Decision

Decision on Lidl Logistics Limited

Updated 6 March 2024

Companies Act 2006

In the matter of application No. 3649 by Lidl Stiftung & Co. KG for a change to the company name of Lidl Logistics Limited, a company incorporated under number 05306500

Joint hearing

Background and pleadings

1. This decision relates to a request by Lidl Logistics Limited (“the respondent) to strike out the application before it files a defence. In his letter of 25 November 2021, Professor Mark Engelman, Counsel for the respondent, submitted that the application, which is based on section 69 of the Companies Act 2006 (“the Act”), should be struck out because:

(i) the respondent was registered on 7 December 2004;

(ii) section 69 of the Act came into effect on 1 October 2008 (4 years after the date the respondent was registered);

(iii) the Act does not have retrospective effect;

(iv) It follows that pre-existing company names, including that of the respondent, are not governed by section 69 of the Act and were the adjudicator to apply section 69 to the respondent’s company name adversely to the interests of either party, the decision would be an exercise in the unfair and arbitrary.

2. Prof. Engelman referred to the following comments of the House of Lords:
“Considerable difficulties, however, might arise if the new interpretation of legislation, consequent on an application of section 3, were always to apply to pre-Act events. It would mean that parties’ rights under existing legislation in respect of a transaction completed before the Act came into force could be changed overnight, to the benefit of one party and the prejudice of the other. This change, moreover, would operate capriciously, with the outcome depending on whether the parties’ rights were determined by a court before or after 2 October 2000. The outcome in one case involving pre-Act happenings could differ from the outcome in another comparable case depending solely on when the cases were heard by a court. Parliament cannot have intended section 3(1) should operate in this unfair and arbitrary fashion.”

3. In addition he referred to the Civil Procedure Rules 3.4.1, headed: “Power to strike out a statement of case” which, he acknowledged, merely informs the adjudicator with respect to interpretation of The Company Names Adjudicator Rules 2008 (“the Rules”), and is not binding upon the adjudicator. This states:

“Applications under r.3.4 should be made as soon as possible (emphasis added) and before allocation if possible (PD supplementing r.3.4, para.5.1, see para.3APD.5). If the application is made by the defendant against the claimant’s statement of case, the claimant cannot obtain a default judgment until that application is disposed of (r.12.3(3)(a)).

4. Prof. Engelman states that, without prejudice to any other defence the respondent has, the case brought by Lidl Stiftung & Co. KG (“the applicant”) is entirely based upon section 69 of the Act and, accordingly, is an “application … in whole … which has no reasonable prospect of success or is otherwise misconceived”.

5. In response to the request, the tribunal issued a preliminary view to refuse the request on 2 December 2021. It stated:

“In respect of the request for strike-out the application on the ground that The Companies Act 2006 does not have retrospective effect. This appears to be incorrect because section 1 of the Act states:

“1. Companies

(1) In the Companies Acts, unless the context otherwise requires— “company” means a company formed and registered under this Act, that is—

(a) a company so formed and registered after the commencement of this Part, or

(b) a company that immediately before the commencement of this Part—

(i) was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or

(ii) was an existing company for the purposes of that Act or that Order,

(which is to be treated on commencement as if formed and registered under this Act).

(2) Certain provisions of the Companies Acts apply to—

(a) companies registered, but not formed, under this Act (see Chapter 1 of Part 33), and

(b) bodies incorporated in the United Kingdom but not registered under this Act (see Chapter 2 of that Part).

(3) For provisions applying to companies incorporated outside the United Kingdom, see Part 34 (overseas companies).”

The underlined text provides retrospective effect in respect of companies registered under the 1985 Act. Further, even in the absence of an express provision that the Act has retrospective effect, the policy aim of section 69 was to avoid companies having to go to court for an order to get a company name changed under passing off law. When considering the nature and purpose of the provision and the consequences of applying it to existing circumstances it is clear that it does not introduce a new requirement or change to the rules of property but, rather, it seeks to provide a remedy to a perceived existing mischief, i.e. company name squatting. In context, there is every reason to believe that it was intended to be applied to existing companies as well as new ones. It does not make anything unlawful that was not already unlawful. Rather, it simply adds a more affordable remedy.

For these reasons, the preliminary view is to reject the request to strike out the application.”

6. On the 7 December 2021, Prof. Engelman replied providing further reasoning and, if these further reasons were not considered sufficient to grant the request to strike out, requested a hearing. He submitted that section 1 of the Act does not displace the general principle that Acts of Parliament do not have retrospective effect. Prof. Engelman referred to Schedule 2 of The Companies Act 2006 (Commencement No. 8, Transitional Provisions and Savings) Order 2008 (“the Order”). Article 17(1) of that Schedule, headed “Transitional Provisions and Savings” under the sub-heading “A company’s name (ss. 53 to 81)” states:

“The following provisions of the Companies Act 2006 do not affect the continued registration of a company by a name by which it was duly registered—

(a) in the case of an existing company, immediately before 1st October 2009”

(Prof. Engelman’s emphasis)

7. He submitted that this article expressly overrides any intention otherwise conveyed by section 1 of the Act that it might have retrospective effect.

8. A joint hearing was held on 21 December 2021 where the respondent was represented by Professor Mark Engelman of Counsel and the applicant was represented by Ms Anna Szpek for Murgitroyd & Company

Decision

9. Rule 5(2) of The Company Names Adjudicator Rules 2008 (“the Rules”) states:

“The adjudicator may strike out the application or any defence in whole or in part if it is vexatious, has no reasonable prospect of success or is otherwise misconceived”.

10. I reproduce below the full text of Article 17 of Schedule 2 of the Order to give its full context:

“A company’s name (ss. 53 to 81)

17.—(1) The following provisions of the Companies Act 2006 do not affect the continued registration of a company by a name by which it was duly registered—

(a) in the case of an existing company, immediately before 1st October 2009, or (b) in the case of a transitional company, on its registration or re-registration (as the case may be).

(2) The provisions are—

(a) section 54 (name suggesting connection with government or public authority); (b) section 55 (other sensitive words or expressions); (c) section 57 (permitted characters etc); (d) section 65 (inappropriate use of indications of company type or legal form); (e) section 66 (name not to be the same as another in registrar’s index).”

11. At the hearing, Prof. Engelman maintained the claim that the Act generally and section 69 specifically do not have retrospective effect. There were three elements to his submissions, namely, that:

(i) there is general presumption against retrospectivity unless the legislation contains specific statements to the contrary;

(ii) (a) there is no specific statement in the Act that indicates it has retrospective effect and, (b) Article 17 of the Order and section 1297 of the Act contain provisions that, it is submitted, point to there being no such effect, and;

(iii) the parliamentary debate during the Act’s passage through Parliament included a statement that the Act does not have retrospective effect.

First Limb: a general presumption against retrospectivity

12. There is no dispute that the tribunal has the power to strike out an application nor that there is a general presumption against retrospectivity. The latter is set out by the House of Lords in Wilson and others. Consequently, I agree with the first limb of Prof. Engelman’s submissions.

Second Limb: (a) no specific statement(s) in the Act to indicate that it has retrospective affect and, (b) Article 17 of the Order and section 1297 of the Act contain provisions that, it is submitted, point to there being no such effect

13. I begin by commenting upon the provisions under section 1 of the Act and Article 17(1) of the Order. In respect of section 1, it provides that a company formed under the 1985 Act is to be treated as if formed and registered under the Act. On an ordinary interpretation of this, a company, such as the respondent, formed under the 1985 Act should be treated in the same way as if it was formed under the Act and this treatment would include treatment under section 69 of the Act. On the face of it, this provides retrospective effect.

14. Article 17(1) of Schedule 2 of the Order provides certain explicit exclusions regarding the effect of section 1. It provides a list of sections of the Act that cannot have an effect upon the continued registration of a company registered under the 1985 Act. Significantly, section 69 is not listed. Prof. Engelman submitted that section 66 (that is listed) incorporates within its language the very same words as section 69. Section 66 states:

“66 Name not to be the same as another in the index

(1) A company must not be registered under this Act by a name that is the same as another name appearing in the registrar’s index of company names.” (my emphasis)

15. He argued that since Article 17(1) and section 66 of the Act preclude the Secretary of State from deciding a “same name” issue because the company was formed under the 1985 Act, it would make no sense” for members of the public not also to be precluded from bringing a “same name” case under section 69. Such an argument fails to identify an important distinction between section 66 and section 69. Section 66 is a provision that has effect upon company names that are the same as another company name on the Companies Register. On the other hand, section 69 is a provision where a company name is the same or sufficiently similar to a name associated with the applicant in which he has goodwill. Section 66 provides a remedy for avoiding identical company names on the Companies Register. Section 69 provides a remedy against a company name that impinges upon the goodwill of another party.

16. This difference of purpose is reflected, in practical terms, by the fact that the Company Names Tribunal was expressly set up to act as the decision-making body in respect of disputes under section 69 and to use its powers as specifically referred to in sections 72 – 74. These sections reference the role of company names adjudicators in determining applications under section 69. The tribunal does not determine issues under section 66. This illustrates that section 69 was introduced to provide a remedy to a perceived existing mischief, i.e. company name squatting and as stated in the preliminary view, it does not make anything unlawful that was not already unlawful. Rather, it simply adds a more affordable remedy in the form of this tribunal.

17. Prof. Engelman also submitted that section 1(b)(i) of the Act does not constitute an express statement that section 69 is intended to have retrospective effect. It is true that section 69 is not expressly mentioned, however, it is clear that section 1(1) is intended to apply to the provisions of the Act because of the following wording (with my emphasis):

(1) In the Companies Acts, unless the context otherwise requires— “company” means a company formed and registered under this Act, that is—

(a) a company so formed and registered after the commencement of this Part, or

(b) a company that immediately before the commencement of this Part—

(i) was formed and registered under the Companies Act 1985 (c. 6) …

(which is to be treated on commencement as if formed and registered under this Act).

18. Prof. Engelman also contended that section 1(1)(a) and section 1(1)(b) should be taken to be cumulative and that section 1(1)(b) only applies to companies identified by the subset of companies caught by section 1(1)(a). I dismiss this because it is very clear from the use of the word “or” at the end of the section 1(1)(a) provision that they are alternative rather than cumulative provisions. As a consequence, section 1(1)(b)(i) must apply to all companies formed under the 1985 Act unless they are specifically excluded. Article 17(1) of Schedule 2 of the Order provides some limited exceptions but, as I have already determined, section 69 is not one of them.

19. Therefore, taking the provision set out in section 1 of the Act and the limited nature of the exclusion to the retrospective nature of the Act as set out in Article 17(1) of Schedule 2 of the Order, it appears that a company, such as the respondent, is subject to the provisions set out in section 69.
20. Prof. Engelman countered this in his submission that section 69 does not have retrospective effect when considered in the context of section 16(1) of The Interpretation Act 1978 and the leading case law on the interpretation of this and, therefore, I must find that there is no retrospective effect. The relevant part of section 16(1) of The Interpretation Act states:

“…, where an Act repeals an enactment, the repeal does not, unless the contrary intention appears … (b) affect the previous operation of the enactment repealed or anything duly done or suffered under that enactment; (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under that enactment … (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the repealing Act had not been passed.”

20. The “contrary intention” referred to in this section is provided in section 1 of the Act when it states that “a company … formed and registered under the Companies Act 1985 … [is] to be treated on commencement as if formed and registered under this Act.” Article 17 would provide a “carve out” from the principle set out in section 1 of the Act but it is clear, as I have already discussed, that Article 17 does not impact upon section 69 of the Act. Therefore, I dismiss the first element of the second limb of Prof. Engelman’s submission.

21. The second element concerns the impact of section 1297 of the Act. The relevant part of this section states:

“1297 Continuity of the law

(1) This section applies where any provision of this Act re-enacts (with or without modification) an enactment repealed by this Act.

(2) The repeal and re-enactment does not affect the continuity of the law.

(3) Anything done (including subordinate legislation made), or having effect as if done, under or for the purposes of the repealed provision that could have been done under or for the purposes of the corresponding provision of this Act, if in force or effective immediately before the commencement of that corresponding provision, has effect thereafter as if done under or for the purposes of that corresponding provision.

22. To interpret this section in the way submitted by Prof. Engelman creates an obvious tension with the provision contained in section 1 of the Act and also with Article 17 of the Order. The only part of this provision that bites upon the current issue is that a repeal and re-enactment does “not affect the continuity of law” (sub-paragraph (2)). The substantive issue of this case is whether the registration of the respondent was done for opportunistic reasons as set out in section 69. It is inconceivable that a reference to “continuity of law” would include permitting an opportunistic registration to remain on the register and to act as a bar to a legitimate challenge that a registration is opportunistic. Such an interpretation would be contrary to section 1 of the Act where it is stated that a company formed under the 1985 Act is “treated … as if formed and registered under [the Act]”. This provision has the effect of bringing the provisions in section 69 to bear upon a company formed under the 1985 Act. I conclude that section 1297 of the Act does not remove retrospective effect of section 69.

23. For clarity, my decision regarding the impact of section 1297 on the retrospectivity of section 69 results in there being no “context” that “otherwise requires” a company formed under the 1985 Act to not be treated as if formed under the Act for the purposes of section 69.

Third Limb: the parliamentary debate during the Act’s passage through Parliament included a statement that the Act does not have retrospective effect

24. The third limb of Prof. Engelman’s submission is that the Hansard record rebuts the policy argument raised in the preliminary view. In particular, Prof. Engelman referred to the exchanges in the Committee of the House considering the Company and Business Names (Amendment) (No. 2) Regulations 2007 introduced by Lord Bach. These exchanges were between Lord Hodgson and Lord Bach:

Lord Hodgson: “…it is clearly sensible that there should be a power to stop individuals and companies being set up in a way that gives greater weight to them or implies associations that do not in fact exist. I also understand the pre-prohibition requirement to stop the unscrupulous dashing in during the gap between the regulations being published and coming into force. My only surprise is that we have got as far as this without the words “Government” and “NHS” being on the list. I know that “royal” and “national” are on the list because I was once involved, along with the Bank of England, in setting up a company with the word “national” in its title. It took an inordinate amount of time to unravel it, even though the Bank was keen on the formation of the particular company.

I have one query on the detail of the regulation. Paragraph 2.3 of the Explanatory Memorandum states:

The Regulations will not affect any company that already has a name including ‘Government’ or ‘HPSS’, ‘HSC’ or ‘NHS’.

The same goes for any business. There is no retrospective effect in these regulations. Am I right in believing that if an organisation has such a name in its title, it has got it? I ask this because if it is retrospective, that is another issue. The paragraph goes on to state:

There is a transitional provision for those to whom such a business is transferred.

Lord Bach: “The new powers are to be found in the Companies Act under Section 55, which covers company names, and the other section is—wait for it—Section 1,194, for business names. I hope that that answers the first question of the noble Lord, Lord Hodgson. On the question about retrospective effect, there is none. On transfer, the expression in Section 2(2)(b) of the Business Names Act 1985 places no restriction on the meaning of the word “transfer”.”

25. From this exchange it can be seen that Lord Bach was responding to a specific query regarding the use of the words/acronyms ‘Government’, ‘HPSS’, ‘HSC’ or ‘NHS’ in a company name. Therefore, it is reasonable to interpret Lord Bach’s comment as specifically referring to the provisions in the Act that deal with the provisions in the Act such as sections 54 and 55. I note that these provisions are among the sections expressly listed at article 17(2)(b) of Schedule 2 of the Order. I find further support for this in that if Lord Bach’s comments were intended to indicate that the Act had an overarching absence of retrospectivity, then this would be at odds with the provisions contained in section 1 and create tension with the purpose of article 17(1) of Schedule 2 of the Order that only identifies certain provisions as not having retrospective effect.

26. In summary, I reject Prof. Engelman’s third limb regarding the claimed general absence of retrospective effect of the Act. Further, the exchange does not counter the preliminary view that section 69 does not introduce a new requirement or change to the rules of property but, rather, it seeks to provide a remedy to a perceived existing mischief, i.e. company name squatting.

Outcome

27. Taking all of the above into account, I conclude that section 69 has retrospective effect and I reject the respondent’s claim to strike out the application. As a consequence, the proceedings continue.

28. After the deadline for submissions on costs (see paragraph 30, below) has passed, the parties will be informed of a revised timetable for the proceedings, including the date for the respondent to file its defence.

Costs

29. The Tribunal awards costs from the published scale at paragraph 10 of the Tribunal’s Practice Direction. This is intended to provide a contribution to costs, but not to recompense the successful party. The applicant has been successful and would normally be entitled to a contribution towards its costs. Ms Szpek agreed with Prof. Engelman that I should defer making any award of costs whilst the parties were engaged in mediation. I did not take further submissions on costs and agreed to await the conclusion of mediation.

30. I consider that a month from the date of this decision is sufficient to conclude mediation activities and, therefore, the parties are directed to provide written submissions on the issue of costs within 28 days of the date of this decision and, if necessary, I will then issue a supplementary decision on costs.

31. 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.

Dated 18 January 2022

Mark Bryant
Company Names