Supreme Court ruling resolves bottled water brand dispute

A legal battle between two bottled water companies that has bounced between various courts for more than two years has finally been settled – with no party emerging as the ultimate victor.

However, one of the parties, Oasis Water, is considering claiming damages from three former franchisees in the wake of the ruling. The matter began when water shop network Oasis launched legal proceedings against three former franchisees who Oasis alleged converted Oasis outlets they owned into MANZI outlets in breach of contract. Around 12 separate legal cases were instituted by Oasis.

This was followed by the former franchisees – by then rebranded as MANZI Water – alleging that it was Oasis that had breached contract. Their arguments included claims that Oasis was competing with its own franchisees. The dispute involved 26 franchise agreements, representing 75 water outlets.

The ongoing court fight led to the exchange of hundreds of pages of court papers between the two parties. The matter was heard by three separate High Court judges before recently reaching the Supreme Court of Appeal (SCA), where all three earlier High Court rulings were simultaneously appealed.

Now finally resolved, a full bench of Judges at the SCA ruled that confirmed that Oasis Water is entitled to protect its trademark and ordered MANZI to return all signage, client lists, manuals, labels, and other printed material containing Oasis’ names or trademarks. MANZI must also “cease using or exploiting the first applicant’s ‘Oasis’ business system and any intellectual property owned,” the ruling stated.

In response to questions from IOL, Oasis Water director Mynhardt Oosthuizen welcomed the judgment, saying it confirmed that “Oasis has a valid and enforceable franchise agreement, as well as a comprehensive and protectable business system, comprising all the components that lie at the heart of the Oasis franchise model, and enjoys contractual protection under the terms of the franchise agreement.”

Oosthuizen added that it was significant that the court found no evidence of “unfair tactics or any similar conduct”. MANZI had alleged that Oasis acted unfairly by imposing new business strategies not part of the original franchise agreements, placing franchisees in financially unsustainable positions.

Based on the ruling, Oasis is now considering whether to pursue a damages claim against the former franchisees. “Oasis can now redirect its resources and efforts, and customers can soon expect Oasis to return to previously lost areas,” Oosthuizen said.

Meanwhile, Oasis – which has 88 franchisees managing around 400 outlets and bottling facilities nationwide – failed in its bid to reclaim the actual water bottling equipment. In a statement, MANZI noted that the SCA ruled Oasis could not recover the equipment “free of charge,” as MANZI had paid for it.

The court found that a clause in a previous franchise agreement that allowed for this was null and void under the Consumer Protection Act (CPA). The agreement was contradictory: one clause said Oasis could reclaim the equipment when the contract ended, while another said the equipment could only be sold to either an existing franchisee-approved buyer or Oasis.

As Patrick Bracher, a director at legal firm Norton Rose Fulbright, wrote in a recent blog post, “the clauses were held [as] ambiguous because they contradicted each other.” He added that under the CPA, the agreement was found to be “plainly unreasonable and unjust insofar as the franchisor could acquire the system and components free of charge”.

Another point raised by MANZI regarding the equipment was that it wasn’t unique to Oasis. On this, its statement said it had succeeded, while the court also ruled that MANZI had not copied any Oasis products or passed off Oasis water as its own.

MANZI’s statement added that the “SCA indicated that the water being sold is municipal water filtered through a process common to all water shops and water purification businesses, utilising water purification equipment that is freely available on the market from third-party suppliers.”

Alfred Challis, CEO of MANZI Water, said: “We welcome the SCA’s decision involving three of our licensees and their previous franchisor, Oasis Water.”

IOL