Decision

Decision on Lend and Invest Limited

Published 31 October 2019

Companies Act 2006

In the matter of application No. 1691 by LendInvest Limited

For a change of the company name of registration No 11167210

Background, claims and defences

1. LEND AND INVEST LIMITED (hereafter ‘the primary respondent’) was incorporated on 24 January 2018.

2. On 20 February 2018, LendInvest Limited (hereafter ‘the applicant’) applied for an Order under section 69 of the Companies Act 2006 (‘the Act’) for the company name LEND AND INVEST LIMITED to be changed.

3. 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 these 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.”

4. The applicant requested that the primary respondent’s director, Mr Naeem Tabassum, be joined to the proceedings under the provisions of section 69(3) of the Act. Mr Tabassum was given notice of this request and provided with an opportunity to comment or to object. No response was received from Mr Tabassum and he was joined to the proceedings as a co-respondent on 25 April 2018.

5. The applicant claims that the name associated with it is LendInvest, in relation to “mortgage lending”, “invest management”, “financial intermediation” and “provision of an online investment platform”.

6. In its Form CNA1 statement of claim the applicant claims that it has traded since its incorporation on 17 July 2012. It claims to have since become one of the UK’s largest non-bank mortgage lenders. The applicant states that LendInvest Limited is the direct or indirect 100% shareholder of 16 other UK companies whose name include the word “LendInvest”, with the applicant being the ultimate holding company of the group.

7. The applicant claims to have more than 19,000 individual users registered on its online investment platform which receives around 37,000 individual visits per month. It claims that to date it has invested £1.2billion in loans, helping to bring 4,000 new or improved homes into the UK market. In terms of turnover it claims that in its annual report, up until 31 March 2017, it had revenue of £40m.

8. The applicant argues that the primary respondent’s name is sufficiently similar to its name and is, therefore, likely to mislead by suggesting a connection between them. The applicant requests that the Tribunal make an order under section 73 of the Act for the name to be changed which does not offend ^{[footnote 1]}.

9. The respondent filed a counterstatement (Form CNA2) denying the claims made. Section 2 of the counterstatement asks which of the applicant’s allegations the primary respondent admits or denies. The primary respondent’s answer was states that, “LendInvest Limited is a well established mortgage provider and online investment platform with billions of assets under its management. In contrast, “LEND AND INVEST LIMITED” is a small start-up company that has not venue launched yet.”

10. Section 3 of the counterstatement specifically asks the respondent to set out any defences upon which it wishes to rely upon. It ticked the boxes for the following defences:

- The primary respondent is either, 1) operating under the name ^{[footnote 2]}, 2) proposing to do so and has incurred substantial start-up costs in preparation ^{[footnote 3]}, or 3) was formerly operating under the name and is now dormant ^{[footnote 4]};

- That its name was registered in the ordinary course of a company formation business and the company available for sale to the applicant on the standard terms of that business ^{[footnote 5]};

- That its name was adopted in good faith ^{[footnote 6]};

- That the interests of the applicant are not adversely affected to any significant extent ^{[footnote 7]}.

Evidence

11. The applicant’s evidence consists of a witness statement and 6 exhibits from Mr Richard Michael Woods who is its acting General Counsel.

12. Mr Woods reiterates the statements made in the statement of claim regarding the number of individual users and visits per month. He also refers to three awards that the applicant has received but it is not clear whether these are UK related awards.

13. Mr Woods’s witness statement makes specific reference to Mr Tabassum being an ex-employee of the applicant. To evidence this, exhibit RMW1 to Mr Woods’s witness statement is a letter dated 8 February 2018 from the applicant to Mr Tabassum. It is noted that the letter states: “Separately, we remind you that your contract of employment with LendInvest Limited, dated 30 June 2015, contains confidentiality provisions which apply indefinitely following the termination of your employment with LendInvest Limited.” Exhibit RMW2 consists of Mr Tabassum’s reply dated 20 February 2018. The letter states that that “You have reminded me the according to my contract with LendInvest Limited, dated 30 June 2015, I am subject to confidentiality provisions which are applicable indefinitely. I have served all the terms, I agreed at the time of ending my work with LendInvest Limited. During my “Garden Leave” and six months following my “Notice Period” I have not worked for any direct or indirect competitors of LendInvest Limited.” In Mr Tabassum’s evidence he makes reference to the claim that he is an ex-employee but does not deny this. In fact, attached to his counterstatement is a heavily redacted copy of the applicant’s letter of 20 February 2018.

14. The respondent filed a witness statement by Mr Tabassum with no accompanying exhibits. The witness statement mainly consists of submissions which we shall not summarise here. However, we confirm that we have read the witness statement and take it’s content into account.

Decision

Goodwill

15. 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 respondent’s company name to suggest a connection between the company and the applicant. Only if this burden is fulfilled is it then necessary to consider if the respondent can rely upon defences under section 69(4) of the Act. The relevant date is the date of incorporation of the contested company which, in this case, is 24 January 2018. The applicant must show that it had a relevant goodwill or reputation at this date.

16. Section 69(7) of the Act defines goodwill as a “reputation of any description”. Consequently, in the terms of the Act, it is not limited to Lord Macnaghten’s classic definition of goodwill in IRC v Muller & Co’s Margerine 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.

17. As previously stated the primary respondent refers to the applicant as having “billions of assets ^{[footnote 8]}” under its management. It also seeks to rely upon the vast difference in company sizes as being a defence to its company registration (which I shall address later). Further, Mr Tabassum, the co-respondent, was an employee of the applicant prior to being placed on gardening leave ^{[footnote 9]}. All of this indicates that there is no dispute that the applicant is an operating business which has acquired goodwill under the name LendInvest.

18. In view of the above, we find that the applicant has the requisite goodwill at the date of incorporation of the contested company name.

Does the respondent’s company name suggest a connection between it and the applicant?

19. The respondent’s name is LEND AND INVEST LIMITED. The name associated with the applicant is ‘LendInvest’. Whilst the applicant’s name is conjoined it is made up of two well-known English words which would naturally be dissected to read as such, especially since the first letter of each word is capitalised. The only other difference between the names is the inclusion of the words “AND” and “LIMITED” in the respondent’s name. The absence/presence of the word ‘AND’ makes no difference to the name being similar since it is merely used to connect two words. The word “LIMITED” simply indicates the corporate status of the company, something which is necessary in most company names. We consider that this difference is to be ignored for the purpose of the comparison ^{[footnote 10]} and that the names are sufficiently similar.

20. Given our findings in respect of goodwill and that a connection between the company names is likely to be made, the applicant has cleared the first two burdens placed upon it. That is the end of the matter unless the respondent can avail itself of one or more of the defences. This is a matter to which we now turn.

Defences

s.69(4)(b) that the company is either (i) operating under the name, (ii) 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.

21. The primary respondent has not made submissions or filed any evidence in relation to points (iii) above. Therefore, it shall be taken that it no longer seeks to rely upon this defence.

22. The primary respondent refers to the applicant’s reference that it has not made any company account filings with Companies House and that the share capital is £1. It states that, at the time of filing its witness statement, it had no obligation or responsibility to share its business plans with the applicant. Moreover, it states that it will submit its annual accounts, confirmation statement and tax return when it is legally obliged to do so and not at the behest of the applicant.

23. It goes on to state that it, “has two different websites and its online presence will be available at www.lendinvest.co.uk and www.lendinvest.com” and the primary respondent will make both websites live once the “Application with the Tribunal is rejected.” ^{[footnote 11]}

24. The primary respondent also states that it has incurred substantial start-up costs in staff, technology, legal and professional costs plus “personal time and significant efforts in the strategic planning of the First Respondent’s business activities” ^{[footnote 12]}. More specifically, it refers to the applicant starting its operation with £200 share capital.

25. The existence of two dormant websites are not evidence of operating under the name. They do not demonstrate that the company name was being used and therefore they do not assist the primary respondent. Its reliance on the operating defence is rejected.

26. With regard to its proposal to operate and Mr Tabassum’s assertion that the primary respondent has incurred substantial start-up costs, this defence is also rejected. There is because there is no specific particularisation of the claimed start-up costs and no corroborating evidence. The highpoint of the primary respondent’s argument is the £200 share capital that Mr Tabassum refers to. However, share capital is part of the capital of a company that comes from the issuing of shares. Moreover, the existence of relatively low share capital does not sufficiently demonstrate that it is proposing to operate and has incurred substantial start-up costs.

69(4)(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.

27. Mr Tabassum sets out his reliance of this defence as follows ^{[footnote 13]}:

The presence of the First Respondent under the name of “Lend and Invest Limited” is legal and the name “Lend and Invest Limited” has been created in the ordinary manners which are necessary and explained in the Companies Act and guidelines issued by the Companies House.

28. This defence must fail for two reasons. Firstly, there is no evidence to show that the company was registered in the ordinary course of a company formation business. Secondly, there is no evidence to show that the company was available for sale to the applicant on the standard terms of that business. This defence is dismissed.

29. We should also add that it is not a defence that the name was available. Companies House registers names which are similar, provided that they do not contravene the “too like” provisions, which are narrow. If this was a proper defence then it would serve to immunise all potential company names against complaint. Therefore, the mere fact that the contested name was registered is irrelevant.

s.69(d) – that the primary respondent’s name was adopted in good faith

30. In (1) Adnan Shaaban Abou-Rahmah (2) Khalid Al-Fulaij & Sons General Trading & Contracting Co v (1) Al-Haji Abdul Kadir Abacha (2) Qumar Bello (3) Aboubakar Mohammed Maiga (4) City Express Bank of Lagos (5) Profile Chemical Limited [2006] EWCA Civ 1492, Rix LJ commented upon the concept of good faith:

48 The content of this requirement of good faith, or what Lord Goff in Lipkin Gorman had expressed by reference to it being “inequitable” for the defendant to be made to repay, was considered further in Niru Battery. There the defendant bank relied on change of position where its manager had authorised payment out in questionable circumstances, where he had good reason to believe that the inwards payment had been made under a mistake. The trial judge had (a) acquitted the manager of dishonesty in the Twinsectra or Barlow Clowes sense on a claim of knowing assistance in breach of trust, but (b) concluded that the defence of change of position had failed. On appeal the defendant bank said that, in the absence of dishonesty, its change of position defence should have succeeded. After a consideration of numerous authorities, this court disagreed and adopted the trial judge’s broader test, cited above. Clarke LJ quoted with approval (at paras 164/5) the following passages in Moore-Bick J’s judgment:

I do not think that it is desirable to attempt to define the limits of good faith; it is a broad concept, the definition of which, in so far as it is capable of definition at all, will have to be worked out through the cases. In my view it is capable of embracing a failure to act in a commercially acceptable way and sharp practice of a kind that falls short of outright dishonesty as well as dishonesty itself.

31. It is necessary to consider (a) what the party knew at the time of a transaction, and (b) how that party’s action would be viewed by applying normally acceptable standards of honest conduct.

32. The respondent claims that whilst they seek to rely upon the “good faith” defence, “the Applicant has no legal right to demand any information or explanation from them to prove to the Applicant that the name “Lend and Invest Limited” was adopted in good faith or not.”. It goes on to state that :

The name “Lend and Invest Limited” is based on two commonly used English words “Lend” and “Invest”. These two words represent the two important business activities of the financial markets (1) “Lend” that defines a financial activity which allows a person or an organisation puts money into financial activities, schemes, shares, properties or a commercial venture with expectation of achieving a profit. ^{[footnote 14]}

33. The applicant argues that the name was adopted to create a connection between the companies, particularly since the co-respondent was formerly the Financial Controller of the applicant, a position he no longer held when the contested company name was incorporated.

34. The primary respondent states that the conjoined words ‘Lend and Invest’ are non-distinctive and therefore consumers would not be confused when they encounter the same words descriptive and customarily used words Lend and Invest. Therefore, they should be free to be used by anyone.

35. The burden is on the primary respondent to make good this defence with evidence. The respondents have not demonstrated that they did not know that the name LendInvest was associated with the applicant when the contested name was chose. The co-respondent, Mr Tabassum, formerly worked for the applicant and so they plainly did know. What needs to be shown is why the company name was adopted by the primary respondent. The descriptiveness of a name in relation to the kind of business involved could be relevant, in principle, to whether the name was adopted in good faith. However, where the name was known to closely resemble that of an existing business in the same field with an established reputation, the mere fact that the contested name is descriptive does not establish that it was adopted in good faith.

Accordingly, no evidence or prima facie basis for relying upon this defence has been lodged and therefore it is rejected.

s.69(4)(e) -The interests of the applicant are not adversely affected to any significant extent.

36. The primary respondent states that the applicant “has made significant achievements in the past six months, which suggest that the use of the name “Lend and Invest Limited” has not caused any negatively[sic] impact on the operating activities of the Applicant. In its most recent Annual Report the Applicant reported that it has raised 161m from two Funds, 480m from 6 banks and other institutions and 150m from London Stock Exchange and the Applicant’s online platform.”

37. To rely on a ‘no adverse effect’ defence it is for the respondent to show, in evidence, what it has done or intends to do. The respondent has not provided any evidence which is directed at this defence and so it must fall at the first hurdle.

38. Notwithstanding the above, the applicant argues that since the co-respondent is the former Financial Controller with access to a number of the applicant’s clients and suppliers then once it had begun operating there could be an adverse effect on its business. This strongly points to there being an adverse effect rather than not. For all of the reasons indicated, the ‘no adverse effect’ defence under section 69(4)(e) of the Act is rejected.

Conclusion

39. The application is successful. In accordance with section 73(1) of the Act, the following order is made:

(a) LEND AND INVEST LIMITED shall change its name within one month of the date of this order to one that is not an offending name;

(b) LEND AND INVEST LIMITED and Mr Naeem Tabassum shall:

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

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

40. In accordance with section 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.

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

42. 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

43. The applicant has been successful and is entitled to a contribution to its costs, according to the scale in the published Practice Direction. The applicant’s evidence and forms have been submitted by its “Acting General Counsel” who is an employee of the company. Therefore, we do not take this to be external professional representation. We therefore award the applicant the following costs, which have been reduced by 50% to reflect the fact that the applicant has not had to pay for professional representation and to ensure that the costs awarded do not exceed those actually incurred in bringing this application. The 50% reduction does not apply to the official fees that the applicant has incurred:

Fee for filing the application: £400 Fee for filing evidence: £150

Preparing a statement and considering the counterstatement: £400 Preparing evidence: £400 Written submissions: £200 Total less 50%: £1050

44. LEND AND INVEST LIMITED and Mr Naeem Tabassum are ordered to pay the sum of £1050 within 21 days of the expiry of the appeal period, or within 21 days of the final determination of this case if any appeal against this decision is unsuccessful. The respondents are jointly and severally liable for these costs. 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.

45. 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 25th October 2019

Mark King
Company Names Adjudicator

Al Skilton
Company Names Adjudicator

Allan James
Company Names Adjudicator

1. Section 73(2) of the Act provides that 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. ↩

2. Section 69(4)(b)(i) of the Act ↩

3. 69(4)(b)(ii) ↩

4. 69(4)(b)(iii) ↩

5. 69(4)(c) ↩

6. 69(d) ↩

7. 69(e) ↩

8. Section 2 of the counterstatement ↩

9. See paragraph 13 above which sets out the evidential context of Mr Tabassum being an ex-employee ↩

10. See, for example, MB Inspection Ltd v Hi-Rope Ltd [2010] RPC 18 at paragraph 48 ↩

11. Page 3 of Mr Tabassum’s witness statement of 12 February 2019. ↩

12. Ditto ↩

13. Ditto ↩

14. Page 4 of Mr Tabassum’s witness statement ↩