Summary

A former director of a company that was known by a prohibited name and that had gone into insolvent liquidation, was held personally responsible for the debts of the company under the Insolvency Act 1986 s.217.

Facts

The claimant Revenue sought to recover monies due to it from the defendant (W) under the Insolvency Act 1986 s.216 and s.217. W had been the director of a company called "Williams Hair Studio Ltd" (the first company), which carried on a hairdressing business from premises where the name "Williams" appeared over the door. It went into insolvent liquidation in 2001. W became the director of "Williams & Xpress Ltd" (the second company), also a hairdressers, which was incorporated after the first company went into liquidation. The second company operated as the "Williams Hair Studio" and the two businesses were merged, and revenue generated by the premises from which the first company had operated was reflected in the accounts of the second. The second company went into insolvent liquidation. It was indebted to the Revenue in respect of arrears of PAYE income, tax and national insurance contributions. The Revenue submitted that the name of the second company was a prohibited name as it was similar to the name of the first company, W was personally responsible for the debts under s.217 of the 1986 Act, and the debts were the subject of certificates that were sufficient evidence of the debts to which they related. W argued that there was not any similarity between the two companies' names irrespective of the extent of the similarity between the businesses.

Held

The registered name of the second company was, when viewed in the appropriate legal context, so similar to the registered name of the first company as to suggest an association with that company. From the time of the merger of the two businesses, the second company was known by a name that was so similar to the registered name of the first company as to suggest an association with that company, Ricketts v Ricketts v Ad Valorem Ltd (2003) EWCA Civ 1706 , (2004) 1 All ER 894 and Revenue & Customs Commissioners v Walsh (2005) EWCA Civ 1921 considered. In the instant case there was a real probability of association and, therefore, W fell within the terms of s.216(2) of the Act.

Judgment for claimant.