claim.

Insolvency law

Effect on instalment agreement: In PMG Motors Kyalami (Pty) Ltd (in liquidation) and Another v Firstrand Bank Ltd, Wesbank Division [2015] 1 All SA 437 (SCA) the appellants, the dealerships, were companies that had functioned as motor vehicle dealerships, but were now in liquidation. The respondent, FirstRand, had concluded floor plan agreements with each of the dealerships. The agreements reserved ownership in the vehicles sold under them to FirstRand until full payment had been made. The registered address of all of the dealerships was in KwaZulu-Natal.

FirstRand cancelled the agreements and demanded the return of all the vehicles subject to the agreements. It proceeded to collect all the affected vehicles with the permission of the dealerships, and thereafter sold the vehicles. The dealerships were subsequently liquidated. Relying on s 84(2) of the Insolvency Act 24 of 1936 (the Act), the liquidators of the dealerships requested that FirstRand pay them the amounts realised from the sale of the vehicles. FirstRand acceded to the request and made the payments. It thereafter took the view that s 84(2) did not apply to the amounts and that the payments had therefore been made in the mistaken belief that they were owing. The liquidators refused to repay the amounts and lodged accounts with the Master reflecting the amounts as assets of the dealerships.

FirstRand, in return, successfully applied in the court a quo under the condictio indebiti to claim back the amounts paid to each dealership.

On appeal to the SCA the court had to determine whether a genuine factual dispute was raised by the dealerships. Gorven AJA decided that a real, genuine and bona fide dispute of fact can exist only where the court is satisfied that the party who purports to raise the dispute has in his affidavit seriously and unambiguously addressed the fact said to be disputed. It was found that the dealerships’ assertions did not give rise to a genuine factual dispute as to delivery of the letters of cancellation.

The dealerships further contended that even if it was found that the agreements were cancelled prior to the commencement of the liquidations, the provisions of s 84(2) of the Act applied to the moneys realised from the sale of the vehicles. That, in effect, amounts to a submission that the payments were not made indebite (ie, ‘not due’) because a valid causa for them was provided by s 84(2).

The crisp issue was thus whether s 84(2) applies to property that was the subject of such an agreement where ownership was reserved and where the agreement was cancelled prior to the commencement of the liquidation of a company. That, in turn, depended on a construction of s 84(2). The court found that s 84(2) applies only where an agreement remained in existence and the property in question was, accordingly, subject to the agreement as at the date of commencement of winding-up. By reason of the fact that the agreements in the present matter were cancelled prior to the commencement of the liquidations of the dealerships, s 84(2) did not apply and the payments were made indebite.

The court below was, therefore, correct in its finding and the appeal was dismissed with costs.

Set-off

Both debts must be liquidated: In Standard Bank of South Africa Ltd v Renico Construction (Pty) Ltd 2015 (2) SA 89 (GJ) a company, Roofcrafters, sold its invoices to Standard Bank. One of Roofcrafters’ debtors was the respondent, Renico. The accounts of Roofcrafters recorded Renico as indebted to Roofcrafters in a sum of close to R 2,5 million. Standard Bank demanded payment from Renico. The latter refused to pay Standard Bank on the ground that Roofcrafters owed it (Renico) more than it owed Roofcrafters. As a result, so Renico argued, these reciprocal debts were extinguished by set-off.

The main question before the present court was whether the debts between Roofcrafters and Renico were capable of set-off. Among the ‘debts’ Renico wanted to set off against Roofrafters’ claim, were claims for contractual damages for a lease breached by Roofcrafters.

Sutherland J first listed the elements of set-off:

  • Both debts must be due to and owed by the same pair of persons.
  • Both debts must be liquidated.
  • Both debts must be due and payable.

The court rejected Renico’s alleged claim to set-off. The court held that the flaw in Renico’s case was that the computation of contractual damages was not a matter of mere arithmetic. A value judgment had to be made in determining the effects of a reasonable effort to mitigate the damages. Until that debate was exhausted – as a rule before a court – the quantum of damages could not be determined.

The court accordingly held that the contractual damages that Roofcrafters allegedly owed Renico were not a liquidated debt for the purpose of set-off.

However, some of Renico’s other claims against Roofcrafters were held to be liquidated and the court accordingly ordered Renico to pay Standard Bank an amount of R 811 501,13, plus interest a tempore morae.

Trade marks

Infringement of: The dispute and outcome in Société des Produits Nestlé SA and Another v International Foodstuffs Co and Others [2015] 1 All SA 492 (SCA) enjoyed, for reasons that will become clear below, more than mere passing interest from the average chocolate aficionado.

The appellants, Nestlé, and the first two respondents, Iffco, were international competitors in the sale of chocolates. They were in dispute about the physical shape, as well as the name of a chocolate bar marketed and sold by Iffco. Nestlé alleged that these attributes of Iffco’s ‘Break’ chocolate bar, infringed trademarks held by Nestlé in the well-known ‘Kit Kat’ chocolate bar, marketed and sold by Nestlé. It also alleged that those attributes resulted in the passing off of Iffco’s chocolate bar for that of Nestlé.

Nestlé had for many years manufactured the four finger and two finger shape ‘Kit Kat’ wafer chocolate. It is trite that Iffco had recently started to manufacture similarly looking four finger and two finger shape wafer chocolates, which it marketed under the name of ‘Break’.

Nestlé unsuccessfully sought interdictory relief in the GP based for trade mark infringement and passing off. Iffco, too, was unsuccessful in its attempt, brought by way of a counter-application before the court a quo, to expunge certain shape trademarks held by Nestlé in its Kit Kat chocolate bar, as well as an application to review the registration of those shape trademarks. Each party obtained leave to appeal to the SCA.

For considerations of space I will merely mention here, that Swain JA, dismissed Iffco’s appeal. The court pointed out that Nestlé’s chocolate bars had been marketed and sold in South Africa under the name ‘Kit Kat’, in the shape depicted in the applications for registration, for the past 50 years. In addition, Nestlé had also for a considerable period of time made extensive use of this shape of the chocolate bar in advertisements to promote its sale.

Next, the court was asked to consider Nestlé’s claim that its registered word trade marks, which consisted, inter alia, of the phrase ‘Have a Break, Have a Kit Kat’ were infringed by Iffco. The registered word trade marks of Iffco are ‘Quanta Break’ and ‘Tiffany Break’, but Iffco used the word ‘Break’ on its packaging as a trade mark. Nestlé claimed that the use of the word ‘Break’ as a trade mark is confusingly or deceptively similar to Nestlé’s trade mark ‘Have a Break, Have a Kit Kat’. In order for a court to find that a consumer would be confused or deceived into thinking that the word ‘Break’ indicated that the origin of Iffco’s product was that of Nestlé, the highly distinctive name of Nestlé’s product ‘Kit Kat’ would have to be ignored. The likelihood of confusion amongst consumers confronted by the respective trade marks had not been established by Nestlé.

As far as Nestlé’s main appeal against the dismissal in the court of its application for interdictory relief was concerned, the court ruled as follows: In terms of s 34(1)(a) of the Trade Marks Act 194 of 1993, Nestlé had to establish that Iffco had used the mark in respect of the same goods for which the trademarks were registered, which was either identical to, or so nearly resembled the registered trade mark, so as to be likely to deceive or cause confusion. The mark was used in respect of the same goods, namely chocolate bars. The issue, accordingly, was whether there was a likelihood of confusion or deception between the chocolate bars. In addition, Nestlé had to establish that Iffco was using the finger wafer shapes themselves, or on the packaging of its chocolate bar, as a badge of origin and not simply in a descriptive manner. The High Court’s findings on that question were found to be incorrect. It was held that the use by Iffco of the shape as depicted on its packaging and its three-dimensional form would be perceived by the consumer as a source identifier, that is, as a badge of origin, of the goods as emanating from Nestlé. The court a quo, accordingly, erred in concluding that Nestlé had failed to prove an infringement of the registered finger wafer trade marks in terms of s 34(1)(c) of the Act.

Nestlé’s appeal was allowed with costs and Iffco was interdicted to infringe Nestlé’s trade marks in respect of its four and two finger ‘Kit Kat’ chocolate wafer bars.

Other cases

Apart from the cases and topics that were discussed or referred to above, the material under review also contained cases dealing with civil procedure, constitutional law, counsel’s fees, criminal procedure, education, environmental law, immigration, interpretation, local government, motor-vehicle accidents, national key points, prisons, and revenue.

This article was first published in De Rebus in 2015 (May) DR 42.