Joddrell V Peaktone LTD

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[2013] 1 All ER 13
Joddrell v Peaktone Ltd

[2012] EWCA Civ 1035 COURT OF APPEAL, CIVIL DIVISION ETHERTON, MUNBY AND LEWISON LJJ 19, 26 JULY 2012
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Company Restoration to register Effect of court order for restoration to register Company being struck off register and dissolved Subsequent order restoring company to register Whether effect of statutory deeming provision retrospectively to validate action commenced by or against company during period of dissolution Companies Act 2006, s 1032(1).
In 2009 the defendant company was struck off the Register of Companies and dissolved pursuant to s 652 of the Companies Act 1985. In 2010 the registrar granted the claimant's application for the defendant to be restored to the register pursuant to s 1029a of the Companies Act 2006. The claimant had been employed by the defendant and had issued proceedings against the defendant claiming that he had suffered noise induced hearing loss which he claimed was attributable to his employment. The defendant issued an application seeking an order striking out the proceedings on the ground that they were an abuse of process. The defendant submitted that the proceedings were a nullity when they were issued, and the order restoring the defendant to the register did not validate the proceedings retrospectively. The district judge held that it was not possible to issue proceedings against a company that had been struck off and then seek to validate those proceedings by a later successful application to restore the company. Accordingly, the claim was struck out. That decision was overturned on appeal. The judge held that the jurisprudence in relation to the construction of s 353 of the Companies Act 1948 and s 653 of the 1985 Act dealing with the effects of restoration of a company, should not be departed from when construing the terms of s 1032(1)b of the 2006 Act, which provided that the general effect of an order by the court for restoration to the register was that the company was deemed to have continued in existence as if it had not been dissolved or struck off the register. The result was that the defendant was precluded from relying on the fact that the company was dissolved when the proceedings were issued. The defendant appealed. The claimant contended that, on the true construction of s 1032(1) of the 2006 Act, the words 'deemed to have continued in existence as if' had the effect that the defendant was capable of being sued because the provision applied to every case of restoration to the register, in contrast to the previous analogous statutory provision which had applied only where the relevant application had been made pursuant to s 653 of the 1985 Act and not where it had been made pursuant to s 651 of that Act. The defendant submitted that the judge had been wrong to conclude that a claimant could properly issue proceedings against a dissolved company which could subsequently be validated by an order made
a b
Section 1029, so far as material, is set out at [15], below Section 1032, so far as material, is set out at [16], below [2013] 1 All ER 13 at 14
pursuant to s 1029 of the 2006 Act. What the claimant should have done, the defendant submitted, was to seek to restore the defendant to the register before
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commencing proceedings against it. Held The effect of s 1032(1) of the 2006 Act was retrospectively to validate an action purportedly commenced by or against a company during the period of its dissolution. A clear distinction emerged from the jurisprudence between the consequences of the order depending upon whether the order was made pursuant to s 651 of the 1985 Act or its statutory predecessors or pursuant to s 653 of the 1985 Act or its statutory predecessors. In the first case, the order had no retrospective effect except to restore the company's corporate existence. It did not validate any actions or activities that had taken place during the period of dissolution. In particular it did not restore to life an action which, having been commenced before the company was dissolved, had abated on the company's dissolution, nor did it bring to life an action which, purportedly commenced while the company was dissolved, was a nullity. In the other case, by contrast, the effect of the deeming provision was to validate retrospectively what had happened while the company was dissolved, so that once the restoration order was made the company was to be regarded as never having been dissolved. Prior to the 2006 Act, there had been two different procedures in place. The 2006 Act had assimilated those procedures into a single composite procedure found in s 1032(1). The fact that in all material respects Parliament had chosen to use precisely the same language in s 1032(1) of the 2006 Act as had previously appeared in s 653 of the 1985 Act and its predecessors could not have been fortuitous. Parliament had plainly been seeking to carry forward, albeit with a wider application, the principle which had, in a narrower context, been repeatedly used in successive Companies Acts. Accordingly, there had been no reason for thinking that the previous jurisprudence should not have applied to s 1032(1) of the 2006 Act. That jurisprudence applied to elucidate and explain the meaning and effect of s 1032(1) of the 2006 Act in just the same way as it had elucidated and explained the meaning and effect of s 353 of the 1948 Act and s 653 of the 1985 Act. Accordingly, the appeal would be dismissed (see [1], [29], [40][42], [49], [53], [54], below). Tymans Ltd v Craven [1952] 1 All ER 613 applied. Morris v Harris [1927] AC 252 considered. Notes For the effect of court order for restoration to the register see 15 Halsbury's Laws (5th edn) (2009) para 1538. For s 1032 of the Companies Act 2006, see 8 Halsbury's Statutes (4th edn) (2008 reissue) 1482. Cases referred to in judgments Dixon (CW) Ltd, Re [1947] 1 All ER 279, [1947] Ch 251. Eastern Capital Holdings Ltd v Fitter (19 December 1991, unreported), QBD. Global Multimedia International Ltd v Ara Media Services (Abu-Aljadail and ors, Pt 20 defendants) [2006] EWHC 3612 (Ch), [2007] 1 All ER (Comm) 1160. Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203, [2008] 1 WLR 806. Lewis and Smart Ltd, Re [1954] 2 All ER 19, [1954] 1 WLR 755. Mixhurst Ltd, Re [1994] 2 BCLC 19. Morris v Harris [1927] AC 252, HL. [2013] 1 All ER 13 at 15 Smith v White Knight Laundry Ltd [2001] EWCA Civ 660, [2001] 3 All ER 862, [2002]
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1 WLR 616. Steanes Fashions Ltd v Legal and General Assurance Society Ltd [1995] 1 BCLC 332, CA. Tymans Ltd v Craven [1952] 1 All ER 613, [1952] 2 QB 100, CA. Uphill v BRB (Residuary) Ltd [2005] EWCA Civ 60, [2005] 3 All ER 264, [2005] 1 WLR 2070. Workvale Ltd (in dissolution), Re [1992] 1 WLR 416, CA. Appeal Peaktone Ltd (Peaktone), appealed from the decision of Judge Stewart QC, sitting in the Manchester County Court, on 27 July 2011, allowing the appeal of Kenneth Joddrell from the decision of District Judge Jones, on 18 January 2011, granting Peaktone's application for Mr Joddrell's personal injury action against it to be struck out as an abuse of the process of the court under CPR 3.4(2)(b). The facts are set out in the judgment of Munby LJ.
Catherine Foster (instructed by Clyde & Co Claims LLP, Manchester) for Peaktone. James Malam (instructed by Recompense Ltd, Totnes) for Mr Joddrell. Judgment was reserved. 26 July 2012. The following judgments were delivered. MUNBY LJ (giving the first judgment at the invitation of Etherton LJ). [1] This appeal raises as the central issue a short point on the meaning and effect of s 1032(1) of the Companies Act 2006. Specifically, it raises the question whether an order made pursuant to s 1029 of the 2006 Act has the effect of retrospectively validating an action purportedly commenced against a company during the period of its dissolution. Judge Stewart QC, from whom this appeal is brought, has held that it does. In my judgment he was right to do so. Section 1032(1) has that effect. The facts [2] The respondent, Kenneth Joddrell (Mr Joddrell), was employed by the appellant, Peaktone Ltd (Peaktone), between 1986 and 2003/2004. He claims to have suffered noise-induced hearing loss which he alleges is attributable to that employment. In his particulars of claim (see below) he pleads that he first became aware of a hearing loss 'in 2006' when he received certain advice. He further pleads that this is his 'date of knowledge'. [3] On 31 March 2009 Peaktone was struck off the Register of Companies and dissolved pursuant to s 652 of the Companies Act 1985. [4] On 24 August 2009 Mr Joddrell purportedly issued proceedings against Peaktone in the Torquay and Newton Abbot County Court claiming damages for personal injury. His particulars of claim followed on 23 December 2009. The claim form and the particulars of claim were purportedly served on Peaktone by a letter dated 23 December 2009 posted to what had been Peaktone's registered office immediately prior to its dissolution. The letter and its contents came to the attention of accountants who had previously acted for Peaktone. In a letter dated 4 January 2010 addressed to Mr Joddrell's solicitors,
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[2013] 1 All ER 13 at 16 they pointed out that Peaktone had been dissolved and that it was therefore unable to complete the forms enclosed in the letter of 23 December 2009. [5] On 29 April 2010 Mr Joddrell applied to the Companies Court for an order pursuant to s 1029 of the 2006 Act that Peaktone be restored to the Register of Companies. On 10 June 2010 Mr Registrar Nicholls made the order sought. [6] Two things about the proceedings in the Companies Court should be noted. First, that the evidence in support of the application made no reference to the fact that the personal injury proceedings had already been issued. On the contrary, the evidence indicated that the order under s 1029 was being sought because Mr Joddrell wished to 'commence' proceedings against Peaktone. Second, that no application for directions under s 1032(3) was made (see below). It is suggested that, if he had known the true facts, Mr Registrar Nicholls would have declined to make any direction advantageous to Mr Joddrell and, indeed, would have required him to bring a fresh claim. It is said that, given the inaccurate and misleading presentation of the circumstances to the Companies Court, Judge Stewart ought to have concluded that the circumstances in which the restoration was achieved amounted to an abuse of process. As matters stand, however, all this seems to me to be neither here nor there. Quite apart from the fact that none of it is raised in Peaktone's grounds of appeal, the order made by Mr Registrar Nicholls stands. It has never been appealed. No application has ever been made to set it aside. We cannot go behind it. The question for us is what it means and what its effect is. [7] On 18 June 2010 Peaktone issued an application in the Manchester County Court (to which the proceedings had by then been transferred) seeking an order striking out the claim under CPR 3.4(2)(b) and (c), that is, on the grounds that it was an abuse of the court's process and that there had been a failure to comply with a rule (this being identified in an accompanying skeleton argument as a failure to comply with CPR 7.5(1)). The application was heard by District Judge Jones on 18 January 2011. He delivered a reserved judgment on 25 January 2011 and ordered that the action be struck out pursuant to CPR 3.4(2)(b). He gave permission to appeal. His order is dated 10 May 2011, the day after he had given a supplemental judgment dealing with costs. [8] On 26 May 2011 Mr Joddrell filed his appellant's notice. The appeal came on before Judge Stewart on 27 July 2011. On that occasion Judge Stewart dealt with and gave judgment on what he called the main issue on the appeal. On 28 November 2011 Judge Stewart dealt with and gave judgment on the remaining issues. In the upshot the order he made on the latter date was that the appeal be allowed and the order of District Judge Jones striking out the claim be set aside. [9] Peaktone's appellant's notice dated 4 January 2012, seeking the reinstatement of the order made by District Judge Jones, was considered by Ward LJ on 8 March 2012. He gave permission to appeal, observing that 'this is an amusing enough point of just enough importance to justify a second appeal'. On 17 April 2012 Mr Joddrell filed a respondent's notice. [10] Mr Joddrell has been represented throughout by Mr James Malam. Peaktone was represented before us, as before Judge Stewart, by Ms Catherine Foster (another counsel had appeared before District Judge Jones). At all three stages the arguments on each side have remained essentially the same. Before turning to those arguments it is convenient first to refer to the relevant statutory provisions. [2013] 1 All ER 13 at 17 The statutory framework [11] The 2006 Act effected a significant change in the statutory framework. Prior to that, and for many years, successive Companies Acts had distinguished between two different routes to a judicial restoration of a dissolved or struck off company.
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[12] The first, which originated in 1900 and thereafter appeared successively in s 242 of the Companies (Consolidation) Act 1908, s 295 of the Companies Act 1929, s 353 of the Companies Act 1948 and s 653 of the 1985 Act, conferred on the court a power in defined circumstances, though exercisable for up to 20 years after dissolution, to order the restoration to the register of a company previously struck off by the Registrar of Companies. The effect of such an order was stated as being that the company is 'deemed to have continued in existence as if its name had not been struck off'. [13] The other, which originated in 1907 and thereafter appeared successively in s 223 of the 1908 Act, s 294 of the 1929 Act, s 352 of the 1948 Act and s 651 of the 1985 Act, conferred on the court a general power, though exercisable only within two years of the date of dissolution of the company, to 'make an order declaring the dissolution to have been void'. The statute provided that 'thereupon such proceedings may be taken as might have been taken if the company had not been dissolved'. Importantly, the 'deeming' provision was not included. [14] I should add that s 651 of the 1985 Act was amended by s 141 of the Companies Act 1989 so as to remove the two-year limitation where the purpose of the application was to enable personal injury proceedings to be brought against a dissolved company. [15] As Judge Stewart noted, the 2006 Act replaced these two separate procedures with a new single procedure. Section 1029(1) of the 2006 Act provides that an application can be made to the court to restore to the register a company which has been dissolved or struck off. Section 1029(2) provides that an application can be made by various specified persons including 'any person with a potential legal claim against the company' and 'any other person appearing to the court to have an interest in the matter'. Section 1030 so far as material for present purposes provides that:
'(1) An application to the court for restoration of a company to the register may be made at any time for the purpose of bringing proceedings against the company for damages for personal injury (4) In any other case an application to the court for restoration of a company to the register may not be made after the end of the period of six years from the date of the dissolution of the company, subject as follows.'
I need not set out the following subsections. Section 1030(6) provides a definition of 'personal injury' which there is also no need to set out. Nor need I set out s 1031. [16] So far as material for present purposes, s 1032 provides as follows:
'(1) The general effect of an order by the court for restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off the register. (2) The company is not liable to a penalty for failure to deliver accounts for a financial year [which] ended(a) after the date of dissolution or striking off, and (b) before the restoration of the company to the register.
[2013] 1 All ER 13 at 18
(3) The court may give such directions and make such provision as seems just for placing the company and all other persons in the same position (as nearly as may be) as if the company had not been dissolved or struck off the register.'
This later power includes, as s 1030(3) recognises:

'power to direct that the period between the dissolution (or striking off) of the company and the making of the order is not to count for the purposes of any [enactment as to the time within which proceedings must be brought].'
[17] For present purposes there are three things to be noted about this new statutory regime. First, as I have already mentioned, that there is now a single procedure. Second, that the previous time limits of two years and 20 years have been replaced with a single period of six years (albeit subject to the exception in relation to personal injury proceedings which had been introduced by the 1989 Act). Third, and most significant, that the crucial words 'deemed to have continued in existence as if', which had previously applied only where the application was made pursuant to s 653 of the
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1985 Act, and not where the application was made pursuant to s 651, now apply by virtue of s 1032(1) in every case. The case law [18] We were helpfully taken through a number of authorities on the old law. I can start with Morris v Harris [1927] AC 252 where Lord Sumner (at 257), having drawn attention to the differing language of ss 223 and 242 of the 1908 Act, continued:
'The words to have been void, in s. 223, appear, it is true, so far as they go, to have some retrospective effect, and tend to some extent to support the respondent's argument. On the other hand, the remaining words, which define the order, point rather to a declaration removing a bar to such action as might otherwise have been taken, than to one validating past proceedings, taken since the dissolution through ignorance or disregard of it and consequently invalid. The remaining words, and thereupon such proceedings may be taken, as might have been taken if the company had not been dissolved, seem to me to point conclusively in the same direction. They describe an authority given to the parties concerned to do, thereupon and accordingly thereafter, things which they might have done but obviously had not done theretofore, and, but for the order, could not have done after the dissolution. I think these words do not affect the validity or the contrary of steps taken during that interval. They must still depend on the facts existing and the rights arising before and independently of the order.'
[19] Lord Blanesburgh (at 268269) said:

'I cannot myself doubt that both the words of s. 223 empowering the C ourt to make an order declaring the dissolution to have been void, and the following words expository of the result, and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved, were in each case designedly chosen to produce the precise result which my noble and learned friend has attributed to them. It is true that a declaratory order under the section unqualified in terms does,
[2013] 1 All ER 13 at 19
and it was in my judgment essential, if many difficulties which readily occur to the mind were to be avoided, that such an order should have the effect of restoring to the revived company its corporate existence as from the very moment of the dissolution thereby declared to have been void. But the expository words which follow carefully and, as I think, advisedly refrain from adding that such an order is to have the effect of restoring to the company from the same moment, not its corporate existence only, but its corporate activity also. On the contrary, these expository words import, as I think, that it is only after the order has been madeit is thereupon but not beforethat any active consequences are to ensue. I think, my Lords, that the terms in which these consequences are described are exhaustive and emphatic. They are intended to show that an order under the section made, it may be, as long as two years after a dissolution which up to that moment was completely effective, is not at once and as of course to ratify acts done during the interval, which, if done at all, must necessarily have been acts of mere usurpation, by a liquidator or other pretended agent with no office knowingly done on behalf of a company which had no existence. On consideration, it appears, I think, clear that automatically to validate such acts as being the acts of a duly constituted officer on behalf of a duly incorporated company might involve consequences too disastrous to be even envisaged. They are avoided by the terms of the section. The company is restored to life as from the moment of dissolution but, continuing a convenient metaphor, it remains buried, unconscious, asleep and powerless until the order is made which declares the dissolution to have been void. Then, and only then, is the company restored to activity.'
[20] In Re CW Dixon Ltd [1947] 1 All ER 279, [1947] Ch 251, the issue was whether a restoration order under s 294 of 1929 Act had the effect of automatically revesting in the company, without the need for a vesting order, property which had vested in the Crown on dissolution as bona vacantia. Vaisey J held that the effect of declaring the dissolution 'to have been void' was to avoid the dissolution ab initio, and that accordingly there was no need for a vesting order. In reaching his decision, Vaisey J relied on Morris v Harris. His decision and reasoning was approved by this court in Smith v White Knight Laundry Ltd [2001] EWCA Civ 660, [2001] 3 All ER 862, [2002] 1 WLR 616. [21] In Tymans Ltd v Craven [1952] 1 All ER 613, [1952] 2 QB 100, an application to the county court for a new tenancy was made on 23 July 1951 on behalf of a company which had been struck off the register in November 1950. The company was subsequently restored to the register pursuant to s 353 of the 1948 Act on 15 October 1951. The application came on for hearing on 31 October 1951 and was dismissed by the county court judge on the basis that the restoration order was not retrospective.
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The Court of Appeal by a majority (Sir Raymond Evershed MR and Hodson LJ, Jenkins LJ dissenting) allowed the company's appeal. Having referred extensively to Morris v Harris, the court held that an order under s 353 declaring that 'the company shall be deemed to have continued in existence as if its name had not been struck off', was effective to validate retrospectively all acts done in the name or on behalf of the company during the period between its dissolution and the restoration of its name to the register. As the Master of the Rolls put it ([1952] 1 All ER 613 at 620, [1952] 2 QB 100 at 113): [2013] 1 All ER 13 at 20
'on 31 October 1951, it was no longer open to [the respondent] to allege the non-existence of the company on the preceding 23 July, for, by the terms of the sub-section, the company had then to be deemed to have continued in existence as if its name had never in fact been struck off the register.'
Referring to Morris v Harris, the court recognised the difference between the effect of orders made under s 352 and s 353. As the Master of the Rolls observed ([1952] 1 All ER 613 at 616, [1952] 2 QB 100 at 107) '[t]he difference in form and language is indeed of the highest importance', Earlier, during the course of argument, the Master of the Rolls ([1952] 2 QB 100 at 104) had asked this very pertinent question:
'Suppose a workman started an action for negligence against his employers, a company, and found that the company had been struck off? Why could not the proceedings be validated?'
[22] In Re Lewis and Smart Ltd [1954] 2 All ER 19, [1954] 1 WLR 755, proceedings had been begun against a company which was subsequently dissolved. An order having then been made under s 352 of the 1948 Act declaring the dissolution void, the question arose as to whether the effect of that order was to revive the proceedings. Wynn-Parry J held, applying Morris v Harris, that the proceedings, having abated on the dissolution of the company, did not revive. [23] In Re Workvale Ltd (in dissolution) [1992] 1 WLR 416, the company was dissolved on 22 July 1986. A writ claiming damages for personal injury against the company was issued on 3 September 1986. The plaintiff's primary limitation period expired on 26 November 1986. On 18 January 1991 the company was restored to the register pursuant to s 651 of the 1985 Act (as amended by the 1989 Act). On appeal from the making of that order the Court of Appeal had to consider various issues which are not relevant for present purposes. In the course of his judgment, however, Scott LJ, with whom Stocker LJ and Sir Stephen Brown P agreed, said (at 418):
'It is worth pointing out that when the company became dissolved the primary limitation period applicable to [the plaintiff's] proposed action had not yet expired, and that from the date of dissolution until such time as the company should be restored to the register it was not possible for an effective action against the company to be commenced. On 3 September 1986, some 24 days before the expiration of the primary limitation period, [his] solicitors issued a writ naming the company as defendant. This, although the solicitors obviously did not realise it, was a nullity. The named defendant did not exist.'
Stocker LJ said much the same (at 426): 'the only action that has been brought by the plaintiff was a nullity from the start. He purported to sue a non-existent company. Therefore there never was an action in existence ' [24] In Re Mixhurst Ltd [1994] 2 BCLC 19, a case where an order was made under s 651 of the 1985 Act, Evans-Lombe J referred to Morris v Harris and said (at 28):
'In their speeches the House of Lords in that case seemed to be construing s 223 of the 1908 Act as only bringing back the company for the
[2013] 1 All ER 13 at 21
purpose of proceedings for it or against it but commenced after the relevant declaration. The declaration did not validate anything happening during the dissolution.'
[25] In Steanes Fashions Ltd v Legal and General Assurance Society Ltd [1995] 1 BCLC 332, it was discovered on the first day of the trial of an action that the plaintiff company had been dissolved. The trial judge accordingly dismissed the action. This
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court held that he should, in accordance with the unreported decision of Evans J in Eastern Capital Holdings Ltd v Fitter (19 December 1991), have stayed the proceedings pending an application for the restoration of the company to the register under s 653 of the 1985 Act. One of the grounds of appeal was that the effect of the order which had since been made under s 653 was retrospectively to cure the plaintiff's inability to maintain the action at the date of the trial. This court agreed. Nourse LJ, with whom Staughton and Leggatt LJJ agreed, expressed his entire agreement with Evans J's observation in Eastern Capital Holdings v Fitter that:
'both logic and convenience point to the action being stayed rather than dismissed. Whatever order is made now during the period of dissolution, it will be retrospectively validated when, and if, the company is restored to the Register. An order of dismissal would have to be set aside because it would be inconsistent with the action being resumed. An action which may be revived should not sensibly be dismissed now. But an action which is presently dead may sensibly be stayed, assuming that any order can be made now, until such time as circumstances change and the action is revived.'
It may be noted that one of the authorities which Evans J had considered in coming to this conclusion was Tymans Ltd v Craven. [26] I go finally to Smith v White Knight Laundry Ltd, where the widow of a former employee of a company wished to bring a claim against the company in relation to her deceased husband's mesothelioma. The company had been dissolved in 1963. Her husband died in February 1995. In January 1998 the company was restored to the register pursuant to s 651 of the 1985 Act (as amended). The writ was issued in April 1999. Leaving aside the effect of the restoration order, the primary limitation period had on any view expired on some date between the dissolution and the restoration. A number of issues arose which there is no need for me to explore. That which is relevant for present purposes was a dispute as to what the effect of the restoration order was in relation to the accrual of the claimant's cause of action. Jonathan Parker LJ, giving the judgment of the court, recorded it as being common ground (para [4]) that, so long as the company remained dissolved, the claimant could not commence proceedings against it. [27] The claimant's case in essence (para [32]) was that there was no defendant available to be sued until the making of the restoration order, that the cause of action could therefore not have accrued at any earlier date, and that the action therefore could not be statute-barred. The company's case (para [41]) was that, although that no cause of action could accrue against the company unless and until an order was made under s 651 declaring the dissolution to have been void, the effect of such a declaration was to restore the company's corporate existence retrospectively, as if it had never been dissolved. Accordingly, for limitation purposesand looking at the matter as at the date when the action was commencedthe cause of action accrued on the date [2013] 1 All ER 13 at 22 when the deceased had the requisite knowledge of damage (whenever that might be) notwithstanding that as at that date the company was in dissolution. [28] The court agreed with the company. Jonathan Parker LJ commented (para [51]) that the claimant's case 'simply begs the question as to the effect of declaring the dissolution to have been void'. Having referred to Vaisey J's decision in Re CW Dixon Ltd [1947] 1 All ER 279, [1947] Ch 251, and commented that Vaisey J had cited Morris v Harris [1927] AC 252 as providing support for his decision, Jonathan Parker LJ continued:
'[53] In our judgment he was right to do so. In the passages from the speeches of Lord Sumner and Lord Blanesburgh on which [counsel] relies a crucial distinction is made between on the one hand the corporate existence of the company, which is restored as from the date of the dissolution, and on the other hand proceedings which had taken place during the period of dissolution (referred by Lord Blanesburgh as corporate activity). In Morris v Harris the House of Lords decided that purported acts of a dissolved, and hence non-existent, company were not validated by the subsequent avoidance of the dissolution. But that is not the instant case. In the instant case, all that is needed for the accrual of a cause of action against the C ompany is corporate existence, no question of corporate activity, in the sense in which Lord Blanesburgh used that expression, arises.
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[54] We conclude, therefore, that by virtue of the restoration order [the claimant's] cause of action against the C ompany accrued on the date on which it would have accrued but for the dissolution.'
[29] In my judgment, all these cases, correctly analysed, are consistent with Morris v Harris. What emerges is the clear distinction between the consequences of the order depending upon whether the order was made pursuant to s 651 of the 1985 Act or its statutory predecessors or pursuant to s 653 of the 1985 Act or its statutory predecessors. In the first case, the order had no retrospective effect except to restore the company's corporate existence. It did not validate any actions or activities that had taken place during the period of dissolution. In particular it did not restore to life an action which, having been commenced before the company was dissolved, had abated on the company's dissolution, nor did it bring to life an action which, purportedly commenced while the company was dissolved, was a nullity. In the other case, by contrast, the effect of the deeming provision was to validate retrospectively what had happened while the company was dissolved, so that once the restoration order was made the company was to be regarded as never having been dissolved. The distinction is well illustrated by a contrasting pair of cases: Tymans Ltd v Craven and Re Lewis and Smart Ltd. The issues [30] In these circumstances the parties, both here and below, have sought to canvass two broad issues. The first, and by far the more important, point relates to the meaning and effect of s 1032(1) of the 2006 Act. Mr Joddrell contends that the effect of the order made in the Companies Court on 10 June 2010 is to preclude any reliance by Peaktone on the fact that it had been dissolved at the time the proceedings were issued on 24 August 2009. Peaktone for its part contends that the proceedings were and remain a nullity. The second point arises out of Mr Joddrell's contention that for various reasons it is in any event not open to Peaktone to pursue the contention of nullity. [2013] 1 All ER 13 at 23 [31] It is convenient to take these two points in turn. The first issue: the parties' contentions [32] In a nutshell Peakstone's case was and is that: (i) the proceedings when issued were a nullity: Re Workvale Ltd [1992] 1 WLR 416. (ii) The order restoring Peaktone to the register does not validate the proceedings retrospectively: Re Lewis and Smart Ltd [1954] 2 All ER 19, [1954] 1 WLR 755. Although s 1032(1) of the 2006 Act uses the same form of words as had previously appeared in s 653 of the 1985 Act and its predecessors, the jurisprudence which had gathered around the earlier provision should not be applied to s 1032(1). (iii) This is supported by the fact that so long as Peaktone remained dissolved it was impossible for Mr Joddrell to serve the proceedings in accordance with CPR 6.3(2), 7.4 and 7.5 and impossible for Peaktone to serve an acknowledgment of service. If any of these matters was in principle capable of being cured by directions given under s 1032(3) of the 2006 Act, no such directions were sought by Mr Joddrell or included by Mr Registrar Nicholls in the order he made on 10 June 2010. (iv) On the other hand, the effect of the order is that time continued to run, so the claim is now time-barred: Smith v White Knight Ltd [2001] 3 All ER 862, [2002] 1 WLR 616. [33] Mr Joddrell's case in essence is that: (i) s 1032(1) means what it says. (ii) More particularly, s 1032(1) should be construed in accordance with Tymans Ltd v Craven as meaning the same and having the same effect as s 653 of the 1985 Act and its predecessors. (iii) So far as concerns the argument based on limitation, it is not possible to tell on the evidence or the pleadings whether Mr Joddrell's 'knowledge', pleaded as being 'in 2006', was acquired before or after 24 August 2006so it is not yet possible to determine the matter one way or the other. [34] The limitation issue was not pursued before us. It is, not least for the reason given by Mr Joddrell, a matter for another day. I therefore say nothing more about it. Before
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us, the argument on this part of the case turned on the meaning and effect of s 1032(1). The first issue: the judgments below [35] District Judge Jones was referred to the more important of the authorities put before us, just as he was taken to the contrasting wording of ss 651 and 653 of the 1985 Act and their predecessors. He said that he found neither this comparison nor the authorities in any way helpful or indicative of the meaning of s 1032(1) of the 2006 Act. None of the authorities, he said, was on the point. His conclusion, in favour of Peaktone, was set out in the following passage in his judgment. Referring to s 1030(1) he said:
'the words for the purpose of bringing proceedings make it clear that before any proceeding can be issued against a company that has been struck off the register, the company has to be restored to the register. In my view, it is just not possible to issue proceedings against a company that has been struck off and then seek to resurrect or validate those proceeding by a later successful application to restore to the register. I make the same point with regard to s 1032(1) of the 2006 Act. This section cannot in my view validate the actions of a company during the time that it does not exist in the sense that it has been struck off the register. The effect of restoring it to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off the
[2013] 1 All ER 13 at 24
Register and that means in my view that as from the date of restoration, the company continues to exist as to future activities the proceedings issued against [Peaktone] in August 2009 were a nullity and cannot be revived or made legitimate by the C ompanies C ourt order of 10 June. The proceedings remain invalid '
[36] Judge Stewart expressed his 'first reaction' as being that the district judge's interpretation was 'far removed from the full force of s 1032(1)'. He was, he said, fortified in that impression by the decision in Tymans Ltd v Craven. Having quoted extensively from that case, Judge Stewart continued:
'As the Master of the Rolls said in the Tymans case, the words in issue in the present case were already of respectable ancestry in 1952. One has to assume that it cannot be by accident that they were incorporated into s 1032 of the 2006 Act and, unless there is a good reason not to do so, it seems to me that I should regard the C ourt of Appeal's majority decision in the Tymans case as determinative. As between the two competing possibilities, ie s 352(1) of the 1948 Act and s 651(1) of the 1985 Act on the one hand, and s 353(6) of the 1948 Act and s 653(2) of the 1985 Act on the other hand. Parliament chose the latter for the 2006 Act '
Turning to the district judge's reliance on s 1030(1), Judge Stewart commented that the district judge had adopted an incorrect approach in first considering s 1030 before turning to s 1032. He continued:
'The company has been restored and the consequences are those set out in s 1032(1). Section 1030 deals with when an application can be made In any event, the company has been restored here. I cannot go behind that and my task is to construe section 1032(1).'
He concluded:
'Notwithstanding that, and asking myself the question I asked before whether there is good reason {not} to depart from the construction of the words in s 1032 as clarified by the Master of the Rolls in the Tymans case in respect of the earlier legislation, my answer is that s 1030 does not provide good reason to depart from that construction.'
In relation to the arguments based on the asserted impossibility of complying with various provisions of the CPR while Peaktone remained dissolved, Judge Stewart observed that '[t]he points made by Ms Foster, although seemingly potent on their face, do not take account of the full force of the retroactivity provision of s 1032(1)'. The first issue: submissions [37] Ms Foster's case, as set out in Peaktone's grounds of appeal and in her skeleton argument, is that Judge Stewart was wrong to conclude that a claimant could properly issue proceedings against a dissolved company which could subsequently be validated by an order made pursuant to s 1029. He ought, she says, to have concluded that such
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proceedings were and remain invalid, indeed a nullity. Her argument proceeded in three stages. First, that the proceedings when issued were a nullity: In re Workvale Ltd (In Dissolution) [1992] 1 WLR 416. Second, that s 1032(1) merely provides for the 'general effect' of an order made pursuant to s 1029. This general principle, she says, cannot be interpreted as meaning that legal proceedings can be retrospectively validated [2013] 1 All ER 13 at 25 by a subsequent restoration to the register. A claimant, she submits, must always take what she calls the fundamental step of restoring the company to the register before commencing proceedings against it. Third, that the points based on the CPR to which I have already referred supported this conclusion. [38] Ms Foster elaborated the second step in her argument by contrasting the 2006 Act and its predecessors. Section 1032(3) is, she says, a stand alone provision, whereas previously the corresponding words had appeared at the end of the relevant subsection in s 655 of the 1985 Act (and its predecessor s 353 of the 1948 Act).1 She submits that the result in Tymans Ltd v Craven might have been different if s 1032(3) had been available. It is not clear, she says, that the draftsman intended the jurisprudence to be the same merely because he used what she describes as similar wording. Moreover, she says, s 1032(1) refers to the 'general effect' of the order; it does not specify that all acts purportedly undertaken are to be validated. In any event, she submits, Tymans Ltd v Craven is distinguishable, for there the company was the purported plaintiffso the act which was validated was a positive act undertaken by the company. In the present case, by contrast, Peaktone as the purported defendant did nothing. Smith v White Knight Laundry Ltd, she says, was on a different point and therefore on the central issue does not assist Mr Joddrell. As a fall back position, she says that even if the effect of the order was retrospectively to validate the issue of the proceedings, it did not retrospectively validate the service of the proceedings. [39] Mr Malam's response to this was brisk and pointed. Ms Foster's first proposition, he says, simply begs the question. Her second proposition founders on Tymans Ltd v Craven. She does not adequately explain why the general principle is to be interpreted as she asserts, nor why Tymans Ltd v Craven does not provide the answer. Historical and comparative analysis of the legislation, he says, shows that Parliament intended s 1032(1) of the 2006 Act to replicate s 653 of the 1985 Act (from which the critical words were borrowed, to all intents and purposes verbatim) and the rhetorical question posed by the Master of the Rolls in Tymans Ltd v Craven is directly in point. The plain meaning and effect of s 1032(1) is not constrained by s 1030(1) as District Judge Jones thought. Her third proposition is answered (as Judge Stewart did) by reference to the powerful effect of s 1032(1). In any event a combination of the overriding objective and the various general and specific powers conferred on the court by the CPR amply meet her concerns. Finally, and for good measure, Mr Malam points to what is said in Palmer's Company Law, binder 4, para 15.521 as being wholly supportive of his case. The first issue: discussion [40] In my judgment Judge Stewart was right and for the reasons he gave. I would be content to adopt his words as my own, but out of deference to the interesting arguments we have heard I think I should set out the matter in my own words.
1
In each case the relevant wording was as follows: 'the company shall be [1985 Act is] deemed to have continued in existence as if its name had not been struck off; and the court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position (as nearly as may be) as if the name of the company had not been struck off.' The words down to the semicolon now appear in s 1032(1) of the 2006 Act, except that the words 'dissolved or struck off the register' now appear in place of 'struck off'. The words after the semicolon now appear in s 1032(3) of the 2006 Act, except that the words 'such provision as seems' now appear in place of 'such provisions as seem'. [2013] 1 All ER 13 at 26
[41] Prior to the 2006 Act there were, as we have seen, two different procedures. In the 2006 Act, Parliament did two things: it assimilated these two procedures into a
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single composite procedure; and it applied to the new procedure the principle, now to be found in s 1032(1) of the 2006 Act, which had previously applied to only one of the old procedures. The fact that in all material respects Parliament chose to use precisely the same language in s 1032(1) as had previously appeared in s 653 of the 1985 Act and its predecessors cannot have been fortuitous. Parliament was plainly seeking to carry forward, albeit with wider application, the principle which, in a narrower context, it had repeatedly used in successive Companies Acts for over a century. It is said that Sir Roger Casement was hanged by a comma. Whatever the truth of that, the fact that what in s 653 of the 1985 Act appeared as two parts of a single sentence divided by a semicolon now appears in two separate sentences (indeed in two separate subsections) divided by a full stop cannot possibly, with all respect to Ms Foster's brave submission deployed in her skeleton argument, make the slightest difference. Nor, I might add, though she did not suggest the contrary, can the minor differences in language between s 1032(1) of the 2006 Act and s 353 of the 1985 Act to which I have drawn attention. [42] Despite Ms Foster's submission to the opposite effect, there is no reason for thinking that the previous jurisprudence should not apply to s 1032(1). On the contrary, given Parliament's deliberate use of a well established and much construed form of words there is every reason for asserting that the previous jurisprudence is highly relevant, indeed, as Judge Stewart held, determinative. As Mr Malam says, the crucial decision for present purposes is that of this court in Tymans Ltd v Craven. In my judgment it applies to elucidate and explain the meaning and effect of s 1032(1) in just the same way as it elucidated and explained the meaning and effect of s 353 of the 1948 Act (and thus, subsequently, of s 653 of the 1985 Act). It is precisely in point. True it is that in Tymans Ltd v Craven the company was the plaintiff whereas in the present case Peaktone is the defendant, but that in my judgment cannot make any difference. In each situation the purported proceedings are a nullity. The proceedings are a nullity because there is no lis; one of the parties does not exist. It cannot matter which side of the record is subject to this vitiating feature. In any event, Sir Raymond Evershed's interlocutory observation in Tymans Ltd v Craven is directly in point, demonstrating, as it seems to me, that he saw no material distinction between the two situations. [43] That is really the end of it, but for completeness I should add four further points. [44] First, the words 'general effect' in s 1032(1) cannot be read, as Ms Foster would have us read them, as cutting down the otherwise unrestricted language of the subsection. The significance of these words is to signal that the 'general' provision in s 1032(1) is subject to what follows in s 1032(2) and 1032(3). [45] Second, s 1032(1) is not to be read down, as District Judge Jones did, by reference to the provisions of ss 1029 or 1030, let alone, as he thought, by reference to the provisions of s 1030(1). Sections 1029 and 1030 are dealing only with the application for an order, and not with its effect; that is spelled out in s 1032. As both s 1029 and s 1030 show, there are many different forensic routes to the making of an order. The precise route to the order in any particular case cannot affect the meaning and effect of the order once it is made; that is spelled out by s 1032(1), which applies to every order. Otherwise, as Mr Malam points out, one would have the striking illogicality that whether proceedings which on commencement were a nullity are retrospectively validated by s 1032(1) will [2013] 1 All ER 13 at 27 depend upon whether they are proceedings for personal injury (and thus within s 1030(1)) or for some other cause of action (and thus within s 1030(4)). The illogicality is even greater when one recalls that the prime purpose of s 1030(1) and 1030(4) is simply to define the different periods within which an application for an order under s 1029 can be made in the two classes of case.2 [46] Third, the sweeping effect of s 1032(1) is illustrated by s 1032(3), which enables the Companies Court to make directions 'for placing the company and all other persons
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in the same position (as nearly as may be) as if the company had not been dissolved or struck off the register'. That, as it seems, to me, is a powerful and illuminating indication of the policy which Parliament had in mind. As Sir Raymond Evershed observed in Tymans Ltd v Craven [1952] 1 All ER 613 at 619, [1952] 2 QB 100 at 111 of the corresponding provision in s 353 of the 1948 Act, these words
'seem to me designed, not by way of exposition, to qualify the generality of that which precedes them, but rather as a complement to the general words so as to enable the court (consistently with justice) to achieve to the fullest extent the as you were position, which, according to the ordinary sense of those general words, is prima facie their consequence.'
[47] Fourth, the conclusion at which I have is arrived is supported by the views expressed both by the editors of Palmer's Company Law, para 15.521, and by the editors of Gore-Browne on Companies, ch 60, para [15A]. [48] There remain the two subsidiary points taken by Ms Foster. She submits that even if the effect of the order was retrospectively to validate the issue of the proceedings, it did not retrospectively validate the service of the proceedings. She has been able to provide no convincing argument as to why that should be so. In my judgment there is nothing in the point. Quite apart from the fact that this difficulty, if it is a difficulty, could in principle be cured either by a direction of the Companies Court under s 1032(3) of the 2006 Act or in accordance with the CPR, the effect of s 1032(1) is, on the view I have adopted, that service, which took place at what prior to dissolution had been Peaktone's registered office, is retrospectively validated by s 1032(1). More generally she relies upon the asserted impossibility of complying with various provisions of the CPR. Again, there is nothing in this point. As Judge Stewart said, the argument does not take account of the full force of the retroactivity provision of s 1032(1). In any event, picking up on points made by Mr Malam, a combination of the overriding objective and the various general and specific powers conferred on the court by the CPR amply meet Ms Foster's contentions. The first issue: conclusion [49] In my judgment, the effect of s 1032(1) is retrospectively to validate an action purportedly commenced by or against a company during the period of its dissolution.
2
Although nothing ultimately turns on the point it might be thought that there is in any event a fundamental internal inconsistency in Peaktone's case. Its argument, accepted by District Judge Jones and repeated before us by Ms Foster, is that the phrase 'for the purpose of bringing proceedings' in s 1030(1) is properly to be understood as confined to proceedings not yet commenced but proposed to be brought in future after an order has been made. Indeed, except on this hypothesis the argument that s 1032(1) is to be read down by reference to s 1030(1) takes Peaktone nowhere. However, if this is correctand I make clear that I express no view at all on a point which there is no need for us to decidethe consequence must be that Mr Joddrell's application did not in fact fall within s 1030(1) at all, on which footing it was necessarily 'any other case' within the meaning of s 1030(4). But on this basis the argument collapses completely. So the very hypothesis which is crucial to the argument in fact destroys it. [2013] 1 All ER 13 at 28
The second issue [50] Mr Joddrell makes essentially two separate submissions: (i) Peaktone's challenge, properly understood, is to the jurisdiction of the court: Uphill v BRB (Residuary) Ltd [2005] EWCA Civ 60, [2005] 3 All ER 264, [2005] 1 WLR 2070; Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203, [2008] 1 WLR 806. Application ought accordingly to have been made pursuant to CPR Pt 11, but Peaktone did not do so, nor indeed could it have, given that it has never filed the acknowledgment of service required by CPR, r 11(2). (ii) Peaktone has in fact submitted to the jurisdiction and thus waived any right it might have had to challenge the jurisdiction. In the first place it did so by applying to strike out the proceedings: see Global Multimedia International Ltd v Ara Media Services (Abu-Aljadail and ors, Pt 20 defendants) [2006] EWHC 3612 (Ch) at [31], [2007] 1 All ER (Comm) 1160 at [31], where Sir Andrew Morritt C said: 'A defendant who intends to challenge the jurisdiction of the court does not threaten to strike out the claim if the claimant refuses to discontinue it.' Moreover, it did so by
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raising the matters relied upon in support of its application under CPR 3.4(2)(c). Furthermore, it has variously alleged that it has a limitation defence and that there has been an abuse of process causing it unmitigatable prejudice, both of which presuppose that the court has jurisdiction to deal with the substance of the claim. [51] Peaktone disputes all this. District Judge Jones agreed with Peaktone, but Judge Stewart took a different view. Although he came to no final conclusion in relation to the second limb of Mr Joddrell's argument, he held that Peaktone's challenge to the validity of the proceedings was 'fair and square' within CPR Pt 11, just as in Hoddinott 's case, that Peaktone had failed to follow the CPR Pt 11 route and that accordingly it is deemed to accept that the court has jurisdiction. It followed, he said, that he would allow Mr Joddrell's appeal on this ground if he was wrong in relation to s 1032(1). [52] In the event, Judge Stewart was entirely correct to allow Mr Joddrell's appeal on the first ground. There is accordingly no need for us to consider whether he was also correct on the second ground. Since there is, in my judgment, no compelling reason why we should do so, I propose to say nothing more about it. LEWISON LJ. [53] I agree. ETHERTON LJ. [54] I also agree. There is nothing I wish to add. Appeal dismissed.
Peter Fuller
Barrister.
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Joddrell V Peaktone LTD

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Joddrell v Peaktone Ltd

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