Decision

Decision on M&S Supply Ltd

Published 30 March 2022

Companies Act 2006

Decision on costs in the matter of the undefended application No. 3638 by Marks and Spencer P.L.C. for a change to the company name of M&S SUPPLY LTD, a company incorporated under number 13491601

1. This written decision confirms the decision on costs that I gave orally at the hearing held via video conference on 28 February 2022.

2. M&S SUPPLY LTD was incorporated on 3 July 2021 and registered at Companies House under Company No. 13491601 (“the Respondent”).

3. On 27 September 2021 Marks and Spencer P.L.C. (“the Applicant”), acting through its legal representatives Stobbs (IP) Limited (“the attorneys”) filed a Form CNA 1 in application to the Company Names Tribunal for an Order under section 69 of the Companies Act 2006 (‘the Act’) to change the company name of the Respondent. From the CNA 1, I note the following points:

• the CNA 1 set out the Applicant’s goodwill and reputation under the name M&S with which the Applicant is associated and included four annexes showing use of the name in the UK, and showing related trade mark registrations and unregistered trade mark rights
  
  
• the CNA 1 included a claim for costs (Question 17). Question 7 asked whether the Applicant had warned the Primary Respondent that the Applicant would start legal proceedings against it that if it did not change its name. The response stated that correspondence was sent on 16 August 2021 by 1st Class post to the registered address of the Primary Respondent
  
  
• it requested that Shahriar Ghahari be joined to the proceedings

4. On 8 November 2021, the tribunal sent the filed form CNA 1 application to the Respondent at its registered address. The official letter was marked as sent by Royal Mail “Signed for” and standard delivery. It included the following text:

If you decide not to defend your company name, the application will normally succeed. A decision in favour of the applicant will normally include an award of costs in favour of the applicant, provided costs have been requested by the applicant.

If you inform the tribunal that you did not receive adequate notice that an application would be made before it was filed, the tribunal will normally not award costs to the applicant. If you are not defending the application and you consider that you did not receive adequate notification from the applicant before the filing of the application, you should inform the tribunal on or before the date for the filing of the defence.

Once an order is issued by the tribunal the adjudicator cannot revisit any costs issues.

5. Shahriar Ghahari is the sole director of the Respondent. Also on 8 November 2021 the tribunal wrote to Mr Ghahari informing him of the request that he be joined as Co-Respondent giving him until 8 December 2021 to comment on the request. (The official letter was marked as sent by Royal Mail “Signed for” and standard delivery.)

6. On 10 November 2021 (at 16:04) Mr Ghahari sent an email to the Company Names Tribunal attaching a letter from

7. The Tribunal letter of 8 November 2021 had included the rubric “If you wish to correspond by email please reply to CNA@ipo.gov.uk and ensure your email is copied to the other party.” It is noted that Mr Ghahari did not copy his email to the attorneys. The correspondence from the Tribunal did not give that email, but the form CNA 1 included both a contact telephone number for the attorneys, through which an email address might have been obtained, and the postal address of the attorneys.

8. On 10 November 2021 a Form NM01 Notice of Change of Name by Resolution was filed at Companies House whereby the respondent company changed its name to MAHSA TRADE LTD; that change of name was duly certified by Companies House on 11 November 2021.

9. On 1 December 2021, the Tribunal acknowledged the change of name to one that did not appear to be an offending name, but gave a preliminary view to award £800 in costs to the applicant, noting the steps taken to give notice to the Respondent prior to action. The letter stated: “If any party disagrees with the preliminary view, they should file form CNA 4 to request a hearing within 14 days of the date of this letter, i.e. on or before 15 December 2021. Any request for a hearing should include full reasons in writing. In the absence of a request to be heard, an order for the payment of costs will be issued in due course.”

10. On 12 December 2021, the Respondent filed a Form CNA 4 (with £100 fee), stating as follows:

11. On 30 December 2021, the Tribunal wrote to the attorneys, referencing the official letter of 1 December 2021, and enclosing the reply dated 12 December 2021. The official letter, highlighting the Respondent’s comments, asked the attorneys to “provide a copy of / proof of delivery of the correspondence” from the Applicant to the Respondent on 16 August 2021.

12. On 4 January 2022, the attorneys sent to the Tribunal a copy of the letter that it had addressed to Shahriar Ghahari, Director of the Respondent, at the company’s registered address in Birmingham (an apartment numbered in the hundred). The attorneys also furnished an image of the franked envelope, correctly addressed, showing the date of 16 August 2021 and the franking cost of £1.14. The content of the letter was very clear in its purpose. It set out brief relevant background and the Applicant’s concerns; it highlighted potential recourse to the Tribunal to seek a change of name and an award of costs. It made it clear that the Applicant was willing to end the dispute if the Respondent were to sign and comply with suitable undertakings. It enclosed a short and clear undertaking for signature, including to effect a change of name within 14 days from the date of the undertakings, and to pay the small administrative fee for filing a Form NM01 at Companies House.

13. On 24 January 2022, the Tribunal wrote to the Respondent, enclosing a copy of the attorneys’ 16 August 2021 correspondence and the proof of franking, correctly addressed. The Tribunal indicated that it therefore intended to maintain the preliminary view of an £800 cost award, but that rule 5(3) gave either party the right to be heard. The letter referred to the need for a Form CNA 4 (plus fee) but noted the Respondent had already filed a Form CNA 4 on 12 December 2021 and clarified that if the Respondent no longer wished to be heard on the matter the Tribunal would issue a refund of the £100 fee paid, and that if was no request for a hearing was made by 4 February 2022, the Tribunal would proceed to issue the Cost Order.

14. On 31 January 2022, the Respondent filed a further Form CNA 4, requesting to be heard and emphasising that the Applicant had provided no proof of delivery, such as a signature from Shahriar Ghahari or Mahsa Abbasnezhad or postage tracking number.

15. On 3 February the Tribunal notified parties that a hearing had been arranged to take place 28 February 2022 via a TEAMS link. I understand that the attorneys contacted the Tribunal querying whether the hearing needed to go ahead as the issues had been aired, and asking whether skeleton arguments would be required.

16. In response, on 22 February 2022, Tribunal Hearings staff relayed to the parties my following communication:

Having reviewed all the papers in this matter, I make the following points and give my provisional view, which may or may not avoid the need for a hearing:

• there is good evidence that the attorneys for Marks & Spencers wrote on 16 August 2021 to the company formerly known as M&S Supply Ltd at its registered address, and that the content of that letter was clear in its purpose
  
  
• there is good evidence too that that letter was franked for dispatch 1st Class via Royal Mail
  
  
• this is enough to raise a presumption that the warning content of the letter was communicated to the company formerly known as M&S Supply Ltd
  
  
• however, it is possible for that presumption to be overcome by evidence
  
  
• on receipt of the CNA 1 form, Shahriar Ghahari contacted Company Names Tribunal (though neglecting to copy to the attorneys for Marks & Spencers) stating that, it had not received any warning communication. Shahriar Ghahari also stated that not being well informed on company names issues, the name was chosen to reflect the initials of Mahsa and Shahriar and that the company was happy to change its name. The statement from Shahriar Ghahari was signed and dated, but included no statement of truth
  
  
• in view of the clear denial in that very prompt and willing response to the CNA 1 service letter from the Tribunal, and in the absence of evidence of delivery or receipt of the 16 August letter, it appears to me reasonable to allow for the possibility that despite dispatch by 1st Class post, the warning was not effectively communicated in fact
  
  
• this is not an instance of repeat attempts or of a doubling up of both ordinary Royal Mail plus a signed for / tracked / recorded delivery or photo-documented delivery, where the question of adequate warning would be less contestable
  
  
• the signed statement from Shahriar Ghahari does not constitute formal evidence in these proceedings. However, my provisional view is as follows:

If all who were occupants at the relevant time at the address of the company formerly known as M&S Supply Ltd are identified and each of those provides a witness statement, which includes a statement of truth, identifies the witness, and is signed and dated, and if each witness is able to state truthfully that no-one associated with the company or at that address received the letter sent by the attorneys for Marks & Spencers on 16 August 2021, then the preliminary award of costs in these undefended proceedings is to be set aside.

If this evidence is to be filed, it should be filed promptly and ideally before midday on Friday 25 February 2022.

The Applicant (Marks & Spencer), having noted the points above, is asked to confirm to the Tribunal whether it wishes for the hearing on Monday to proceed – again ideally before midday on Friday 25 February 2022. In relation to the earlier enquiry from the attorneys for Marks & Spencer, no skeleton argument would be required.

If there is no request by the attorneys, then there is no need for the hearing to proceed, and it will be vacated in the expectation that the evidence on behalf of the respondents may be provided promptly. The fee for requesting the hearing would in those circumstances be refunded.”

17. On 24 February 2022, witness statements were filed by both Shahriar Ghahari and Mahsa Abbasnezhad, confirming their residence at the registered address and that they had not received any notification from the Applicant requesting the Respondent change its name. The evidence was signed and accompanied by a statement of truth and an understanding of the potential legal consequences for anyone who makes a false statement in a document verified by a statement of truth without an honest belief in its truth.

18. On 25 February 2022, the attorneys confirmed that they wished to proceed with the hearing on 28 February 2022.

The hearing

19. The hearing was attended by Richard Ferguson of Stobbs IP Limited for the Applicant, and by Ms Abbasnezhad on behalf of the Respondent.

20. Mr Ferguson drew my attention to the following provisions relating to the postal matters:

• Interpretation Act 1978 – section 7:

References to service by post.

Where an Act authorises or requires any document to be served by post (whether the expression “serve” or the expression “give” or “send” or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

• Companies Act 2006 – section 1139

Service of documents on company

(1) A document may be served on a company registered under this Act by leaving it at, or sending it by post to, the company’s registered office.

• Civil Procedure Rules - Practice Direction 6A – service within the United Kingdom

How service is effected by post, an alternative service provider or DX

3.1 Service by post, DX or other service which provides for delivery on the next business day is effected by –

(1) placing the document in a post box;

(2) leaving the document with or delivering the document to the relevant service provider; or

(3) having the document collected by the relevant service provider

• the Company Names Adjudicator Rules - Practice Direction 6A – service within the United Kingdom

Address for service

13.—(1) Where a person has provided an address for service in the United Kingdom under rule 3 he may substitute a new address for service in the United Kingdom by notifying the adjudicator on the appropriate form. (2) Where the primary respondent has a registered office in the United Kingdom the adjudicator may treat this as the address for service in the United Kingdom unless and until an alternative address is provided

21. I also bear in mind the provisions of the Company Names Tribunal: practice direction, (published in October 2014, updated January 2017). The scope of the practice direction is set out in its first part, where it explains that the Company Names Adjudicator Rules 2008 “provide the framework for the management of proceedings brought before the Tribunal. Certain of the Rules are prescriptive in nature, such as the requirements as to fees and forms. However, the adjudicator has a wide discretion to manage proceedings as he/she sees fit. For the sake of clarity and consistency and so that parties know what to expect, this direction sets out the Tribunal’s practice in relation to the main areas where the adjudicator’s discretion operates. This practice direction will not fetter the discretion of the adjudicator.”

22. The practice direction states the following in respect of costs in undefended applications:

10.4.1 If an application is undefended, an award of costs is likely to be made against the respondent, provided a request for costs has been made by the applicant and pre-action enquiries have been made, and provided the application succeeds. It should be noted, however, that the adjudicator will not normally award costs to the applicant if the respondent, whilst not defending the application, nevertheless satisfies the tribunal that it did not receive any notice, or did not receive adequate notice, that the application would be made. The adjudicator will, likewise, normally not award costs if the applicant indicates in box 7 of the application form (CNA1) that it did not contact the company prior to making the application.

10.4.2 If there is no indication (or there is inadequate indication) on the application form as to whether reasonable pre-action contact was made, the adjudicator may request information from the applicant prior to considering whether an award of costs is appropriate.”

23. In support of an award of costs to the Applicant Mr Ferguson made several points:

• that his firm had followed protocol and that 1st Class postage constituted good service;
  
  
• that the chronology may be considered suspicious on the basis that the Respondent only denied receipt on 12 December 2021, following the preliminary view on costs given in the Tribunal letter of 1 December 2021;
  
  
• that the passage of time has disadvantaged the Applicant, as whereas the Respondent has been permitted to fortify its case with evidence, the Applicant has not been able to make enquiries with the Royal Mail as to delivery

24. The submission on the chronology (at the second bullet above) is not in fact well founded since, as is clear from my earlier account of the correspondence, Mr Ghahari had expressly denied receipt of any notice in his email of 11 November (as per paragraph 6 above), although it does not appear that that email correspondence was copied to the attorneys. As to the point made at the third bullet above, it is not clear to me that the Applicant, having franked a letter for 1st Class dispatch, could have done more to fortify its case, since I cannot see that enquiries of Royal Mail at any stage could have revealed evidence of delivery.

25. I imply no criticism of the attorneys. The content of their 16 August warning letter was entirely clear and the attorneys additionally maintained and were able to furnish record of the correctly addressed envelope, confirming the date of 1st Class franking. However, it remains my view that whereas the above facts are certainly enough to give rise to a presumption that the warning content of the letter was communicated to the Respondent, it is possible to rebut such a presumption, dependent on the circumstances and evidence. The Royal Mail is reliable, but it is not infallible. It sometimes happens that letters are misdelivered, and the risk of such a circumstance must be all the greater in an apartment block. (That said, I do not overlook that a business that chooses a residential apartment block as its registered address may also bear some responsibility for the heightened risk of mis-delivery.)

26. In this case, the two residents of the flat that is the Respondent’s registered address have given witness statements that they did not receive the warning letter. The evidence from the Applicant’s side is that it was sent, but there is no evidence of correct delivery or attempted delivery. The sum of £800 typically payable by a respondent in an undefended application for a change of company name is only a contribution towards the actual legal costs incurred by the Applicant, which are likely to be considerably greater. Nonetheless, £800 (plus £100 if a hearing is requested to challenge an award) is still a significant amount of money. If a respondent is able to state truthfully in evidence that they did not receive a warning, and if there is no reason to doubt the truthfulness of the statement, and if there were more that an applicant might have done to ensure effective communication, then it may be considered unfair that the respondent should face such costs. This appears to me in line with the provision at 10.4.1 of the practice direction that costs may not be awarded in circumstances where a respondent “nevertheless satisfies the tribunal that it did not receive any notice … that the application would be made”.

27. I recognise that the witness statements are essentially assertions, but there is nothing in the conduct of the respondent in this case to suggest that the witness evidence should be doubted. Nor would it be possible for a respondent to do more to demonstrate non-receipt.

28. The respondent has been consistent in its account (as set out at my paragraph 6 and 10 above). The respondents acted very promptly and willingly when they received the CNA 1 correspondence from the Tribunal. There is no strong reason to conclude that they would have simply ignored the letter from the attorneys. As I have noted, the letter was very clear and offered swift and ready disposal of the matter, requiring only that the respondent sign and return a short undertaking, and to carry out its terms thereafter (changing its name).

29. There is no requirement for an applicant to effect warning by having the delivery signed for or otherwise recorded, still less to reinforce that step by sending additionally by standard post (1st or 2nd class). Nonetheless, this is an approach taken by some attorneys, and one that too that the Tribunal has taken in appropriate circumstances (for instance in the service of the Form CNA 1). The additional cost of such a step is modest and may be considered proportionate to demonstrate best efforts and achieve a greater degree of certainty.

30. I make no award of costs in this case. The fee(s) paid by the Respondent, who initially requested the hearing, will be reimbursed.

Dated 25 March 2022

Matthew Williams
Company Names Adjudicator