C of A (CIV) NO. 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.

The/

- 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)

(1)/

- 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
affida­
vits. 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)

the/

- 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!

This/

- 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)

ments/

- 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
citi­
zens 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)

On/

- 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)

the/

- 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)

as/

- 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)

"It/

- 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)

perishes/

- 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)

seeing/

- 12 -

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)

ded/

- 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)

the/

- 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/

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) The/

- 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

required/

- 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)

mers/

- 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 Sa­
loon' 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)

copied/

- 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)

did/

- 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

was/

- 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)

authority/

- 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)

the/

- 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)

Company/

- 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)

Lesotho/

- 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) In/

- 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