Decision

Decision on Certo Construction (London) Limited

Published 10 August 2020

Companies Act 2006

In the matter of application no. 1780 by Certo Construction Limited for a change to the company name of Certo Construction (London) Limited, company registration 11257470.

1. Company 11257470 (“the primary respondent”) was incorporated on 15 March 2018 with the name CERTO CONSTRUCTION (LONDON) LIMITED. This name has caused Certo Construction Limited (registration no. 11032600) to make an application to this Tribunal, on 19 June 2018, under section 69 of the Companies Act 2006 (“the Act”).

2. 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 respondent to show –

(a) that the name was registered before the commencement of the activities on which the applicant relies to show that 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.”

3. The applicant requested that the primary respondent’s sole director, Mr Victor Stephen Wright, be joined to the proceedings under the provisions of section 69(3) of the Act. Mr Wright was given notice of this request by letter dated 24 September 2018 and provided with an opportunity to comment or object. No response was received from Mr Wright and he was joined to the proceedings as a co-respondent on 5 February 2019.

4. The applicant claims that the name associated with it is Certo Construction Limited. The applicant was incorporated on 26 October 2017. The applicant explains that it operates within the construction industry, particularly the hotel, office and property refurbishment sector. With regard to its goodwill/reputation under the name relied upon, the applicant states:

The company is set up for the purposes of undertaking construction projects in the UK and abroad. There have been numerous negotiations with various prospective clients that had been ongoing whilst Victor Wright was a director of the applicant. These negotiations were progressing favourably for the Applicant until Mr Wright set up a rival company with a view to diverting work away from the applicant and taking advantage of the goodwill that had been developed in the name. Had there been no goodwill then it is unlikely that Mr Wright would have sought to take advantage of the similarity in name. The customers that the applicant was in discussions with sought to take advantage of the similarity in name. the customers that the applicant was in discussions with have all been written to put them on notice of the Mr Wright’s [sic] action. A sample copy is attached.

5. The applicant explains that it objects to the name in issue because Mr Wright, a sole director of the primary respondent, was engaged as a director of the applicant between 26 October 2017 and 22 March 2018, when the applicant discovered the existence of the primary respondent. During that period, Mr Wright was responsible for negotiating contracts on behalf of the applicant. The applicant submits that Mr Wright was attempting to divert custom away from the applicant, but without customers being aware that they were dealing with a different entity. The applicant notes that the names are very similar and claims that Mr Wright is attempting to exploit this for the benefit of the primary respondent.

6. The applicant requests that the Tribunal “transfer ownership of the name to Certo Construction Limited. In the alternative, for Certo Construction (London) Limited to be struck off the register.”

7. The primary respondent filed a notice of defence, signed by Mr Wright. Attached to the original Form CNA2 were a number of documents. These were not filed as evidence in the usual format. However, Mr Wright had signed the Form CNA2 and confirmed that the facts stated within that Notice of defence were true. As a consequence, we have read all of these documents and have borne their contents in mind in reaching a decision. In particular, we note the following documents:

a. An undated Company Profile for the primary respondent which lists construction projects undertaken at four locations in London, which includes both offices and apartments. Although the document is undated, it records the position as of March 2018, stating: “a group of investors who have between them created a wholly paid up share capital investment of £333,333” and goes on to record the “balance sheet status” for March 2018 as £333,333. b. A document setting out a list of four projects completed “to date”. The value of one of these projects has not been disclosed, but the value of the other three are listed as £110,000, £17,500 and £250,000 respectively. The document also lists a number of “projects in the pipeline” as follows:

Due to commence: Value:

October 2018 £30,000

October 2018 £100,000

October 2018 £25,000

November 2018 £250,000

January 2019 £1,400,000

February 2019 £2,000,000

March 2019 £500,000

8. In the Notice of defence, Mr Wright denies that the applicant has any goodwill or reputation. In particular, he submits that at the time of his departure from the business, the applicant had no ongoing projects and had received no tender opportunities or projects in the pipeline. Mr Wright states:

Whereas I had made contact with some of my closest previous clients, design consultants, quantity surveyors and project managers, to advise them that I was working for Certo Construction Ltd on a part time consultancy basis, any opportunities they may have been able to offer would have been offered only because of their relationship and trust in me and would have been offered on the strict understanding of my involvement in the projects.

9. The primary respondent relies upon defences based upon sections 69(4)(b) and (e) of the Act (shown above).

10. Neither the primary respondent nor Mr Wright are represented. The applicant is represented by Birkett Long LLP. Both parties filed evidence. The applicant elected not to file evidence in reply. Neither party requested a hearing and this decision is taken following a careful perusal of the papers.

Evidence

Applicant’s Evidence

11. The applicant filed evidence in the form of the witness statement of Mr Dennis Cutts dated 14 December 2018, which was accompanied by 1 exhibit. Mr Cutts is the sole director and shareholder of the applicant.

12. Mr Cutts explains that he and Mr Wright decided to work together, having worked together previously for another business. Mr Wright was appointed as a director of the applicant in October 2017. Mr Cutts explains that Mr Wright’s role in the business was to assist in obtaining new contracts.

13. Mr Cutts focuses upon the breakdown of the relationship between himself and Mr Wright, which eventually culminated in Mr Wright leaving the business in March 2018 and his directorship being terminated. It was after this that Mr Cutts became aware that Mr Wright was still in contact with the applicant’s potential clients using the same name, meaning that potential clients did not realise they were dealing with a different entity. Mr Cutts has provided copies of letters sent by his attorney to these potential customers, notifying them of Mr Wright’s departure from the business. The attorney’s letter notes that the potential customers “were in discussions with our client regarding the possibility of working together”.

14. With regard to the applicant’s goodwill and reputation, Mr Cutts states that the applicant “continues to trade and has won and undertaken various fit out and refurbishment contracts since its incorporation”. Mr Cutts has provided a copy of various pages from the applicant’s website. There is no information provided on that page about projects undertaken by the applicant.

15. Mr Cutts states that he has invested a significant amount in the applicant’s online presence and is constantly pitching for new work. Mr Cutts also states:

1. It is noted that the response of Mr Wright and the Respondent states at reference point “11” that it is contested there was any goodwill or reputation in the Applicant. Mr Wright states that “at the time of my departure of Certo Construction Limited, they had no ongoing project on site, had received no tender opportunities, had no pipeline and potential opportunities, and were at that point in time, namely 15 March 2018, not in way [sic] therefore not in any way shape or form an operational going concerns.

Whereas I had made contact with some of my previous clients, design consultants, quantity surveyors and project managers, to advise them that I was working for Certo Construction Limited…” These comments are incorrect as I was on site in Paris, Berlin, Amsterdam and Brussels for an international client based in the UK and these projects were won by me for the benefit of the Applicant.”

Respondent’s Evidence

16. The respondent’s evidence consists of the witness statement of Mr Victor Wright dated 3 April 2019, which is accompanied by 6 exhibits (parts of which are subject to a confidentiality order). As noted above, Mr Wright is the sole director of the respondent and a co-respondent in these proceedings.

17. Mr Wright has provided a copy of a bank statement for the respondent which dates back to October 2018, as well as a screen shot of the respondent’s bank account which dates back to March 2018.

18. Mr Wright has provided a Company Profile Document, updated as of March 2019. This lists 6 projects completed by the respondent at locations in London, including hotels, offices, apartments, a school and a gallery.

19. Mr Wright states that he has been continuing to increase his business over the last 12 months and has established business banking facilities, public liability insurance, employer’s liability insurance, contractors all risks insurance and has registered for VAT and Employers PAYE.

20. With regard to his activities for the applicant, Mr Wright states:

“Up to the point that we parted company, my contact with perspective clients was merely introductory by way of issuing a company profile document.”

21. With regard to the projects in Paris, Berlin and Brussels referred to in Mr Cutts’ statement, Mr Wright states as follows:

The projects in Paris, Berlin and Brussels that Mr Cutts refers to were at a very early feasibility stage, with no contract terms agreed and could not in any way be considered live projects […].

Decision

22. As the primary respondent has defended the application, the applicant must establish that it has goodwill or reputation in relation to a name that is the same, or sufficiently similar, to that of the company name in issue in order to suggest a connection between the company name and the applicant. If this burden is fulfilled, it is then necessary to consider if the primary respondent can rely upon defences pleaded under section 69(4) of the Act.

The Applicant’s Goodwill

23. Section 69(7) of the Act defines goodwill as a “reputation of any description”. Consequently, in terms of the Act, it is not limited to Lord Macnaghten’s classic definition in IRC v Muller & Co’s Margarine Ltd [1901] AC 217:

“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.”

24. The relevant date for establishing goodwill is the date of incorporation of the primary respondent which, in this case, is 15 March 2018. The applicant must show that it had goodwill or reputation at this date, and that that goodwill or reputation was associated with the name CERTO CONSTRUCTION LIMITED.

25. Whilst the applicant claims to have undertaken work and, consequently, to have goodwill or reputation in the name in issue, this is contested by the respondents.

26. The applicant itself has filed very little evidence which could be considered to demonstrate goodwill or reputation. The applicant has, of course, provided a print out of its website, which displays its name in the domain name for that site. However, that print out is undated and, in any event, provides no information about work undertaken or ongoing projects. The existence of a website alone is not enough to establish goodwill or reputation. We have been provided with no information about the number of visitors to that website. I also note that Mr Cutts states that he had been on site in Paris, Berlin, Amsterdam and Brussels for an international client based in the UK by the time Mr Wright parted ways with the applicant. Mr Cutts states that these projects were won for the benefit of the applicant. However, no information is provided as to how these projects were won i.e. whether customers would have come into contact with the name in issue and in what way. Further, there is no evidence as to who the customer or customers were.

27. There is, of course, evidence from Mr Wright himself to the effect that he had approached potential clients on behalf of the applicant during his time with the business and, importantly, that he had specifically told the clients that he was acting on behalf of Certo Construction Limited. Whilst this does demonstrate that clients had been approached under the name in issue, we have no way of knowing how many clients were approached or whether these approaches resulted in work being secured.

28. Taking the evidence as a whole into account, we do not consider that the applicant has demonstrated that it had goodwill or reputation in the name Certo Construction Limited at the relevant date.

29. However, in the event that we are wrong in this finding, we will go on to consider the similarity of the names and whether the respondent has made out any defences.

Similarity of names

30. The other initial burden facing the applicant is showing that the company name is sufficiently similar to Certo Construction Limited to suggest a connection between the primary respondent and the applicant. The primary respondent’s name is CERTO CONSTRUCTION (LONDON) LIMITED. The only difference between the two names is the addition of the word “London”. This is descriptive of a geographical location and will be viewed as indicating the geographical origin of the business.

31. The word ‘construction’ does, of course indicate the sector within which the parties operate and the word ‘limited’ simply serves to identify the entity as a limited company. As it is, therefore, the word “CERTO” that is the distinctive element of both the applicant’s name and the primary respondent’s name, we are satisfied that, if the applicant had demonstrated goodwill or reputation in that name, the ground specified in subsection 69(1)(b) would be established. In that event, the onus would have fallen on the primary respondent to establish that it can rely on one of the defences pleaded in the Notice of defence.

Defences

32. The first defence relied upon by the respondents is that the primary respondent is operating under the name or has incurred substantial start up costs in preparation pursuant to section 69(4)(b)(i) and (ii) respectively.

33. We are mindful that the wording of the legislation is not clear as to the relevant date for the assessment of the operating defence. The purpose of the provisions of the Act under which this application is brought is to prevent “squatting” i.e. to prevent the registration of a company name by an entity whose main purpose in registering the name is to obtain money (or other consideration) from another party with a reputation under the name, or to prevent that party from registering the name. In particular, the powers set out in sections 69 to 73 of the Act were not intended to provide an alternative remedy to the law of trade marks or the tort of passing off.

34. Following the policy of the Act through to its logical conclusion would suggest that provided a respondent can show that it has traded under the name, (even if that amounted to passing off), that should be sufficient to make out the defence under section 69(4). That remains the case even if the primary respondent started trading after the application in issue was made, provided that trading had commenced, or substantial start-up costs had been incurred, by the time that the primary respondent came to file its Notice of defence. In any event, we will consider the position both at this date and at the earlier date of the application in issue.

35. As of today’s date, the evidence is clear that the respondent has undertaken construction work and can be found to have operated under the name Certo Construction (London) Limited. Further, with its Notice of defence, the respondent filed a Company Profile Document which listed four projects undertaken by the respondent. This indicates that the primary respondent was trading under its name at the time of the Notice of defence. By the time Mr Wright filed his evidence, in April 2019, this document had been updated to record new projects undertaken. It seems likely that the primary respondent had been trading prior to the date of the application in issue. However, even if the evidence does not go that far it is sufficient to establish that the primary respondent was, at the very least, preparing to operate by the date of the application in issue (19 June 2018). A bank account was established by March 2018. Further, the first Company Profile Document states “a group of investors who have between them created a wholly paid up share capital investment of £333,333”. This had clearly taken place by March 2018, because the “balance sheet status” for that date is recorded as £333,333.

36. This defence can, of course, be overcome if the applicant could demonstrate that the main purpose of the registration of the name was to obtain money (or other consideration) from the applicant or to prevent the applicant from registering the name. However, there is no evidence that either of these circumstances apply in the present case. There is no evidence that the respondent has sought to obtain money or other consideration from the applicant and, particularly as the respondent has in fact been trading under the name, there is nothing to suggest that its main purpose in registering the name was to obstruct the applicant’s registration of it.

37. As we have already found in favour of the respondents in relation to their operating defence, we do not consider it necessary to go on to assess their second pleaded defence based upon section 69(4)(e) of the Act.

Outcome

38. The application to change the company name has failed because the applicant has failed to establish goodwill or reputation in the name Certo Construction Limited and, in any event, the respondents have a defence that it has been operating, or preparing to operate, under the name in issue.

Cost

39. The Tribunal awards costs from the published scale at paragraph 10 of the Tribunal’s Practice Direction. However, as the respondents have been unrepresented throughout, the following guidance contained in the Practice Direction applies: “those without representation will normally receive 50% of the above but will receive the full expenses”. With that in mind, we award the primary respondent costs on the following basis:

Preparing a statement and considering the applicant’s statement: £200

Preparing evidence and considering the applicant’s evidence: £250

Official fee for Notice of defence: £150

Official fee for Notice of giving evidence: £150

Total: £750

40. We therefore order Certo Construction Limited (registration no. 11032600) to pay CERTO CONSTRUCTION (LONDON) LIMITED (registration no. 11257470) the sum of £750 within 2 months of the expiry of the appeal period or, if there is an appeal, within 21 days of the final determination of this case if any appeal against this decision is unsuccessful.

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

Dated this 30 day of July 2020

Stephanie Wilson
Company Names Adjudicator

Allan James
Company Names Adjudicator

Mark King
Company Names Adjudicator