Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd & another
 3 All SA 175 (A)
Supreme Court of Appeal
27 May 1998
Smalberger, Harms, Marais, Schutz and Plewman JJA
JJF Hefer and I Potgieter
1998 (3) SA 938 (SCA)
. Editor's Summary . Cases Referred to . Judgment .
Jurisdiction Passingoff action Whether or not a court has jurisdiction does not depend on where the goodwill of the
plaintiff is located Where the defendants reside within the area of the court, such court has jurisdiction to hear the
matter If defendants are not resident within the area of the court, the court will have jurisdiction if the claim arose
within its jurisdiction.
Passingoff Elements of Reputation Reputation as a component of goodwill Where goodwill is located What a
plaintiff in a passingoff action has to establish in respect of reputation.
The Appellant ("Caterham") claimed exclusivity for its product, the Caterham Seven or Super Seven, and alleged
that the Birkin Seven, the product of the first Respondent ("Birkin") was being passed off as that of Caterham's. The
Caterham Seven and the Birkin Seven were both replicas of the Lotus Seven Series III sports car. There were no
registered trade marks, designs or patents that had a bearing on Caterham's rights.
Caterham's main claims in the trial court related to copyright infringement. All the original claims were dismissed
by the trial court; leave to appeal on copyright was refused but the court a quo granted leave to appeal on passing
off. On appeal, Caterham limited the relief sought to an interdict restraining Birkin from manufacturing, marketing,
selling and exporting from South Africa a sports car having the distinctive shape and configuration using the
Held The Court held that a distinction had to be made between the issue of jurisdiction and the issue of where
the goodwill of Caterham was located. The court below had jurisdiction because the Respondents resided within its
area. Had the Respondents not been residents of the court below, the question would have been whether the
claim in delict had arisen within its jurisdiction.
The Court held that the germane question in casu concerned the elements of the delict of passingoff; these
were reputation, misrepresentation and damage. The Court noted that the essence of an action for passingoff was
to protect a business against a misrepresentation that the business, goods or services of the representor were
that of the business or were associated therewith. Such a misrepresentation could be committed only in relation to
a business that had goodwill, viz the totality of attributes that lure or entice clients or potential clients to support a
particular business. The components of goodwill included the locality and the personality of the driving force behind
the business, business licences, agreements such as restraints of trade and reputation. The only component of
goodwill of a business which could be damaged by means of passingoff was its reputation which was why proof of
the relevant reputation was the first
Page 176 of  3 All SA 175 (A)
requirement for a successful passingoff action. It was thus incorrect to equate goodwill with reputation. The Court
held further that the fact that, under certain circumstances, the locality of a business might be a component of
goodwill did not mean that goodwill could only exist where the business was located.
The correct issue to be established in a passingoff action was whether the plaintiff had, in a practical and
business sense, a sufficient reputation amongst a substantial number of persons who were either clients or
potential clients of his business. The "location" of the reputation had to subsist where the misrepresentation
complained of caused actual or potential damage to the drawing power of the plaintiff's business. The locality of the
plaintiff's business was not irrelevant and was an important consideration in determining whether the plaintiff had
potential clients and whether the alleged misrepresentation caused his business any harm. The extent of a
business's reputation and the scope of its activities were also relevant to the probability of deception and to
damages; the smaller the reputation, the smaller the likelihood of deception and of damage.
A plaintiff had to establish distinctiveness of his goods or services to prove reputation. Further, the reputation
had to have been in existence at the time that the defendant entered the market.
Applying the above principles to the instant case, the Court concluded that Caterham had failed to establish the
reputation upon which it relied for its passingoff action. The appeal was accordingly dismissed with costs.