Decision

Decision on Meridian Heating and Cooling Limited

Published 24 August 2018

Companies Act 2006

Consolidated proceedings in the matter of application nos 1384 & 1385 by Meridian Cooling Ltd, for a change to the company names of Meridian Heating and Cooling Limited (10046734) and Meridian Heating and Cooling Solutions Limited (10048292)

1. Company no. 10046734 was incorporated on 7 March 2016 with the name Meridian Heating and Cooling Limited. Company no. 10048292 was incorporated on 8 March 2016 with the name Meridian Heating and Cooling Solutions Limited. I will refer to both these companies as the primary respondents.

2. The above names caused Meridian Cooling Ltd (“the applicant”) to make applications to this Tribunal, on 22 February 2017, under section 69 of the Companies Act 2006 (“the Act”).

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. At the request of the applicant, a director and secretary of the primary respondents (Ms Suzanne Hedges, now, following marriage, Ms Lovell) was joined to the proceedings under the provisions of section 69(3) of the Act. Ms Lovell was given notice of this request and an opportunity to comment or to object. The Tribunal received no comments or objections and she was subsequently joined to the proceedings as a co-respondent.

5. The applicant states that the name associated with it is MERIDIAN COOLING LTD. It states that it has traded under that name since 2005 in the Bournemouth and Poole area, initially in relation to the installation and servicing of air conditioning units, but subsequently in relation to a wider range of services. The applicant explains that it objects to the primary respondents’ names because if they traded under them this would cause confusion and diversion of trade.

6. The applicant indicates that it is claiming costs and states that it wrote to the primary respondents on 26 August 2016 in order to “avoid the necessity for this application”[s].

7. The primary respondents filed notices of defence, which included reliance on some of the specific defences provided for by section 69(4) of the Act. Rather than summarise the nature of the defence now, it is better to return to it below when we set out some more of the context to this dispute.

8. In these proceedings, the applicant is represented by Humphries Kirk LLP, the primary respondents by Allsop, Durn & Dearlove. Both sides filed evidence. The parties were asked if they wished for a decision to be made following a hearing or from the papers. Neither side chose to be heard, but both filed written submissions in lieu of attendance at a hearing. We make this decision after having carefully read all the papers filed by the parties.

Evidence

The witnesses

9. The primary respondents’ evidence was given by Ms Lovell. The applicant’s evidence was given by Mr Simon Purches, a director of the applicant. Another of the applicant’s directors, Shaun du Feu, also gave evidence, but his evidence is little different to that of Mr Purches. Rather than summarise the evidence on a piecemeal basis, we set out below what appears to us to be the main issues that are pertinent to the proceedings; we do, however, confirm that all of the evidence has been carefully considered in reaching our decision.

The early history of the applicant

10. It is clear, and undisputed, that the controlling mind of the applicant is Mr Purches. He began trading in 2005. He was acquainted with an individual named Kevin Lovell who, since 2003, had been operating a business under the name Meridian Ventilation Systems Limited. It was agreed between the two that Mr Purches could start to operate a business from the same property that Mr Lovell was operating from. Mr Purches says that this was for a mutually beneficial purpose (with Mr Lovell seeing a benefit in having an air conditioning business on site) and that any assistance given to him by Mr Lovell was limited. Ms Lovell states that Mr Purches was allowed onsite as a goodwill gesture and she describes a greater level of assistance given to him by Mr Lovell and his company than that described by Mr Purches.

11. Mr Purches states that he moved out of Mr Lovell’s premises as he secured his own premises; he states that there was no falling out with Mr Lovell. However, he does not explain why he choose a name with Meridian in it, a word which appeared in Mr Lovell’s company name. Ms Lovell states that Mr Purches was asked to leave because Mr Lovell had discovered attempts to entice his customers and staff away from him, in order for Mr Purches to set up his own business. Either way, Mr Purches clearly moved on, and he incorporated the applicant company on 14 September 2005 and carried on trading under that name.

Ongoing trade by the applicant

12. Mr Purches provides a number of pieces of evidence demonstrating the ongoing trade of the applicant. We do not consider it necessary to summarise that evidence in detail because Ms Lovell accepts in her evidence that the applicant has been trading since 2005 and does not dispute that it has acquired goodwill in its name. We do note from Mr Purches’ evidence various case studies, and website prints, which show that the services offered by the applicant, whilst primarily being in the field of air conditioning, also relate to the provision/installation of ventilation systems.

The registering of the primary respondents’ names

13. Ms Lovell explains that Sam Lovell, Kevin Lovell’s son, qualified as an air conditioning and refrigeration engineer. After gaining his qualification and experience in the field, he formed a company called Meridian Air Conditioning Limited along with his fiancée at the time, now his wife, Ms Lovell. Ms Lovell does not say when this was, but from the public records of Companies House, the company was incorporated on 12 August 2013. Kevin Lovell was appointed a director of this company. It is explained that it was only natural for the company name to include the word Meridian given that Kevin Lovell’s company had already been established in the field for over 14 years; this is described as taking the family businesses’ name, but specifying it more towards air conditioning. This is, of course, not one of the company names the subject of this dispute, but Ms Lovell goes on to discuss those names as set out below.

14. Ms Lovell states that the primary respondents’ names were chosen to “deny other persons the ability to use that name in order to confuse them with the company [Meridian Ventilation Systems Limited or Meridian Air Conditioning Limited – the Lovells’ companies] and therefore to affect their goodwill and custom”. Ms Lovell states a number of times that the primary respondents are dormant companies and that they have never traded and never will. She states that there is no malice or desire to defraud as it is not trading or advertising.

15. Mr Purches states that the primary respondents’ must have been fully aware of the applicant’s name yet chose names that were in close proximity to it and must be fully aware of the likelihood of misleading the public.

Confusion

16. Mr Purches states that there has been actual confusion with the applicant and Meridian Air Conditioning Limited. He identifies four companies who were confused and states that several thought that a new shop opened by Meridian Air Conditioning Limited was actually the applicant’s shop. He states that he has also been contacted by third parties following internet searches being conducted who have been confused by the similar names.

17. Ms Lovell states that what is referred to above is not relevant because the confusion was not with the primary respondents. She states that there is bound to be some confusion because of the prevalence of companies who make use of the word MERIDIAN in their names.

18. That completes our review of the evidence to the extent we consider necessary.

Decision

19. If the primary respondent defends the application, as here, 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 suggesting a connection between the company and the applicant. If this burden is fulfilled, it is then necessary to consider if the primary respondents can rely upon defences under section 69(4) of the Act. The relevant date is the date on which the applications for a change of name were made which, in this case, was 22 February 2017.

20. The applicant must show that it had a goodwill or reputation at this date associated with the name relied upon i.e. MERIDIAN COOLING LTD.

The applicant’s goodwill/reputation

21. 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 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.

22. We will deal with this briefly. This is because, as noted earlier, the primary respondents have accepted that the applicant has a goodwill associated with its name. From the evidence provided, that goodwill is in the field of air conditioning, but there is also some evidence that ancillary services have been provided in the field of ventilation.

Similarity of names

23. The other initial burden facing the applicant is that the company names must be sufficiently similar to suggest a connection between the companies and the applicant. The names are as follows:

Meridian Heating and Cooling Limited

and

Meridian Heating and Cooling Solutions Limited

v

Meridian Cooling Ltd

24. In its written submissions, the primary respondents refer to the many other Meridian companies that exist on the companies register, and, also, the fact that the applicant itself chose a name that was similar to Kevin Lovell’s company name (Meridian Ventilation Systems Limited) when it could have chosen any name.

25. Whilst we note the above, we do not consider the circumstances in which the applicant’s name was adopted to be relevant in determining whether the names the subject of this dispute are sufficiently similar. In our view, it is an inevitable conclusion, irrespective of any other Meridian companies that may exist, that the respective names are sufficiently similar to suggest a connection. This is factored not just upon the common presence of Meridian, but also the similarity between the, admittedly descriptive, names: Cooling Ltd, Heating and Cooling Limited and Heating and Cooling Solutions Limited.

Defences

26. Having concluded that the applicant has goodwill in its name, and that that names are to be regarded as sufficiently similar to the primary respondents’ names, the application will succeed unless the primary respondents can avail themselves of any of the statutory defences under section 69(4) of the Act (these are set out at the beginning of this decision). In this regard, the burden is on the primary respondents “to show” that they are entitled to rely upon any of the defences mentioned.

27. The primary respondents’ have specifically relied on the good faith defence and, also, the no adverse effect defence. The latter defence was the result of an amendment to its pleadings following an indication by the Tribunal that the initially pleaded defence of company dormancy was not sustainable (although the primary respondents still consider that it is). There is no suggestion that the defences under sections 69(4)(a) or (4)(c) apply, so we make no further reference to them. We will, though, touch on the other statutory defences.

Section 69(4)(b)

28. This reads as follows:

(b) that the company -

(i) is operating under the name, or

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

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

29. On its own admission, the primary respondents have accepted that they are not operating under the name nor proposing to do so. The defence was (before amendment), instead, based on dormancy. However, as can be seen from the wording of the above provision, the defence is clear in its application, that it was “formally operating under the name” but is “now dormant”. The primary respondents argue that the provision is simply about dormancy and should therefore apply to companies that have never traded. However, that is not what the provision states and it is, in our view, a prerequisite to this defence that the company has formally operated. The defence is dismissed.

Section 69(4)(e)

30. The defence applies if “the interests of the applicant are not adversely affected to any significant extent”. The primary respondents’ submissions focus upon the absence of any connection (as per their earlier submissions) and that there is no evidence showing any potential adverse effect. We note, also, the primary respondents’ statement that they do not intend to operate under the name.

31. In relation to the connection point and the absence of evidence (of adverse effect), we disagree with the primary respondents’ position. As the applicant submits, if the primary respondents did start to trade then business could well be diverted from it. This, in itself, is a potential significant adverse effect. Of course, the fact that the company is dormant is borne in mind, but despite the primary respondents’ statement that they will never trade under the names, we are not satisfied that this should constitute a defence under the provisions because a company cannot fetter itself in this way – with changes of director, or changes of mind, it cannot be ruled out that trading will not take place. The defence is dismissed.

Section 69(4)(d) – was the name adopted in good faith?

32. 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.

33. In (1) Barlow Clowes International Ltd. (in liquidation) (2) Nigel James Hamilton and (3) Michael Anthony Jordon v (1) Eurotrust International Limited (2) Peter Stephen William Henwood and (3) Andrew George Sebastian [2005] UKPC 37, the Privy Council considered the ambiguity in the Twinsectra Ltd v Yardley [2002] 2 AC 164 judgment. The former case clarified that there was a combined test for considering the behaviour of a party: what the party knew at the time of a transaction and how that party’s action would be viewed by applying normally acceptable standards of honest conduct.

34. We do not consider it necessary to determine the rights or wrongs in Mr Purches’ decision to adopt the name Meridian Cooling Ltd. This is because the position, from 2005 onwards, was that Meridian Ventilation Systems Limited and Meridian Cooling Ltd have lived alongside each other in what, on the face of it, is a closely allied area of trade. Despite what the parties have said about customers becoming used to differentiating between those businesses, we would be surprised if some consumers had not been confused. That said, the above named parties, from what we can see, appear to have tolerated each other’s use of those names in trade. That was the status quo.

35. However, matters have now changed. First, Mr Sam Lovell, together with his fiancée (now wife) Ms Lovell, set up Meridian Air Conditioning Limited in 2013. We understand why the name Meridian was chosen (as his father had used it for many years) and that the descriptive component represents his trained area of specialism. That said, the status quo that we have described may well have started to become unsettled as a result of this. Whilst the evidence is not detailed, Mr Purches makes reference to instances where confusion has arisen.

36. Matters then move forward to the incorporation of the primary respondents, under names which are closer again (due to the presence of cooling in them) to that of the applicant. It is undoubtedly the case that the officers of the primary respondents must have known of the name of the applicant’s company. They also ought to have known that the potential for confusion would increase if those companies were to ever trade. Ms Lovell states that the companies were incorporated for, essentially, defensive purposes, to stop others from trading under those names who may otherwise benefit from the goodwill established by Kevin Lovell’s company. However, on the face of it, any diversion of trade would be away from the applicant given that its name is closer to the company names. We also find it difficult to comprehend who such defensive tactics were aimed at, beyond Mr Purches and his company.

37. The primary respondents have stated a number of times in the papers before us that the applicant ought to establish bad faith. That is not the test. The onus is on the primary respondents to establish good faith. In the absence of any real evidence demonstrating a need to protect, defensively, the names that it registered, and in circumstances where the names registered were closer to a competitor, with the consequent further unsettling of the status quo, we are not satisfied that the good faith defence has been established. We therefore reject the defence.

Outcome

38. We have dismissed any possible defences. As a consequence, the applications succeed.

39. Therefore, in accordance with section 73(1) of the Act, we make the following order:

(a) Meridian Heating and Cooling Limited and Meridian Heating and Cooling Solutions Limited shall change their names within one month of the date of this order to ones that are not offending names^{[footnote 1]} ;

(b) Meridian Heating and Cooling Limited, Meridian Heating and Cooling Solutions Limited, and Ms Suzanne Lovell (neé Hedges) each shall:

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

(ii) not to cause or permit any steps to be taken calculated to result in other companies being registered with names that are offending names.

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 changes are made within one month of the date of this order, we will determine new company names as per section 73(4) of the Act and will give notice of those changes under section 73(5) of the Act.

42. All respondents, including Ms Lovell, have a legal duty under Section 73(1)(b)(ii) of the Act not to cause or permit any steps to be taken calculated to result in other companies being registered with offending names; this includes the current companies. 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 towards its costs, based upon the scale of costs published in the Practice Direction, but bearing in mind that the cases were consolidated. We award costs on the following basis:

Fee for application: £400 x 2

Preparing statements and considering the primary respondents’ statements: £600

Preparing evidence and commenting on respondent’s evidence: £750

Fee for filing evidence: £150 x 2

Written submissions: £400

Total: £2850

44. We order Meridian Heating and Cooling Limited, Meridian Heating and Cooling Solutions Limited, and Ms Suzanne Lovell (neé Hedges), being jointly and severally liable, to pay Meridian Cooling Ltd the sum of £2850 within fourteen days of the expiry of the appeal period, or within fourteen days of the final determination of this case if any appeal against this decision is unsuccessful. 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 against this decision to order a change of name must be given within one month of the date of this order. Appeal is to the High Court in England, Wales and Northern Ireland and to the Court of Session in Scotland.

46. The company adjudicator must be advised if an appeal is lodged, so that implementation of the order is suspended.

Dated 21 August 2018

Oliver Morris
Company Names Adjudicator

Judi Pike
Company Names Adjudicator

Christopher Bowen
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. ↩