Highly Nutritious Food Company (Pty) Ltd v Companies Tribunal and Others (91718/2016) [2017] ZAGPJHC 471 (22 September 2017)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE: 91718/2016

Not reportable

Not of interest to other judges

Revised.

22/9/17

In the matter between:

THE HIGHLY NUTRITIOUS FOOD COMPANY

APPLICANT

(PTY) LTD

AND

THE COMPANIES TRIBUNAL

FIRST RESPONDENT

MS KATURI MOODALIYAR N.

SECOND RESPONDENT

EAT RIGHT CATERING (sic)

THIRD RESPONDENT

SERVICES (PTY) LTD

COMPANIES AND INTERLLECTIAL

FOURTH RESPONDENT

PROPERTY COMMISSION

TWALAJ

[1] Before this Court, is an application wherein the applicant seeks the following orders:

i. Reviewing and setting aside the decision of the second respondent to refuse the applicant's application to the first respondent to make a determination in terms of section 160 (3)(a) of the Companies Act 71 of 2008 ("the Companies Act");

ii. Declaring that the third respondent's name does not comply with sections 11(2)(b) and 11(2)(c)(i) of the Companies Act;

iv. Authorising and directing the fourth respondent to change the name of the third respondent to its registration number, in the event of the third respondent not complying with paragraph 3 above within 60 days from the date of this order;

v. In the alternative to prayers 2, 3 and 4 above, referring the applicant's application in terms of section 160 of the Companies Act back to the first respondent for re-consideration and determination;

vi. Ordering the first respondent to pay the applicant' costs; and

vii. Further and/or alternative relief.

[2] At the start of the hearing of this matter, the second and third respondents brought an application for condonation for the late filing of their answering affidavit and the application was granted.

[3] It is common cause that the applicant is the proprietor of the trade mark known as EATrite and has filed a trade mark application no: 2015/15045 EATrite in class 43 in respect of "Services for providing food and drink". It is not in dispute that the applicant has at least since 2005 been using the trade mark EATrite in respect of the offering for sale and sale of goods in the retail and/or wholesale trade. The applicant has spent considerable sums of money in promoting and advertising its EATrite products which has made a turnover of approximately R6m for the years 2013, 2014 and 2015 collectively.

[4] During August 2015, it came to the applicant's attention that on the 9th of June 2015 the third respondent was incorporated under the name, Eat Right Catering (sic) Services (Pty) Limited. The only distinctive element in the name of the third respondent is EAT RIGHT, which is visually confusingly similar and phonetically and conceptually identical to the applicant's EATrite trade mark. As a result, on the 11th of September 2015 the applicant addressed a letter to the third respondent requesting it to apply to the Commissioner of Companies to change its name. No response was received from which prompted the applicant to send a reminder to the third respondent on the 28th of September 2015.

[5] Further, in an attempt to establish whether the third respondent's business interests overlap with that of the applicant, or with the services included in the specifications of the Applicant's trade mark application for its EATrite trade mark, an investigator was appointed to investigate the activities of the third respondent. The investigation revealed that the third respondent intends to operate as a catering and take-away business. On the 1ih of November 2015, in an attempt to settle the matter amicably between the parties, the applicant addressed another letter to the third respondent which was followed by a reminder on the 8th of December 2015.

[6] On the 2s1t of April 2015, the applicant launched its application in terms of section 160 (3)(b)(ii) of the Companies Act for an order that the third respondent's name, Eat Right Cartering (sic) Services (Pty) Limited, does not satisfy the requirements of section 11 of the Companies Act and the third respondent be directed to choose a new name.

[7] The third respondent did not file any opposing papers to this application and the applicant applied for a default order. This application was refused by the first envisaged in section 160(2)(b) of the Companies Act for the late filing of the application. It is this decision of the first respondent which is sought to be reviewed and set aside.

[8] It is contended on behalf of the applicant that it was necessary for the applicant to first address a letter to the third respondent in an attempt to settle the matter amicably without engaging in a costly litigation. It was necessary for the applicant to engage the services of an investigator to ascertain that the third respondent's business activities were similar to those of the applicant. Good cause, it is contended, does not refer to the delay in launching the objection only but that the Tribunal should have considered the matter as a whole and not confine itself to the time limits. Further, it is contended, according to section 160(2)(b), on good cause shown, the application may be brought at any time after the date of the reservation or registration of the name that is the subject of the application, in any other case.

[9] Counsel for the first and second respondents contended that the decision of the respondents does not have to be a correct one as long as it is reasonable. The respondents were correct in dismissing the application of the applicant since the starting blocks in such matter is the provisions of section 160(2)(b) and the applicant failed to meet the requirements set out in this section. The applicant failed to provide any reasons as to why it waited about seven (7) months to file its application with the first respondent, nor did the applicant provide any explanation as to what happened during that period of seven (7) months. The respondents, it is contended, correctly dismissed the applicant's application for it failed to give an explanation for the seven months delay. It accordingly, failed to satisfy the requirement of good cause and to establish the jurisdictional requirement in terms of section 160(2)(b) of the Act.

[10] Section 1lofthe Companies Act, Act 71 of 2008 provides as follows:

"11. Criteria for names of companies

(1) .................

(2) The name of a company must­

(a) Not be the same as-

(i) The name of another company, domesticated company, registered external company, close corporation or co-operative;

(ii) A name registered for the use of a person, other than the company itself or a person controlling the company, as a defensive name in terms of section 12(9), or as a business name in terms of Business Names Act, 1960 (Act 27 of 1960), unless the registered user of that defensive name or business name has executed the necessary documents to transfer the registration in favour of the company;

(iii) A registered trade mark belonging to a person other than the company, or a mark in respect of which an application has been filed in the Republic for registration as a trade mark or a well­ known trade-mark as contemplated in section 35 of the Trade Marks Act, 1993 (Act 194 of 1993), unless the registered owner of that mark has consented in writing to the use of the mark as the name of the company; or

(iv) A mark, word or expression the use of which is restricted or protected in terms of the Merchandise Marks Act, 1941 (Act 17 of 1941), except to the extent permitted by or in terms of that Act;

(b) Not be confusingly similar to a name, trade mark, mark, word or expression contemplated in paragraph (a) unless-

(i) In the case of names referred to in paragraph (a)(i), each company bearing any such similar name is a member of the same group of companies;

(ii) In case of a company name similar to a defensive name or to a business name referred to in paragraph (a)(ii), the company, or a person who controls the company, is the registered owner of that defensive name or business name;

(iii) In the case of a name similar to a trade mark or mark referred to in paragraph (a)(iii), the company is the registered owner of the business name, trade mark, or mark, or is authorised by the registered owner to use it; or

(iv) In the case of a name similar to a mark, word or expression referred to in paragraph (a)(iv), the use of that mark, word or expression by the company is permitted by or in terms of the Merchandise Marks Act, 1941;

(c) Not falsely imply or suggest, or be such as would reasonably mislead a person to believe incorrectly, that the company-

(i) Is part of, or associated with, any other person or entity;

(ii) ……………..

[11] Section 160 of the Companies Act provides as follows:

"160 Disputes concerning reservation or registration of company names

(1) A person to whom a notice is delivered in terms of this Act with respect to an application for reservation of a name, registration of a defensive name, application to transfer the reservation of name or the registration of a defensive name, or the registration of a company's name, or any other person with an interest in the name of a company, may apply to the Companies Tribunal in the prescribed manner and form for a determination whether the transfer of any such reservation or registration of a name, satisfies the requirements of this Act.

(2) An application in terms of subsection (1) may be made-

(a) Within three months after the date of a notice contemplated in subsection (1), if the applicant received such a notice; or

(b) On good cause shown at any time after the date of the reservation or registration of the name that is the subject of the application, in any other case.

(3) After considering an application made in terms of subsection (]), and any submissions by the applicant and any other person with an interest in the name or proposed name that is the subject of the application, the Companies Tribunal-

(a) Must make a determination whether that name, or the reservation, registration or use of the name, or the transfer of the reservation or registration of the name, satisfies the requirements of the Act; and

(b) May make an administrative order directing –

(i) The Commission to-

(aa) reserve a contested name, or register a particular defensive name that had been contested, for the applicant;

(bb) register a name or amended name that had been contested as the name of a company;

(cc) cancel the reservation of a name, or the registration of a defensive name; or

(dd) transfer, or cancel the transfer of, the reservation of a name, or the registration of a defensive name, or

(ii) A company to choose a new name, and to file a notice of an amendment to its Memorandum of Incorporation, within a period and on any conditions that the Tribunal considers just, equitable and expedient in the circumstances, including a condition exempting the company from the requirement to pay the prescribed fee for filing the notice of amendment contemplated in this paragraph.

(4) Within 20 business days after receiving a notice or a decision issued by the Companies Tribunal in terms of this section , an incorporator of a company, a company, a person who received a notice in terms of section 12(3) or 14 (3), an applicant under subsection (1) or and any other person with an interest in the name or proposed name that is the subject of the application, as the case may be, may apply to a court to review the notice or decision".

[12] It is trite that the Court has a wide discretion in evaluating 'good cause', the intention being to ensure that justice is done.

[13] In the case of Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape) 2003 (6) SA (SCA) the Court stated the following:

The courts generally expect an applicant to show good cause: (a) by giving a reasonable explanation for the default; (b) by showing that the application is made bona fide; and (c) by showing a bona fide defence to the plaintiff's claim which prima facie has some

prospect of success.

[14] In the case of Chetty v Law Society, Transvaal, 1985 (2) SA 756 the Court dealt with the term "sufficient cause" or "good cause" when used in the context of an application for rescission of Judgement. It stated the following:

"For obvious reasons a party showing no prospect of success on the merits will fail in an application for rescission of a default judgment against him, no matter how reasonable and convincing the explanation of his default".

[15] In the case of Kritzinger v CCMA and Others (JR2254/05 (227) ZALC 85 (November 2007) in support of the principle initiated in Melane v Santam Insurance Co. Ltd. 1962 (4) SA (A) 532 the Court stated the following:

"These factors are not individually decisive but are interrelated and must be weighed against each other. In weighing the factors for instance, a good explanation for the delay in lateness may assist the application in compensation for weak prospects of success. Similarly strong prospects of success may compensate for the inadequate explanation and the long delays."

[16] In Grootboom v National Prosecuting Authority and Another 2014 (2) SA 68 (CC) the Constitutional Court stated the following:

"The standard for considering an application for condonation is the interests of justice. However, the concept 'interests of justice" is so elastic that it is not capable of precise definition. It includes: the nature of the relief sought; the extent and cause of the delay; the effect of the delay on the administration of justice and other litigants; the reasonableness of the explanation for the delay; the importance of the issue to be raised in the intended appeal; and the prospects of success.

[17] I agree with counsel for the respondents that the crux of the matter is the interpretation of section 160(2)(b) of the Companies Act. The section requires the applicant to show good cause when bringing the application for an objection before the Tribunal.

[18] Section 160(2)(b) allows any person and at any time to bring an application on good cause shown. This does not refer only to the delay in bringing the application but to show good cause as to why the application must be entertained. The section requires the applicant to furnish a reasonable explanation as to why the application should be entertained by the Tribunal. It does not require an explanation only as to the delay in bringing the application but refer to the merit of the application as well. It is section 160(1) that prescribes, for a particular category of persons, to launch an application within the period of three (3) months after they became aware of the registration of the name.

[19] It is my respectful view therefore that to evaluate good cause, the Tribunal was obliged to look at the whole matter including the merits to determine whether it was in the interests of justice to entertain the application. In my view, the Tribunal failed in its duty to consider all the relevant factors necessary to determine whether the applicant has established good cause in its application. It is apparent from the testimony of the applicant that it has been trading since 2005 and has applied to register a trade mark no: 2015/15045 EATrite in class 43 in respect of "Services for providing food and drink". That it has had a turnover of about R6m over a period of three (3) years. This testimony was, in my view, sufficient to have alerted the respondents as to the bona fides of the applicant, its prospects of success and the probable prejudice it could suffer if the application is not adjudicated upon.

[20] I am inclined to agree with counsel for the respondents that section 160 of the Act is there to protect the interests of the companies so registered and those of its creditors. However, in casu, the second respondent in its decision stated that it was aware of the report by the investigator that third respondent was dormant and not trading at the time due to financial constraints. I am therefore satisfied that at the time the decision was made, there was no prejudice to be suffered either by the creditors of the third respondent nor the third respondent itself. The third respondent was served with the application, and was fully aware of the proceeding before the Tribunal, but chose not to participate in the proceedings. Therefore, there was no reason for the Tribunal to shut the door to the applicant and not to adjudicate the application. The balance of convenience favoured the applicant at the time.

[21] It is therefore my considered view that the decision of the Tribunal to dismiss the application solely on the basis that the applicant did not show good cause for the delay in bringing the application was unreasonable and falls to be reviewed and set aside.

[22] Counsel for the applicant contended that this Court has the discretion to entertain the application since it makes no sense to remit it back to the first respondent for a decision on the merits as opposed to substituting the first respondent's decision with a correct decision. A referral back to the first respondent, it is contended, will result in the applicant having to incur yet further costs in relation to this matter and the possibility of having to again approach the Court on the first respondent's decision on the merits cannot be excluded.

[23] Section 8 of the Promotion of Administrative Justice Act, Act3 of 2000 provides as follows:

"8. Remedies in proceedings for judicial review:-

(1) The court or tribunal, in proceedings for judicial review in terms of section 6(1), may grant any order that is just and equitable, including orders­

(a) Directing the administrator-

(b) ..........................

(c) Setting aside the administrative action and-

(i) Remitting the matter for reconsideration by the administrator, with or without directions; or

(ii) In exceptional cases-

(aa) substituting or varying the administrative action or correcting a defect resulting from the administrative action; or

(bb) ... ... ... ... ... ... ... ... ... ... .. ...

[24] In the case of Glenister v President of the Republic of South Africa and Others (CCT 41/08) [2008] ZACC 19; 2009 (1) SA 287 (CC); 2009 (2) BCLR 136 (CC) the Constitutional Court stated the following:

" Courts have traditionally resisted intrusions into the internal procedures of other branches of government. They have done this out of comity, and, in particular, out of respect for the principle of separation of powers. But at the same time they have

claimed the right as well as the duty to intervene in order to prevent the violation of the Constitution. To reconcile their judicial role to uphold the Constitution, on the one hand, and the need to respect the other branches of government, on the other hand, Courts have developed a 'settled practice' or general rule of jurisdiction that governs judicial intervention in the legislative

process.

The basic position appears to be that, as a general matter, where the flaw in the law-making process will result in the resulting law being invalid, Courts take the view that the appropriate time to intervene is after the completion of the legislative process. The appropriate remedy is to have the resulting law declared invalid. However, there are exceptions to this judicially developed rule or 'settled practice'. Where immediate intervention is called for in order to prevent the violation of the Constitution and the rule of law, Courts will intervene and grant immediate relief But intervention will occur in exceptional cases, such as where an aggrieved person cannot be afforded substantial relief once the process is completed because the underlying conduct would have achieved its object."

[25] In the case of Gauteng Gambling Board v Silverstar Development 2014 (4) ZSCA 163 the Supreme Court of Appeal stated the following:

"The power of a court provided in section 8(1)(c)(ii)(aa) of PAJA to substitute or vary administrative action or to correct a defect resulting from an administrative action is extraordinary. It is exercised sparingly, in exceptional circumstances.

The Court continued to describe exceptional circumstances as follows:

"Since the normal rule of common law is that an administrative organ on which a power is conferred is the appropriate entity to exercise that power, a case is exceptional when, upon a proper consideration of all the relevant facts, a court is persuaded

that a decision to exercise a power should not be left to the designated functionary. How that conclusion is to be reached is not

statutorily ordained and will depend on established principles informed by the constitutional imperative that administrative action

must be lawful, reasonable and procedurally fair. "

[26] I am unable to agree with counsel for the applicant in this regard. It is apparent from the decision of the respondents that the merits of the application were never adjudicated upon. It is only the jurisdictional factors that were considered when the application was dismissed. It is my view therefore, that there is no decision of the respondents that needs to be substituted by this Court on the merits of the application.

[27] I agree with counsel for the respondents that it is only in exceptional circumstances that the Court may intervene and exercise the power designated and ordained on the functionary. However, no exceptional circumstances have been placed before this Court to justify its intervention in the function of the first respondent. There is no merit in the perception by the applicant that, to remit this matter back to the first respondent for consideration will result in the applicant incurring further costs and the possibility of having to again approach the court on the decision of the first respondent.

[28] In the circumstances, I make the following order:

i. The decision of the second respondent to refuse the applicant's application to the first respondent to make a determination in terms of section 160(3)(a) of the Companies Act is reviewed and set aside;

ii. The matter is remitted to the first respondent for reconsideration in terms of section 8(1)(c)(i) of the Promotion of Administrative Justice Act, Act 3 of 2000; and must be adjudicated upon within 60 days from the date of this order.

iii. The applicant is ordered to instruct the sheriff to serve this order on the Third Respondent within 5 court days from the date of this order;

iv. The first respondent to pay the costs of the applicant.

_________________________

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION

Date of hearing: 11 September 2017

Date of Judgment: 22 September 2017

For the Applicant: Advocate: L.G Kilmartin

For the Respondent: Advocate: Z. Matebesa