England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM PLYMOUTH COUNTY
COURT (HHJ Overend)

		Royal Courts of Justice Strand, London, WC2A 2LL
		26 March 2003

Lord Justice Jonathan Parker :

INTRODUCTION

1. This is an appeal by Regent Leisuretime Ltd ("the Company") against orders made by HHJ Overend on 7 May 2002 and 12 July 2002 respectively. Permission to appeal was granted by Aldous LJ at an oral hearing on 24 October 2002.
2. The Company appears on this appeal by Mr Stephen Amos, a director, pursuant to a direction given by Peter Gibson LJ on 13 January 2003.
3. On 17 November 1998 the registrar of companies struck the Company off the register of companies pursuant to section 652 of the Companies Act 1985 ("the 1985 Act"). The Company was dissolved shortly thereafter. On 30 March 2001 Mr Amos and another former director of the Company, Mr Peter Barton, applied on behalf of the Company, without notice, to restore the Company to the register pursuant to section 653 of the 1985 Act. I shall refer to these proceedings as "the restoration proceedings". By an order made in the restoration proceedings on 19 April 2001 District Judge Walker restored the Company to the register, and directed that in the case of any claim of the Company which was not statute-barred on the date of dissolution no period of limitation should run between that date and the date of the order (19 April 2001). I shall refer hereafter to that period as "the period of dissolution".
4. On the following day (20 April 2001) the Company commenced an action against NatWest Finance Ltd (formerly County NatWest Ltd) ("the Bank") claiming damages for negligence and/or fraudulent misrepresentations. I shall refer to this action as "the Company action". The Bank is the respondent to this appeal.
5. On 13 July 2001 the Bank applied to be joined as respondent in the restoration proceedings, and on 17 October 2001 District Judge Tromans made an order to that effect. On 7 May 2002 a further hearing of the restoration proceedings took place, this time before HHJ Overend, at which the Bank was represented by Mr Andrew Sutcliffe QC (who also appears for the Bank on this appeal). At that hearing, the Bank applied to vary the order made by District Judge Walker by the deletion of the direction as to limitation ("the limitation direction"). Mr Amos (appearing then, as now, for the Company) resisted that application. In the result, by his order dated 7 May 2002 (the first of the two orders against which the Company now appeals) the judge acceded to the Bank's application.
6. In the meantime, on 14 September 2001 the Bank served a Defence and Counterclaim in the Company action. By its Defence, the Bank contended that the Company's claim was statute-barred, and on 21 January 2002 it applied for summary judgment on that basis.
7. The Bank's application for summary judgment came before HHJ Overend on 12 July 2002, and by his order of that date (the second of the two orders against which the Company now appeals) the judge granted that application, concluding that the Company's claim was statute-barred.

THE FACTUAL BACKGROUND

8. In 1991 the Company bought a property known as Carvynick Golf and Country Club, with the aid of a loan of £400,000 from the Bank. The loan was for a term of one year. In January 1992 the Company was looking to purchase two additional properties, The Blue Lagoon and The Tall Trees Night Club and to refinance the one-year loan on Carvynick Golf Club. (I shall refer hereafter to the three properties together as "the Properties".) For these purposes, the Company required a loan of £2.025M.
9. The Bank was willing to make such a loan, but it required (a) that a report and valuation be obtained from independent valuers showing a minimum forced sale value of the Properties of not less than £3.5M, and (b) that the security for the loan should include personal guarantees of all the Company's liabilities to the Bank, both present and future, by Mr and Mrs Amos jointly and severally (limited to £500,000) and by Mr Barton (limited to £250,000).
10. In early March 1992 (and in any event prior to 16 March) Mr Timothy Murphy, an employee of the Bank working in its Acquisition Finance Department in Leeds, telephoned Mr Douglas McLaughlin, a partner in Messrs. Tretheweys, Chartered Valuation Surveyors, and instructed him to value the Properties for the purposes of the proposed facility to be granted by the Bank. On 16 and 17 March 1992 Mr McLaughlin inspected the Properties and arrived at his valuations. In accordance with his firm's normal practice (and not having at that stage received any instructions from the Bank to the contrary) he did so on an open market value basis, as opposed to a forced sale value basis.
11. By letter dated 17 March 1992 a Mr Hargreaves, a local director of the Bank, wrote to Mr McLaughlan formally instructing him to carry out the valuation of the Properties (together with some other properties). The letter included the following:

"Your report should cover the following areas: -

Your opinion of: -

1. a current market value of the Properties assuming a willing buyer and a willing seller within a reasonable time period.

2. a current market value assuming a willing buyer and willing seller assuming a sale within 6 months as may be considered acceptable for security purposes. A "forced sale mortgage valuation".

12. Following receipt of that letter, Mr McLaughlin had a number of telephone conversations with Mr Murphy. In one of those conversations reference was made to the letter, and to the instruction contained in it to value the Properties on a forced sale value basis. In an affidavit sworn in an action subsequently brought by the Bank on the guarantees ("the Guarantee action", to which further reference is made below), Mr McLaughlin stated that after consulting with his partners he told Mr Murphy that the open market value of the Properties would need to be reduced by between 30 and 50 per cent in order to reflect their forced sale value. According to Mr McLaughlin's affidavit, Mr Murphy's response was that such a reduction would be detrimental to the transaction proceeding, and it was accordingly agreed that Mr McLaughlin's report would be prepared on an open market value basis.
13. The written report is dated 26 March 1992. A note in the introductory part of the report states as follows:

"This report is prepared in accordance with previously agreed Conditions of Engagement which are recited in Appendix 1 to this document."

14. Paragraph 4.1 of Appendix 1 to the valuation is in the following terms:

"Unless otherwise instructed, the value given is the "Open Market Value" defined as the best price at which the Property .... might reasonably be expected to be sold by private treaty at the date of the Tretheweys valuation assuming:

4.1.1. a willing seller;

4.1.2. a reasonable period in which to negotiate the sale taking into account the nature of the Property .... and the state of the market;

4.1.3. that values remain static during that period;

4.1.4. that the Property .... is freely exposed to the open market; and

4.1.5. that no account is taken of any additional bid by a purchaser with a special interest."

15. The report was received by the Bank on 26 March 1992 (although Mr Amos and Mr Barton did not see it until some time later). On that day, Mr Amos and Mr Barton attended at office of their solicitor, Mr Hills, to prepare for completion of the loan documentation the following day. In the course of that meeting, they made a conference call to Mr Murphy in which he was asked about the valuation. Mr Murphy responded to the effect that he had received the report and that it was "just enough". The court has held that this amounted to a representation that the Properties had been valued at not less than £3.5M on a forced sale value basis.
16. On the following day, 27 March 1992, the loan documentation was completed, and the Bank issued a formal facility letter. Paragraphs 8.9 and 8.10 of the facility letter contain the Bank's requirement for guarantees from Mr and Mrs Amos and from Mr Barton. Paragraph 9.3.1 (under the heading 'Conditions precedent') contains the requirement for an independent valuation. It provides that the Bank's obligation to make the facility available is subject to the Bank and its advisers being satisfied with:

".... a report and valuation by independent valuers showing a minimum forced sale valuation of [the Properties] of £3,500,000 ...."

17. The transaction was duly completed (and first tranche of the loan drawn down) on 1 April 1992.
18. Subsequently the Company defaulted on the loan, and on 31 August 1993 the Bank appointed administrative receivers and managers over the Company's assets and business.
19. On 6 September 1993 Mr Amos, who had not as yet seen Mr McLaughlin's report and who was by this stage concerned about his prospective liability as guarantor, telephoned Messrs Tretheweys to inquire whether what he believed to be the forced sale value of the Properties of not less than £3.5M was still more or less correct. He spoke to a Mr Bower, who informed him that the Properties had been valued not on a forced sale value basis but on an open market value basis. This unwelcome news was confirmed in a letter dated that day (6 September 1993) from Mr Bower to Mr Amos. After referring to Mr McLaughlin's report, and to their telephone conversation earlier in the day, the letter continues:

"In accordance with our above-mentioned telephone conversation, we write to confirm that our valuations as contained in [Mr McLaughlin's report] were undertaken on an "open market" basis, in accordance with our Conditions of Engagement, as appendixed to the [report]. The valuations were not provided upon a "forced sale" basis."

20. Shortly thereafter, Mr Amos and Mr Barton first saw Mr McLaughlin's report (including Appendix 1).
21. On 21 December 1994 the Bank made formal demand on the guarantors.
22. In a letter dated 3 January 1995 to the Bank's then solicitors, Messrs Dibb Lupton Broomhead, Mr Skerrett (the solicitor for the guarantors) said this:

"... all or any liability under the alleged guarantee is denied. Our clients are at the moment formulating a very substantial claim for damages against [the Bank] and the papers are with counsel. Our clients have received Legal Aid to bring proceedings and had your letters under reply not been received those proceedings would have been issued and served upon you in the near future.

We therefore formally advise you that any action which you are misguided enough to bring against our clients on behalf of the Bank will be strenuously resisted and met with a substantial counterclaim far exceeding the amount of any guarantee liability which you allege."

23. On 13 February 1995 the Bank commenced the Guarantee Action, seeking payment by the guarantors under their guarantees.
24. On 24 April 1995 the guarantors served a Defence and Counterclaim in the Guarantee action. The Defence and Counterclaim was signed by counsel ( Mr Dirik Jackson, as he then was). In its unamended form the Defence and Counterclaim alleged (among other things) that Mr Murphy, acting on behalf of the Bank, had represented to Mr Amos and Mr Barton that the valuation which the Bank had received from Messrs Tretheweys was "just enough" (paragraph 22); that the representation was false (paragraph 32); and that that representation, together with others, had been made by agents of or employees of the Bank "fraudulently in that they knew that they were false or recklessly not caring whether they were true or false", alternatively negligently (paragraph 35). The Counterclaim claimed damages under various heads including (in paragraph 50.3) "diminution in the value of the shareholdings of [Mr Amos and Mr Barton] as a result of the purchase [of The Blue Lagoon and The Tall Trees Night Club]". By amendment, a figure of £1.6M was inserted as the quantum of the damages claimed under this head. The Counterclaim was also amended to include a claim for an order setting aside the guarantees.
25. In an affidavit sworn in the Guarantee action on 31 May 1995, Mr Murphy said this (in paragraph 15):

"On receiving [Mr McLaughlin's report], I was concerned to confirm that the basis of valuations stated to be "with vacant possession" corresponded with the "forced sale mortgage valuation" referred to in paragraph numbered 2 on the first page of Peter Hargreaves' letter of 17 March 1992. I therefore telephoned Mr McLaughlin of Tretheweys who confirmed to me that their "vacant possession valuation" was his firm's phraseology for a "forced sale valuation" within the terms set out in Mr Hargreaves' letter."

26. However, in paragraph 11 of his affidavit in the Guarantee action (sworn on 20 June 1995) Mr McLaughlin denied that such a conversation ever took place. He said this:

"No such telephone conversation .... ever took place. It is true that Mr Murphy did speak to me on the [telephone] .... but the import of those telephone conversations was very different from that deposed to in his Affidavit. In particular I could never have said, as is alleged, that "vacant possession valuation" within the [context] of my valuation report was my firm's phraseology for the expression "forced sale valuation" as used by Mr Hargreaves in his letter of instruction. The two terms are contradictory[:] "Vacant possession value" excludes any element of "forced sale" in its quantification. The term "freehold with vacant possession valuation" is clearly and succinctly defined in paragraph 4.3 and 4.1 of Appendix 1 which accompanied the [report] to mean the best price at which the property .... might reasonably be expected to be sold by private treaty at the date of the valuation on the basis set out in paragraph 4.3. I cannot accept that Murphy could conceivably have believed otherwise."

27. In early August 1995 the Bank served a Reply and Defence to Counterclaim in the Guarantee Action. Paragraph 20(a) of the Reply and Defence to Counterlaim was in the following terms:

"The [Bank] received a copy of [Mr McLaughlin's report] on 26 March 1992. On or shortly after that date, Mr Murphy had a telephone conversation with Mr Douglas McLaughlin who compiled the report on Tretheweys' behalf. In the course of that conversation, Mr McLaughlin confirmed to Mr Murphy that what Tretheweys called a "vacant possession" valuation was their phraseology for a "forced sale" valuation."

28. The Reply and Defence to Counterclaim went on to plead that Mr Murphy had relied on that telephone conversation in concluding that condition 9.3.1 in the facility letter had been satisfied.
29. On 30 January 1998 the receivership of the Company came to an end. Mr Amos tells us that he did not learn of this until about 17 April 1998, when his solicitor, Mr Skerrett, first heard about it from another firm of solicitors in connection with an unrelated matter. Mr Skerrett immediately wrote to Messrs Dibb Lupton Alsop, the Bank's solicitors (who had also acted for the receivers), requiring the former receivers to hand over all documents and records in their possession relating to the Company's affairs within 7 days, and threatening proceedings in default. No reply appears to have been received to this letter, for on 14 July 1998 Mr Skerrett wrote again threatening to report Messrs Dibb Lupton Alsop to the Law Society if no reply was received within the next seven days. This elicited a reply from Messrs Dibb Lupton Alsop to the effect that they had ceased to act for the receivers many months earlier and that they held no documents belonging to the Company.
30. In the meantime in January 1998 the trial of the Guarantee action took place before HHJ Weeks QC. In the result, Judge Weeks QC entered judgment on the Bank's claim in the sum of £712,236 as against Mr and Mrs Amos and in the sum of £356,118 as against Mr Barton, and he dismissed the Counterclaim. He found that Mr Murphy had made the alleged misrepresentation as to the valuation which the Bank had obtained, but he went on to hold that the guarantors did not enter into their guarantees in reliance on that misrepresentation. In the course of his judgment Judge Weeks QC noted that various other claims raised by the guarantors had either not been pursued or been abandoned in the course of the trial. Mr Sutcliffe tells us that in the course of the trial the judge expressed the view that such a claim could only be made by the Company, and not by its shareholders. It is also to be noted that the only witness who impressed Judge Weeks QC as being entirely reliable was Mr McLaughlin.
31. On 17 November 1998 the Company was struck off the register under section 652 of the 1985 Act, and on or about 24 November 1998 it was dissolved. Mr Amos tells us that the various letters and notices from the registrar of companies relating to the striking off and the dissolution were not received by him or Mr Barton since the receivers had changed the registered office of the company to the address of their firm. He further tells us that he did not learn that the Company had been struck off until the Spring or Summer of 2000.
32. The guarantors appealed to the Court of Appeal against Judge Weeks QC's order, and on 14 July 1999 their appeal was allowed and the judgment against them set aside. The Court of Appeal (Roch and Morritt LJJ and Lindsay J) found that Mr Murphy had made the misrepresentation fraudulently (no express finding of fraud having been made by Judge Weeks QC), and that the misrepresentation had induced the guarantors to enter into their guarantees. On 29 February 2000 a petition by the Bank for permission to appeal to the House of Lords was refused by the House of Lords.
33. On 30 March 2001 Mr Amos and Mr Barton applied on behalf of the Company under section 653 of the 1985 Act for the restoration of the Company's name to the register of companies. The application was made without notice, and the Bank was not joined as respondent. The evidence in support of the application consisted of two affidavits by Mr Amos, a short confirmatory affidavit by Mr Barton and an affidavit by their solicitor evidencing service of the application on the registrar of companies and exhibiting a letter from the Treasury Solicitor confirming that he had no objection to the relief sought. In his first affidavit, Mr Amos gave as the reason for the application the fact that (as he and Mr Barton had been advised) the cause of action for the recovery of damages from the Bank in respect of the loss of the value of the Company's shares was the Company's cause of action, and not that of the guarantors.
34. On 19 April 2001 District Judge Walker made the order referred to in the introduction to this judgment, restoring the Company's name to the register and giving the limitation direction. The effect of the limitation direction, if it is to stand, would be to suspend the running of time in relation to the claim for damages in the Company action.
35. On the following day, the Company commenced the Company action. A Statement of Claim (settled by solicitors, Messrs Blight Skinnard) was served on 15 August 2001. The Statement of Claim pleads (in paragraph 27) that Mr Murphy's misrepresentation was made fraudulently, and (in paragraph 37) that as a result the Company:

".... acquired two non-viable assets [sc. The Blue Lagoon and The Tall Trees Night Club], its whole business failed and its shares became worthless."

36. On 14 September 2001 the Bank served a Defence and Counterclaim in the Company action, pleading a limitation defence. On 28 September 2001 the Company served a Defence to Counterclaim, also settled by Messrs Blight Skinnard. The Defence to Counterclaim does not plead to the limitation defence, and no Reply has been served.
37. In the meantime, as noted in the introduction to this judgment, the Bank applied to be joined as a party to the restoration proceedings and to vary District Judge Walker's order by the deletion of the limitation direction. On 17 October 2001 an order to that effect was made by District Judge Tromans.
38. It also applied for summary judgment under CPR Part 24 on the ground that the Company had no real prospect of succeeding on the claim since its claim was plainly statute-barred.
39. The Bank's application to vary District Judge Walker's order was granted by Judge Overend on 7 May 2002; its application for summary judgment was granted by Judge Overend on 12 July 2002. The judge refused permission to appeal in each case.
40. On 24 October 2002 Aldous LJ, at an oral hearing, granted permission to appeal.

THE RELEVANT STATUTORY PROVISIONS

41. For convenience, the statutory provisions to which reference is made in this judgment are set out in the Appendix to this judgment.

JUDGE OVEREND'S JUDGMENTS

The judgment in the restoration proceedings

42. The judge began by rejecting a submission by Mr Amos (based on a passage in Halsbury's Laws to which I shall return) that the Bank was not entitled to apply to vary District Judge Walker's order. He also rejected a submission by Mr Sutcliffe to the effect that there was no jurisdiction under section 653 to give a limitation direction in favour of the company being restored to the register, and that the power to give a limitation direction was only exercisable in favour of creditors. Relying on the decision of this court in Tymans Ltd. v. Craven [1952] 2 QB 100, the judge concluded that it was necessary to consider the position as at the date of dissolution and not at the date of restoration. He continued:

"It is the latter date which, in my judgment, is implicit in Mr Sutcliffe's submission. There is nothing in the words of the section to suggest that the power to suspend limitation exists in favour of a creditor, yet there is no like power to suspend limitation in respect of the company's claims."

43. The judge accordingly turned to Mr Sutcliffe's alternative submission that, assuming the court had jurisdiction to give the limitation direction in question, the jurisdiction should not be exercised in the circumstances of the instant case. In this connection the judge rightly drew attention to the fact that he was not hearing an appeal against District Judge Walker's order; rather, he was adjudicating on the question whether such a direction should be made in the context of a contested (as opposed to a 'without notice') hearing. After referring to the factual history, and to the judgment of Judge Weeks QC, the judge turned to Mr Amos' submission that it was a highly significant factor that material facts (and in particular the existence and terms of Appendix 1 to the valuation) had been concealed from him and that he had not seen Appendix 1 until it was produced pursuant to an 'unless' order in November 1997. As to that, the judge concluded that "the reality of the situation" (as he put it) was that Mr Amos and Mr Barton had come into possession of the full contents of the valuation in 1993. The judge also quoted in extenso the letter from Mr Bower of Messrs Tretheweys to Mr Amos dated 6 September 1993 (quoted earlier in this judgment). The judge then recorded Mr Sutcliffe's submissions that Mr Amos and Mr Barton knew all the facts relevant to the Company's cause of action against the Bank in 1993, and that it might have been possible for the directors to bring an action on behalf of the Company, on providing a suitable indemnity.
44. Turning to District Judge Walker's order, the judge said this:

"The learned District Judge decided that in the circumstances he would suspend the effect of the limitation period despite the fact that the primary limitation period had run out on 31 March 1998, some months before the dissolution of the company. Mr Amos says this is a case where effectively the Bank have been caught with their pants down and they need their backside smacked, and so therefore the order made by the District Judge was quite correct. He has, however, to deal with the fact that the law has to be seen to be approached equally between the parties. He has to deal with the question as to why it was that the company was not joined in the proceedings back in 1995, when the basic factual allegations were known to him and to Mr Barton, and formed the basis of extensive pleadings in the guarantors' Defence and Counterclaim [in the Guarantee action].

True it is that the Bank has been found guilty of a fraudulent misrepresentation, but that is something which can still remain a defence to any claim brought by the Bank against the company. There is no limit to defending actions brought against the company.

It seems to me that this is a case which has now gone on far too long. These are events which took place some ten years ago. The issues have been litigated already up to the House of Lords.

In my judgment, the submissions made by Mr Sutcliffe, which are to the effect that a distinction should be drawn between creditors on the one hand and the company on the other, is a valid distinction. The creditors do not have control over the company. In this case, however, the members are the controlling shareholders and directors of the company, and in my judgment on the information before this court they have at all times [had] the relevant knowledge with which to bring a claim in the name of the company against the Bank. In my judgment in those circumstances the District Judge should not have exercised his discretion in the way that he did. He should have drawn a line under this long-played-out battle, and he should have resisted the temptation to make the order that he did.

Indeed, had the defendants been present and had the full facts been before the District Judge, as they are now before this court, I have no doubt that he would not have made the order that he did."

45. The judge accordingly varied District Judge Walker's order by deleting the direction suspending the limitation period.

The judgment on the Bank's application for summary judgment in the Company action.

46. The judge accepted Mr Sutcliffe's submission that Mr Amos (and hence the Company) knew all the facts relevant to the cause of action in September 1993, and that in consequence (and absent any limitation direction) the action became statute-barred not later than September 1999. He rejected a submission by Mr Amos that he and Mr Barton only acquired the relevant knowledge for the purposes of section 32 of the Limitation Act 1980 ("the 1980 Act") in June 1995, when they saw Mr McLaughlin's affidavit denying that he had told Mr Murphy that the valuation was on a forced sale value basis. He also rejected a further submission by Mr Amos that Mr Murphy's fraudulent activities amounted to concealment sufficient to prevent time running. The judge continued:

"Parliament has indeed sought to protect those who have been the subject of fraud and concealment, and Parliament has made it plain that the limitation period shall not begin to run prior to any facts relevant to the right of action having been revealed to the claimant.

In my judgment the relevant material was within the company's knowledge at or shortly after September 1993 and, although I reach this conclusion with some regret and with considerable sympathy for Mr Amos who has presented his case with skill, I am unable to decide in any other way than to accept the Bank's submissions and to apply the Limitation Act. Accordingly, I summarily dismiss the claim under Part 24."

THE ISSUES ON THE APPEAL

47. Mr Amos challenges Judge Overend's judgment in the restoration proceedings on the procedural ground that the Bank had no right to apply to vary District Judge Walker's order. He contends that an application to modify an order restoring a company to the register may only be made by the company, acting by a representative duly authorised by the company in general meeting. He challenges Judge Overend's judgment in the Company action on the ground that the Company can defeat the Bank's limitation defence by recourse to section 32 of the 1980 Act.
48. When granting permission to appeal Aldous LJ did not deliver a judgment, but according to the transcript of the hearing he said in the course of the hearing that the Court of Appeal should consider Mr Amos' submission that the Bank had no right to apply to be joined as a party in the restoration proceedings, and Mr Sutcliffe's submission that there was no jurisdiction under section 653(3) to suspend the running of time in favour of the Company. He also said that he had come to the conclusion that the appeal had a real prospect of success on the ground that the Company (as opposed to Mr Amos) did not know of the fraud. In saying that, Aldous LJ was plainly referring to the possibility that the Company may not have learned of the fraud until less than six years before the commencement of the Company action on 20 April 2001: i.e. that it may not have learned of the fraud until after 20 April 1995.
49. Prompted by Aldous LJ's observations, the Bank by a respondent's notice invites this court to uphold the judge's order in the restoration proceedings on the additional ground that the judge ought to have held that District Judge Walker had no jurisdiction under section 653(3) to give a limitation direction in relation to claims by the Company which were not statute-barred at the date of dissolution. Since the respondent's notice was filed out of time, Mr Sutcliffe needs permission to argue that issue (which I will call "the jurisdiction issue").
50. Subject to the jurisdiction issue (that is to stay, assuming that the appropriate jurisdiction exists), the following appear to me to be the issues which arise on this appeal:

1. Whether the Bank was entitled to apply in the restoration proceedings to set aside or vary District Judge Walker's order ("the procedural issue").

2. Whether, as a matter of discretion, the judge erred in varying the District Judge's order by deleting the limitation direction ("the discretion issue").

3. Whether, depending on the resolution of issues 1 and 2, the Company has a real prospect of succeeding on its claim, with the consequence that summary judgment under CPR Part 24 ought not to have been granted to the Bank. It is common ground that the resolution of this issue in turn depends on whether there is a real prospect of the Company successfully defeating the Bank's limitation defence. I will accordingly refer to this issue as "the limitation issue".

THE JURISDICTION ISSUE

51. At the conclusion of Mr Sutcliffe's submissions we indicated to him that we did not consider the jurisdiction issue to be arguable, and that we would accordingly refuse the Bank permission to raise it in the respondent's notice. In this section of the judgment I give my reasons for that refusal.
52. Applying for permission to argue this issue, Mr Sutcliffe repeated the submission which the judge rejected. Thus, he submitted (correctly) that had the Company not been struck off time would have continued to run against it, with the consequence that (as he submitted) the claim would have become statute-barred at the latest in September 1999, i.e. six years after the receipt by Mr Amos of Mr Bower's letter dated 6 September 1993. It follows, he submitted, that a limitation direction suspending the limitation period during the period of dissolution would not put the Company in the same position 'as if [its] name had not been struck off', and accordingly that section 653(3) does not confer jurisdiction to make a such a direction in favour of the company which is being restored to the register.
53. In support of these submissions, Mr Sutcliffe relied on observations of Megarry J in Re Lindsay Bowman Ltd [1969] 3 All ER 601 (a case concerning an application under section 353(6) of the Companies Act 1948, the precursor of section 653(3) of the 1985 Act). In Lindsay Bowman, a creditor of the company which was petitioning to be restored to the register supported the petition conditionally on a direction being made under the subsection to the effect that the restoration of the company should not prejudice any remedy which a creditor of the company as at the date of dissolution might otherwise have against any person prior to the order for restoration taking effect. Specifically, the creditor sought to preserve a remedy which it would otherwise have had against the directors of the company personally. In the course of his judgment, Megarry J said this (at page 603):

"What is sought is a provision that will preserve to the creditor the rights that he acquired while the company was defunct. The statutory fiction that results from an order under the subsection is that the company continued in existence throughout; and this, with all that flows from it, is the necessary consequence of the order. One of the consequences is that any liabilities properly incurred by a director in the name of the company would be liabilities of the company and not of the director. What the concluding limb of the subsection empowers me to do is to give directions or make provisions for placing the company and others in the same position as nearly as may be as if the name of the company had not been struck off. What counsel for the supporting creditor seeks is a direction or provision putting him in the same position as if the company had been struck off, as in fact it was. In other words, he seeks a direction or provision which will negative the statutory fiction, whereas all that the subsection empowers me to do is to give a direction or make a provision which supports and carries out the statutory fiction as nearly as may be. I do not see what power I have to include such a direction or provision in the order."

54. Mr Sutcliffe also relied on Re Priceland [1997] BCC 207, in which Laddie J followed Megarry J's reasoning, describing it (at p.213C) as "faultless".
55. Mr Sutcliffe submitted that the decision of this court in Tymans Ltd v. Craven, and the later decision of Roxburgh J in Re Donald Kenyon Ltd [1956] 1 WLR 1397, on both of which the judge relied in reaching his decision on the jurisdiction issue, are distinguishable from the instant case. Thus, the issue in Tymans v. Craven was whether a restoration order, without more, operated to validate an act done purportedly on behalf of the company during the period of dissolution. By a majority, the Court of Appeal held that it did. And in Donald Kenyon a limitation direction was made in favour of creditors of the company as at the date of dissolution whose claims were not statute-barred at that date. Both these decisions, Mr Sutcliffe submitted, are consistent with what Megarry J in Lindsay Bowman called 'the statutory fiction'.
56. For my part (and on this issue I know that I speak also for my Lords), I cannot accept these submissions.
57. In Tymans Ltd. v. Craven Sir Raymond Evershed MR, referring to the second limb of section 353(6) (the power to give directions), said:

".... the final sentence confers a special power to add where necessary to the order of restoration special directions designed to achieve .... a putting back of the clock, an achieving of what Lord Sumner [in Morris v. Harris [1927] AC 252] called an 'as you were position' between the company and third parties."

58. This observation was echoed by Hodson LJ in the same case, where he said (at p.628C):

"For my part, I think the words of s.353(6) are clearly designed to produce an 'as you were' position, and I think that the latter part of the subsection is complementary and intended to provide for cases where provision is necessary in order to clarify an obscure position or give back to the company an opportunity which it might otherwise have lost."

59. A limitation direction such as was made in the instant case inevitably operates to "give back to the company an opportunity which it might otherwise have lost", viz. a claim which might otherwise have become statute-barred during the period of dissolution.
60. True it is that had there been no dissolution, time would have continued to run against the Company; but it does not follow that there is no jurisdiction to make a limitation direction in the Company's favour. As the judge in the instant case rightly said:

".... one has to consider the position as at the date of dissolution of the company and not at the date of restoration."

61. As Sir Raymond Evershed MR said in Tymans Ltd. v Craven (in the passage quoted in paragraph 57 above), putting the company back in the same position as if it had not been struck off may, in an appropriate case, require the turning back of the limitation clock to the date of dissolution and ignoring the period of dissolution for limitation purposes. That, indeed, was precisely the situation in Donald Kenyon. In that case, the contributories petitioned for the restoration of the company so that they could get in a sum of money standing to the credit of the company's account at a building society. Roxburgh J concluded (plainly rightly, in my judgment) that fairness required that the restoration should be on terms that time should not run during the period of dissolution against creditors whose claims were not statute-barred at the date of dissolution, and he accordingly made a limitation direction to that effect pursuant to the second limb of section 353(6). In the course of his judgment, Roxburgh J said this with reference to section 353(6):

".... what I have to do is put all other persons – not only the company, but all other persons – in the same position as nearly as may be as if the name of the company had not been struck off. At the date of the dissolution, the creditors .... who were not statute-barred at the date of dissolution .... could have stopped the statute running by issuing, possibly serving, a writ. [Counsel for the petitioner] contends that the creditor could also have applied to restore the name of the company to the register and then have issued his writ. Of course he could, but that is not the same position, nor is it, in my judgment, the nearest that can be done to get to the 'as-you-were position'; and it seems to me that, when a company has been dissolved and therefore nobody can sue it without getting it restored to the register, it is only common fairness that, if the contributories for purposes of their own, want to get it restored to the register years afterwards, the period [of dissolution] should be disregarded for the purposes of the Statute of Limitations. .... Common justice requires that some such provision should be inserted."

62. Nor, in my judgment, is there any basis for Mr Sutcliffe's submission that the jurisdiction conferred by the second limb of section 653(3) to give a limitation direction is confined to a limitation direction in favour of creditors: the subsection must in my judgment also confer jurisdiction to give a limitation direction in favour of the company which is being restored, where it seems to the court just to do so.
63. Those are my reasons for refusing Mr Sutcliffe permission to argue the jurisdiction issue.
64. I turn, then, to the arguments on the remaining issues. I do so on the footing that District Judge Walker had jurisdiction to give the limitation direction in favour of the Company.

THE ARGUMENTS ON THE REMAINING ISSUES

The arguments on behalf of the Company

65. On the procedural issue, Mr Amos submits that the Bank had no right or status to apply in the restoration proceedings to vary District Judge Walker's order. In support of this submission he relies on a paragraph in Halsbury's Laws 4th edition (reissue) Vol 7(2) (Companies) para 2188 at page 1498 under the subheading 'Restoration to the Register', which reads:

"The court will usually make the order [for restoration] if there is any business or property to be dealt with, but on the terms that all proper returns are to be made. However, no application to set aside or modify an order for restoration to the register may be made except on behalf of the company, and then only if there is some evidence that the board or the company in general meeting has considered the matter."

66. A footnote to the second sentence of that paragraph cites as authority In re Regent Insulation Co Ltd, reported in the Times on 5 November 1981 (a decision of Vinelott J). I shall have to return to that case later in this judgment.
67. On the discretion issue, Mr Amos submits that the judge's conclusion that the limitation direction should be deleted is flawed in that he did not give proper weight to the fact that while the Company was in receivership the directors had no control over it, and to the fact that at no time prior to the judgment of the Court of Appeal in July 1999 were the directors in a position to bring an action in the name of the Company since the existence of charges over their residences as security for their guarantees meant that they were not in a position to offer the Company an appropriate indemnity against any costs of the action which it might have to pay. He accepts, however, that notwithstanding that he remained in ignorance of the dissolution until the Spring or Summer of 2000, he did not attempt to take any step to prosecute the Company's claim against the Bank.
68. On the limitation issue, Mr Amos submits that in any event the judge misdirected himself as to the requirements of section 32(1) of the 1980 Act, as explained by Lord Browne-Wilkinson in Sheldon v. Outhwaite [1996] AC 102 at 144. He submits that the Company's claim against the Bank for damages for fraudulent misrepresentation is an 'action based upon the fraud of the defendant' within the meaning of section 32(1)(a), and that the fraud was not discovered until, at the earliest, June 1995 when Mr McLaughlin provided the statement which formed the basis of his affidavit in the Guarantee action.
69. As to Mr Bower's letter dated 6 September 1993, Mr Amos submits that there was no evidence before the judge that the contents of that letter were communicated to the receivers, who were in control of the Company at the time (having been appointed on 31 August 1993).
70. Mr Amos further submits that the Company's loss was not suffered when it completed the transaction on 1 April 1992, since it was by no means inevitable at that date that any loss would be suffered. In support of this submission he relies on UBAF Ltd v. European American Banking Corp. [1984] 1 QB 713.

The arguments for the Bank

71. On the procedural issue, Mr Sutcliffe submits that the judge was plainly right to reject Mr Amos' submission based on the passage in Halsbury's Laws quoted earlier. Mr Sutcliffe relies in this connection on the decisions of this court in Re Blenheim Leisure (Restaurants) Ltd [2000] BCC 554 and Smith v. White Knight Laundry Ltd [2002] 1 WLR 616. He submits that the Bank was clearly an interested party entitled to be heard on the question whether a limitation direction should be given in favour of the Company, and there was insufficient evidence before District Judge Walker on that question when he made his order. If and so far as necessary, Mr Sutcliffe also prays in aid Article 6 of the European Convention on Human Rights.
72. As to Regent Insulation (cited as authority for the proposition in Halsbury's Laws on which the Company relies), Mr Sutcliffe submits that when properly analysed it does not support that proposition, and that the proposition itself is wrong.
73. On the discretion issue, Mr Sutcliffe supports the judge's reasoning. He submits that the judge made no error of principle, nor are there any other grounds justifying interference by this court with the exercise of his discretion.
74. On the limitation issue, Mr Sutcliffe starts by pointing out – correctly – that neither the Statement of Claim nor the Defence to Counterclaim in the Company action plead any facts on the basis of which it could be argued that the running of time was postponed (whether under section 14A or under section 32 of the 1980 Act); nor, for that matter, has any witness statement been served by the Company identifying facts which might give rise to a triable issue in this regard. He submits that the Company's claim for damages for misrepresentation (whether the misrepresentation is alleged to have been made fraudulently or negligently) is not a claim which is 'based upon the fraud of the defendant' for the purposes of section 32(1)(a). Relying on Beaman v. A.R.T.S., Ltd [1949] 1 KB 550 CA, he submits that section 32(1)(a) applies only to actions in which the allegation of fraud is an essential component of the cause of action. He goes on to submit that the allegation of fraud is not an essential component of the Company's cause of action for damages for misrepresentation, since its claim for such damages can succeed in negligence or, for that matter, under section 2(1) of the Misrepresentation Act 1967.
75. On the footing, therefore, that the Company's claim is one to which section 32(1)(b) applies, Mr Sutcliffe reminds us of the decision of this court in Johnson v. Chief Constable of Surrey The Times, 23 November 1992, Court of Appeal (Civil Division) Transcript No 961 of 1992 (a decision which was cited by Neill LJ in C v. Mirror Group Newspapers & Ors [1997] 1 WLR 131 at 136) to the effect that the expression 'any fact relevant to the plaintiff's right of action' in section 32(1)(b) means facts which are essential to the cause of action and does not extend to facts which, although not essential to the cause of action, would if proved assist the claimant. He submits that the allegation of fraud in the instant case falls within the latter category.
76. Turning to the facts, Mr Sutcliffe submits that in any event the Company cannot bring itself within either subsection (1) or subsection (2) of section 32 since it had discovered all the facts relevant to its right of action prior to April 1995. In support of this submission he points to the allegations contained in the Defence and Counterclaim in the Guarantee action, which was served on 24 April 1995 on behalf of Mr Amos and Mr Barton as guarantors. He submits that the Defence and Counterclaim in the Guarantee Action alleges the very same fraudulent conduct on the part of Mr Murphy as that which the Company alleges in the Company action. He points out that the pleading is signed by counsel, and reminds us of the provisions of the Code of Conduct for members of the Bar in pleading allegations of fraud. He also relies on the letter dated 3 January 1995 from Mr Skerrett to Messrs Dibb Lupton Broomhead (quoted in paragraph 19 above) as establishing that by that date the evidential material which was placed before counsel and on which the allegations in the Defence and Counterclaim were based must have been available to Mr Amos and Mr Barton.
77. As to the suggestion made by Aldous LJ to the effect that it might be arguable that the knowledge of Mr Amos was not the knowledge of the Company, Mr Sutcliffe submits that no distinction can be drawn for this purpose between the Company and its directors. Relying on Newhart Developments v. Co-operative Commercial Bank Ltd [1978] QB 814, he submits that notwithstanding the receivership the directors retained their powers in relation to the Company's claim against the Bank. In consequence, he submits, knowledge of the directors of facts relevant to the Company's claim was no less the knowledge of the Company because the Company was in receivership.
78. Mr Sutcliffe further submits (relying once again on Newhart Developments) that Mr Amos and Mr Barton could have initiated an action in the Company's name against the Bank, notwithstanding that the Company was in receivership.
79. As to Mr Amos' submission (relying on UBAF) that time may not have started to run in relation to the Company's claim until some date after the completion of the transaction on 1 April 1992, Mr Sutcliffe submits that the UBAF case is distinguishable and that the only possible view on the facts of the instant case is that (subject to any postponement under section 32) time began to run when the transaction was completed.

CONCLUSIONS ON THE REMAINING ISSUES

The procedural issue

80. In Blenheim Leisure a company which claimed to be a subtenant of business premises was struck off on the application of its directors on the ground that it was no longer trading. At the time it was struck off the company was involved in proceedings with its landlords, who were seeking possession of the premises. The directors applied under section 653(2B)(c) for it to be restored to the register. The landlords applied to be joined in order to oppose the making of a restoration order on the ground that such an order would or might have the effect of invalidating notices which the landlords had served under the Landlord and Tenant Act 1954. The landlords' application was refused by the companies registrar, and an appeal to the judge was dismissed. The landlords appealed to the Court of Appeal, which, by a majority (Aldous and Tuckey LJJ, Nourse LJ dissenting), allowed the appeal.
81. In the course of his judgment, Aldous LJ said (at p.573H):

"[Section 653(2B)(c)] gives to the court a wide discretion and enables the court to take into account the rights of third parties that may be directly affected. In my view it is desirable that the appellants be added so that the court can be fully informed of their rights and take [them] into account before deciding whether it is just for restoration to be ordered.

In my judgment it is desirable, if justice is to be done and seen to be done, that the appellants are added to these proceedings so that the court can resolve whether registration should be ordered. To conclude to the contrary would mean that rights directly affecting the appellants would be decided without their being able to be heard upon the issue of whether restoration was just. That in my judgment is not desirable."

82. Agreeing with Aldous LJ, Tuckey LJ said (at p.574F):

"As Aldous LJ has said, s.653(2B) gives the court a wide discretion as to whether to allow restoration, particularly where one of the grounds relied on is that it is just to do so. The fact that the landlords will, it is to be assumed, lose their right to possession of the clubs if the company is restored must, it seems to me, be relevant to the exercise of this discretion. This being so I do not think the rules preclude the court from allowing the landlords' intervention. They are drawn in wide general terms to ensure that parties whose rights may be affected by a particular decision have a right to be heard. They are based on principles of natural justice. Looking at the CPR I would say that prejudice to the landlords is an issue connected to a matter in dispute in the proceedings, namely the restoration of the company to the register. It is desirable that landlords should be allowed to intervene because if they are not to be heard before the decision is made they never will be. If the company is restored it will be too late. ....

I should add that it will still be for the court to decide in any particular case whether or not to allow intervention. It could I think quite properly only allow intervention in cases where the order for restoration itself would or might directly affect the rights of the intervener."

83. Although in Blenheim Leisure the court was concerned with subsection (2B) of section 653, the observations of Aldous and Tuckey LJJ are in my judgment equally applicable to the concluding words of subsection (3), which confer on the court an equally wide discretion ('.... give such directions and make such provisions as seem just ....').
84. There is also, in my judgment, a parallel between the instant case and the decision of this court in Smith v. White Knight Laundry. In that case, the widow of a deceased employee of a company which had been dissolved wished to bring a claim against it under the Fatal Accidents Acts. She applied, without notice, under section 651 for a declaration that the dissolution be declared void. The registrar made the order sought, and directed that the period since the dissolution should not be taken into account for limitation purposes. The applicant then commenced proceedings, contending that the cause of action had not accrued until after the restoration of the company to the register, but in the alternative, if the claim would otherwise have been statute-barred, asking that the primary limitation period be disapplied under section 33 of the 1980 Act. On the company's application, a preliminary issue was ordered as to whether the claim was statute-barred. On the claimant's appeal against that order, the judge held that there was a triable issue as to whether the claim was statute-barred, and of his own motion set aside the limitation direction which had been made under section 651. The Court of Appeal dismissed the claimant's appeal against the judge's order. Delivering the judgment of the court, I said (in paragraph 60):

"Finally, as a matter of general practice it seems to us that where a restoration order is sought in the Companies Court by a prospective claimant in a personal injuries action, a section 651 direction [i.e. a limitation direction under that section] should not normally be made unless (a) notice of the application has first been given to all those parties who may be expected to oppose the making of such a direction, including the company's insurers, and (b) ..... the court is satisfied (i) that it has before it all the evidence which the parties would wish to adduce on an application by the prospective claimant under section 33; and (ii) that an application under section 33 would be bound to succeed."

85. As to the passage in Halsbury's Laws on which Mr Amos relies, to the effect that only the company may apply to set aside or modify a restoration order, it seems to me that, as framed, the passage is misleading in so far as it suggests that Vinelott J's decision in Regent Insulation is authority for the proposition that third parties affected by a restoration order may not apply to set aside or vary it.
86. In Regent Insulation, a former employee of a company which had been dissolved wished to sue the company, together with others of his former employers, for damages for negligence and breach of statutory duty in causing him to suffer from asbestosis. He accordingly applied for an order that the company be restored to the register, and he also sought a limitation direction in favour of creditors whose claims were not statute-barred at the date of dissolution. The application was served on the company at its registered office. The registrar made the order. An application was subsequently made, purportedly by the company, to set aside the entirety of the registrar's order. Since the application was substantially out of time the first issue which Vinelott J had to consider was whether he should exercise his discretion to extend time. As regards the substantive part of the restoration order, he said that he had no hesitation in declining to do so. He accordingly went on to consider whether he should extend time so as to enable the application to proceed in respect of the limitation direction. In the result he declined to do so, on the ground that there was no evidence before him that the application had been authorised by the company in general meeting, or that there were in existence directors capable of constituting a quorum. Vinelott J was not concerned in Regent Insulation with an application made by a third party. The application before him was an application purportedly made by the company, but in circumstances where there was no evidence that the company had in fact authorised it. Thus, as I read Vinelott J's judgment, Regent Insulation did not decide that only the company may apply to set aside or modify a restoration order: had it done so, it would in my judgment have been wrongly decided.
87. A limitation direction such as was made in the instant case (i.e. in favour of the company being restored to the register) inevitably operates to the prejudice of a prospective defendant to a claim by the company based upon a cause of action which had accrued prior to the date of dissolution and which was not statute-barred at that date; just as a limitation direction in favour of a creditor whose claim was not statute-barred at the date of dissolution inevitably operates to the prejudice of the company being restored to the register. To my mind it follows that just as the company (in its capacity as the applicant for the restoration order) is entitled to be heard in opposition to the imposition of a limitation direction in favour of third party creditors, by the same token third parties who would be prejudiced by a limitation direction sought by the company must also be entitled to be heard in opposition to it.
88. I would therefore reject Mr Amos's submissions on the procedural issue.

The discretion issue

89. Although, for reasons given earlier, I have concluded that there is jurisdiction to give a limitation direction in favour of the company being restored, the scope for giving such a direction must in my judgment be extremely limited. To my mind, the jurisdiction ought only to be exercised in exceptional circumstances. My reasons for this conclusion are as follows.
90. So far as I can see, the question whether a limitation direction should be given in favour of the company being restored to the register can only arise in circumstances where the company has an asset in the form of a claim based on a cause of action which was not statute-barred at the date of dissolution. The 1980 Act provides a detailed limitation regime under which, in certain specified circumstances, the running of time may be postponed (see, e.g., sections 14A, 32 and 33). The effect of a limitation direction under section 653(3) is completely to override that regime. Whilst considerations of essential fairness may justify the giving of a limitation direction in favour of third party creditors (as they did, for example, in Donald Kenyon), the same cannot so readily be said of a limitation direction in favour of the company being restored to the register: indeed, on the face of it fairness will generally require that the company, like any other claimant faced with a limitation defence, should be left to attempt to meet that defence by recourse to the statutory regime in the 1980 Act.
91. In the instant case, I cannot discern any such exceptional circumstances as might serve to justify the limitation direction which the District Judge made, and I accordingly conclude that the judge was right to delete the limitation direction from the order. The fact that Mr Amos took no step to initiate a claim by the Company, despite the fact that (as he has told us) he did not learn that the Company had been struck off until the Spring or Summer of 2000, by which date time had in any event expired, seems to me to reinforce that conclusion.
92. I would only add that I should not be taken as agreeing with the judge's expressed reason for his decision to delete the limitation direction, viz. that the case had already "gone on for far too long", and that the District Judge should have "drawn a line under this long-played-out battle". Those considerations, as it seems to me, are themselves dependent upon whether or not the claim would (absent a limitation direction) be statute-barred.

The limitation issue

93. In the first place, I reject Mr Amos' submission, based on UBAF, that the primary limitation period may not have begun to run until some time after the transaction was completed on 1 April 1992.
94. In UBAF the plaintiff lender brought an action against a New York bank on whose invitation the plaintiff had contracted to make, and had made, loans to two Panamanian borrowers who subsequently defaulted on the loans. The contract had been entered into more than six years prior to the commencement of proceedings. The plaintiff claimed damages in deceit, alleging that the defendant bank had misrepresented that the loans were 'attractive financing of two companies in a sound and profitable group'. In the alternative, the plaintiff claimed damages under section 2(1) of the Misrepresentation Act 1967 and in negligence. The plaintiff obtained leave to serve the proceedings on the defendant out of the jurisdiction. The defendant applied to set the leave aside, on the ground (among others) that the claim in negligent misrepresentation was statute-barred since the plaintiff's claim that it would not have contracted to make the loans had it known that the defendant's representations were false implied that it had suffered damage when it made the loans, and that accordingly its cause of action had accrued more than six years before the commencement of proceedings. At first instance, Leggatt J upheld the defendant's contentions and set aside the leave to serve out of the jurisdiction. The Court of Appeal (Ackner and Oliver LJJ) allowed the plaintiff's appeal. Ackner LJ, giving the judgment of the court, concluded that the question whether or not the claim based on negligent but innocent misrepresentations was statute-barred depended on the facts found at trial, since it was not self-evident that the plaintiff must have suffered damage at the moment when it entered into the loan contract.
95. In Nykredit Mortgage Bank plc v. Edward Erdman Group plc [1997] 1 WLR 1627 at 1634D-E, Lord Nicholls treated UBAF as being in accord with what he concluded was the correct approach in determining when a lender's cause of action against a valuer in respect of a negligent valuation of its security first arose. In Nykredit the lender bank sought interest on damages from the date of the loan transaction, on the footing that it had suffered an immediate loss when it entered into that transaction and accordingly that its cause of action in tort arose on that date. Lord Nicholls, with whom the remainder of their Lordships agreed, observed (at p.1632B-C) that a lender's cause of action against a negligent valuer of its security did not necessarily arise when the loan contract was entered into, and that the moment at which a loss was first revealed depended on the facts of each case. Lord Hoffmann, agreeing with Lord Nicholls, emphasised (at p.1638H) that, in accordance with their Lordships' earlier judgments in the case – reported under the title Banque Bruxelles Lambert SA v. Eagle Star Insurance Co Ltd [1997] AC 191 – the valuer is responsible only for the consequences of the lender having too little security. He continued:

"Proof of loss attributable to a breach of the relevant duty of care is an essential element in a cause of action for the tort of negligence. Given that there has been negligence, the cause of action will therefore arise when the plaintiff has suffered loss in respect of which the duty was owed. It follows that in the present case such loss will be suffered when the lender can show that he is worse off than he would have been if the security had been worth the sum advised by the valuer. The comparison is between the lender's actual position and what it would have been if the valuation had been correct.

There may be cases in which it is possible to demonstrate that such loss is suffered immediately upon the loan being made. The lender may be able to show that the rights which he has acquired as lender are worth less in the open market than they would have been if the security had not been overvalued. But I think that this would be difficult to prove in a case in which the lender's personal covenant still appears good and interest payments are being duly made. .... Relevant loss is suffered when the lender is financially worse off by reason of a breach of the duty of care than he would otherwise have been. This is, I think, in accordance with [UBAF] ...."

96. In my judgment the situation in the instant case is materially different from a situation in which a lender has entered into a loan transaction relying on negligent valuation advice. In the instant case the conclusion seems to me to be inevitable that (assuming that the Company can establish that it entered into the transaction in reliance on the pleaded misrepresentations), any resulting loss was suffered at that date. By contrast, as Lord Hoffmann pointed out in Nykredit (at p.1638D), a valuer owes no duty of care to a lender in respect of his entering into the transaction as such, and it is accordingly:

".... insufficient, for the purpose of establishing liability on the part of the valuer, to prove that the lender is worse off than he would have been if he had not lent the money at all."

97. Any doubts which might otherwise have existed as to this are, in my judgment, put at rest by the allegation in paragraph 37 of the Statement of Claim in the Company action (quoted in paragraph 35 above).
98. In my judgment, therefore, unless postponed by virtue of section 14A or section 32, the primary six-year limitation period began to run in respect of the Company's claim on 1 April 1992, and the claim is accordingly statute-barred.
99. In my judgment section 14A cannot assist the Company in relation to its alternative claim in negligence, since it is plain on the evidence that the Company (through its directors) must have known the material facts about the damage, and that the damage was attributable to Mr Murphy's misrepresentation, before the date when it was struck off (17 November 1998): i.e. more than three years before the commencement of the action. In any event, in my judgment the finding of fraud made by the Court of Appeal effectively subsumed the alternative claim in negligence.
100. As to section 32, in the first place I reject Mr Sutcliffe's submission that the Company's claim for damages for fraudulent misrepresentation (i.e. a claim in deceit) is not an action 'based upon the fraud of the defendant' within the meaning of that expression in subsection (1)(a). In my judgment it plainly is. Moreover, it is immaterial, in my judgment, that the claim has also been pleaded in the alternative in negligence. The fact that the entitlement of a claimant to damages in respect of a particular loss may be founded on more than one cause of action does not mean that the causes of action are to be treated as the same. In any event, the measure of damage in the instant case may not be the same in fraud as in negligence, since damages awarded for fraudulent misrepresentation are not necessarily limited to the damages which would be awarded for innocent but negligent misrepresentation (see Clerk & Lindsell on Torts 18th edn. para 15-02).
101. Nor do I derive any assistance on this question from the decision of this court in Beaman v. A.R.T.S.. The claim in that case was pleaded in conversion. Fraud is not an element (let alone an essential element) of the tort of conversion. As Lord Greene MR said (at p.558):

".... the word 'fraudulent' in connexion with conversion, however important it may be in a criminal matter is, in the civil action of conversion, so far as regards the cause of action, nothing more than an abusive epithet."

102. That observation is plainly not applicable to the instant case.
103. I turn, then, to Mr Amos's submission that the fraud of the Bank, through its agent Mr Murphy, was concealed from the Company until some time after 20 April 1995 (being six years before the commencement of proceedings). In my judgment this submission fails on the uncontested evidence. On 24 April 1995 the Company's directors, Mr Amos and Mr Barton, as guarantors, served a Defence and Counterclaim in which they pleaded the facts relating to Mr Murphy's fraud. The letter from Mr Skerrett to Messrs Dibb Lupton Broomhead dated 3 January 1995 makes it clear that the material on the basis of which that pleading was settled by counsel was already with counsel by that date (legal aid having previously been obtained). It is clear, therefore, that Mr Amos and Mr Barton knew the relevant facts concerning Mr Murphy's fraud well before 20 April 1995.
104. In my judgment, their knowledge of those facts also amounts to knowledge on the part of the Company. As Lord Reid said in Tesco Ltd v. Nattrass [1972] AC 153 at 170:

"A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one and the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company."

105. In my judgment, the fact that Company was in receivership does not affect the position. It may be that, in practical terms, the receivership would have prevented the directors from commencing proceedings in the name of the Company so long as it lasted (see Tudor Grange Holdings Ltd v. Citibank NA [1991] 4 All ER 1), but it does not follow that knowledge acquired by the Company's directors that the Company had a claim in fraud against the Bank is not to be treated as knowledge acquired by the Company for the purposes of section 32(1) of the 1980 Act. In my judgment, vis a vis the Company there could be no continuing 'concealment', within the meaning of section 32(1), once its directors knew the relevant facts.
106. Nor can I accept Mr Amos' submission that the 'concealment' continued until Mr McLaughlin swore his affidavit in June 1995. In my judgment a party who has instructed his solicitors and counsel to settle a pleading alleging fraud cannot be heard to say the facts which had been alleged on his behalf had been concealed from him until some later date, e.g. until it had become clear that facts alleged would be established at trial.
107. Accordingly, on the limitation issue I conclude that the judge was right to grant summary judgment to the Bank on the footing that the Company's claim is plainly and obviously statute-barred.

RESULT

108. I would therefore dismiss this appeal. In so doing, however, I would like to express my gratitude to Mr Amos for courteous manner in which he made his submissions, and for the economy of the submissions.

Lord Justice Keene :

109. I agree.

Lord Justice Schiemann :

110. I also agree.
Order: Appeal dismissed. Each of the three appellants to be liable for the costs up to and including the judgment of District Judge Trennan. Thereafter (before Judge Overend and the Court of Appeal) liability to be that of the company. Counsel to prepare a draft order. (Order does not form part of the final approved judgment)
 
APPENDIX

THE RELEVANT STATUTORY PROVISIONS

A. In relation to the restoration proceedings:

Companies Act 1985

652 Registrar may strike defunct company off register.

(1) If the registrar of companies has reasonable cause to believe that a company is not carrying on business or in operation, he may send to the company by post a letter inquiring whether the company is carrying on business or in operation.

(2) If the registrar does not within one month of sending the letter receive any answer to it, he shall within 14 days after the expiration of that month send to the company by post a registered letter referring to the first letter, and stating that no answer to it has been received, and that if an answer is not received to the second letter within one month from its date, a notice will be published in the Gazette with a view to striking the company's name off the register.

(3) If the registrar either receives an answer to the effect that the company is not carrying on business or in operation, or does not within one month after sending the second letter receive any answer, he may publish in the Gazette, and send to the company by post, a notice that at the expiration of 3 months from the date of that notice the name of the company mentioned in it will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved.

(4) If, in a case where a company is being wound up, the registrar has reasonable cause to believe either that no liquidator is acting, or that the affairs of the company are fully wound up, and the returns required to be made by the liquidator have not been made for a period of 6 consecutive months, the registrar shall publish in the Gazette and send to the company or the liquidator (if any) a like notice as is provided in subsection (3).

(5) At the expiration of the time mentioned in the notice the registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register, and shall publish notice of this in the Gazette; and on the publication of that notice in the Gazette the company is dissolved.

...........

653 Objection to striking off by person aggrieved

(1) Subsection (2) applies if a company or any member or creditor of it feels aggrieved by the company being struck off the register under section 652.

(2) The court, on an application by the company or the member or creditor made before the expiration of 20 years from publication in the Gazette of notice under section 652, may, if satisfied that the company was at the time of the striking off carrying on business or in operation, or otherwise that it is just that the company be restored to the register, order the company's name to be restored.

................

(2B) The court, on an application by a notifiable person made before the expiration of 20 years from publication in the Gazette of notice under section 652A(4) may, if satisfied –

(a) ....

(b) ....

(c) that it is for some other reason just to do so,

order the company's name to be restored to the register.

……………

(3) On an office copy of an order made under subsection (2) .... being delivered to the registrar of companies for registration the company to which the order relates 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 company's name had not been struck off.

B. In relation to the Company action:

The 1980 Act

2 Time limit for actions founded on tort

An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.

....

11 Special time limit for actions in respect of personal injuries

(1) This section applies to any action for damages for negligence, nuisance or breach of duty .... where the damages claimed .... consist of or include damages in respect of personal injuries to the plaintiff or any other person.

....

(2) None of the time limits given in the preceding provisions of this Act shall apply to an action to which this section applies.

(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) or (5) below.

(4) Except where subsection (5) below applies, the period applicable is three years from –

(a) the date on which the cause of action accrued; or

(b) the date of knowledge (if later) of the person injured.

(5) – (7) ....

14 Definition of date of knowledge for purposes of sections 11 ....

(1) .... in sections 11 .... of this Act references to a person's date of knowledge are references to the date on which he first had knowledge of the following facts –

(a) that the injury was significant; and

(b) that the injury was attributable in whole or in part to the act of omission which is alleged to constitute negligence, nuisance or breach of duty; and

(c) the identity of the defendant; and

(d) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant;

and knowledge that any acts or omissions did not, as a matter of law, involve negligence, nuisance or breach of duty is irrelevant.

..........

(3) For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire –

(a) from facts observable by him; or

(b) from facts ascertainable by him with the help of medical or other appropriate expert advice which it is reasonable for him to seek;

but a person shall not be fixed under this subsection with knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice.

...........

14A Special time limit for negligence actions where facts relevant to cause of action are not known at the date of accrual

(1) This section applies to any action for damages for negligence, other than one to which section 11 of this Act applies, where the starting date for reckoning the period of limitation under subsection (4)(b) below falls after the date on which the cause for action accrued.

(2) Section 2 of the Act shall not apply to an action to which this section applies.

(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below.

(4) That period is either –

(a) six years from the date on which the cause of action accrued; or

(b) three years from the starting date as defined by subsection (5) below, if that period expires later than the period mentioned in paragraph (a) above.

(5) For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.

(6) In subsection (5) above "the knowledge required for bringing an action for damages in terms of the relevant damage" means knowledge both –

(a) of the material facts about the damage in respect of which damages are claimed; and

(b) of the other facts relevant to the current action mentioned in subsection (8) below.

(7) For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment.

(8) The other facts referred to in subsection (6)(b) above are –

(a) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and

(b) the identity of the defendant; and

(c) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant.

(9) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above.

(10) For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire –

(a) from facts observable or ascertainable by him; or

(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek;

but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice.

............

32 Postponement of limitation period in case of fraud, concealment or mistake

(1) Subject to subsections (3) .... below, where in the case of any action for which a period of limitation is prescribed by this Act, either –

(a) the action is based upon the fraud of the defendant; or

(b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or

(c) the action is for relief from the consequences of a mistake;

the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.

References in this subsection to the defendant include references to the defendant's agent and to any person through whom the defendant claims and his agent.

(2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.

...........

33 Discretionary exclusion of time limit for actions in respect of personal injuries .....

(1) If it appears to the court that it would be equitable to allow an action to proceed having regard to the degree to which –

(a) the provisions of section 11 .... of this Act prejudice the plaintiff ....; and

(b) any decision of the court under this subsection would prejudice the defendant ....;

this court may direct that those provisions shall not apply to the action, or shall not apply to any specified cause of action to which the action relates.

(2) .....

(3) In acting under this section the court shall have regard to all the circumstances of the case and in particular to –

(a) the length of, and the reasons for, the delay on the part of the plaintiff;

(b) the extent to which, having regard to the delay, the evidence adduced or likely to be adduced by the plaintiff or the defendant is or is likely to be less cogent than if the action had been brought within the time allowed by section 11 ....;

(c) the conduct of the defendant after the cause of action arose, including the extent (if any) to which he responded to requests reasonably made by the plaintiff for information or inspection for the purpose of ascertaining facts which were or which might be relevant to the plaintiff's cause of action against the defendant;

(d) the duration of any disability of the plaintiff arising after the date of the accrual of the cause of action;

(e) the extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages;

(f) the steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received.

(4) – (8) .....