Revenue & Customs v Walsh

Under the Insolvency Act 1986, the comparison of company names under section 216(2)(b) is not made in the abstract. There must first be a degree of similarity. The names must then be assessed in the context of their actual or likely use, including the businesses, locations, customers and persons involved. A common surname is not automatically incapable of satisfying the requirement. Where binding authority leaves the proposed appeal with no arguable point of law and no real prospect of success, permission to appeal should be refused.

The Revenue claimed that Mr Walsh was personally liable for debts owed by SG&T Walsh and Company Limited, an insolvent company of which he had been a director. The claim relied on sections 216 and 217 of the Insolvency Act 1986 and the alleged use of a prohibited name by Walsh Construction Limited.

Laddie J entered judgment for approximately £286,000 and costs and refused permission to appeal. The application to the Court of Appeal concerned whether Walsh Construction Limited was sufficiently similar in name to the liquidated company as to suggest an association.

Application dismissed. Permission to appeal was refused, with no order as to costs.

1. Sections 216 and 217 of the Insolvency Act 1986 impose consequences where a person involved in the management of a company uses a prohibited name. The issue was whether the second company’s name fell within section 216(2)(b).
2. The Court of Appeal’s decision in Ricketts v Ad Valorem Factors Limited [2003] EWCA Civ 1706 made clear that the statutory question is not answered by an abstract comparison of the names. There must first be a degree of similarity. The names must then be considered in the context of all the circumstances in which they were actually used or likely to be used. Relevant matters can include the products dealt in, business locations, customers and those involved in operating the companies.
3. On the facts found by Laddie J, the requisite degree of similarity plainly existed between the names. Both companies carried on business as building and civil engineering contractors, they shared a trading address for a period, and Mr Walsh was part of the public face of both. Those matters supported the conclusion that a reasonable customer or member of the public familiar with both companies would associate them.
4. The proposed appeal depended on treating the contextual inquiry as capable of creating similarity between otherwise dissimilar names. That argument could not succeed in the face of the binding decision in Ricketts. The proposed appeal therefore raised no arguable point of law and had no real prospect of success.

1. Court of Appeal (Civil Division): On 14 October 2005, Lord Justice Jonathan Parker dismissed the application for permission to appeal. There was no order as to costs. [2005] EWCA Civ 1291
2. High Court, Chancery Division: On 7 June 2005, Laddie J entered judgment for the Revenue for approximately £286,000 and costs and refused permission to appeal.