Decision

Decision on In and Out Hotel Limited

Published 6 March 2019

Order under the Companies Act 2006

In the matter of application No. 1451

For a change of company name of registration No. 10226033

Introduction

1. The company name In and Out Hotel Limited (‘the primary respondent’) has been registered since 10th June 2016 under number 10226033. On 31st May 2017, Naval and Military Club and In & Out Limited (“the applicants”) filed an application under section 69(1) of the Companies Act 2006 (“the Act”) for an order changing the name of the company. The applicants’ grounds are that (i) they have goodwill in the names THE IN AND OUT/THE IN & OUT, and (ii) these names are the same as ‘In and Out Hotel Limited’, or sufficiently similar to mislead by suggesting a connection between the primary respondent and the applicants.

Co-respondent

2. Mr James Adam Reuben, who is a director of the primary respondent, has been joined to the proceedings as a co-respondent in accordance with s.69(3) of the Act.

Claims

3. The applicants claim that The Naval and Military Club (“Club”) is a historic London club founded in 1862. During the period 1866 to 1999, Club was located at Cambridge House in Piccadilly. Unusually for central London, Cambridge House has in and out drives. For reasons that are obvious, the gateway to one drive was marked ‘IN’ and the other gateway marked ‘OUT’. According to the applicants, this resulted in Club becoming colloquially known as “THE IN & OUT CLUB.” This name also helped to distinguish Club from The Army & Naval Club, which had a similar name.

4. Since 1993, the business of Club has been conducted by the second applicant, i.e. In & Out Limited. In 1995 and 2010, this company registered THE IN AND OUT and THE IN & OUT as trade marks covering, inter alia, “provision of temporary accommodation”, “conference and meeting facilities”, “restaurant services” and “catering and banqueting services.” The applicants claim that they own goodwill under these marks in relation to the above services, and “private members club services”, “the provision of social, sports, health club and recreational services.”

5. In 1999, Club moved out of Cambridge House to nearby premises in St James’s Square. However, it continued to be known as “THE IN & OUT CLUB.” The words ‘IN’ and ‘OUT’ adorn the columns supporting the portico entrance to Club’s current location.

6. The applicants point out that the primary respondent is owned by the Reuben family headed by the billionaire brothers, Simon and David Reuben. Their property company is the current owner of Cambridge House. The applicants claim that the respondents intend to open a hotel at the premises. According to the applicants, the use of the company name by the primary respondent is likely to cause confusion in the mind of the public.

7. The applicants say that it is inconceivable that the Reuben family, and by extension the primary respondent, were unaware of the reputation of Club when the primary respondent was incorporated under the contested name.

8. The respondents filed a Notice of Defence. The main points taken are that:

• the Reuben Brothers purchased Cambridge House at 94 Piccadilly in 2011;
• that building had been vacant since the Naval and Military Club moved to new premises in 1999;
• the building has become known as “The In and Out” or “The In and Out Club”;
• the applicants did not remove the words ‘IN’ and ‘OUT’ from the gateposts on moving out of the premises, or compel their successors to do so;
• the respondents deny that the applicants have goodwill in the name ‘THE IN AND OUT’ to the extent that this name refers to the applicants and no one else;
• the primary respondent was created as a corporate vehicle for a proposed hotel development;
• the respondents accept that the primary respondent is ultimately owned by members of the Reuben family;
• the words ‘The In and Out’ were selected to convey a connection to the building of the same name;
• the respondents deny that the use of the contested company name will cause confusion because (a) the inclusion of the word ‘Hotel’ distinguishes the name from the applicants’ name and trade marks, (b) the applicant’s run a private members club, not a hotel, and (c) the name is associated with the building at 94 Piccadilly;
• the contested name was chosen in good faith and, in any event, does not adversely affect the goodwill of the applicants

Representation

9. The applicants are represented by Hunters, solicitors. The respondents are represented by Reed Smith LLP. A hearing took place on 10th January 2019 at which Mr Hugo Cuddigan QC appeared as counsel for the applicants. Mr Benet Brandreth QC appeared as counsel for the respondents.

The evidence

10. The applicants’ evidence consists of three witness statements by Mr Anthony Lee, who is the Secretary and Chief Executive of The In and Out Club, a witness statement by Mr Tim Newark, who in 2014 was commissioned to write a book about the history of Club, and a witness statement by Mr Michael Spencer, who is a Chartered Trade Mark Attorney with Bromhead Johnson, who represented the applicants before Hunters took over as the applicants’ representatives. The sole purpose of Mr Spencer’s statement is to put a copy of Mr Newark’s book into evidence. Mr Lee’s third statement was filed in reply to the respondents’ evidence.

11. The respondents’ evidence consists of a witness statement by Mr Roger Thornton. Mr Thornton is the Head of Property at Motcomb Estates Limited, which manages the property portfolio of Simon and David Reuben.

12. Mr Lee’s evidence confirms that the second applicant operates The Naval and Military Club on behalf of the first applicant. At the hearing, Mr Brandreth accepted that the applicants have established goodwill and reputation under the sign ‘In and Out’ in relation to a private members club. Consequently, it is unnecessary to go into Mr Lee’s evidence on this matter in great detail. It is, however, necessary to examine his evidence going to the issues of (i) the extent to which the public knew the club as ‘The In and Out Club’ at the time that the primary respondent was incorporated on 10th June 2016 (“the relevant date”), and (ii) the nature and extent of the business of the club.

13. According to Mr Lee, the club’s turnover is around £3.5m per annum. The food and beverage side of the business is outsourced and has a similar turnover. The club’s gym and fitness centre is also outsourced and also has a separate turnover. The club’s membership is around 50% military people and 50% civilian. The club also offers services to members of other clubs from around the world on a reciprocal basis. Mr Lee says that the club has a website – www.inandoutclub.co.uk – which is designed for members and non-members. Non-members can use its services when using the club for an event, such as a wedding or a function ^{[footnote 1]}. The club has three bookable spaces for events. These can accommodate between 85 to 180 guests. The club has other rooms which can be used for smaller dinners, luncheons or meetings. There are two bars, two restaurants, a room where afternoon tea can be taken, and a business centre.

14. According to an article in Tatler under the title ‘IN and OUT CLUB’, “The Naval and Military Club has never been known by its real name ^{[footnote 2]}.” An article in The Times on 13th January 1999 recorded that the club, nicknamed ‘The In and Out Club’ after the signs on its gateposts, was to leave the premises at 94 Piccadilly after 133 years and move to new premises in St James’s Square following the owner’s decision to put the building up for sale ^{[footnote 3]}.

15. The club publishes a newsletter for its members called “The In and Out Magazine”. Examples of the newsletters published between 1999 and 2017 (i.e. after the move to St James’s Square) are in evidence ^{[footnote 4]}. There are also examples in evidence of third parties using ‘The In and Out’ or ‘In and Out Club’ to identify the club well after it had moved to its new premises in 1999 ^{[footnote 5]}

16. The availability of the club as a wedding venue was publicised on the website hitched.co.uk ^{[footnote 6]}. This particular article dates from December 2017, i.e. after the relevant date. However, these services were available prior to that date ^{[footnote 7]}. The significance of this article is it shows that, at least in its role as a wedding venue, the club is regarded as a competitor to London hotels ^{[footnote 8]}.

17. In his second statement, Mr Lee gives evidence that on 5th January 2018 a copy of The Gentleman’s Journal was sent by post addressed to Simon and David Reuben at Cambridge House, 4 St James’s Square, London ^{[footnote 9]}. Mr Lee says that this is evidence that the sender believed that he or she could contact the Reuben brothers at the Club’s address.

18. Mr Thornton’s evidence is that the property at 94 Piccadilly, together with a number of other adjacent properties, were purchased in 2011 by Tower Properties Management Limited and other companies controlled by Simon and David Reuben. James Reuben, the sole director of the primary respondent, is David Reuben’s son. Initially it was intended to turn the property in to high end residential use. However, in 2015 it was decided to turn it into a hotel.

19. According to Mr Thornton, the decision to name the primary respondent with the contested name was a collective decision made by James Reuben, Daniel Smith (Head of in-house architectural team), PDP (external architects) and himself. Mr Thornton describes the reasons for choosing the contested name like this.

“4. We chose the name In and Out Hotel because the Building is well known to the public at large as the “In & Out”. The words “In” and “Out” are painted in large letters on the gates outside and for decades it was identified as such. Indeed, as a result of this long period of use the Building is a London landmark known by that name rather than by its formal address (see for example, the articles exhibited at RTI 3-7, which refer to the Building as the “In & Out”). It was referred to generally by the parties as the “In & Out” during discussions to purchase the building in 2011 with the then marketing agents, Jones Lang LaSalle (Damian Corbett and others). In subsequent discussions with our professional consultants, including planning consultant DP9 (Bob Woodman), Architects PDP (Andrew Davidson), Historic Building Consultants Donald Insall Associates (Peter Riddington) and others, the Building (together with the other properties that will form the Hotel) was referred to as the “In & Out”. During meetings with third parties, such as Planning Officers (Sara Spurrier and John Walker), Councillors at Westminster City Council (Councillor Robert Davies), local residents (those at 100 Piccadilly, White Horse Street and in Shepherd Market) and Historic England (Michael Dunn), they have all generally referred to the buildings that will form the Hotel as the “In & Out”. These discussions took place over many years, initially during the design and grant of planning permission for the residential conversion, and then during the design and grant of planning permission for the Hotel.

“5. As the name “In and Out” is synonymous with the Building we naturally continued using “In and Out” in the name of the company that would operate the hotel at the Building, anticipating that the hotel would be known by the same name. We briefly discussed other names, such as “Piccadilly Hotel” and “Cambridge Hotel”, but we decided those names were too generic. The Hotel will be situated in a London landmark and we wanted to emphasise the fact that guests will have the opportunity to stay in this iconic building by using the name by which that building is known.

“6. The “In and Out” name distinguishes the Building from the other properties in the area. This is an advantage for the Hotel as, without that name, it would simply be comprised of three property assets in the portfolio. If the Hotel had a different name it might develop a reputation over time but there is an advantage to operating from a building that has an established presence by using its name.

“7. To be clear, it is the reputation of the Building on which the Hotel seeks to capitalise and not that of one of its former occupants, the Naval and Military Club. We were aware that the Naval and Military Club was colloquially known as the “In & Out Club” when it occupied the Building. The Naval and Military Club vacated the Building in 1999 and we were not aware that it still traded as the In & Out Club at the time we made the application to register [the primary respondent].”

20. According to Mr Thornton, the applicants have not objected to others using the words ‘In and Out’ in connection with the building at 94, Piccadilly. He says that in February 2015, Tower Properties granted a licence to Piccadilly Fine Foods Limited to sell food and drink in the forecourt of the building. This was marketed as ‘In and Out Food Court’ (Mr Thornton does not say when this occurred). He exhibits copies of 19 pages from Facebook with pictures and discussion about the food court ^{[footnote 10]}. The earliest date shown on these pages is 18th November 2016, i.e. after the relevant date. The manager of the food court, Mr Peter Sullings, is said to have told Mr Thornton that the applicants made no complaint about the use of ‘In and Out Food Court’.

21. Mr Thornton’s evidence is that when he and the others chose the contested name they were aware that other companies had been incorporated with names including ‘In and Out’.

22. Tower properties spent a substantial amount on the development of the hotel. Mr Thornton says that there is an understanding that on delivery of the completed hotel to the primary respondent, it will pay the costs relating to the detailed design of the hotel.

23. Mr Lee’s evidence in reply, on behalf of the applicants, raises a number of arguments in response to Mr Thornton’s evidence. It is only necessary to cover two of these here. Firstly, in reply to Mr Thornton’s statement that those choosing the contested name were not aware that the second applicant traded as ‘In and Out’, Mr Lee states that this would have been obvious to anyone doing a basic internet search. Further, Mr Lee points out that ‘In and Out Limited’ (i.e. the second applicant) appears first in Mr Thornton’s list of results for companies with names including ‘In and Out’. Secondly, in response to Mr Thornton’s point that the applicants did not object to others using names including ‘In and Out’, Mr Lee points out that the applicants cannot reasonably be expected to oppose all such uses. He cites, as an example, the use of In and Out Car Valeting LLP by a business in Wales, which the applicants are aware of, but decided not to oppose.

The law

24. 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 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 those 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.

Goodwill

25. As noted above, the respondents now accept that the applicants had goodwill at the relevant date under the name ‘In and Out’ in relation to the services of a private members club. However, the respondents continue to dispute that ‘In and Out’ is exclusively distinctive of the applicants’ business.

26. We find that, at the relevant date, the second applicant was the owner of a substantial goodwill in a business operating a members club offering accommodation, food and drink services, and related services for functions and meetings. These services were primarily offered to members of the club, both military and civilian, and to members of similar clubs based overseas. Additionally, the business offered accommodation, catering and other services for functions, such as weddings, to members and non-members.

Similarity of names

27. The test is whether the respondent’s name is:

…the same as a name associated with the applicant in which he has goodwill, or…sufficiently similar to [a name associated with the applicant in which he has goodwill]…. that its use in the United Kingdom would be likely to mislead by suggesting a connection between the company and the applicant.

28. The onus is on the applicants to establish that this condition was met at the relevant date.

29. The respondents contend that the contested name is distinguishable from the name(s) in which the applicants have established goodwill because it includes the additional word HOTEL, which is not descriptive of the applicants’ business. Consequently, the names are not the same and no one will be misled into believing that the user of the contested name is connected with the applicants.

30. The applicants say that (a) IN AND (&) OUT is distinctive of the second applicant’s business, (b) the word ‘HOTEL’ in the primary respondent’s name is descriptive of hotel services, and (c) that the second applicant provides the same kinds of services as hotels.

31. The parties’ arguments assume that it is appropriate to consider the nature of the goodwill associated with them in deciding whether use of the primary respondent’s name would be likely to mislead. We accept that it is appropriate to take into account the nature of the goodwill relied on by the applicants. The use in s.69(1) of the words “a name associated with the applicant in which he has goodwill” (emphasis added) indicates that the applicants’ goodwill is to be considered in the assessment of whether use of the contested name is likely to mislead.

32. By contrast, the nature of the primary respondent’s business is not usually an important factor in the assessment of whether use of the contested name is likely to mislead. This is because (a) although a company’s main business activities are recorded in the register of companies, this does not prevent companies from conducting other activities, and (b) the primary respondent’s current business plans do not constrain its future commercial activities. In this case the nature of the respondent’s business is also clearly indicated in the company name ‘In and Out Hotel Limited’ (emphasis added). This is not a name which lends itself to use in relation to commercial activities unconnected to hotels. It is therefore appropriate to take the indication ‘Hotel’ into account in deciding (a) whether the names are the same, and (b) whether people will be misled by use of the contested name.

33. We find that the inclusion of the word ‘Hotel’ in the contested name means that the contested name is the not the same as the name(s) in which the applicants have established goodwill. Consequently, s.69(1)(a) of the Act does not apply.

34. The respondents’ denial of the applicants’ case under s.69(1)(b) depends heavily on the distinguishing effect of the word ‘Hotel’. Mr Brandreth submitted that the case should be decided in the same way as the passing off action in Harrods v Harrodian School ^{[footnote 11]}. In that case, the Court of Appeal upheld a judgment of the High Court that the use of ‘Harrodian School’ in relation to education services provided in a building previously used by a sports club established by employees of Harrods and known as ‘The Harrodian Club’, was not passing off.

35. For his part, Mr Cuddigan pointed out that the absence of a common field of activity was an important aspect of the trial judge’s assessment that there was no misrepresentation in that case. Here, he submitted, the parties were in similar fields, if not the same field, of activity.

36. We do not consider that the Harrods case assists the respondents. This is because we accept Mr Cuddigan’s submission that the nature of the second applicant’s goodwill under ‘In and Out’ is not dissimilar to hotel services (within which we include those services currently planned, as well as other kinds of hotel and related services which could be provided under the contested name) as was the case in Harrods.

37. In our view, the provision of temporary accommodation, food and drink and meetings and events related services to members of a club (and to members of other clubs) is similar to a hotel providing temporary accommodation, food and drink, and meetings and events related services to members of the public. The fact that the second applicant also offers its services to members of the public in connection with weddings and other similar events further diminishes the difference between the nature of the second applicant’s goodwill and the hotel services that reasonably could be provided under the contested name.

38. In our view, there is a strong prima facie case that those familiar with the second applicant’s goodwill under ‘In and Out’, or ‘The In and Out Club’, are likely to be misled into believing the ‘The In and Out Hotel’ is an extension of the activities provided by the second applicant under ‘The In and Out Club’. This is because (a) the provision of temporary accommodation, food and drink services, and meetings and events related services to members of the public is a plausible extension of the business in which the second applicant has goodwill, (b) such a perceived extension of activities would naturally account for the use of the word ‘Hotel’ in the contested name, (c) the names at issue are otherwise very similar, if not the same, and (d) the respondents’ evidence does not establish that there were numerous other businesses trading under names including ‘The In and Out’ in a relevant field of activity (or otherwise). Therefore, we cannot infer that the public have become used to distinguishing between businesses trading under such similar names. Consequently, we find that the applicants’ case satisfies s.69(1)(b) of the Act.

39. In reaching this finding we have not attached any weight to the applicants’ case that the misdirection to its current address of a copy of the Gentleman’s Journal addressed to the Reuben brothers is evidence of confusion. There are several possible explanations for this, the most obvious one being that it is simply a case of misaddressed mail.

The defences

40. The Notice of Defence appears to identify two defences. Firstly, that the contested name was adopted in good faith, and secondly that the interests of the applicant are not adversely affected to any significant extent. The latter defence was not pursued at the hearing, at least as a discrete defence under s.69(4)(e). We consider that Mr Brandreth was right not to pursue this defence. If we are right that the contested name is likely to mislead the public into believing that the primary respondent is connected with the applicants, and the parties are in related fields of activity, then it follows that the interests of the applicants are liable to be affected by use of the contested name. At the very least, it will dilute the distinctiveness of the name and the reduce the second applicant’s ability to control its own reputation. This brings us to the respondents’ main argument, which is that the contested name was adopted in good faith.

The good faith defence

41. Mr Cuddigan submitted that for the purposes of the Companies Act 2006, “good faith” must be considered as a matter of UK law alone. We accept that the tests applied under trade mark law to establish whether an applicant who applies to register a trade mark acted in “bad faith”, or whether a potential infringer acted “in accordance with honest practices in industrial or commercial matters”, are not necessarily determinative of whether a party adopted a company name in good faith. This is partly because UK trade mark law is based on an EU Directive and “bad faith” and “honest practices in industrial or commercial matters” are autonomous concepts of EU law which must be given a uniform interpretation throughout the European Union. ^{[footnote 12]} By contrast, the Companies Act 2006 is a piece of ‘home grown’ legislation. In determining the meaning of “good faith” under the Act, it is therefore necessary to be guided, primarily, by cases giving meaning to those words, or similar terms, under UK law. Having said that, we accept that many of the factors used to assess bad faith and/or commercial honesty are also relevant to any assessment of good faith. Therefore, although of secondary importance, we believe that we can give some weight to previous judgments of the courts about the meaning of ‘bad faith’ and ‘honest practices in… commercial matters’ under EU-derived trade mark law.

42. On behalf of the applicants, Mr Cuddigan relied on the following principles, which he submitted could be extracted from the judgments of the House of Lords in Twinsectra v Yardley, ^{[footnote 13]} the Privy Council in Barlow Clowes v Eurotrust International Ltd, ^{[footnote 14]} and the Court of Appeal in England and Wales in Niru Battery Manufacturing v Milestone Trading Ltd. ^{[footnote 15]}


“(i) Good faith is a broad concept. 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 – see Niru Battery at para 164.

(ii) There is a combined subjective/objective approach to the honesty of a party’s behaviour. This involves (i) a consideration of what the party knew at the time of a transaction and (ii) how that party’s action would be viewed by applying normally acceptable standards of honest conduct – see Barlow Clowes paras 15–18, 28–32.

(iii) As to knowledge, it is dishonest for a man deliberately to shut his eyes to facts which he would prefer not to know. If he does so, he is taken to have actual knowledge of the facts to which he shut his eyes – see Twinsectra at paragraph 112.”

43. The applicants’ case is, essentially, that (a) the respondents’ evidence is not sufficient to establish that they did not know about the second applicant’s continuing activities under the name ‘The In and Out’ when the contested name was adopted, (b) the absence of trade mark or internet searches is inconsistent with the claim to have acted in good faith, and (c) the onus is on the respondents to show that they acted in good faith.

44. Mr Brandreth, for the respondents, submitted that (a) in the absence of cross examination, Mr Thornton’s evidence established that the respondents did not know about the second applicant’s on-going use of ‘In and Out’ when the contested name was adopted, (b) the absence of trade mark or internet searches was insufficient to undermine the respondents’ claim to have acted in good faith, and (c) the respondents’ belief that the building in which they intended to trade was known as ‘The In and Out’ gave the respondents a legitimate reason for adopting the contested name.

45. We accept that it is appropriate to approach the matter on the basis that good faith is a broad concept that is capable of covering “a failure to act in a commercially acceptable way and sharp practice of a kind that falls short of outright dishonesty.” This is consistent with the judgment of Moore-Bick J. at first instance in Niru Battery where the judge said:

“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, insofar 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.”

46. The above statement was approved by the Court of Appeal ^{[footnote 16]} in the context of a submission by counsel for one of the defendants in Niru Battery to the effect that a person who received some money, and then paid it away, must be held to have acted in good faith unless he was shown to have acted dishonestly. ^{[footnote 17]} The President of the High Court (with whom Dame Elizabeth Butler-Sloss expressly agreed) rejected that submission. ^{[footnote 18]} We do not therefore consider that the applicants must show that the respondents’ conduct amounted to dishonesty before we can reject the respondents’ claim that the contested name was adopted in good faith.

47. We accept that (a) it is appropriate to determine what the respondents knew at the time the contested name was adopted, and (b) whether the adoption of the name would be viewed as commercially acceptable behaviour when judged objectively. This means how reasonable men and women in the field would view the respondents’ behaviour (i.e. not simply how the respondents viewed their own actions).

48. We accept that the respondents’ failure to conduct trade mark or internet searches before adopting the name ‘The In and Out’ is a relevant factor in our assessment on whether the respondents’ behaviour was in accordance with acceptable standards of commercial behaviour. This is consistent with the judgments of Underhill L.J. and Sales L.J in Assos v Asos, ^{[footnote 19]} to which our attention was drawn. However, we recognise that this judgment was given in a different context; namely, whether the failure to conduct such searches before using a trade mark was “in accordance with honest practices in industrial or commercial matters.” We do not accept that the failure to conduct such searches is a decisive factor in company name cases. The importance that can be attached to such an omission will vary (in the range of ‘none’ to ‘some’) depending on all the other facts and circumstances surrounding the adoption of a contested company name. Some weight may be given to a failure to make appropriate inquiries where the respondent’s state of knowledge was such that some investigation of third party rights was called for.

49. We do not accept that it is appropriate to attribute knowledge to the respondents that they did not in fact have on the basis that they “deliberately … shut [their] eyes” to the facts. As indicated above, this submission is based on the judgment of the House of Lords in Twinsectra. The context in which this statement was made is shown in the following extract from the judgment:

“110. Prior to the decision in Royal Brunei Airlines Sdn Bhd v Tan the equitable claim was described as “knowing assistance”. It gave a remedy against third parties who knowingly assisted in the misdirection of funds. The accessory was liable if he knew all the relevant facts, in particular the fact that the principal was not entitled to deal with the funds entrusted to him as he had done or was proposing to do. Unfortunately, the distinction between this form of fault-based liability and the liability to make restitution for trust money received in breach of trust was not always observed, and it was even suggested from time to time that the requirements of liability should be the same in the two cases. Authorities on one head of liability were applied in cases which concerned the other, and judges embarked on sophisticated analyses of the kind of knowledge required to found liability.

“111. Behind the confusion there lay a critical issue: whether negligence alone was sufficient to impose liability on the accessory. If so, then it was unnecessary to show that he possessed actual knowledge of the relevant facts. Despite a divergence of judicial opinion, by 1995 the tide was flowing strongly in favour of rejecting negligence. It was widely thought that the accessory should be liable only if he actually knew the relevant facts. It should not be sufficient that he ought to have known them or had the means of knowledge if he did not in fact know them.

“112. There was a gloss on this. It is dishonest for a man deliberately to shut his eyes to facts which he would prefer not to know. If he does so, he is taken to have actual knowledge of the facts to which he shut his eyes. Such knowledge has been described as “Nelsonian knowledge”, meaning knowledge which is attributed to a person as a consequence of his “wilful blindness” or (as American lawyers describe it) “contrived ignorance”. But a person’s failure through negligence to make inquiry is insufficient to enable knowledge to be attributed to him: see Agip (Africa) Ltd v Jackson [1990] Ch 265, 293. (emphasis added)”

50. It is clear from the final sentence of paragraph 50 of the judgment that merely failing to make appropriate inquiries is insufficient to attribute knowledge to a person that he or she did not in fact have. The most that the applicants have established in this case is that the respondents were negligent in this respect. Therefore, to the extent that the applicants’ case is based on attributing knowledge to the respondents that they did not in fact have, we reject it.

51. We accept that the onus is on the respondents to show that the contested name was adopted in good faith. This is evident from the wording of s.69(4) of the Act, which reverses the usual persuasive and evidential burdens in civil law cases where good faith will usually be presumed and bad faith must be proven by the person alleging it. The reverse burden is justified by (a) the purpose of the legislation – which is to prevent the opportunistic registration of company names (also known as ‘company name squatting’), and (b) the practical difficulty that applicants would face if they had the burden of showing that a (usually unused) company name was adopted for opportunistic reasons. It should be easy for a respondent to explain its purpose in registering a name and to provide business plans etc. By contrast, it would usually be very difficult for an applicant to establish what the respondent’s motives were in registering the name. The legislature has addressed this difficulty by providing sufficient defences so that anyone acting in good faith, and who is therefore not company name squatting, can avoid the consequences of adopting a name which is the same as, or similar to, one in which someone else has associated goodwill.

52. We now turn to the facts. The respondents now accept that the applicants’ business was known as The In and Out Club whilst it occupied the premises in Piccadilly. On the evidence, we find that it had been known by this name for many years prior to moving to new premises in St James’s Square in 1999. The evidence also shows that the club continued to be known by this name after it moved to new premises in 1999 and that remained the case at the relevant date.

53. As to the respondent’s state of knowledge at the time that the contested name was adopted, we consider that what Mr James Reuben knew (or did not know) about the second applicant’s goodwill is important. This is because he is the sole director of the primary respondent. Therefore, although the decision to adopt the contested name may have been one taken together with others, he was responsible for incorporating the primary respondent under the contested name. We therefore consider it unfortunate that Mr Reuben did not provide any evidence himself setting out what he did, or did not, know about the applicants’ goodwill. This omission does not assist the respondents to discharge the burden of showing that the contested name was adopted in good faith.

54. Mr Thornton’s evidence is that those responsible for choosing the contested name (which included Mr James Reuben and he) were aware that the Naval and Military Club was colloquially known as the ‘In and Out Club’ when it occupied the premises in Piccadilly. However, he denies that they were aware that it still traded under that name. In the absence of cross examination, we accept that Mr Thornton is telling the truth. However, Mr Thornton’s evidence about Mr James Reuben’s state of knowledge on this matter is (at best) hearsay. Section 4 of the Civil Evidence Act 1995 permits hearsay evidence in civil proceedings. One of the things that courts and tribunals are required to consider when deciding what weight to attach to such evidence is whether it would have been reasonable and practicable for the party by whom the evidence was adduced to have produced the maker of the original statement as a witness. It clearly would have been possible for Mr Reuben to give evidence about whatever it was that he told Mr Thornton. This points up a difficulty with Mr Thornton’s evidence on this point; namely, that he does not specifically say that Mr Reuben made any statement to him as to what he knew about The In and Out Club. We note that this contrasts with Mr Thornton’s evidence about his conversation with Mr Peter Sullings about a third party’s use of the ‘In and Out Foodcourt’ in which he recounts what Mr Sullings told him. Therefore, whilst we accept that Mr Thornton did not know that The In and Out Club was still known by that name when the contested name was chosen, we do not know whether his evidence about the others’ state of knowledge is based on specific statements they made to him during their discussions about the name, or merely his assumption based on the absence of any positive statements of relevant knowledge by them during these discussions. Therefore, we do not accept that Mr Thornton’s evidence establishes that Mr James Reuben did not know that the second applicant was still known as ‘The In and Out Club’ when the contested name was adopted.

55. Further, we note that Mr Thornton does not deny that those involved in the choice of company name knew that the Naval and Military Club continued to trade. His evidence is that they did not know it still traded as The In and Out Club. Given that the club had been known by that name for over 100 years prior to 1999, it should have been apparent to Mr Reuben that this name would probably continue to be associated with the business of the Naval and Military Club. This should have been given additional importance given that a members club offering accommodation and dining/catering facilities is offering similar services to a hotel, albeit to a restricted public. Therefore, even if Mr Reuben did not know that the Naval and Military Club continued to trade as The In and Out Club, we do not accept that this fact alone establishes that the contested name was adopted in good faith. In this context, we attach some weight to the respondents’ failure to carry out even a basic internet search before adopting the contested name.

56. Mr Brandreth relied on the trade mark case of Hotel Cipriani v Cipriani (Grosvenor Street) ^{[footnote 20]} as support for the respondents’ case on good faith. The issue in that case was whether the owners of the famous hotel in Venice had registered the EU trade mark ‘Hotel Cipriani’ for hotel and restaurant services in bad faith. It was alleged that the registrant knew at the time it applied for registration that others had a commercial interest in the name Cipriani. The judge decided that the application had not been made in bad faith: the applicant could reasonably believe that it had a right to register the mark. This finding was clearly linked to the applicant’s prior use of the mark and acquired goodwill in relation to its hotel business in Venice. In contrast, the respondents in this case have no established business under the name ‘The In and Out’.

57. Another important aspect of the respondents’ case is that the building which is planned to be used for the proposed hotel shares the reputation attached to the name ‘The In and Out’. In this connection, Mr Brandreth sought to draw an analogy with the case of Sir Robert McAlpine v Alfred McAlpine. ^{[footnote 21]} However, that was a case in which both parties owned goodwill in two businesses conducted under names including ‘McAlpine’. There is no such goodwill in the name of a building as such. And where a business is conducted on premises which are subsequently sold, or revert to their landlord, the vendor or tenant normally takes the goodwill of the business with it. ^{[footnote 22]} Therefore, we do not accept that any parallel can be drawn between this case and the McAlpine case.

58. As to the argument that the mere fact that the premises at 94, Piccadilly are known as ‘The In and Out’ provide justification for the respondents’ claim to have adopted the name in good faith, Mr Brandreth relied mainly on the applicants’ evidence. He drew our attention to the following documents:

• an article from the Evening Star dated 18th April 2013 refers to the property as “the former home of the Naval and Military Club, better known as the “In and Out” because of the signs on its gateposts.” ^{[footnote 23]} It appears to us that the reference to the “In and Out” is to the club not just the building
• an article from the Daily Mail dated 18th April 2013 which includes a reference to “The grade 1-listed In and Out.” ^{[footnote 24]} This appears to be a reference to the building. However, we note that the title of the article is “Bids are finally in for the In and Out club” (emphasis added)
• an article from the Daily Mail online dated 20th December 2017 which includes the sentence “On one side of the In and Out is 90-93 Piccadilly, a Grade II listed corner building dating back to 1882.” ^{[footnote 25]} This also appears to be a reference to the building. However, we note that the article as a whole, including the title, make it clear that the reference is to the In and Out Club, “…which occupied the building from 1865 to 1999”
• an article in The Times dated in 1996 stated that a consortium wanted “…to develop the club, better known as the In and Out, as a casino.” ^{[footnote 26]} Again, this appears to be reference to the club and not just the building at 94 Piccadilly

59. These articles are sparse evidence that the building at 94 Piccadilly has a reputation as ‘The In and Out’ which is distinct from the goodwill generated by the Naval And Military Club. ^{[footnote 27]} We take account of Mr Thornton’s evidence that the building was referred to as the In & Out during discussions with various third parties relating to the proposed development of the property. We accept that the building has sometimes been referred to this way. The building appears to have empty since 1999. In circumstances where the only use of the building in living memory has been the location of the club popularly known as The In and Out Club, it is inevitable that the name of the club will continue to be used by some as a convenient way to identify the building it formerly occupied. However, this does not establish that the building has a reputation distinct from that of The In and Out Club, or that the Military and Naval Club somehow shares its goodwill with the building it formerly occupied. Consequently, we reject the respondents’ case that there is a shared reputation/goodwill under ‘In and Out’, which they reasonably believed that they were entitled to exploit.

60. Mr Brandreth reminded us that in our decision in Axa v Axa Engineering Limited ^{[footnote 28]} we pointed out that the purpose of s.69 of the Act is to prevent the opportunistic registration of company names for commercial gain or other mischief, rather than to provide exclusive rights to a company or trading name (as with trade marks). This is correct. However, this does not mean that the respondents are entitled to the good faith defence unless they are company name squatting. Rather, to avail themselves of the defence the respondents must show that, in all the circumstances, they adopted the contested name in good faith.

61. In our view, when judged objectively against the normal standard of commercial behaviour, the respondents’ intention to exploit the reputation of ‘The In and Out’ without regard to the applicants’ goodwill under that name, does not demonstrate that they acted in a commercially acceptable way. At most, the respondents have established facts that are as consistent with bad faith as good faith. That is not sufficient to make out the good faith defence. Consequently, we reject it.

Outcome

62. The primary respondent cannot rely upon any of its defences. Therefore, the application is successful. In accordance with section 73(1) of the Act, the following order is made:

(a) In and Out Hotel Limited Limited shall change its name within one month of the date of this order to one that is not an offending name ^{[footnote 29]}; (b) In and Out Hotel Limited and Mr James Reuben each shall:

(i) take such steps as are within their 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.

63. In accordance with s.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.

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

65. The 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.

Costs

66. The applicants have been successful and are entitled to a contribution towards their costs. We assess costs using the scale published at paragraph 10 of the Tribunal’s practice direction, as follows: Official fee for filing the application £400

Official fees for filing evidence x 2 £300

Official fee for requesting a hearing £100

Preparing a statement and considering the counterstatement £400

Preparing evidence and considering and commenting on the respondents’ evidence £1000

Preparing for and attending a hearing £1000

Total £3200

67. In and Out Hotel Limited and Mr James Reuben are jointly and severally liable for the above costs. They are ordered to pay In & Out Limited the sum of £3200. This sum is to be paid within 14 days of the period allowed for appeal or, if there is an appeal, within 14 days of the conclusion of the appeal proceedings (subject to any order of the appellate tribunal).

68. 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 separate right of appeal in relation to costs.

69. 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 so that implementation of the order is suspended. Dated 25 March 2019

Allan James
Judi Pike
Oliver Morris
Company Names Adjudicators

1. See exhibit AL7, page 115 to 121, describing the services offered in September 2015 ↩

2. See exhibit AL3, page 48 ↩

3. See exhibit AL3 page 58 ↩

4. See exhibit AL5 ↩

5. See exhibit AL3, page 51 (Esquire Magazine, 2014), AL4, page 64 (The Newsletter of The Association of Royal Navy Officers, also 2014) and AL7, page 105, Evening Standard, 2009) ↩

6. See exhibit AL7, pages 133 to 137 ↩

7. See exhibit AL7, page 115 to 121, describing the services offered in September 2015 ↩

8. See exhibit AL7, page 138 ↩

9. See exhibit AL8 ↩

10. See exhibit RT-1 pages 8-26 ↩

11. [1996] RPC 697, Court of Appeal in England and Wales ↩

12. See the answer of the Court of Justice of the European Union to the first question referred by the national court in Malaysia Dairy Industries Pte Ltd v Ankenævnet for Patenter og Varemærker, Case C 320/12. ↩

13. [2002] UKHL 12 ↩

14. [2005] UKPC 37 ↩

15. [2003] EWCA Civ 1446 ↩

16. See paragraph 164 of the judgment of the Court of Appeal ↩

17. See paragraph 144(ii) of the judgment of the Court of Appeal ↩

18. See paragraphs 163 and 193 of the judgment of the Court of Appeal ↩

19. See paragraphs 192 and 246 of the judgment of the Court of Appeal in England and Wales, [2015] EWCA Civ 220 ↩

20. [2008] EWHC 3032 (Ch) ↩

21. See [2004] RPC EWHC 630 ↩

22. See paragraph 3-209 of The Law of Passing Off by Professor Christopher Wadlow 5th Ed ↩

23. See AL3, page 59 ↩

24. See AL3, page 60 ↩

25. See AL7, pages 127 and 130 ↩

26. See exhibit TN9 to the witness statement of Tim Newark. ↩

27. We note that at the same time as the contested name was incorporated, the co-respondent also incorporated a company under the name The In and Out Club. We understand that this company name has since been changed or the company voluntarily struck off: see Annex 1 to Form CNA1. ↩

28. BL O/208/18 ↩

29. 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. ↩