England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MANCHESTER COUNTY COURT
HIS HONOUR JUDGE STEWART QC

		Royal Courts of Justice Strand, London, WC2A 2LL
		26 July 2012

Lord Justice Munby :

1. This appeal raises as the central issue a short point on the meaning and effect of section 1032(1) of the Companies Act 2006. Specifically, it raises the question whether an order made pursuant to section 1029 of the 2006 Act has the effect of retrospectively validating an action purportedly commenced against a company during the period of its dissolution. His Honour Judge Stewart QC, from whom this appeal is brought, has held that it does. In my judgment be 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 Limited (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 section 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, 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 section 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 section 1029 was being sought because Mr Joddrell wished to "commence" proceedings against Peaktone. Second, that no application for directions under section 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.

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.
12. The first, which originated in 1900 and thereafter appeared successively in section 242 of the Companies (Consolidation) Act 1908, section 295 of the Companies Act 1929, section 353 of the Companies Act 1948 and section 653 of the Companies Act 1985, conferred on the court a power in defined circumstances, though exercisable for up to twenty 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 section 223 of the 1908 Act, section 294 of the 1929 Act, section 352 of the 1948 Act and section 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 section 651 of the 1985 Act was amended by section 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 sub-sections. Section 1030(6) provides a definition of "personal injury" which there is also no need to set out. Nor need I set out section 1031.

16. So far as material for present purposes, section 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.

(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 section 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 twenty 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 section 653 of the 1985 Act, and not where the application was made pursuant to section 651, now apply by virtue of section 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 (page 257), having drawn attention to the differing language of sections 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 (page 268) said this:

"I cannot myself doubt that both the words of s 223 empowering the Court 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, 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 made – it is "thereupon" but not before – that 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 In Re C W Dixon Limited [1947] Ch 251, the issue was whether a restoration order under section 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, [2002] 1 WLR 616.
21. In Tyman's Ld v Craven [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 section 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. 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 section 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 (page 113):

"on October 31, 1951, it was no longer open to the respondent to allege the non-existence of the company on the preceding July 23; for, by the terms of the subsection, 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 section 352 and section 353. As the Master of the Rolls observed (page 107) "The difference in form and language is indeed … of the highest importance." Earlier, during the course of argument, the Master of the Rolls (page 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 In re Lewis & Smart Ld [1954] 1 WLR 755, proceedings had been begun against a company which was subsequently dissolved. An order having then been made under section 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 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 section 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 (page 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 (page 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 [1993] BCC 748, a case where an order was made under section 651 of the 1985 Act, Evans-Lombe J referred to Morris v Harris and said (page 755):

"In their speeches the House of Lords in that case seemed to be construing sec 223 as only bringing back the company for the 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 court held that he should, in accordance with the unreported decision of Evans J in Eastern Capital Holdings Ltd v Fitter (1991), have stayed the proceedings pending an application for the restoration of the company to the register under section 653 of the 1985 Act. One of the grounds of appeal was that the effect of the order which had since been made under section 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 Ltd 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 Tyman's Ld v Craven.

26. I go finally to Smith v White Knight Laundry Ltd [2001] EWCA Civ 660, [2002] 1 WLR 616, 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 section 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 section 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 purposes – and looking at the matter as at the date when the action was commenced – the cause of action accrued on the date 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 In Re C W Dixon Limited [1947] Ch 251, and commented that Vaisey J had cited Morris v Harris as providing support for his decision, Jonathan Parker LJ continued (paras [53]-[54]):

"In our judgment he was right to do so. In the passages from the speeches of Lord Sumner and Lord Blanesborough 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 Blanesborough 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 company is corporate existence – no question of "corporate activity", in the sense in which Lord Blanesborough used that expression, arises.

We conclude, therefore, that by virtue of the restoration order [the claimant's] cause of action against the company 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 section 651 of the 1985 Act or its statutory predecessors or pursuant to section 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: Tyman's Ld v Craven and In re Lewis & Smart Ld.

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 section 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.
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: In re Workvale Ltd (In Dissolution) [1992] 1 WLR 416.

ii) The order restoring Peaktone to the register does not validate the proceedings retrospectively: In re Lewis & Smart Ld [1954] 1 WLR 755. Although section 1032(1) of the 2006 Act uses the same form of words as had previously appeared in section 653 of the 1985 Act and its predecessors, the jurisprudence which had gathered around the earlier provision should not be applied to section 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 section 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 Laundry Ltd [2001] EWCA Civ 660, [2002] 1 WLR 616.

33. Mr Joddrell's case in essence is that:

i) Section 1032(1) means what it says.

ii) More particularly, section 1032(1) should be construed in accordance with Tyman's Ld v Craven as meaning the same and having the same effect as section 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 2006 – so 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 us, the argument on this part of the case turned on the meaning and effect of section 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 sections 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 section 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 section 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 section 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 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 Companies Court order of 10th 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 section 1032(1)". He was, he said, fortified in that impression by the decision in Tyman's Ld v Craven. Having quoted extensively from that case, Judge Stewart continued:

"As the Master of the Rolls said in the Tyman's 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 section 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 Court of Appeal's majority decision in the Tyman's case as determinative.

As between the two competing possibilities, ie section 352(1) of the 1948 Act and section 651(1) of the 1985 Act on the one hand, and section 356(6) of the 1948 Act and section 653(2)(iii) of the 1985 Act on the other hand. Parliament chose the latter for the 2006 Act …"

Turning to the District Judge's reliance on section 1030(1), Judge Stewart commented that the District Judge had adopted an incorrect approach in first considering section 1030 before turning to section 1032. He continued:

"The company has been restored and the consequences are those set out in section 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 section 1032 as clarified by the Master of the Rolls in the Tyman's case in respect of the earlier legislation, my answer is that section 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 "The points made by Ms Foster, although seemingly potent on their face, do not take account of the full force of the retroactivity provision of section 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 section 1029. He ought, she says, to have concluded that such 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 section 1032(1) merely provides for the "general effect" of an order made pursuant to section 1029. This general principle, she says, cannot be interpreted as meaning that legal proceedings can be retrospectively validated 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 section 655 of the 1985 Act (and its predecessor section 353 of the 1948 Act).^[1] She submits that the result in Tyman's Ld v Craven might have been different if section 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, section 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, Tyman's Ld v Craven is distinguishable, for there the company was the purported plaintiff – so 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, 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 Tyman's Ld v Craven. She does not adequately explain why the general principle is to be interpreted as she asserts, nor why Tyman's Ld v Craven does not provide the answer. Historical and comparative analysis of the legislation, he says, shows that Parliament intended section 1032(1) of the 2006 Act to replicate section 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 Tyman's Ld v Craven is directly in point. The plain meaning and effect of section 1032(1) is not constrained by section 1030(1) as District Judge Jones thought. Her third proposition is answered (as Judge Stewart did) by reference to the powerful effect of section 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 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.
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 single composite procedure; and it applied to the new procedure the principle, now to be found in section 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 section 1032(1) as had previously appeared in section 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 section 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 sub-sections) 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 section 1032(1) of the 2006 Act and section 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 section 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 Tyman's Ld v Craven. In my judgment it applies to elucidate and explain the meaning and effect of section 1032(1) in just the same way as it elucidated and explained the meaning and effect of section 353 of the 1948 Act (and thus, subsequently, of section 653 of the 1985 Act). It is precisely in point. True it is that in Tyman's Ld 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 Tyman's Ld 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 section 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 section 1032(1) is subject to what follows in sections 1032(2) and 1032(3).
45. Second, section 1032(1) is not to be read down, as District Judge Jones did, by reference to the provisions of sections 1029 or 1030, let alone, as he thought, by reference to the provisions of section 1030(1). Sections 1029 and 1030 are dealing only with the application for an order, and not with its effect; that is spelt out in section 1032. As both section 1029 and section 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 section 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 section 1032(1) will depend upon whether they are proceedings for personal injury (and thus within section 1030(1)) or for some other cause of action (and thus within section 1030(4)). The illogicality is even greater when one recalls that the prime purpose of section 1030(1) and 1030(4) is simply to define the different periods within which an application for an order under section 1029 can be made in the two classes of case.^[2]
46. Third, the sweeping effect of section 1032(1) is illustrated by section 1032(3), which enables the Companies Court to make directions "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." 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 Tyman's Ld v Craven (page 111) of the corresponding provision in section 353 of the 1948 Act, these words

"seem to me 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, para 60[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 section 1032(3) of the 2006 Act or in accordance with the CPR, the effect of section 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 section 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 section 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 section 1032(1) is retrospectively to validate an action purportedly commenced by or against a company during the period of its dissolution.

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] 1 WLR 2070; Hoddinott and others v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203, [2008] 1 WLR 806. Application ought accordingly to have been made pursuant to CPR 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 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 Limited v ARA Media Services [2006] EWHC 3612 (Ch), [2007] 1 All ER (Comm) 1160, para [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 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 11, just as in Hoddinott, that Peaktone had failed to follow the CPR 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 section 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.

Lord Justice Lewison :

53. I agree.

Lord Justice Etherton :

54. I also agree. There is nothing I wish to add.

Note 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 section 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 section 1032(3) of the 2006 Act, except that the words “such provision as seems” now appear in place of “such provisions as seem”.    [Back]

Note 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 section 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 section 1032(1) is to be read down by reference to section 1030(1) takes Peaktone nowhere. However, if this is correct – and I make clear that I express no view at all on a point which there is no need for us to decide – the consequence must be that Mr Joddrell’s application did not in fact fall within section 1030(1) at all, on which footing it was necessarily “any other case” within the meaning of section 1030(4). But on this basis the argument collapses completely. So the very hypothesis which is crucial to the argument in fact destroys it.    [Back]