Archer Structures Ltd. v Griffiths

For the purposes of Insolvency Act 1986, section 216, the similarity of company names is assessed objectively. The relevant question is whether the names are so similar as to suggest an association. A company’s get-up cannot be relied upon to avoid the statutory prohibition.

Where section 216 is contravened, section 217 imposes personal joint and several liability for the relevant debts incurred while the person is involved in management. Insolvency set-off under rule 4.90 adjusts the insolvent company’s liability, but does not reduce or extinguish the director’s separate primary liability.

Archer Structures Limited claimed against Christopher Griffiths under sections 216 and 217 of the Insolvency Act 1986. Mr Griffiths had been a director of MPJ Construction Limited, which entered insolvent liquidation, and later became a director of MPJ Contractors Limited.

The preliminary issues concerned whether MPJ Contractors Limited was a prohibited name, whether Mr Griffiths was personally liable for Contractors’ judgment debt of £80,315.67, and whether he could rely on a defence based on insolvency set-off under rule 4.90 of the Insolvency Rules 1986.

1. Section 216. The requirements of section 216(1) were satisfied. The statutory comparison was objective, and Archer’s knowledge, or any confusion, was irrelevant. MPJ Contractors Limited was as nearly similar to MPJ Construction Limited as possible and plainly suggested an association. The question was one of fact for the court.

2. Section 216(6) did not permit reliance on different stationery, formatting or other get-up. In the statutory context, a name remained a name however it appeared. Allowing get-up to defeat the prohibition would undermine the purpose of the legislation, which was directed at the phoenix syndrome.

3. Section 217. Mr Griffiths was personally responsible for Contractors’ relevant debts and was jointly and severally liable with Contractors. His liability was primary, not secondary liability as a surety or guarantor. A creditor could pursue any joint debtor for the whole sum.

4. Rule 4.90 of the Insolvency Rules 1986 adjusted the mutual liabilities between Archer and Contractors and left Contractors liable only for the balance. It did not regulate the relationship between Archer and Mr Griffiths, and did not extinguish or reduce Mr Griffiths’s separate liability under section 217.

5. The court rejected the proposed set-off defence and held Mr Griffiths liable for the judgment debt of £80,315.67, together with accrued interest and costs. He could not rely on the grounds pleaded in paragraph 11 of the defence or paragraph 6.2 of counsel’s skeleton argument.

First-instance determination of preliminary issues. No appellate history is stated in the judgment.