C of A
(CIV) N. 20/88

IN THE
LESOTHO COURT OF APPEAL

In the
Appeal of:

HYPERAMA
(PROPRIETARY) LIMITED APPELLANT

and

O K
BAZAARS (1929) LIMITED RESPONDENT

Held at
Maseru

Coram

SCHUTZ, P

MAHOMED,
JA

TRENGOVE,
JA

JUDGMENT

TRENGOVE
JA: This appeal is about a passing off claim concerning the use of
the name "Hyperama". The respondent. OK Bazaars
(1929)
Limited, is a South African company which operates a large numer of
stores throughout Southern Africa, including a group
of stores
trading under the name "The Hyperama". The appellant is a
Lesotho company and it has four stores that also
trade under the name
"Hyperama" at Maseru.

2

The
appeal arises out of an application on notice of motion in terms of
which the respondent sought to restrain the appellant (a)
from using
the name "Hyperama", or any name confusingly similar
thereto, in the course of or in any relation to its stores
or any
business conducted by it, and (b) from using certain letterheads and
the name Hyperama in the colour form and logo as exemplified
in such
letterheads. The appellant opposed the application on a number of
grounds, the main ground of opposition being that the
respondent had
failed to prove that it had a valid claim against the appel-(lO) lant
for passing off in Lesotho. The learned Judge
a quo, Kheola J, having
heard argument, granted a final interdict, together with ancillary
relief, in terms of the notice of motion.
The appellant has appealed
against the whole of this judgment and the Order.

The
affidavits reveal a number of disputes of fact. The respondent sought
a final interdict, and ancillary relief, on the papers,
and without
resort to oral evidence. In such a case the general rule was stated
by Van Wyk J in(20) Stellenbosch Farmers' Winery
Ltd v Stellenvale
Winery (Pty) Ltd 1957 (4) SA 234 (c)at 235 E-G to be that:

"...where there is a dispute as to the facts a final interdict
should only be granted in notice of motion proceedings if the
facts
stated by the respondents together with the admitted facts in the
applicant's affidavits justify such an order. ...Where
it is clear
that facts, though not formally admitted, cannot be denied, they must
be regarded as admitted."

(See
also: Tamarillo (Pty) Ltd v BN Aitkin (Pty) Ltd 1982(30)

3

(1) SA
398 (A) at 430-1, and Plascon-Evans Paints v Van Riebeeck Paints 1984
(3) SA 623 (A) at 634F-635C).

In this
Court the debate revolved mainly around the following issues, namely:

1. whether
   the facts stated by the appellant, together with the admitted facts
   in the respondent's affidavit, justify the granting
   of a final
   interdict;

   
   

2. whether
   on such facts the respondent has established that it has protectable
   goodwill in Lesotho, and that(10) confusion has occurred
   there; and

   
   

3. whether
   the respondent has not, in any event, waived its rights or been
   estopped from establishing such rights or acquiesced in
   the
   appellant's use of the name "Hyperama".

   
   

Before
proceeding to consider these issues, I shall first refer to the facts
stated in the appellant's affidavit together with the
admitted facts
in the respondent's affida­vits. These facts can be summarised as
follows: (20)

The
respondent's stores are grouped into two main trading divisions. The
one consists of a large number of department stores and
supermarkets
trading under the name O K Bazaars. The other main division is the
Hyperama divi­sion comprising a number of large
department stores
generally known as Hypermarkets, in which the respondent trades as
"The Hyperama". Since the establishment
of the Hyperama
division in 1979, the number of Hyperamas in South Africa has grown
to 10. They are situated at the following places,
(30)

4

the
opening date of each Hyperama being indicated in bra­ckets:
Edenvale (July 1976) ; Prospecton, Durban (August 1977); Menlyn,

Pretoria (December 1979); Roodepoort (November 1979); Parow (October
1982); Sandton (August 1982); West Street, Durban (August
1981);
Vereeniging (October 1984); Tyger Valley, Bellville (August 1985);
and Bloemfontein (October 1987).

Thus, at
present, all the respondent's Hyperamas are in the Republic of South
Africa. It has no Hyperama in(10 Lesotho. The reason
is that for a
Hyperama to be a success­ful business enterprise it must be
located in an area in which there is a large economically
active
population to support it. Maseru and environs has a relatively small
population of about 60 000 people. However, the nearest
Hyperama to
Lesotho is the one at Bloemfontein which is approximately 120 kms
from Maseru. As I have already men­tioned, this
Hyperama was
opened in October 1987.

I come
now to the facts pertaining to the goodwill and(20) reputation of the
respondent's Hyperamas. The name "Hypera­ma"
was coined
for use in relation to the respondent's stores. In South Africa the
name is a trade mark, but this, of course, is not
applicable to
Lesotho. A logo for the name "Hyperama" was specially
created for the Hyperama Division by an advertising
agency. And, as
part of a new trade identity and get-up for the Hyperama stores, the
advertising agency was also required to advise
the respondent on a
new colour for use in the logo and the store get-up. As a result of
extensive research the colour green was
chosen.(30!

5

This
particular colour has been used by the respondent's Hyperamas since
1979, and it is featured as the stores' trading colour
in the store
name on the logo, on letterheads and other stationery, on all blazers
and uniforms worn by Hyperama staff, in the
decor of the stores, and
on points of sales tickets, price tags and packaging.

The
respondent also conducts an extremely active adver­tising and
publicity campaign on behalf of its Hyperama stores. To this
end, it
makes extensive use of three adver-(10) tising media in South Africa,
namely, television, radio and the national press.
Advertising also
takes place in the local press in areas where Hyperama stores are
situated; for example, since its opening in
1987 the Hyperama in
Bloemfon-tein has been actively advertised in the local newspapers,
Ons Stad and Volksblad, and on the regional
radio channel. Radio
Oranje. The total cost of advertising the Hyperama stores during the
period January 1983 to December 1987
came to R15.7 million. In
addition to direct advertising, the respondent spends large sums of
money on sponsoring sports( 20) and
cultural events and on cultural
and other projects. The total cost of sponsorships linked to the
respondent's Hypera­ma Division
during 1986-198 7 and 1987-1988
was approximately R500 000,00 per annum.

It is
common cause between the parties that the South African television
services, TV1 and TV4, and Radio Oranje, on which the Hyperama

Division advertises, are received in Lesotho, and more particularly
in Maseru. Furthermore, two South African newspapers that often
carry
Hyperama advertise-(30)

6

ments.
The Sunday Times and The Star, a Johannesburg daily newspaper, are
available and are sold in Maseru on a regular basis. The
circulation
of the Sunday Times in Lesotho is said to be about 2 124 copies per
week. However, it should be noted that Hyperama's
advertising and
publicity campaigns have never been directed specifically at the
Lesotho market. Hyperama does not advertise on
Radio Lesotho, a radio
station which is aimed exclusively at the people of Lesotho. And
Hyperama's sponsorship of sports and cultural
events, and the like,
have thusfar related only to events taking(10) place in South Africa
and not in Lesotho.

As far as
goodwill and reputation are concerned, the respondent also relies on
the extent of economic interaction between South
Africa and Lesotho.
There are unquestionably very close economic ties between the two
countries. They belong to the same customs
union. South African
businessmen, tourists and others visit Maseru constantly.
Bloemfontein is Lesotho's nearest major business
and shopping centre.
Many Lesotho residents, particularly from Maseru, go to(20
Bloemfontein regularly on shopping excursions and
for various, other
reasons. Thousands of Lesotho citizens are migrant workers on mines
in the Witwatersrand area where much of
the Hyperama advertising
takes place. According to the Official Year Book of South Africa
(1986) some 130 000 Lesotho citi­zens
were legally employed in
South Africa in 1984. And finally on this aspect, persons living in
Ladybrand, in the Orange Free State,
have particularly close links
with Maseru; some actually work there, while others go there
regularly for business and other purposes.
(30)

7

On the
basis of the aforementioned facts, the respon­dent avers, in its
founding affidavit, that a substantial number of Lesotho
citizens
would inevitably have been exposed to the advertising for its
Hyperama stores, and that the respondent's goodwill and
reputation in
Hyperama, the logo and the Hyperama green would have become well
known to them. This averment is disputed by the
appellant.

I come
now to the facts relating to the appellant's stores and its
activities. The appellant was registered on(10) 16 June 1983

according to the laws of Lesotho, and since that date it has been
trading actively in Maseru under the name "Hyperama".
The
appellant has four stores operating under this name. The first of
these stores was opened in Market Street in 1983; the second
store
was opened in 1984, also in Market Street; in 1985 the third store
was opened in Kingsway Street; and in October 1987, the
fourth store
was opened, also in Market Street, in premises adjacent to one of the
existing stores. The name "Hyperama"
is boldly displayed on
the extensions of the shops in green colouring(20) very similar to
the shade of green used by the respondent's
Hyperama stores. The name
"Hyperama" also features promi­nently in the
appellant's advertising literature. The appellant
avers that it was
fully entitled to trade under the name "Hyperama" in
Lesotho and it claims to have acquired a reputation
and goodwill
associated with that name in Maseru and environs.

In May
1988 two suppliers of goods to the respondent's Hyperama stores,
Audiolek and Tek Electronics, enquired from(30)

8

the
respondent whether it was operating a Hyperama in Maseru. The basis
of these enquiries was that the Bloemfontein depots of these
firms
had received requests, by letter, from Hyperama (Pty) Ltd., Maseru,
for catalogues and price lists in respect of certain
makes of Audio
and Video products. It then appeared that the letterheads used by the
appellant copied the respondent's Hyperama
logo exactly and almost
exactly the hyperama green. The appellant concedes that the print
style of the name Hyperama on its letterheads
is identical to that of
the respondent's. The appellant has(10) not offered any explanation
as to how this came about. However,
without conceding that it was
obliged to do so, it agreed, as an act of good faith, to destroy or
deliver up for destruction its
letterheads and to use lettering which
is not the same as, or similar to, that of the respondent. The
appellant also tendered costs
in this regard. And finally on this
aspect, the appellant stated that the print style of the name
"Hyperama" (logo),
which was identical to that of the
respondent, was only used in that form by the appellant on its
letterheads and on no other advertising(20)
material or signboard.

It is now
necessary to consider whether on the facts set out above the
respondent has made out a case on which a final interdict
on the
grounds of passing off could be granted. In Capital Estate and Others
v Holiday Inns Inc and Others, 1977 (2) SA 916 (A)
at 929C, Rabie JA
defined the wrong known as passing off as follows:

"The wrong known as passing off consists in a represen­tation
by one person that his business (or merchandise(30)

9

as the case may be) is that of another or that it is associated with
that of another, and in order to deter-mine whether a representation

amounts to a passing off, one enquires whether there is a reasonable
likeli­hood that members of the public may be confused
into
believing that the business of one is, or is connected with, that of
another."

It has
been said that the foundation of the action of passing off is the
protection of goodwill. It follows that (10) In an application
for an
interdict on account- of alleged passing off the applicant must prove
the existence of good­will within the area of
jurisdiction of the
High Court of Lesotho, together with acts calculated to injure it
(see: Alain Bernadin et Compagnie v Pavilion
Properties Ltd (1967)
RPC 581 at 583.) On the facts of this case, I have no doubt that the
appellant chose the name coined by the
respondent, "Hyperama",
and deliberately copied its logo and the store get-up of the
respondent's Hyperama stores, with
the sole purpose of obtaining some
benefit from the reputation, in(20) the wider sense, of the
respondent. However, the crucial
issue in this appeal is whether the
learned Judge a quo erred in holding that the respondent has shown
that the goodwill it seeks
to protect exists within, or extends to,
Lesotho.

The
meaning and nature of goodwill was fully considered in the well-known
case Commissioner of Inland Revenue v Muller and Co's
Margarine Ltd
(1901) AC 217 (HL). At

223-4
Lord Macnaghten said: (30)

10

"It is a thing very easy to describe, very difficult to define.
It is the benefit and advantage of the good name, reputation,
and
connection of a business. It is the attractive force which brings in
custom. It is the one thing which distinguishes an old-established

business from a new business at its first start. The goodwill of a
business must emanate from a particular centre or source. However

widely extended or diffused its influence may be, goodwill is worth
nothing unless it has power of attraction sufficient to bring

custo-~(10 mers home to the source from which it emanates. Good­will
is composed of a variety of elements. If differs in its
composition
in different trades and in diffe­rent business in the same trade.
One element may preponderate here and another
element there. To
ana­lyze goodwill and split it up into its component parts, to
pare it down as the Commissioners desired
to do until nothing is left
but a dry residuum ingrained in the actual place where the business
is carried on while everything
else is in the air, seems to me to
be(20 as useful for practical purposes as it would be to resolve a
human body into the various
substances of which it is said to be
composed. The goodwill of a business is one whole, and in a case like
this it must be dealt
with as such.

For my part, I think that if there is one attribute common to all
cases of goodwill it is the attribute of locality. For goodwill
has
no independent existence. It cannot subsist by itself. It must be
attached to a business. Destroy the business, and the goodwill(30)

11

perishes with it, though elements remain which may perhaps be
gathered up and revived again." (My underli­ning. )

For the
present purposes, two facets of goodwill are of particular
significance. The first is that goodwill does not subsist by
itself,
it must attach to a business and it must have a location. The second
being that goodwill, as opposed to reputation in the
wider sense, is
the attractive force which brings in custom. (10)

In the
court a quo, and also in this court, counsel for the appellant
contended that the respondent has no goodwill in Lesotho because
it
has no business here, does not trade here, has no association with
trade here and has never entered the market here. In support
of this
proposi­tion, counsel relied on a number of well known cases on
passing off such as Alain Bernadin et Compagnie v Pavilion
Properties
Ltd (Also known as the Crazy Horse case) supra; Star Industrial
Company Limited v Yap Kwee Kor (1976) FSR(20) 256; T
Oertli AG v EJ
Bowman (London) Ltd (1957) RPC 388; The Athletes Foot Marketing
Associates Inc v Cobra Sports Ltd & Another
(1980) RPC 343; and
Pick-n-Pay Stores Ltd v Pick-'n-Pay Superette (Pty) Ltd 1973 (3) SA
564 (R) which, counsel submitted, was on
all fours with the present
case.

On the
other hand, counsel for the respondent submitted that the true test
is whether the respondent's reputation in the area in
which the
appellant is operating its business

and its
goodwill is known there in such a way that persons(30)

2

seeing
the appellant's business or goods will make the association with the
respondent. Kheola J accepted this proposition which,
in his view,
derived support from a number of cases including C and A Modes and
Another v C and A (Waterford) Ltd and Others (1978)
FSR 126 and In re
Baskin-Robbins Ice Cream Co and Another v Gutman and Another (1976)
FSR 545. In this regard, the learned Judge
referred to the following
passage in the judgment of Henchy J in the C and A Modes case, supra,
at pages 138-139:

"Goodwill does not necessarily stop at a frontier.(10 Whether in
a particular ares a plaintiff has a goodwill which is liable
to be
damaged by the unlawful competi­tion resulting from passing off
is a question of fact and of degree. . What has to be
established for
the success of a plaintiff's claim in an action such as this is that
by his business activities - be they by direct
selling within the
state or otherwise - he has generated within the State a property
right in a good­will which will be violated
by the passing off.
It is true that there is authority for the proposition that(20) a
plaintiff's reputation which owes nothing
to user in this State is
not sufficient to support a passing off action (Alain Bernadin et Cie
v Pavilion Properties Ltd (1967)
RPC 58) but, as is stated in Kerly's
Law of Trade Marks and Trade Names (10th ed. , p 386) it is difficult
to see any rational
basis for this distinc­tion. If there are in
this State sufficient customers of a plaintiff's business to justify
his claim
to have a vested right to retain and expand that custom,
then there is ample authority in principle and in the deci- (30)

13

ded cases for the conclusion that, no matter where the plaintiff's
business is based, he is entitled to be protected against its
being
taken away or dissipated by someone whose deceptive conduct is
calculated to create a confusion of identity in the minds
of existing
or potential customers." (My underlining.)

And also
to the Baskin-Robbins Ice Cream case, supra, at page 548 where Graham
J said:

"A similar narrow view seems at first sight to have(10 been
expressed by Pennycuick J in Alain Bernadin et__ Cie. v Pavilion

Properties Ltd., the 'Crazy Horse' case (1967) RPC 581, relying on
the words of Jenkins LJ in Oertli AG v Bowman (London) Limited
(1957)
RPC 388. Again it seems to me these cases ought not to be read as
going further than requiring that in the normal case distinctiveness

must be established by showing user of the disputed mark or get-up by
the plaintiff on his goods or premises in this country, so
that the
public here understand such mark or get-up to mean(20) him. It may
well be very difficult if not normally impossible for
a plaintiff to
establish such a reputa­tion and goodwill as will support a
passing off action without showing he has user of
his mark or get-up
in this country.

Some businesses are, however, to a greater or lesser extent truly
international in character and the reputa­tion and goodwill

attaching to them cannot in fact help being international also. Some
national bounda­ries such as, for example, those between
members
of(30)

14

the EEC are in this respect becoming ill-defined and uncertain as
modern travel and Community rules make the world grow smaller.
Whilst
therefore not wishing to quarrel with the decisions in question, if
they are read as I have suggested, I believe myself
that the true
legal position is best expressed by the general proposition, which
seems to me to be derived from the general line
of past authority
that the existence and extent of the plaintiff's reputation and
goodwill in every case is one of fact however
it may be proved
and(10) whatever it is based on."

Accepting
the above passages as good law, the learned Judge then approached the
problem in the instant case on the following basis.
He held quite
correctly, in my respectful view, that goodwill did not necessarily
stop at frontiers and that the question as to
the existence of the
respondent's goodwill in Lesotho was one of fact. As to the facts,
the learned Judge referred to the evidence
of respondent's extensive
advertising campaigns to which residents of Maseru(20) were also
exposed. He said in this regard:

"I am sure that a very substantial number of people who live in
Maseru have seen these advertisements and therefore know the

applicant's (now the respondent's) Hyperama stores even if some of
them have never actual­ly visited them."

The
learned Judge also accepted that many Maseru residents often go to
Bloemfontein for shopping and that it was likely that, some
of them
have visited the respondent's Hyperama store in Bloemfontein. He also
referred to the fact that(30)

many
Lesotho citizens travel to South Africa to work in the mines as well
as in many other sectors of the economy, and in practically
all the
cities in South Africa. He said that it was again likely that these
citizens would have seen the respondent's advertisements
and would
also have visited its Hyperama stores. The learned Judge's finding on
this issue is summed up in the following passage
in his judgment:

"On the basis of the extensive advertising campaign by the
applicant (now respondent) of its Hyperama stores which is received

in Maseru and Lesotho I am satisfied(10) that the applicant
(respondent) has proved the requi­site reputation which amounts

to a protectable goodwill within this country."

In
arriving at this conclusion the learned Judge a quo has, in my
opinion, erred in the following two respects, namely

1. he
   has not sufficiently distinguished between mere reputation and
   goodwill, and

   
   

2. he
   erred in finding that it was likely that Lesotho residents would
   have visited the respondent's Hyperama stores either in Bloemfontein

   or elsewhere in South(20) Africa.

   
   

I refer,
firstly to the distinction between "reputa­tion" and
"goodwill". I do not consider it necessary
to deal with all
the cases cited by counsel in this regard for most of them are
reviewed in the judgment of Walton J in The Athletes
Foot Marketing
Associates Inc v Cobra Sports Ltd and Another (1980) RPC 343 to which
I intend referring in some detail.

(30)

16

The facts
in The Athletes Foot case can be summed up as follows: The plaintiffs
carried on in the USA and else­where a business
in which they
granted franchises to indepen­dent stores to carry on business in
the supply of footwear for athletes under the
name "The Athletes
Foot". They had a large number of franchised stores and a good
and extensive reputation at least in
the USA. Although they had taken
steps to secure a franchise agreement for the United Kingdom, and a
prospective franchisee had
even gone so far as to order goods and
stationery with a view to establishing a(10) chain of stores under
the name "The Athlete's
Foot" in the United Kingdom, the
plaintiffs had not concluded a franchise agreement in relation to the
United Kingdom. Furthermore,
there had been no sales in the United
Kingdom under the name "The Athlete's Foot", and the
evidence did not disclose
that sales had ever been made abroad under
that name to visitors from the United Kingdom. The first defendants
carried on business
as retailers of shoes in England, and in
September 1979 they opened a basement store, which they called
"Ath­lete's Foot
Bargain Basement", and commenced to
advertise(20) under that name in an athletics magazine. Upon seeing
the defendant's advertisements,
the plaintiffs sued the defen­dants
for passing off and moved for interlocutory relief. Walton J
dismissed the plaintiff's
motion on the grounds that it was not
possible to say that it had any goodwill in the United Kingdom
whatsoever, whatever the strength
of its more general reputation may
be.

The
question of law that Walton J was required to consider was what
connection with the United Kingdom was(3C

17

required
before the plaintiffs could successfully maintain an action for
passing off. Walton J pointed out that in this regard -

"There appear, on the cases, to be two schools of thought...
There is what was described in argument as a 'hard line' school
of
thought, which maintains that it is essential for the plaintiff to
have carried on trade in this country (best, perhaps, exemplified
by
Bernadin et Cie v Pavilion Properties Ltd (1967) RPC 581, the well
known 'Crazy Horse' case) and a much(10) less demanding approach,

which suggest that something less than that will do (well exemplified
by Maxims Limited v Dye (1977) 1 WLR 1155, the case concerning
the
famous restaurant)."

Walton J
then proceeds to review and comment upon some cases dealing with the
question under consideration. For the present purposes
a reference to
four of these cases will, in my view, suffice.

The first
of these cases is Commissioner of Inland(20) Revenue v Muller and
Co's Margarine Ltd, supra. Referring to Lord Macnaghten's
statement
on the meaning and nature of goodwill, Walton J remarked at page 351:

"As I understand what Lord Macnaghten is saying, it is that
goodwill is an attractive force which pulls in custom; hence,
however
weak the lines of force, one can see where goodwill subsists by
observing the areas in which the business attracts custom,
or
custo­mers. If this is correct - and it seems obvious common
sense - it follows that if there are no custo-(30)

18

mers, there is no goodwill, and if there is no good­will, it is
not there to be harmed."

The next
case is The Alain Bernadin (or "Crazy Horse") case, supra.
The plaintiffs carried on the business of a place
of entertainment in
Paris under the name of "Crazy Horse Saloon" or "Crazy
Horse". The defendant company started
a place of entertainment
in London under the name of "Crazy Horse Saloon", An
advertisement issued by them stated "Crazy
Horse Saloon comes to
London", giving the(10) impression that they were offering the
same sort of enter­tainment as did
the plaintiffs. The plaintiffs
had since 1951 extensively advertised their Paris business in the
United Kingdom, but carried on
no activities of any kind there.
Pennycuick J dismissed an application for an inter­locutory
injunction. He concluded as follows:

"I conclude with considerable reluctance as regards the facts of
this particular case that the plaintiff company has not shown
a prima
facie ground for an(20) injunction, that is to say, it has failed to
show that it has acquired by user of the name 'Crazy
Horse Sa­loon'
in this country any goodwill or reputation such as is sought to be
protected in a passing off action. I have
reached that conclusion
with regret in the particular case because it is perfectly clear that
the defendant company has chosen
the identical name 'Crazy Horse
Saloon' with the sole purpose of 'cashing in' on the reputation, in
the wider sense, of the plaintiff
company, and again has deliberately
(30)

19

copied in its decoration and advertisement those of the plaintiff
company's establishment. If I were able to hold that the plaintiff

company had established a reputation in the relevant sense in this
country, then I would have no hesitation in holding that the
acts of
the defendant company were calculated to cause decep­tion or
confusion and I would grant an injunction, but I do not
think I am
entitled to do so."

Commenting
on this passage Walton J, in his judgment,(10) says at page 354:

"I think this passage is extremely important in consi­dering
the present case, for it makes the distinction between 'reputation'
-
gained possibly as the result of advertising, possibly merely by word
of mouth - and 'goodwill' which of course can hardly exist
without
the goods, services or provider of these acquiring a reputation, but
which requires something more. Nor, of course, is
that passage
consistent with any sugges­tion that the plaintiffs' desire
possibly to commence(20) business in this country
in the future would
have made any difference to the outcome."

The third
case is Baskin-Robbins Ice Cream Co and Another v Gutman and Another,
supra. I have already refer­red to the passage
in the judgment of
Graham J in this case, which was cited with approval by Kheola J. I
do not consider it necessary to refer to
the facts of this case. In
his comments on Graham J's judgment, Walton J pointed

out that
the passage in question is obiter, since Graham J(30)

20

• did
  not grant the injunction, and added -

  
  

"nevertheless, if the crucial distinction between 'reputation'
in the wide sense and 'goodwill' is borne in mind, this appears
to me
to square fully with the previous current of authority".

Of the
cases reviewed by Walton J, I refer, finally, to C and A Modes v C
and A (Waterford) Ltd (1978) FSR 126. The facts of this
case are
briefly as follows: The plain­tiffs, C and A Modes, owned and
operated numerous drapery(10) shops in Great Britain
and one in
Belfast, Northern Ireland. It did not own any shop or retail outlet
in the Republic of Ireland. The trading style used
by the plaintiff
throughout its sales outlets, on its goods and in its advertisements
was the symbol "C and A". Evidence
was adduced to show that
the plaintiff had advertised its goods extensively in the Republic of
Ireland both through newspapers
and maga­zines circulating there
and on television channels which were available to viewers in the
Republic. There was also
evidence that a very substantial and regular
custom from(20 the Republic of Ireland was enjoyed by the plaintiff's
store in Belfast.
An excursion train travelled each Thurs­day
from Dublin to Belfast, and so great was the influx of customers from
the Republic
as a result of that excursion that the store ordinarily
employed extra part-time staff on Thursdays as it did on Saturdays
which
were normally the busiest shopping days. Similar conditions
were experienced on Bank-holidays and on particular types of public

or spe­cial holidays. The defendant, C and A (Waterford) Ltd, was
incorporated in Ireland in 1972, and although no evidence(30

21

was
adduced by the defendant at the trial, it emerged that the defendant
in fact carried on a retail drapery business using for
the purpose a
large motor van with the letters "C and A" painted on its
sides. In addition, those letters formed part
of the defendant's
trading name. The defendant offered no explanation for the choice of
this particular trading style.

Upon an
action for passing off, the plaintiff claimed an injunction to
restrain the defendant from carrying on(10) business under
the name
"C and A (Waterford )". The trial Judge held that the
plaintiff was entitled to succeed in its action, and on
appeal his
decision was upheld by the Supreme Court. In confirming that the
plaintiff had a protectable reputation in the Republic,
Hency J said,
inter alia:

"Can it be said in these circumstances that, because the
plaintiffs have no direct retailing outlet in the Republic, they
have
no protectable goodwill in the Republic? In my opinion, the answer is
'No'. Goodwill(20) does not necessarily stop at a frontier.
Whether
in a particular area a plaintiff has a goodwill which is liable to be
damaged by the unlawful competition resul­ting
from passing off
is a question of fact and of degree. What has to be established for
the success of a plaintiff's claim in an action
such as this is that
by his business activities - be they by direct selling within the
State or otherwise - he has generated within
the State a property
right in a goodwill which will be violated by the passing-off. It is
true that there is(30)

22

authority for the proposition that a plaintiff's repu­tation
which owes nothing to user in this State is not sufficient to
support
a passing-off action (Alain Bernadin et Cie v Pavilion Properties Ltd
(1967) RPC 581) but, as is stated in Kerly's Law
of Trade Marks and
Trade Names (10th ed., p 386), it is difficult to see any rational
basis for this distinction. If there are
in this State sufficient
customers of a plaintiff's business to justify his claim to have a
vested right to retain and expand that
custom, then there is
autho-(10) rity in principle and in the decided cases for the
conclusion that no matter where the plaintiff's
busi­ness is
based, he is entitled to be protected against its being taken away or
dissipated by someone whose deceptive conduct
is calculated to create
a confusion of identity in the minds of existing or potential
customers."

In his
comments on this case, Walton J said that the decision appeared to be
fully in line "with the general(20) principles
I trust I have
discerned in the vast majority of cases". However, he disagreed
with Henchy J's criticism of the decision in
the Crazy Horse case, in
the passage quoted above, saying:

"I think this displays a complete misapprehension of the Crazy
Horse decision. If there had been customers of the Crazy Horse

business in England, in the sense in which there were customers of
the Sheraton Hotels business in England, the decision surely
must
have been the other way, and Pennycuick J would have been (30)

23

the first to deliver such a judgment."

As I have
already mentioned, Walton J dismissed the plaintiff's motion for an
interlocutory injunction. The learned Judge's reasons
for so doing
are set out in the following passage in his judgment at page 357:

"Having here commented upon all the cases on this point which
were cited to me, unless the 'hard line' alleged to have been
taken
by the Privy Council in the Star Industrial case, and by the House of
Lords in the (10) Advocaat case represents the law
- in which case
the plaintiffs' case is even more wholly unarguable than I think it
to be - the position in law appears to be relatively
clear. That is
to say, it does not matter that the plaintiffs are not at present
actually carry­ing on business in this country,
provided that
they have customers here. Equally, it is of no moment, if they have
no customers here, that they have a reputa­tion
in the general
sense of the word in this country. It is also of no moment that that
reputation may have(20) been brought about
by advertising: this can
bo. of no moment, unless (as it did in the C & A case) it brings
in customers, when, of course, once
again there is no need to rely
upon it. Now in the present case the most remarkable fact of all is
that the plaintiffs disclose
not one single solitary transaction by
way of trade with anybody in this country at all. The nearest they
get to this essential
requirement is to show that they had entered
into some kind of negotiations with Ravel with a view to the grant of
a franchise
to that(30)

24

Company. But, to date, this has not come to anything. But the matter
does not rest there. There is not even a single instance given
of a
transaction by one of the plaintiffs' franchisees in the U.S.A. (or
Australia or Japan, for that matter) with anybody normally
resident
in England or Wales at all. Whether such an instance by itself would
be of any assistance to the plaintiffs may well be
a moot point on
several different grounds; but there is not even one such offered.

In these circumstances, it is simply not possible to(10) say that the
plaintiff company has any goodwill in this country whatsoever,

whatever the strength of its more general reputation may be."
(My underlining.)

I fully
agree with Walton J's statement of the law in the above passage. It
appears to me to be correct in prin­ciple and as
a matter of
logic, and it accords with the views expressed in two other cases to
which we were refer­red , namely, Pick-'n-Pay
Stores Ltd v
Pick-'n-Pay Superette (Pty) Ltd 1973 (3) SA 564 (R) and Tie Rack PLC
v The Rack(20) Stores (Pty) Ltd & Another
1989 (4) SA 427 (T). It
follows that it is not enough for the respondent, in the instant
case, to show that as a result of extensive
advertising campaigns its
Hyperama stores have acquired a reputation in a general sense in
Lesotho. The respondent must go further.
It must show that Lesotho
citizens or Maseru residents have responded positively to the
advertising campaigns by shop­ping
at one or other of the
respondent's Hyperama stores in South Africa. In the absence of
evidence of such customer support there
can be no question of proof
of goodwill in(30)

25

Lesotho
for, as Lord Macnaghten has so aptly said, goodwill "is the
attractive force which brings in custom". It is this
very
fundamental element of goodwill, as opposed to reputation in the
wider sense, that the learned Judge a quo . appears to have

overlooked. There is no evidence whatso­ever, in any of the
affidavits filed on behalf of the re­spondent, that any resident

of Maseru, or citizen of Leso­tho, for that matter, has ever
shopped at any of the respon­dent's Hyperama stores. However,
the
learned Judge a quo found, as I have already mentioned, that it was
likely that(10) some of the Lesotho citizens who go to
Bloemfontein
for shopping, or who travel to South Africa as migrant workers, would
have visited one or other of the respondent's
Hyperama stores. In my
view this inference cannot be justified on the basis of facts that
are either common cause or not in dispute.
There is no evidence that
the respondent's Hypera­ma store in Bloemfontein is situated in
the central business area or in any
other area frequented by people
from Lesotho who visit Bloemfontein for the purpose of shopping.
Simi­larly, there is no evidence
that migrant workers who go to
South Africa from Lesotho are employed or are accommodated in areas
where Hyperama stores are located,
or where they ordinarily do their
shopping.

]To sum
up. In my view the learned Judge a quo erred in holding that the
respondent had discharged the onus of establishing that
it had any
goodwill in Lesotho. It is accordingly unnecessary to deal with any
of the other grounds upon which the application
was opposed.

(30)

26

In the
result the appeal is upheld with costs, the Order of the Court a quo
is set aside and the following Order is substituted
therefor, namely:

"The rule nisi in paragraph 2 of the Order of Court,

dated 8 June 1988, is discharged with costs and no

order is made on the Application."

J.J
TRENGOVE

JUDGE OF
APPEAL

I agree

For

W P
SCHUTZ

PRESIDENT

I agree

For

I MAHOMED

JUDGE OF
APPEAL

Delivered
at Maseru this 12th day of June 1990

FOR THE
APPELLANT: MR S DU TOIT

FOR THE
RESPONDENT: MR G I HOFFMAN

and

MR C J PEARSON