THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case No 252/2010

In the matter between:

ALLIANCE PROPERTY GROUP (PTY) LTD

APPELLANT

and

ALLIANCE GROUP LIMITED

FIRST RESPONDENT

AUCTION ALLIANCE KWAZULU-NATAL
(PTY) LTD

SECOND RESPONDENT

Neutral citation: Alliance Property Group v Alliance Group (252/10) [2011]
ZASCA 14 (14 March 2011)

Coram:
HARMS DP, HEHER, PONNAN, TSHIQI JJA et PLASKET AJA
Heard:
25 February 2011
Delivered:
14 March 2011

Summary: Practice – Whether appeal having any practical effect or result –
section 21A of the Supreme Court Act 59 of 1959 – Passing-off – proof of
reputation – proof of misrepresentation.

ORDER
_______________________________________________________________
On appeal from:  KwaZulu-Natal High Court (Pietermaritzburg) (Sishi J sitting
as court of first instance):

(1) The appeal is upheld with costs and the order of the court below is set
aside.

(2) The following order is substituted for the order issued by the court below.
'(a) The respondents are interdicted, in the provinces of KwaZulu-Natal and
the Eastern Cape, from passing-off their property services as those of the
applicant or as being associated in the course of trade with the applicant, by
using the name, mark and trading style of Alliance Group without clearly
distinguishing their services from those of the applicant.
(b) The respondents are directed to pay, jointly and severally, the applicant’s
costs of the application, including the costs of two counsel.'

JUDGMENT

PLASKET AJA (HARMS DP, HEHER, PONNAN, TSHIQI JJA concurring):

[1] The appellant appeals against the judgment of Sishi J in the KwaZulu-
Natal High Court, Pietermaritzburg in which its application to interdict the
respondents from passing-off their property services as those of the appellant
was dismissed with costs.

[2] Two principal issues arise. The first is whether the appeal will have any
practical effect and if not whether it should be dismissed in terms of s 21A of
the Supreme Court Act 59 of 1959. The second is whether, if the appeal is not
to be dismissed in terms of s 21A, Sishi J was correct in dismissing the

application on the basis that the appellant had failed to prove a reputation in
the name and trading style of Alliance Property Group and that it had failed to
prove a misrepresentation on the part of the respondents that created a
likelihood of deception or confusion between the appellant’s name and that of
the respondents. Prior to dealing with these issues, it is necessary to set out
the facts.

The facts

[3] The appellant commenced business under its present name in 1997. It
conducts business in the field of commercial and industrial property, including
property development and facilitation, valuations and consultancy, property
sales, the letting of property, property management and public auctions of
property. The heartland of its operations is the province of KwaZulu-Natal, but
the papers show that it also conducts business in the Eastern Cape, from that
province's border with KwaZulu-Natal to East London.

[4] The first respondent commenced its existence in 1999 as Electronic
Auctioneering Ventures Ltd. In the following year it changed its name to
Auction Alliance Holdings Ltd and then, in 2003, to Asset Alliance Ltd. A few
years later, it embarked on a rebranding, restructuring and consolidation of its
associated companies. The result was that, in October 2006, it changed its
name to Alliance Group Ltd. It conducts the business of property auctions,
business sales, property finance, property inspections and valuations in
KwaZulu-Natal and elsewhere in the country, including the Eastern Cape.

[5] The second respondent was incorporated in 2000 under the name
Kusasa Commodities 191 (Pty) Ltd. It changed its name to Auction Alliance
KwaZulu-Natal (Pty) Ltd in 2001. Between 2003 and 2007 it traded as Auction
Alliance but, from September 2007, has traded as Alliance Group. Its core
business is the selling of immovable property by way of auctions. It operates
in KwaZulu-Natal.

[6] As a result of the first respondent's rebranding and the change of name
and trade name of it and second respondent, the appellant launched its
application to interdict them from passing-off their services as those of the
appellant's. As stated above, Sishi J dismissed the application. He then
granted leave to appeal to this court.

Will the appeal have any practical effect?

[7] After leave to appeal had been granted, the respondents’ attorneys
wrote a letter to the appellant's attorneys in which they said that the
respondents had undergone an 'internal strategy change' and had  'performed
an intensive "brand audit" in light of market conditions'. The result was that
they decided to re-focus their core business to that of auctions, rebranded
their business and resumed trading as Auction Alliance. The letter then
stated:
'Our clients are prepared to abandon the costs order in their favour relating to the
proceedings in the Court a quo and are prepared to agree that each party be responsible for
their own costs in connection with the application for leave to appeal in the event that your
client is prepared to withdraw its appeal to the Supreme Court of Appeal.'

[8] It will be noted that the letter gave no undertaking that the respondents
would not in future pass-off their business as that of the appellant. Instead, it
made the assertion that as they had changed back to their previous names,
the appellant’s appeal was moot.

[9] The appellant’s attorneys replied to the letter by saying that ‘your
client’s statement that it no longer proposes to trade as “Alliance Group” does
not destroy our client’s right to pursue its appeal’. They noted that the
respondents had not abandoned the judgment in their favour and had given
no undertaking not to trade as the Alliance Group.

[10] The letter then mentioned that the second respondent (it would seem)
was still trading under the name of the Alliance Group in Durban. Finally, the
appellant’s attorneys demanded that, in order to settle the matter, the

respondents should abandon the judgment in their favour, give an ‘irrevocable
undertaking’ that they would not use the name Alliance Group, or apply for the
registration of a new company with that name, and take various other steps
specified in the letter. When, some two weeks later, the appellant’s attorneys
had received no response, they informed the respondents’ attorneys that they
were proceeding with the preparation of the record.

[11] Shortly before the appeal was to be heard, the appellant brought an
application in which it sought leave to lead further evidence. That evidence
was to the effect that, in addition to the second respondent carrying on
business under the name of Alliance Group, two of the first respondent’s
subsidiaries in Johannesburg and Port Elizabeth were also doing so some
seven months after the letter informing the appellant of the rebranding. The
respondents, in an answering affidavit, ascribed this to an insignificant
oversight which had been rectified.

[12] Section 21A(1) of the Supreme Court Act 59 of 1959 provides that
’[w]hen at the hearing of any civil appeal to the Appellate Division or any
Provincial or Local Division of the Supreme Court the issues are of such a
nature that the judgment or order sought will have no practical effect or result,
the appeal may be dismissed on this ground alone’.

[13] The purpose of this section was considered by this court in Premier,
Provinsie Mpumalanga, en ŉ ander v Groblersdalse Stadsraad,1 in which it
was held:
‘Die artikel is, myns insiens, daarop gerig om die drukkende werklas op Howe van appèl,
insluitende en miskien veral hierdie Hof, te verlig. Dit breek weg van die destydse vae
begrippe soos “abstrak”, “akademies” of “hipoteties”, as maatstawwe vir die uitoefening van 'n
Hof van appèl se bevoegdheid om 'n appèl nie aan te hoor nie. Dit stel nou 'n direkte en
positiewe toets: sal die uitspraak of bevel 'n praktiese uitwerking of gevolg hê? Gesien die
doel en die duidelike betekenis van hierdie formulering, is die vraag of die uitspraak in die
geding voor die Hof 'n praktiese uitwerking of gevolg het en nie of dit vir 'n hipotetiese
toekomstige geding van belang mag wees nie.’

1 1998 (2) SA 1136 (SCA) at 1141D-E. See too Rand Water Board v Rotek Industries (Pty)
Ltd 2003 (4) SA 58 (SCA) paras 13-14.

[14] In Port Elizabeth Municipality v Smit2 this court held that the
discretionary power to dismiss an appeal in terms of s 21A without
consideration of the merits was only operative where there was an existing
dispute between the parties that, for some or other reason, had become
academic or hypothetical (and that, in the absence of an existing dispute, s
21A did not apply because there simply was no appeal before the court).

[15] On the facts that I have set out above, I am of the view that it cannot be
said that the dispute between the appellant and the respondents is academic
or hypothetical. The fact that the respondents have failed to give an
undertaking that they will not, in future, use the name Alliance Group renders
the dispute a live one. I accordingly find that the appeal is not one that will
have no practical effect or result and that it must, as a result, be determined
on the merits.

The merits

[16] In Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd &
another,3 Harms JA identified the elements of the wrong of passing-off to be
'the "classical trinity" of reputation (or goodwill), misrepresentation and
damage'. As a form of wrongful competition it is unlawful because 'it results,
or at any rate is calculated to result, in the improper filching of another's trade
and an improper infringement of his goodwill and/or because it may cause
injury to that other's trade reputation'.4

2 2002 (4) SA 241 (SCA) para 7.
3 1998 (3) SA 938 (SCA) para 13. See too Nino’s Coffee Bar & Restaurant CC v Nino’s Italian
Coffee & Sandwich Bar CC & another; Nino’s Italian Coffee & Sandwich Bar CC v Nino’s
Coffee Bar & Restaurant CC 1998 (3) SA 656 (C) para 30.
4 Brian Boswell Circus (Pty) Ltd & another v Boswell-Wilkie Circus (Pty) Ltd 1985 (4) SA 466
(A) at 478I-J.

[17] The elements of passing-off were described more fully as follows in
Premier Trading Co (Pty) Ltd & another v Sporttopia (Pty) Ltd:5
‘Passing-off is a wrong consisting of a false representation made by one trader (the
defendant) to members of the purchasing public that the enterprise, goods or services of a
rival trader (the plaintiff) either belong to him (the defendant) or are connected, in the course
of trade, with his own enterprise, goods or services. (I shall abbreviate, for the sake of
convenience, “enterprise, goods or services” to the single term “the product” since this is a
case of “product confusion” rather than “business connection confusion”.) The defendant's
representation is a misrepresentation if it is likely to deceive or confuse a substantial number
of members of the public as to the source or origin of his product. Passing-off, to be
actionable, erodes the plaintiff's goodwill. Goodwill is the product of a cumulation of factors,
the most important of which, in the context of passing-off, is the plaintiff's reputation.
Reputation is the opinion which the relevant section of the community holds of the plaintiff or
his product. If favourable, it would dispose potential customers to patronise the plaintiff or his
product and, if unfavourable, it would tend to discourage them from doing so. The plaintiff's
reputation may be associated with the symbol under which his product is marketed. The
symbol renders the product distinctive of the plaintiff or his product. A false representation by
the defendant about the symbol used by the plaintiff may encourage or induce potential
customers of the plaintiff, believing that they were patronising him, into patronising the
defendant.’

[18] I turn now to the issues to be decided, namely whether the appellant
proved a reputation in its name and trading style and whether it proved a
misrepresentation on the part of the respondents.

(a)  Reputation

[19] It is necessary to point out that, while in the court below the appellant
sought to lay claim to the word 'Alliance' as being descriptive of its business,
Sishi J held, correctly, that it was a descriptive word that could not be
monopolised by the appellant.6 The appellant does not attack this finding and
concedes that it does not have a monopoly on the word 'Alliance'. Instead it

5 2000 (3) SA 259 (SCA) at 266G-267C. See too Capital Estate and General Agencies (Pty)
Ltd & others v Holiday Inns Inc & others 1977 (2) SA 916 (A) at 929C-D; Brian Boswell Circus
(Pty) Ltd & another v Boswell-Wilkie Circus (Pty) Ltd fn 4 at 478E-H.
6 See Value Car Group Ltd & another v Value Car Hire (Pty) Ltd & others [2005] 4 All SA 474
(C).

argues that it has established a reputation symbolised by the name and trade
style of Alliance Property Group.

[20] In Brian Boswell Circus (Pty) Ltd & another v Boswell-Wilkie Circus
(Pty) Ltd7 Corbett JA stated that there were two important considerations in
respect of the acquisition by a business of a reputation in a trade name:
'Firstly, whether the general public will be confused or deceived into thinking, because of
identity or similarity of names, that the business of the defendant is that of the plaintiff, or is
connected therewith, must, as a matter of logic, depend on the extent to which that name is
associated in the minds of members of the public with the business carried on by the plaintiff,
ie the extent to which plaintiff has acquired a reputation in that trade name. Secondly, as the
rationale of the wrong of passing off is the protection of the plaintiff's trade and goodwill, a
valid cause of action would seem to postulate the existence of a goodwill, ie reputation,
attaching to that trade name. Whether reputation, in this sense, is always a sine qua non of a
successful passing off action need not now be decided.'
In addition, the reputation that is sought to be protected must have been in
existence when the misrepresentation was made.8

[21] The existence of the appellant's reputation at the relevant time is a
question of fact. The appellant has put up the following facts, none of which
have been disputed by the respondents in any meaningful way: the appellant
has provided property services under the style Alliance Property Group since
its incorporation in 1997; its business has, since then, encompassed a full
range of property related services and, since 1997, it has facilitated a number
of property developments having a combined value of over R800m; since its
incorporation, its portfolio of commercial and industrial properties that it
manages has grown to 54 buildings worth R948m; it has conducted a number
of public auctions of property, including one in Dubai; it has acted as a
consultant and advisor to a Dubai-based company that is developing a
prestigious golf and leisure resort in KwaZulu-Natal; brochures reflecting its
profile in 2003 and 2007 reflect  a considerable growth in its business; since
1998, its turnover from property related activities, primarily in the form of
commissions, has exceeded R91m; and it has advertised its services widely.

7 Footnote 4 at 479B-D. See too Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty)
Ltd fn 3 paras 20-21.
8 Caterham Car Sales & Coachworks Ltd v Birkin Car Sales (Pty) Ltd fn 3 para 22.

[22] In answer to this, the respondents claim no knowledge of the
appellant's reputation; state that it is not involved in property auctions to any
'significant degree'; suggest the appellant's property portfolio may have
declined since the signing of the founding affidavit; allege that the appellant
trades in a small part of the country; and claims that the respondent is much
bigger than it. The appellant's schedule of the properties it manages shows,
however, that its business is only carried on in KwaZulu-Natal and the Eastern
Cape, and extends no further than the Eastern Cape.

[23]  It is evident from the period during which the appellant has traded, the
nature of its business and the scope of its operations that the appellant has
established that it has acquired a reputation in its field in KwaZulu-Natal and
the Eastern Cape. It is argued on behalf of the respondents, however, that
there is a difference between it acquiring a reputation and proving a
secondary meaning. This issue was dealt with by this court in Brian Boswell
Circus (Pty) Ltd & another v Boswell-Wilkie Circus (Pty) Ltd9 in which the court
held simply that ‘the latter would seem to include the former’.

[24] The court then referred with approval to Policansky Bros Ltd v L & H
Policansky10 in which this court said the following concerning a name
acquiring a secondary meaning:
'If a person has previously through his advertisements and through the quality of his goods
made his name valuable as a trade name so that his name has become distinctive both of his
goods and of himself as the manufacturer of those goods, and if his goods have come to be
universally known in the market by his name then his name is said to have obtained a
secondary meaning. When this is the case another person cannot use that name in
connection with a similar class of goods unless he makes it perfectly clear to the public that
he is not selling the goods of the original manufacturer . . . .'

[25] On the strength of the above, I conclude that the appellant has
established a reputation in the field of providing property-related services in
KwaZulu-Natal and the Eastern Cape and that it has done so in relation to the
name and trading style of Alliance Property Group which name (to the extent

9 Footnote 4 at 482A-B.
10 1935 AD 89 at 103.

that it may be descriptive) has acquired a secondary meaning as a result of
the close and distinctive association between it and the business the appellant
carries on in the minds of the public. In addition, the evidence also establishes
that the appellant’s reputation was in existence when the respondents began
to trade under the name Alliance Group Ltd. As a result, the appellant has
established that, in relation to the first issue, the court below erred in finding
that the appellant had not proved a reputation in its name and trading style.

(b)  Misrepresentation

[26] In Capital Estate & General Agencies (Pty) Ltd & others v Holiday Inns
Inc & others,11 this court held the following in respect of the proof of the
misrepresentation necessary to establish a passing-off:
‘The wrong known as passing off consists in a representation by one person that his business
(or merchandise, as the case may be) is that of another, or that it is associated with that of
another, and, in order to determine 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 the one is, or is connected with, that of another.
Whether there is a reasonable likelihood of such confusion arising is, of course, a question of
fact which will have to be determined in the light of the circumstances of each case.’
(Reference omitted.)

[27] The court, in Miriam Glick Trading (Pty) Ltd v Clicks Stores (Transvaal)
(Pty) Ltd & others,12 after referring to the above passage from the Holiday
Inns case, proceeded to set out how the factual enquiry is to be conducted:
‘In such an enquiry the trade names must be considered from the visual, phonetic and
ideological points of view. They must be considered not side by side, but as a member of the
public would see them, one after the other, with a time lapse in between and having regard to
the likelihood of imperfect recollection. In passing-off they must be considered not in abstracto
but in the form and under the circumstances in which they are used. This involves having
regard to all the surrounding circumstances such as the nature of the businesses in question
and the goods to which they relate, the types of persons who constitute potential clients of
such businesses and the conditions under which such businesses are conducted. The criteria

11 Footnote 5 at 929C-E. See too Brian Boswell Circus (Pty) Ltd & another v Boswell-Wilkie
Circus (Pty) Ltd fn 4 at 478E-J.
12 1979 (2) SA 290 (T) at 295A-D.

is not that of a very careful or a very careless purchaser but an ordinary purchaser of the
types comprising the potential clients’.

[28] Prior to September 2007, the appellant, trading as Alliance Property
Group, provided a comprehensive range of property-related services. The
respondents traded as Auction Alliance and concentrated on selling property
by way of public auctions. At this stage, the only common factor in the names
of the appellant and the respondents was the descriptive word Alliance. To
the extent that this had the potential to cause confusion, it was a risk that the
appellant and the respondents bore, but the remainder of their respective
names was sufficient to distinguish them from each other in the minds of the
public.13

[29] In September 2007, however, the respondents dropped the word
Auction from their names, expanded their services in the property field to
include more than property auctions and called themselves Alliance Group
Ltd. The effect of this was to remove important features that distinguished the
business of the appellant from that of the respondents, make the respondents’
businesses look more like the appellant’s business from a functional point of
view and to make their names look strikingly similar to that of the appellant.
By doing this, confusion in the minds of the public was inevitable and it is
hardly surprising that instances of actual confusion arose.

[30] In these circumstances, I am of the view that the appellant succeeded
in establishing a misrepresentation on the part of the respondents that its
businesses were the same business as that of the appellant or was connected
with it. That being so, I am of the view that the court below erred in this
respect too and that, consequently, the appeal must succeed.

THE ORDER

13 Sir Robert McAlpine Ltd v Alfred McAlpine Ltd [2004] RPC 36 711 (HC) paras 49-50;
Initiative Promotions and Designs CC v Initiative Media South Africa (Pty) Ltd & others 2005
BIP 516 (D) at 525B-E, quoting with approval Kerly Law of Trade Marks and Trade Names 12
ed (1986) p 389.

[31] The following order is issued.

(1) The appeal is upheld with costs and the order of the court below is set
aside.
(2) The following order is substituted for the order issued by the court below.
'(a) The respondents are interdicted, in the provinces of KwaZulu-Natal and
the Eastern Cape, from passing-off their property services as those of the
applicant or as being associated in the course of trade with the applicant, by
using the name, mark and trading style of Alliance Group without clearly
distinguishing their services from those of the applicant.
(b) The respondents are directed to pay, jointly and severally, the applicant’s
costs of the application, including the costs of two counsel.'

_____________________
C. PLASKET
ACTING JUDGE OF APPEAL

APPEARANCES
APPELLANT:  G E Morley SC instructed by Cox Yeats, Durban; Honey
Attorneys, Bloemfontein

RESPONDENTS: J-H Roux SC instructed by Cliffe Dekker Hofmeyr, Cape
Town; Symington and De Kock, Bloemfontein
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

14 March 2011

STATUS

Immediate

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

Alliance Property Group (Pty) Ltd v Alliance Group Ltd
(252/10) [2011] ZASCA  (14 March 2011)

The Supreme Court of Appeal (SCA) upheld an appeal against an order of the
KwaZulu-Natal High Court (Pietermartizburg) in the above matter. The
appellant appealed against the judgement of the court a quo in which its
application to interdict the respondents from passing-off their property
services as those of the appellant’s was dismissed with costs.

The main issues before the court was whether the appellant had proved a
reputation in its name and trading style and whether it had proved a
misrepresentation on the part of the respondents.

The court held that the appellant had indeed established a reputation in the
field of providing property-related services in KwaZulu-Natal and the Eastern
Cape and that it had done so in relation to the name and trading style of
Alliance Property Group which name (to the extent that it may have been
descriptive) had acquired a secondary meaning as a result of the close and
distinctive association between it and the business of the appellant in the
minds of the public.

The court further held that the appellant succeeded in establishing a
misrepresentation on the part of the respondents in that their respective
businesses were in the same field as that of the appellant and the name
under which they traded was strikingly similar to that of the appellant.

Therefore, the SCA ordered that the respondents be interdicted, in the
provinces of KwaZulu-Natal and the Eastern Cape, from passing-off their
property services as those of the applicant or as being associated in the
course of trade with the applicant, by using the name, mark and trading style
of Alliance Group without clearly distinguishing their services from those of the
applicant.