Decision

Decision on IBMS Group Limited

Updated 17 August 2018

Order under the Companies Act 2006

In the matter of application No. 1387 by International Business Machines Corporation

For a change of company name of registration No. 10507507

Background

1. This is a decision on costs against which there is, under section 74 of the Companies Act 2006 (“the Act”), no right of appeal.

2. The company name IBMS Group Limited (“the primary respondent”) has been registered since 2 December 2016 under number 10507507. By an application filed on 17 February 2017, International Business Machines Corporation (“the applicant”) applied for a change of name of this registration under the provisions of section 69(1) of the Act. The application form stated that the applicant had contacted the primary respondent on 4 January 2017 at its registered address and that the applicant’s letter had been returned.

3. The Company Names Tribunal served the application on the primary respondent at its registered office, Kemp House, 160 City Road, London EC1V 2NX, on 3 March 2017, in accordance with rule 3(2).

4. The copy of the application was sent by Royal Mail special delivery. It was returned, undelivered. A copy of the application was then sent by ordinary post. Following correspondence between the primary respondent and the Tribunal, which it is not necessary to document in detail, it transpired that the Kemp House address was out of date. The Kemp House address belonged to the company formation agents. The primary respondent updated its registered address at Companies House on 12 April 2017 and was allowed to defend its company name registration against the applicant’s complaint.

5. The primary respondent’s counterstatement, filed on 3 May 2017, contained the following:

“…the name “IBMS” was chosen by its director, Steven Sharratt, to honour his late father, Ian Bruce Mark Sharratt…”.

A copy of the death certificate for Mr Sharratt’s father was attached to the counterstatement, showing these to be the names of the late Mr Sharratt.

6. The counterstatement went on to state:

(k) The Respondent was formed as a holding company to develop commercial renewable energy projects, beginning with the design and build of an anaerobic digestion (“AD”) plant in Surrey, for which purpose a specil project vehicle called DBE Energy Limited was incorporated on 15 December 2016 and statement of capital showing IBMS Group Limited as the only member and Mr Sharratt as the sole director are attached.

(l) Since then, the Respondent has entered into funding and joint venture agreements in respect of the Surrey plant with two other parties, as a result of which DBE Energy Limited is now owned jointly by a new company (in which IBMS Group Limited holds 50% of the shares) and an investment company. DBE Energy Limited is due to start building within the next few weeks an AD facility at a large eco-development to process food waste and convert it into bio-methane for energy.

(m) The relevant property and construction agreements are substantially agreed and due to be completed within the next couple of weeks. Pending completion, details of the parties to and location of the project are confidential and commercially sensitive. Redacted copies of the project documents (which are copious) can be provided to the Tribunal if required.

(n) This is clearly a very different field of business from the one in which the Applicant operates and in which it claims to have established goodwill and reputation in the name “IBM”. Further, IBMS Group Limited’s field of business is even more remote, being limited to the holding of shares in and the supply of staff and operational management services to DBE Energy Limited and, it is hoped, subsequent special project vehicles in the AD field.

(1) The Respondent has been operating under the name “IBMS Group Limited” since December 2016 and detailed in paragraph 1, sub-paragraphs (4) (k) - (m) above. It has incurred substantial costs and liabilities in starting up, estimated to amount to more than £30,000 to date and are continuing to be incurred on a daily basis.

(2) As detailed in paragraph 1, sub-paragraph (4) above, the name “IBMS Group Limited” was clearly adopted by the Respondent in good faith. The initials “IBMS” are those of its founding director’s late father, Ian Bruce Mark Sharratt. It never crossed Mr Sharratt’s mind that the use of those initials could be linked with the Applicant in any way.

(3) For the reasons detailed in paragraph 1, sub-paragraph (4) above, the interests of the Applicant are not adversely affected by the Respondent’s use of the name “IBMS Group Limited” to any significant extent or not at all.

(4) The Applicant has not made any allegation under section 69 (5) of the Companies Act 2006. It is confirmed, for the avoidance of any doubt, that in registering the name “IBMS Group Limited”, neither the Respondent nor Mr Sharratt intended to seek any payment or other consideration from the Applicant or to prevent the Applicant from registering the name or otherwise to exploit the Applicant or its subsidiaries in any way.

7. Given the information in the counterstatement regarding the primary respondent’s operations and the inspiration for the name, the primary respondent was invited to file its evidence first. This is because, under section 69(4)(b)(i) of the Act, a company has a defence to an application under section 69 if it is operating (trading) under the name and the application will fail unless the applicant can show, under section 69(5) of the Act, that the main purpose of the primary respondent (and/or the co-respondent, Mr Sharratt) in registering the name was to obtain money (or other consideration) from the applicant or prevent it from registering the name.

8. The primary respondent’s evidence was filed in February. The applicant sent a letter to the Tribunal, dated 10 May 2018, in which it said:

“Having carefully considered all the evidence provided by Mr Sharratt, we have decided to withdraw our complaint. We would like it to be noted that Mr Sharratt incorporated his company on December 2nd, 2016 and that we wrote to him only a month later on January 4th, 2017. This letter, which was addressed to the company’s registered address, was returned to us undelivered. It was because we were unable to contact Mr Sharratt that we then filed a CNA1 form with the Company Names Tribunal (CNT) on February 17th, 2017. Given that Mr Sharratt was unreachable at the registered address for his company, IBM believes that it is appropriate for each party to bear their own costs in this case.”

9. The primary respondent wrote to the Tribunal, on 16 May 2018, disagreeing with the applicant’s view on costs. The applicant responded on 23 May 2018, maintaining its position. The Tribunal issued a preliminary view, on 31 May 2018, that each side should bear its own costs. The primary respondent objected to the preliminary view on 12 June 2018, which resulted in a case management conference (“CMC”) with me on 19 July 2018, by telephone. Ms Nicki Pyecroft represented the applicant, and Mrs Sarah Sharratt represented the primary respondent (and the co-respondent, Mr Steve Sharratt).

Decision

10. Rule 11 of the of the Company Names Adjudicator Rules 2008 states:

“The adjudicator may, at any stage in any proceedings before him under the Act, award to any party by order such costs (in Scotland, expenses) as he considers reasonable, and direct how and by what parties they are to be paid.”

11. Mrs Sharratt’s submissions were largely based upon the contents of the primary respondent’s letter of 16 May 2018. The letter said that as soon as Mr Sharratt learned of the application, he telephoned the applicant:

“ During a conversation with the Applicant’s representative, Ms Pyecroft, on 24 April, Mr Sharratt explained why we had only just been put on notice of the complaint and the reasons why we would be defending it. He gave the Applicant the opportunity to withdraw the complaint or to discuss how it might be resolved before further costs were incurred. The Applicant declined to engage with him and chose to pursue the proceedings regardless. Ms Pyecroft informed Mr Sharratt that it was the Applicant’s policy always to issue proceedings and never to withdraw.”

12. I asked Ms Pyecroft, at the CMC, whether this was an accurate statement from her point of view. She told me that the applicant takes its proceedings very seriously and wants to be in possession of all the facts before it makes a decision.

13. I agree with Ms Pyecroft that the applicant was not obliged to send notice that it would make the application to anywhere other than the address for the primary respondent which is recorded on the register at Companies House. The notice that was sent was a request that the primary respondent change its name. It seems to me that even if the correct, current address had been used, it would have made no difference to the applicant if the primary respondent had received notice prior to the filing of the application because a) Ms Pyecroft did not deny that the applicant’s policy is always to issue proceedings and b) if the primary respondent had been able to contact the applicant, as it did as soon as it knew of the proceedings, the applicant would have pressed ahead because once Mr Sharratt had tried to engage with the applicant and set out the potential defences to the application, that still did not result in any dialogue. Nor was there any dialogue once the applicant had seen the counterstatement, including the death certificate showing the names of Mr Sharratt’s late father.

14. Mrs Sharratt’s letter of 16 May 2018 says:

“…the Applicant failed to send any communication to Mr Sharratt at the personal service address on the Respondent’s register at Companies House. Had the Applicant been serious about trying to contact Mr Sharratt before incurring the costs of these proceedings, it would have sent a letter to him at his registered address…”.

15. Whilst the applicant was not obliged to send its pre-action notice letter of 4 January 2017 to anywhere except the primary respondent’s registered address, I agree with Mrs Sharratt that all the signs indicate that the applicant was not interested in resolving the issue by any means other than pursuing an application to the Tribunal for a change of name. I say this because the applicant refused to engage in dialogue when Mr Sharratt tried to discuss the issue, setting out why the primary respondent would defend and why it considered it had grounds to defend. This remained the case after the counterstatement was filed. The applicant’s withdrawal, three months after the primary respondent filed its evidence, was as a result of seeing the primary respondent’s evidence, as stated in the applicant’s letter of 10 May 2018. This strongly suggests that the applicant considered that the primary respondent was entitled to rely upon at least one of its pleaded defences and that the applicant could not show that the provisions of section 69(5) of the Act, nevertheless, applied.

16. In my view, the primary respondent is entitled to a contribution towards the costs of defending the application and filing evidence because the applicant has withdrawn the application after having seen the evidence. The primary respondent has, therefore, been the successful party. If the applicant had engaged in dialogue, the case need not have got as far as it did. I note here that the pre-action notice was not received owing to the primary respondent’s mistake in recording its change of address promptly. This is unfortunate because the Tribunal expects that a prospective applicant would have sent the primary respondent a letter before action and properly considered any response prior to filing an application. The applicant could not properly consider any response before filing the application because there was no response. However, if the address had been current, there is no doubt in my mind that Mr Sharratt would have made immediate contact with the applicant, as he did in April, immediately upon receiving the CNA1 application form. If the applicant does have a policy of always issuing proceedings, a policy which was not denied when I asked Ms Pyecroft, it is unhelpful and potentially damaging to businesses which have then to devote resources to fighting an application which could have been avoided. The Tribunal is not in existence for speculative applications.

17. Taking the various factors into consideration, I conclude that the primary respondent is entitled to a cost award which is not cancelled out by its failure to have a current address recorded on the register on 4 January 2017. Balancing this fact, and the fact that the primary respondent was not professionally represented and so would not have incurred professional fees, I award the following costs to the primary respondent, which are a contribution, as set out in the Practice Direction, at section 10.1:

Fee for filing the counterstatement: £150

Fee for filing evidence £150

Preparing evidence £700

Total £1000

18. I have made no award for considering the application and preparing a defence because of the primary respondent’s failure to have a current address recorded on the register at the time of the pre-action letter and the service of the CNA1 upon the primary respondent, which took place under rule 3(2). This was the responsibility of the primary respondent. Likewise, I make no award for attending the case management conference as it was called because the Tribunal had given a preliminary view with which the primary respondent disagreed, rather than, for example, the applicant contesting a preliminary view in the primary respondent’s favour.

19. I order International Business Machines Corporation to pay to IBMS Group Limited the sum of £1000 within fourteen days of the date of this decision. As per section 74 of the Act, there is no right of appeal against this decision.

Dated 31 July 2018

Judi Pike
Company Names Adjudicator