THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case No: 595/08

In the matter between :

POLARIS CAPITAL (PTY) LTD
Appellant

and

THE REGISTRAR OF COMPANIES
First Respondent
POLARIS CAPITAL MANAGEMENT INC
Second Respondent

Neutral citation:
Polaris v The Registrar of Companies (595/08) [2009]
ZASCA 131 (30 September 2009)

Coram:
STREICHER, BRAND, SNYDERS JJA, LEACH and
BOSIELO AJJA

Heard:
25 AUGUST 2009

Delivered:
30 SEPTEMBER 2009

Summary:
Companies Act 61 of 1973 – s 45(2) – new company name will
cause confusion – name undesirable.

ORDER

On appeal from: High Court, Cape of Good Hope (Brusser AJ sitting as
court of first instance).

The appeal is dismissed with costs including the costs of two counsel.

JUDGMENT

STREICHER JA (BRAND, SNYDERS JJA, LEACH and BOSIELO AJJA
concurring)

[1] On 26 May 2003 the appellant, a South African registered company,
formerly known as African Harvest Growth Asset Managers (Pty) Ltd, by
special resolution, changed its name to Polaris Capital (Pty) Ltd. The
Registrar of Companies, the first respondent, registered the name change
on 3 June 2003 but the second respondent, Polaris Capital Management
Inc, a corporation incorporated in the USA, in terms of a letter dated 29
January 2004, objected to the name change. On 14 October 2005 the
registrar upheld the objection and ordered the appellant to change its name
within 60 days. The appellant thereupon applied to the High Court, Cape of
Good Hope Provincial Division, for the setting aside of the registrar’s
order. Brusser AJ dismissed the application but granted leave to the
appellant to appeal to this court.

[2] In terms of s 44(1) of the Companies Act 61 of 1973 any company
may by special resolution change its name to a name which is not, in the

opinion of the registrar, undesirable. Provision is then made in s 45(2) for
an objection against such a name change. The section provides as follows:
‘If within a period of one year after . . . the date of . . . a certificate of change of name
. . . any person lodges an objection in writing with the Registrar against the name
contained in  . . . the last-mentioned certificate, on the grounds that such  name . . . is
calculated to cause damage to the objector or is undesirable, the Registrar may, if he is
satisfied that the objection is sound, order the company concerned . . . to change the said
name . . ..’

[3] The second respondent objected to the name change on the ground
that it is both undesirable and calculated to cause it damage as
contemplated in s 45(2). The registrar upheld the objection on the ground
that the name is undesirable. In reasons for his decision subsequently
furnished by the registrar, he stated that the name of the second respondent
is wholly incorporated into the appellant’s name and that its business
activities are identical to the business of the second respondent. He stated,
furthermore, that the second respondent had built a reputation and goodwill
to its name since 1996, long before the appellant adopted its name Polaris
Capital in 2003. He concluded that ‘since the names are almost identical,
and since the parties are engaged in the same activities, confusion is likely
to occur’ and ordered the appellant to change its name.

[4] The appellant thereupon applied in terms of s 48 for the registrar’s
order to be set aside. The section provides that any company or person
aggrieved by an order of the registrar in terms of, amongst others, s 45(2),
may ‘within one month after the date of such . . . order apply to the Court
for relief, and the Court shall have power to consider the merits of any such
matter, to receive further evidence and to make any order it deems fit’. The
registrar did not oppose the application.

[5] Being an application for final relief the Plascon Evans-rule applied
and the matter had to be decided on the facts stated by the second
respondent and the facts stated by the appellant in so far as those facts were
admitted by the second respondent or not denied in a manner that raises a
real, genuine or bona fide dispute of fact. Approached on this basis the
facts on which the application had to be decided are as follows.

[6] On 3 June 2003 the appellant resolved to change its name from
African Harvest Growth Asset Managers (Pty) Ltd to Polaris Capital (Pty)
Ltd and in July 2003 it commenced trading. The appellant carries on
business within South Africa. It provides an investment service for a
predominantly South African clientele consisting of institutional clients,
private companies, public companies and individuals. It advises South
African investors and invests their funds both within South Africa and
overseas. It is licensed as a Financial Services Provider in terms of s 8 of
the Financial Advisory and Intermediary Services Act 37 of 2002. The
second respondent became aware of the appellant’s use of the name Polaris
Capital during September 2003 and discussed the matter with the appellant
but the appellant persisted in using the name. The second respondent
thereupon lodged an objection with the registrar on 29 January 2004.

[7] The second respondent was incorporated in 1993 in the USA and is
registered as an investment advisor with the US Securities and Exchange
Commission. It has been trading continuously since 1995 as a global and
international equity manager. Since 1996 it has marketed itself and made
sales representations in South Africa to numerous major commercial banks,
investment and merchant banks, asset management funds, life assurance
companies, public companies, attorneys firms, the South African Reserve
Bank, national airlines, government departments and auditing firms. Mr
Bernard Horn jr, the president and portfolio manager of the second

respondent attended an international investors’ conference organised by
Deutsche Bank Securities in Cape Town and Johannesburg during which
he met with various representatives of South African companies and after
the conference he made representations to them on behalf of the second
respondent. Since 1996 the second respondent’s representatives have on
numerous occasions been contacted telephonically and via e-mail by South
Africans interested in equity management.

[8] The second respondent was one of the managers of the Iscor Pension
Fund in South Africa from 1996 until 2000, a fact that was publicised in a
publication ‘Pensions and Investments’ on 29 September 1997 and 3 April
2000. In December 2000 it concluded an investment advisory agreement
with Oasis Global Management Company (Guernsey) Limited in terms of
which it was appointed to manage the interests of that company’s South
African clients. In March 2003 it concluded a further investment advisory
agreement with the South African registered company Oasis Asset
Management Limited and two related Irish companies.

[9] Since the commencement of its business in 1995 the second
respondent has featured extensively in the international financial press in
articles available to South African readers.

[10] Included in equity funds managed by the second respondent are
substantial shareholdings in South African companies traded on the
Johannesburg Stock Exchange. Second respondent’s current holdings
include Sappi, Sasol, Impala Platinum, Metorex and BHP Billiton.

[11] The second respondent contends that as a result of the aforegoing it
became known in the Republic to those interested in equity investment and
to equity managers. The appellant denies that that is the case and attached

affidavits by a number of people interested in equity investment to the
effect that the second respondent is unknown to them. However, there may
well be many people who do not know about the second respondent but it
does not follow that there are not many to whom it is known. If the
evidence of contacts made with South Africans is accepted, as it has to be,
the second respondent must be known to many South Africans and South
African companies, more so in the light of its contracts with Iscor and the
Oasis companies.

[12] ‘Polaris Capital’ is the dominant part of the second respondent’s
name and that is the name by which it became known. Although the
appellant denies that it knew about the existence of the second respondent
at the time when it changed its name, a simple internet search would have
revealed its existence. The second respondent’s web-site is frequently
accessed by South Africans and such access frequently results in South
Africans making use of the services provided by the second respondent. As
a result of the internet, customers and potential customers in South Africa
have direct access to details of the second respondent’s products and
services, details of the performance of the second respondent’s various
funds and to management reports in respect of second respondent’s various
funds.

[13] The court below held that a risk of confusion could not reasonably be
discounted and that it could for that reason not be concluded that the
registrar improperly exercised his discretion in terms of s 45. However, the
question that had to be decided by the court below was not whether the
registrar had exercised his discretion correctly. In terms of s 48 the court to
which application is made has power to consider the merits of the matter, to
receive further evidence and to make any order it deems meet. The court

below, therefore, had the power to deal with the matter as a court of first
instance ie the proceedings before it was in the nature of a rehearing.1

[14] In an article by JB Cilliers entitled Similar company names: A
comparative analysis and suggested approach – Part 2 1999 (62) THRHR
57 at p 68 – 69 the author states:
‘In terms of sections 45(2A) and 48 of the Companies Act 1973 (SA), the court must
decide the matter de novo, unfettered by the decision reached or opinion formed by the
Registrar. The merits to be considered by the courts are whether, on a balance of
probability and on the evidence before it, the existing company has such vested rights in
its name or particular words in its name that the registration of the new company or the
amended name of another company is undesirable, or whether the existing company has
shown not only that confusion or deception is likely, but that if either ensues it will
probably cause it damage. This distinction clearly delineates the two pillars of the
protection against the registration of similar company names under the Companies Act
1973(SA).’
The suggested approach was adopted by this court in Peregrine Group
(Pty) Ltd and others v Peregrine Holdings Ltd and others 2001 (3) SA
1268 (SCA).

[15] The appellant submitted that its name is not undesirable, that the
registrar erred in finding it to be undesirable and that the registrar’s
decision should for that reason be set aside. As to the circumstances under
which a company name may be found to be undesirable, this court, in the
Peregrine-case, approved the following statement by Lazarus AJ in his
judgment against which the appellant in that case appealed:2
‘In my view it is inappropriate to attempt to circumscribe the circumstances under
which the registration of a company name might be found to be “undesirable”. To do so
would negate the very flexibility intended by the Legislature by the introduction of the
undesirability test in the section and the wide discretion conferred upon the Court to

1 See Krediet Bank van Suid-Afrika Bpk v Registrateur van Maatskappye en andere 1978 (2) SA 644 (W)
at 650C-D.
2 At 1274C-G par 8.

“make such order as it deems fit”. For the purposes of the present matter it suffices to
say that, where the names of companies are the same or substantially similar and where
there is a likelihood that members of the public will be confused in their dealings with
the competing parties, these are important factors which the Court will take into account
when considering whether or not a name is “undesirable”.’

[16] In Vicom New Zealand Ltd v Vicomm Systems Ltd  [1987] 2 NZLR
600 (CA) at 605(10) the New Zealand court of appeal, per Cooke P stated
in respect of a company name that was contended to be undesirable:
‘[A] serious risk of confusion of the public or a section of the public is well recognised
as a head of undesirability when the registration of a company name is in issue: see the
judgment of McGregor J in South Pacific Airlines of New Zealand Ltd v Registrar of
Companies [1964] NZLR 1, 5, a passage which has been followed more than once in
the High Court and should now, we hold, be approved by this Court.’

[17] In Deutsche Babcock SA (Pty) Ltd v Babcock Africa (Pty) Ltd and
another 1995 (4) SA 1016 (T) at 1022G-1024G Mynhardt J referred to
South African cases in which the likelihood of confusion was considered to
render the registration of a new company name undesirable. He also
referred to New Zealand cases including the Vicom-case and concluded at
1024H:
‘From the aforegoing review of cases it appears that when there is a likelihood that the
public, or a section thereof, might be misled by the similarity of the names under
consideration, or that there is “a serious risk of confusion of the public”, then it ought to
be held that a name is undesirable.’

[18] It would seem that the phrase ‘a serious risk of confusion’ was meant
to mean no more than a probability of confusion. That would be in line
with the South African cases referred to by Mynhardt J which he would
seem to approve. He himself said at 1025D:

‘If the similarity between the two names is likely to lead to confusion of customers or
potential customers of either the applicant or the first respondent, then the change of
name cannot be permitted . . ..’
If that is how ‘a serious risk of confusion’ is to be understood I agree save
that I would add that the degree of confusion will no doubt be a factor to be
taken into account in deciding in terms of s 48 whether or not a company
name is undesirable. A company name will be confusing when, in doing
business with the company, the public or a section of the public would be
confused into thinking that they are doing business with another company
or would be confused into thinking that the company is associated in some
way with the other company.

[19] The dominant part of the second respondent’s name is Polaris
Capital. It is not merely a descriptive name. Until the appellant changed its
name to Polaris Capital, no company had been registered in South Africa
by that name and although there are other companies registered in South
Africa with the word ‘Polaris’ as part of their names, ‘Polaris Capital’
cannot be said to have lost its distinctiveness as part of a company name.
None of these other companies with the word ‘Polaris’ as part of their
names trades as equity managers. Being the first company to use the name
Polaris Capital it must be accepted, in the light of the evidence referred to
above, that the second respondent became known to a substantial number
of influential people in South Africa ie that the second respondent acquired
a reputation in South Africa as an international equity manager. Having
established that reputation in South Africa the second respondent acquired
vested rights in its name entitling it to object against the adoption of the
name Polaris Capital by the appellant.

[20] The appellant contends that although it adopted the dominant part of
the second respondent’s name as its name such adoption has not and will

not lead to confusion because ‘the appellant’s customer base falls within a
limited and educated group of financial services experts.’

[21] It is clear that in determining whether there would be confusion
regard has to be had to the nature of the business and customer base of the
respective companies.3 Both the appellant and the second respondent trade
as equity managers but the one conducts its business in the USA and the
other conducts its business in South Africa. Both of them invest in South
African equities and foreign equities.

[22] The appellant’s submission that its customer base consists of an
educated group of financial service experts is not correct. In a
supplementary affidavit filed by the appellant it is stated that the appellant
invests in South African equities on behalf of, amongst others, individuals.
There is no reason to assume that the individuals concerned are financial
services experts.

[23] In the light of the fact that the name adopted by the appellant is for
all practical purposes almost identical to that of the second respondent and
the fact that the appellant and the second respondent both conduct business
as equity managers I am of the view that people who know about the
second respondent may well think that there is an association between the
two. The appellant contended that if that was the case the second
respondent should have been able to produce evidence of confusion four
years after the second respondent started doing business under the name
‘Polaris Capital’ and that it failed to do so.

[24]  The only evidence tendered by the second respondent as to actual
confusion
was
an
e-mail
communication
directed
to

3 See American Chewing Products Corporation v American Chicle Company 1948 (2) SA 736 (A) at 743.

‘…@polariscapital.com’ (the second respondent’s e-mail address) instead
of to ‘…@polariscapital.co.za’ (the appellant’s e-mail address) and an
allegation by Horn that the second respondent ‘is frequently contacted by
many of the South African companies whose equity funds they manage
(such as Sappi, Sasol, Impala Platinum, Metorex and BHP Billiton) who
are confused by the existence of the [appellant] and continuously question
whether [second respondent] and the [appellant] are related or the same
entity’.

[25] The sender of the wrongly directed e-mail deposed to an affidavit in
which he explained that he made a clerical error by inadvertently typing the
wrong e-mail address, that it was not as a result of any confusion on his
part as he was at no time under the impression that Polaris Capital (Pty) Ltd
was associated in any way with an entity by the name Polaris Capital
Management Inc.

[26] The statement that the second respondent is frequently contacted by
South African companies whose equity funds they manage such as Sappi,
Sasol, Impala Platinum, Metorex and BHP Billiton cannot be correct as the
second respondent did not manage equity funds of any of these companies.
Horn probably meant to say that the second respondent is contacted by
companies in which it has invested to enquire whether the appellant was
associated with the second respondent. What the reason for the enquiries
was we do not know. But the enquiries do indicate that the enquirers were
at least wondering whether the appellant and the second respondent were in
some way or other associated with one another. Such uncertainty is
undesirable and is at least a factor to be taken into account in deciding
whether a new company name is undesirable. In cases concerning trade
marks, where the issue was whether a trade mark had been infringed by the
use of a mark so nearly resembling a registered trade mark ‘as to be likely

to deceive or cause confusion’, it has been held that infringement will be
proved if there is a likelihood that a substantial number of people who are
interested in the relevant product will be or are likely to be confused or
deceived. Confusion would according to these cases exist when a person is
confused as to the existence or non-existence of a connection between the
product being marketed under the disputed mark and the owner of the
registered trade mark.4 That is to say that confusion will exist when people
wonder whether there is such a connection.5

[27] The fact that there had been many enquiries as to whether the
appellant and the second respondent are associated with one another
strengthens my view that a substantial number of people who knew about
the second respondent and who associated the name ‘Polaris Capital’ with
the second respondent would have assumed that there was an association
between the second respondent and the appellant which was conducting a
similar business to that of the second respondent. The second respondent
would not necessarily have come to know of such people and the fact that
no evidence has been tendered of instances of such confusion does not
prove that there have not been such instances. My view is further
strengthened by the fact that the registrar, who is experienced in the field,
came to the same conclusion.6

[28] The position is of course not static. The second respondent’s
objection itself indicated that it was still interested in the South African
market and that it could in the future expand its activities in South Africa.
Should that happen there can be no doubt that confusion will result.

4 Oude Meester Groep Bpk and another v SA Breweries Ltd; SA Breweries Ltd and another v Distillers
Corporation (SA) Ltd and another 1973 (4) SA 145 (T) at 160F-H; Adidas Sportschuhfabriken Adi
Dassler KG v Harry Walt & Co (Pty) Ltd 1976 (1) SA 530 (T) at 533C-E.
5 Hack’s Application (1941) 58 RPC 91 at 106.
6 Vicom New Zealand Ltd v Vicomm Systems Ltd  [1987] 2 NZLR 600 (CA) at 604 (10-15).

[29] At least one of the purposes of the Act in so far as it provides that a
company may be ordered to change its name if it is undesirable is clearly to
protect the public from being confused as to the entity it is dealing with. In
view of my finding that a substantial number of people will be so confused
if the appellant is allowed to retain its name I conclude that the court a quo
correctly dismissed the appellant’s application for an order setting aside the
registrar’s decision that its name is undesirable.

[30] The appeal is therefore dismissed with costs including the costs of
two counsel.

__________________
P E STREICHER
JUDGE OF APPEAL

Appearances:

For Appellant:
A R Sholto-Douglas SC

M C Seale

Instructed by

Brian Bacon & Associates Inc, Cape Town

Webbers, Bloemfontein

For 2nd Respondent:
A de Vos SC

R Tainton

Instructed by

Adams & Adams Attorneys, Cape Town

Honey Attorneys Inc, Bloemfontein

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
30 September 2009
Status:
Immediate

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.

* * *
POLARIS CAPITAL (PTY) LTD v THE REGISTRAR OF COMPANIES &
ANOTHER

The Supreme Court of Appeal today dismissed an appeal against a judgment in the
High Court, Cape of Good Hope in terms of which that court dismissed an
application by the appellant for an order setting aside a decision and order of the
Registrar of Companies that the appellant should change its name.

On 26 May 2003 the appellant, a South African registered company, formerly
known as African Harvest Growth Asset Managers (Pty) Ltd changed its name to
Polaris Capital (Pty) Ltd. Polaris Capital Management Inc a corporation
incorporated in the USA objected to the name change.

Both Polaris Capital (Pty) Ltd and Polaris Capital Management Inc trade as equity
managers but the one conducts its business in South Africa and the other conducts

its business in the USA. Both of them invest in South African equities and foreign
equities.

Polaris Capital Management Inc was the first to use the name Polaris Capital in
South Africa. Since 1996 it has marketed itself and made sales representations in
South Africa to major commercial banks, investment and merchant banks, asset
management funds, life insurance companies, public companies etc. On the evidence
presented it became known to a substantial number of influential people in South
Africa as an international equity manager.

The Registrar of Companies upheld the objection to the appellant’s new name on the
ground that the name was undesirable. He stated that Polaris Capital Management
Inc had built a reputation and goodwill to its name since 1996, long before the
appellant adopted its name Polaris Capital (Pty) Ltd in 2003. He concluded that
‘since the names are almost identical, and since the parties are engaged in the same
activities, confusion is likely to occur’ and ordered the appellant to change its name.
The SCA upheld the Registrar’s decision and order.