Decision

Decision on CDS-Wilman Ltd

Published 16 June 2022

Companies Act 2006

In the matter of application No. 3073 by Wilman Universal Industries Ltd t/a CDS Wilman for a change to the company name of CDS-WILMAN LTD, a company incorporated under number 12308383

Background and pleadings

1. The company name CDS-WILMAN LTD (“the primary respondent”) has been registered since incorporation on 11 November 2019 under number 12308383.

2. By an application filed on 14 November 2019, Wilman Universal Industries Limited (“the applicant”) applied under section 69(1) of the Companies Act 2006 (“the Act”) for the primary respondent’s name to be changed. On the Form CNA1, the applicant identifies itself as “Wilman Universal Industries Ltd t/a CDS-Wilman” but it is clear from the Companies House register that the name of the legal entity is “Wilman Universal Industries Limited”. At question 10 of the Form CNA1, the applicant makes it clear that the name associated with it is “Wilman Universal Industries Ltd t/a CDS-Wilman”. Therefore, I proceed on the basis that the applicant is the legal entity “Wilman Universal Industries Limited” but that the name associated with it and relied upon for the purposes of these proceedings is “Wilman Universal Industries Ltd t/a CDS-Wilman”.

3. The applicant claims that it has goodwill and reputation in respect of the design, construction and fit-out of commercial kitchens and restaurants for major high street chains. It states that it has been operating under the name for a number of years and has built up goodwill with both suppliers and blue chip clients. It further states that its reputation is such that it is a market leader in its field and that new business is obtained through word of mouth in the industry.

4. It is claimed that the primary respondent has been set up by Philip Ramsbottom, an ex-subcontractor who was paid for all the work that he undertook and it is alleged that the primary respondent was registered in order to extract further monies not due to him.

5. The primary respondent filed a notice of defence and counterstatement. It denies that the primary respondent was trading in the way claimed at the time the primary respondent was incorporated and, at that time, it did not have the goodwill and reputation claimed. It also states that, to the best of its knowledge, the primary respondent has not made any requests for money nor for any other consideration from the applicant and it puts the applicant to proof of the allegation.

6. The primary respondent relies upon a defence that its name was adopted in good faith. The primary respondent also filed a “short position paper” with the defence. I will refer to this, as necessary, later in the decision. However, I do note that at its Exhibit 4, is a copy of a notice issued by Companies House, dated 5 November 2019, that states:

The Registrar of Companies gives notice that, unless cause is shown to the contrary, at the expiration of 2 months from the above date [i.e. 5 November 2019] the name of [the applicant] will be struck off the register and the company will be dissolved. Upon dissolution all property and rights vested in, or held in trust for the company are deemed to be bona vacantia and accordingly will belong to the crown.

7. A screenshot of the London Gazette, dated 5 November 2019, is also provided but the detail is illegible.

8. At the request of the applicant, Mr Ramsbottom was joined to the proceedings as co-respondent.

9. The parties both filed evidence. The parties were asked if they wanted a decision to be made following a hearing or from the papers. Neither side chose to be heard. The applicant was represented by JMW Solicitors LLP and the respondents represented themselves. I make this decision having carefully considered all the papers.

Evidence

10. The applicant’s evidence takes the form of a witness statement by Susan Jones in her capacity of Finance Director of the applicant. She provides a brief history of, and an explanation of the nature of the applicant’s business. She also provides evidence regarding the relationship between the applicant and Mr Ramsbottom.

11. The primary respondent’s evidence is in the form of a witness statement by Mr Ramsbottom. He explains that he has worked in the role of a senior site manager for twenty years and has recently been accepted as a member of the Chartered Institute of Builders. Mr Ramsbottom provides his version of events at the time of the breakdown of his relationship with the applicant.

12. The applicant provided evidence-in-reply in the form of a further witness statement by Ms Jones. This evidence is intended to rebut Mr Ramsbottom’s version of events.

Decision

13. Section 69 of the Act states:

(1) A person (“the applicant”) may object to a company’s registered name on the ground—

(a) that it is the same as a name associated with the applicant in which he has goodwill, or

(b) that it is sufficiently similar to such a name that its use in the United Kingdom would be likely to mislead by suggesting a connection between the company and the applicant

(2) The objection must be made by application to a company names adjudicator (see section 70)

(3) The company concerned shall be the primary respondent to the application

Any of its members or directors may be joined as respondents

(4) If the ground specified in subsection (1)(a) or (b) is established, it is for the respondents to show—

(a) that the name was registered before the commencement of the activities on which the applicant relies to show goodwill; or

(b) that the company—

(i) is operating under the name, or

(ii) is proposing to do so and has incurred substantial start-up costs in preparation, or

(iii) was formerly operating under the name and is now dormant; or

(c) that the name was registered in the ordinary course of a company formation business and the company is available for sale to the applicant on the standard terms of that business; or

(d) that the name was adopted in good faith; or

(e) that the interests of the applicant are not adversely affected to any significant extent

If none of those is shown, the objection shall be upheld

(5) If the facts mentioned in subsection (4)(a), (b) or (c) are established, the objection shall nevertheless be upheld if the applicant shows that the main purpose of the respondents (or any of them) in registering the name was to obtain money (or other consideration) from the applicant or prevent him from registering the name

(6) If the objection is not upheld under subsection (4) or (5), it shall be dismissed

(7) In this section “goodwill” includes reputation of any description.

Goodwill/reputation

14. The relevant date for the purpose of proving goodwill/reputation is the date of the registration of the contested company name which, in this case, is the date of incorporation, 11 November 2019.

15. The concept of goodwill was explained in Inland Revenue Commissioners v Muller & Co’s Margarine Ltd [1901] AC 217 at 223:

What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start.

16. Sections 69(1) and (7) stipulate that the applicant must have goodwill and/or a reputation in the name associated with it. This must be proven in evidence. The applicant’s evidence relevant to demonstrating its goodwill/reputation can be summarised as:

• the applicant’s business was established in 1981 when it was known as Catering Design Services;
  
• the business quickly became known as “CDS” and, in 2001, it was purchased by Wilman Universal Industries Limited;
  
• such was the goodwill in the business that the new owners decided to incorporate “CDS” into its own name. Since then, it has been known as Wilman Universal Industries Limited trading as CDS-Wilman;
  
• the applicant designs and builds commercial catering facilities and has a large client base that includes high street names such as John Lewis, Waitrose, Asda, Debenhams, Harry Ramsdens and McDonalds. It is one of the leaders in its field;
  
• a health and safety incident referred to by Mr Ramsbottom occurred whilst the applicant was undertaking work at the John Lewis & Partners premises in Cambridge. This is referred to by Ms Jones. I refer to this here because it is evidence of the applicant undertaking work for John Lewis and is, therefore, relevant in the assessment of the applicant’s goodwill/reputation

17. This evidence suffers from a complete absence of corroborative evidence. There is no information regarding turnover, no invoices relating to business conducted under the name “Wilman Universal Industries Limited t/a CDS-Wilman”, no evidence corroborating it’s claimed client list nor any details of advertising or promotion activities. However, although the existence of goodwill/reputation was initially denied in the counterstatement, the applicant’s evidence insofar as it goes to the issue of its goodwill/reputation has not been challenged by the respondents. Therefore, I accept that the applicant has been trading under the name “Wilman Universal Industries Limited t/a CDS-Wilman” since 2001 and is in the business of designing and building commercial catering facilities. The claim that it has a client base that includes high street names is also partially borne out by the fact that Mr Ramsbottom provides evidence regarding an accident on the applicant’s site at the John Lewis’ premises in Cambridge.

18. Mr Ramsbottom denies the applicant’s claim that it “was trading as described …in their application at the time [the primary respondent] was incorporated”. I understand this to be a reference to Mr Ramsbottom’s claim that “the applicant’s operations were in disarray”, “conversations were overheard where clients had dismissed them from projects” and that this illustrated a poor reputation rather than goodwill. As I have already commented, the applicant’s evidence makes references to trading since 1981 (and trading as Wilman Universal Industries Limited trading as CDS-Wilman since 2001) and has had customers that includes high street names and, Mr Ramsbottom himself has worked at a site of at least one of these (John Lewis in Cambridge). Whether or not the applicant was having troubles in the months prior to the relevant date in these proceedings, this does not act as a counterpoint to the evidence that illustrates goodwill and reputation.

19. Taking all of the above into account, whilst the applicant’s evidence suffers from a number of deficiencies, when it is considered it its entirety and keeping in mind that there is no challenge to Ms Jones’ statements detailed in paragraph 16, above, I conclude that the applicant has the requisite goodwill/reputation as required by section 69(1)(a) and section 69 (7).

Are the names “sufficiently similar”?

20. The primary respondent’s name must also be “sufficiently similar” to the name in which the applicant enjoys goodwill/reputation in the UK such that it would be likely to mislead by suggesting a connection between them. The name relied upon by the applicant is “Wilman Universal Industries Ltd t/a CDS-Wilman”. The differences between this name and the primary respondent’s name “CDS-Wilman Ltd” is the presence of the words “Wilman Universal Industries Ltd t/a” in the applicant’s name.

21. Owing to the differences the names are not the same (section 69(1)(a)). However, the words “Wilman Universal Industries Ltd t/a” present in the name relied upon indicate that the applicant trades as “CDS-Wilman” and this element only differs from the primary respondent’s name in that that name has the addition of the letters “Ltd”. This addition will be perceived as the very obvious abbreviation of the word “Limited” being merely descriptive of the legal nature of the business. It is “CDS-Wilman” that is the distinctive part of the primary respondent’s name and this will be perceived as being the same as the trading name of the applicant identified in the name that the applicant relies upon. Taking all of this into account, I find that the names are sufficiently similar and that the use of the primary respondent’s name in the UK would be likely to mislead by suggesting a connection between it and the applicant’s business under the name “Wilman Universal Industries Ltd t/a CDS Wilman”, under section 69(1)(b) of the Act.

Defences

22. As the ground specified in subsection 69(1)(b) is established, the onus switches to the primary respondent to establish its defence. Only one defence is relied upon, namely, that under section 69(4)(d) the contested company name was adopted in good faith.

23. It is evident from the wording of s.69(4) of the Act that the onus is on the respondents to show that the contested name was adopted in good faith. The relevant date for this defence is the date on which the company name was registered, namely, 11 November 2019.

24. In order to understand the context of the evidence submitted by the primary respondent, it is necessary to provide further information regarding the applicant’s case. I detail this below:

• Mr Ramsbottom was engaged by the applicant under an agreement for services dated 4 June 2019 (“the contract”). Clause 3.1 of the contract states that it shall continue until an agreed end date. Immediate termination is permitted with cause under Clause 11.1;
  
• on 20 August 2019, without notice, Mr Ramsbottom ceased to provide his services under the contract and “purported” to raise an invoice to the applicant dated 30 September 2019. This invoice was raised in the name of Patriot Security Ltd at the same address held for Mr Ramsbottom. It is headed “FINAL ACCOUNT” and was for a total of £23,652 in respect of various items, the largest of which was over £17,000 in respect of an “ex gracia payment early contract termination from “21/08/19 to 04/12/19”;
  
• in the email exchange that followed the applicant’s HR Manager expressed the view to Mr Ramsbottom that the applicant had no contractual obligation to make such a payment and that it would not be doing so;
  
• Mr Ramsbottom replied by threatening a letter before action if payment was not made within 30 days and reserving “the right to contact third party stakeholders pertaining to public interest issues arising from our dispute”;
  
• on 5 November 2019, a notice appeared erroneously in the London Gazette stating that the applicant would be struck off. The notice was promptly withdrawn and the applicant continued to trade and still does;
  
• a further email from Mr Ramsbottom, dated 7 November 2019, was sent to the applicant’s client referring to an accident on-site that he claimed was not reported to the appropriate health and safety body. As a result, the applicant’s solicitors wrote to Mr Ramsbottom on 12 November 2019;
  
• Ms Jones then became aware that on 11 November 2019, the primary respondent had been incorporated and this led to an immediate letter from the applicant’s solicitors to Mr Ramsbottom warning him to immediately cease using the CDS-Wilman name

25. The relevant evidence provided by the primary respondent can be summarised as follows:

• following receipt of his invoice, Mr Ramsbottom received a telephone call from the operations manager of the applicant who stated that he was acting under instruction from Ms Jones, to offer full payment of the invoice in consideration for the primary respondent “being handed over to the applicant”. Mr Ramsbottom states that he informed the operations manager that the primary respondent was owned by three individuals and that he could not accept the offer. He cites this as evidence that the purpose of forming the primary respondent was not to extract monies from the applicant
  
• Mr Ramsbottom states that he fails “to see how incorporating a company name used by a third party company which had been listed in the London Gazette to be liquidated could possibly be considered a viable strategy to secure any funds due”
  
• Mr Ramsbottom provides further details about the accident at the applicant’s site in Cambridge and re-states that the accident was reportable. He states that he became concerned that the applicant may try to apportion blame for the accident to him. Further, he states that as he was no longer working for the applicant and in order to distance himself from the applicant, he contacted the onsite health and safety team directly in order to have a direct line of communication adding that such communications are routine in the industry

26. The following principles in relation to good faith can be extracted from the judgments of the Privy Council in Barlow Clowes v Eurotrust International Ltd, and the Court of Appeal in England and Wales in Niru Battery Manufacturing v Milestone Trading Ltd:

(i) Good faith is not displayed by a failure to act in a commercially acceptable way or by certain kinds of sharp practice which fall short of outright dishonesty or by dishonesty itself – see Niru Battery at para 164.

(ii) There is a combined subjective/objective approach to the honesty of a party’s behaviour. This involves (i) a consideration of what the party knew at the time of a transaction and (ii) how that party’s action would be viewed by applying normally acceptable standards of commercial behaviour – see Barlow Clowes paras 15–18, 28–32.

27. The issue I must determine is whether the primary respondent was incorporated in good faith. There is a factual background in the evidence, in particular, the health and safety incident, that are not directly relevant to the issue I have to decide beyond illustrating that that incident may have been a motivating factor in the incorporation of the primary respondent. My task is (a) to determine what the primary respondent knew at the time the contested name was adopted, and (b) whether the adoption of the name would be viewed as commercially acceptable behaviour when judged objectively. This means how reasonable people in the field would view the primary respondent’s behaviour (i.e. not simply how the respondent viewed their own actions).

What did the respondent know when it adopted the name?

28. I have found that the applicant had goodwill/reputation identified by the name “Wilman Universal Industries Limited t/a CDS-Wilman”. Mr Ramsbottom, having been very recently contracted to work for the applicant, must have been aware of this at the date the primary respondent was incorporated.

29. At the date of incorporation of the primary respondent, it is common ground that he and the applicant were in dispute over alleged monies owed to him by the applicant and that further, there was the health and safety incident on one of the applicant’s sites that Mr Ramsbottom considered not to have been dealt with appropriately by the applicant. I take from these two facts that Mr Ramsbottom was unhappy with the applicant at the time the primary respondent’s name was adopted.

30. Mr Ramsbottom refers to the fact that, on 5 November 2019, the applicant appeared in the London Gazette which indicated that it was to be struck off. He uses this fact to justify why he was entitled to incorporate the primary respondent on 11 November 2019. The notice is provided in an attachment to the primary respondents “Short Position Paper” that accompanied its Form CNA2, but as I have already observed, its contents are not clear. The primary respondent also provides a copy of the Companies House Notice announcing the same. Therefore, I consider that Mr Ramsbottom was aware of the contents of the Companies House Notice as of 5 November 2019 and, if he wasn’t, he should have been.

Would the adoption of the name be viewed as acceptable commercial behaviour?

31. It is clearly stated in that notice that a) the applicant’s name will be struck off at the expiration of a two month period that commenced on 5 November 2019 i.e. the strike off date would be 5 January 2020, and b) that any property of the applicant would become bona vacantia and owned by the Crown. The consequence of the first of these statements is that Mr Ramsbottom knew, or should have known, that the applicant would not have been struck off until 5 January 2020. He has not explained why, knowing this, the primary respondent was incorporated on 11 November 2019. Regardless of this, he was also aware that even after being struck off, the property of the applicant would pass to the Crown and was not his to take. This property included the goodwill/reputation associated with the applicant and identified by the name “Wilman Universal Industries Limited t/a CDS-Wilman”

32. Taking all of this into account, I reject Mr Ramsbottom’s claim that the primary respondent’s name was adopted in good faith.

33. I find that the primary respondent was incorporated prematurely and without due diligence being conducted and the reasons for doing this do not support the primary respondent’s claim that it was incorporated in good faith.

Outcome

34. The primary respondent cannot rely upon its defence. Therefore, the application is successful. In accordance with section 73(1) of the Act, the following order is made:

(a) CDS-Wilman Ltd shall change its name within one month of the date of this order to one that is not an offending name;^{[footnote 1]}

(b) CDS-Wilman Ltd and Philip Ramsbottom each shall:

(i) take such steps as are within their power to make, or facilitate the making, of that change;

(ii) not to cause or permit any steps to be taken calculated to result in another company being registered with a name that is an offending name.

35. In accordance with s.73(3) of the Act, this order may be enforced in the same way as an order of the High Court or, in Scotland, the Court of Session.

36. In any event, if no such change is made within one month of the date of this order, I will determine a new company name as per section 73(4) of the Act and will give notice of that change under section 73(5) of the Act.

37. All respondents, including individual co-respondents, have a legal duty under Section 73(1)(b)(ii) of the Companies Act 2006 not to cause or permit any steps to be taken calculated to result in another company being registered with an offending name; this includes the current company. Non-compliance may result in an action being brought for contempt of court and may result in a custodial sentence.

Costs

38. The Tribunal awards costs from the published scale at paragraph 10 of the Tribunal’s Practice Direction. This is intended to provide a contribution to costs, but not to recompense the successful party. It is the applicant who has been successful in these proceedings and who is entitled to a contribution towards its costs. The award breakdown is as follows:

Filing the Form CNA1 and considering the Form CNA2: £400
Preparing and filing evidence and considering the other side’s evidence: £600
Fee for filing the Form CNA1: £400
Fee for filing the Form CNA3 x 2: £300

Total: £1700

39. CDS-Wilman Ltd and Philip Ramsbottom, jointly and severally, are ordered to pay Wilman Universal Industries Limited the sum of £1700. This sum is to be paid within twenty-one days of the expiry of the period allowed for appeal or, if there is an appeal, within twenty-one days of the conclusion of the appeal proceedings (subject to any order of the appellant tribunal).

40. Under section 74(1) of the Act, an appeal can only be made in relation to the decision to uphold the application; there is no right of appeal in relation to costs. Any notice of appeal must be given within one month of the date of this decision. Appeal is to the High Court in England Wales and Northern Ireland and to the Court of Session in Scotland. The Tribunal must be advised if an appeal is lodged.

Dated 16 June 2022

Mark Bryant
Company Names
Adjudicator

1. An “offending name” means a name that, by reason of its similarity to the name associated with the applicant in which he claims goodwill, would be likely to be the subject of a direction under section 67 (power of Secretary of State to direct change of name), or to give rise to a further application under section 69. ↩