fail. Lotus stopped making the III before 1973, either in South Africa or elsewhere. There is also no indication that it
had any business of any sort in South Africa by 1988. There was thus no residual goodwill which could have been
assigned in 1988. Following a similar factual route, Howard JP dismissed the claim.
[13] It is necessary to pause and consider whether the statement in Webster & Page does not conflate two
different matters, namely the elements of the delict of passingoff and the requirements for jurisdiction. The court
below had jurisdiction, I would suggest, because the defendants reside within its area. Had they not been
residents of that area, the question would have been whether the claim in delict had arisen within its jurisdiction
(cf. Thomas v BMW South Africa (Pty) Ltd 1996 (2) SA 106 (C)
View Parallel Citation
127GH). The unrelated, but for this case germane, question concerns the elements of the wrong. They are the
"classical trinity" of reputation (or goodwill), misrepresentation and damage (Consorzio del Prosciutto di Parma v
Marks & Spencer PLC and others [1991] RPC 351 (CA) 368 line 34 and 369 line 51).
[14] Our courts of first instance have so far adopted the same approach as that of the court below (Slenderella
Systems Incorporated of America v Hawkins and another 1959 (1) SA 519 (W) 521A522B; Lorimar Productions Inc and
others v Sterling Clothing Manufacturers (Pty) Ltd 1981 (3) SA 1129 (T) 1138H1140A; Tie Rack plc v Tie Rack Stores
(Pty) Ltd and another 1989 (4) SA 427 (T) 442G445D). These judgments are the reason for the characterisation of
South Africa, with the UK, as the only major "hard line" jurisdictions left (Wadlow The Law of Passingoff 2ed p 98).
The matter was recently debated in this court, but the question was left open (McDonald's Corporation v Joburgers
DriveInn Restaurant (Pty) Ltd and another1 1997 (1) SA 1 (A) 1519). It was pointed out (at 16AD) that the origin
of the "hard line" is to be found in an oftquoted dictum of Lord Macnaghten in The Commissioners of Inland Revenue
v Muller & Co's Margarine Limited [1901] AC 217 (HL). Before I consider that case, it is convenient first to focus on the
general principles of passingoff.
[15] The essence of an action for passingoff is to protect a business against a misrepresentation of a particular
kind, namely that the business, goods or services of the representor is that of the plaintiff or is associated
therewith (Capital Estate and General Agencies (Pty) Ltd and others v Holiday Inns Inc and others 1977 (2) SA 916 (A)
929CD). In other words, it protects against deception as to a trade source or to a business connection (Reckitt &
Colman SA (Pty) Ltd v S C Johnson & Son SA (Pty) Ltd 1993 (2) SA 307 (A) 315B). Misrepresentations of this kind can
be committed only in relation to a business that has goodwill or a drawing power (Afrikaans: "werfkrag"). Goodwill
is the totality of attributes that lure or entice clients or potential clients to support a particular business (cf. A Becker
and Co (Pty) Ltd v Becker and others 1981 (3) SA 406 (A) 417A). The components of goodwill are many and diverse
(O'Kennedy v Smit 1948 (2) SA 63 (C) 66; Jacobs v Minister of Agriculture 1972 (4) SA 608 (W) 624A625F). Well
recognised are the locality and the personality of the driving force behind the business (ibid), business licences
(Receiver of Revenue, Cape v Cavanagh 1912 AD 459), agreements such as restraints of trade (Botha and another v
Carapax Shadeports (Pty) Ltd 1992 (1) SA 202 (A) 211HI) and reputation. These
Page 182 of [1998] 3 All SA 175 (A)
components are not necessarily all present in the goodwill of any particular business.
[16] The only component of goodwill of a business that can be damaged by means of a passingoff is its reputation
and it is for this reason that the first requirement for a successful passingoff action is proof of the relevant
reputation (Hoechst Pharmaceuticals (Pty) Ltd v The Beauty Box
View Parallel Citation
(Pty) Ltd (in liquidation) and another 1987 (2) SA 600 (A) 613FG; Brian Boswell Circus (Pty) Ltd and another v Boswell
Wilkie Circus (Pty) Ltd 1985 (4) SA 466 (A) 479D; Williams t/a Jenifer Williams & Associates and another v Life Line
Southern Transvaal 1996 (3) SA 408 (A) 419AB, 420B). Misrepresentations concerning other components of goodwill
are protected by other causes of action such as claims for injurious falsehoods. It is thus incorrect to equate
goodwill with reputation (or vice versa) or to suggest that the "need for some reputation or secondary meaning to
be shown ... is not a principle or rule of law" (Union Wine Ltd v E Snell & Co Ltd 1990 (2) SA 180 (D) 183IJ). If the
protection of the reputation of a business is the only or main concern of the remedy, why is it necessary to localise
goodwill for purposes of passingoff? A similar question has been posed more than once (cf. Van Heerden &
Neethling Unlawful Competition (1995) p 178183 and NS Page in (1990) 2 SA Merc LJ 29). The answer must be
sought in The Commissioners of Inland Revenue v Muller & Co's Margarine Ltd, a case which the Federal Court of
Australia (General Division) in Conagra Inc v McCain Foods (Aust) Pty Ltd 23 IPR 193, [1992] 106 ALR 465 encourages
one to read as a whole and in context and not to rely on the famous dictum of Lord Macnaghten in isolation.
[17] The issue was whether a particular agreement was subject to payment of stamp duty under the Stamp Act
1891. The Act imposed stamp duty upon any agreement made in the UK except for the sale of "any property locally
situate out of the United Kingdom". Simplified the facts were these. One Muller had carried on a wholesale business
as manufacturer of a margarine in a town in Germany. He sold, inter alia, the goodwill of the business together with
a covenant that he would not be engaged in a similar trade within fifty miles of that town. The main issue was
whether the goodwill of the business fell within the statutory exception, the Commissioners arguing that it did not
because goodwill is incorporeal and cannot be situate anywhere. The question was "whether the goodwill which is
comprised in this contract has a locality for the purpose of the Stamp Act" (Lord Davey at 226). Lord Macnaghten
posed the same question and proceeded to answer it (at 223225) and I quote his speech on the subject fully with
underlining added:
"Then comes the question, Can it be said that goodwill has a local situation within the meaning of the Act? I am disposed to
agree with an observation thrown out in the course of the argument, that it is not easy to form a conception of property