English and Welsh Courts - Miscellaneous

IN THE COUNTY COURT IN LEEDS

		The Court House Oxford Row Leeds LS1 3BG
		10/05/2016

Judge Behrens:

1. Introduction

1. On 4 February 2012 Mrs Instone was walking towards the entrance of Primo Restaurant, Unit E, West Point Wellington Street Leeds when she alleges she slipped as a result of the presence of snow or ice on a ramp or paved pathway outside the entrance. As a result she suffered a fractured shoulder from which she made a complete recovery within 2 years. It is common ground between the parties that the quantum of any claim for that injury is between £5,000 and £15,000 – probably nearer the lower end of that bracket.
2. On 9 February 2012 Mrs Instone consulted Cohen Cramer in relation to a possible claim in respect of her accident. On 13 February 2012 Mrs Instone entered into a CFA with Cohen Cramer with the benefit of ATE insurance.
3. It will be necessary to set out the history of the claim in some detail later in the judgment. It is only fair to comment that the prosecution of the claim has not been straightforward. Some might describe it as a nightmare.
4. The first set of difficulties lay in determining who the correct Defendant was. The proceedings were to be brought under the Occupiers Liability Act 1957. This involved a determination of the identity of the occupier. There were difficulties in determining whether it was the landlord or the tenant of the premises. There were a number of different landlords for different parts of the premises. Furthermore there were 2 candidates for the identity of the tenant running Primo Restaurant – Primo Restaurants Ltd ("Primo") and Prosecco (Leeds) Ltd ("Prosecco").
5. The second set of difficulties lay in the fact that both Prosecco and Primo were insolvent and by the beginning of 2015 had been struck off the Register of Companies and dissolved.
6. In January 2015 Cohen Cramer on behalf of Mrs Instone instituted 2 sets of proceedings in the Chancery Division to restore Prosecco and Primo to the Register to enable proceedings to be brought against them. Both sets of proceedings were listed for hearing on 14 April 2015.
7. On 2 February 2015 Cohen Cramer issued a claim form against 5 Defendants in respect of Mrs Instone's accident. Prosecco and Primo were, respectively the First and Second Defendant.
8. On 14 April 2015 Primo was duly restored to the Register. For reasons which will be explored in more detail later in the judgment the application to restore Prosecco to the register was withdrawn.
9. On 1 June 2015, that is to say just within the 4 month period permitted, Cohen Cramer served the proceedings on all the Defendants except for Prosecco.
10. On 21 July 2015 the liquidator of Primo sent a letter to Cohen Cramer in which he made it clear that Primo's assets were sold to Prosecco on 28 October 2010. On that date Prosecco took up occupation of the restaurant pursuant to a Licence to Occupy with the consent of the landlord. Primo accordingly ceased to be the occupier on 28 October 2010.
11. In the light of this information Cohen Cramer discontinued the claim against Primo. On 17 August 2015 Cohen Cramer issued a second application to restore Prosecco to the Register and a without notice application to extend the time for service of the claim on Prosecco. Each of the applications was listed on 5 October 2015. On that date DJ Goldberg made an order restoring Prosecco to the Register and DJ Kelly made an order extending the time for service of the claim form.
12. On 8 October 2015 Keoghs on behalf of Prosecco applied to set aside DJ Kelly's order. On 2 December 2015 DJ Kelly refused to set aside her order.
13. This is an appeal against DJ Kelly's order. Prosecco contends that Mrs Instone cannot meet the stringent requirements of CPR 7.6(3). Accordingly there was no jurisdiction for DJ Kelly to extend the time for service of the claim form. Accordingly service should have been set aside and the claim struck out.

2. The facts

14. I have set out the bare bones of the facts in the Introduction. I shall not repeat them. However there are a number of areas where it is necessary to look at the position in more detail.

The investigation up to 2014

15. On 20 February 2012 Ms Cawood a partner in Cohen Cramer wrote a detailed letter of claim addressed to "Primo Restaurante". Zurich Insurance ("Zurich") stated that they acted for Prosecco. However Zurich took until 21 August 2012 to deny liability. On 5 December 2012 Zurich alleged that their insured was not responsible for the outside of the premises and asserted that the Fourth Defendant was responsible.
16. A letter of claim was sent to the Fourth Defendant on 31 January 2013. The Fourth Defendant asserted that the Third Defendant was responsible for the commercial properties.
17. Requests were made for the identity of the landlord. A number of reminders were sent. Eventually on 12 December 2014 Zurich sent a copy of the lease to Cohen Cramer. The lease identified Primo as the tenant and contained no reference to the Licence to occupy dated 28 October 2010.
18. In December 2014 Cohen Cramer discovered that both Prosecco and Primo had been dissolved. Further enquiries were made of Zurich to discover the exact name of the insured.

Events leading to the withdrawal of the application to restore Prosecco.

19. On 2 January 2015 Cohen Cramer received an email from Zurich which included:

"We are currently reviewing and have requested further information from our insured's broker.

Our insured is Prosecco (Leeds) Limited, not Primo Restaurants Limited. We are trying to ascertain who is responsible for the area concerned and the relationships between the companies (should one exist) and the property owners.

As such, as investigations are ongoing, we are not prepared to nominate solicitors at present. We will revert as soon as possible".

20. On 15 January 2015 Cohen Cramer instituted the 2 sets of proceedings to restore Prosecco and Primo to the Register.
21. On 2 February 2015 Zurich sent Cohen Cramer a further email which included:

"With reference to the above mentioned claim. We note that you have made an application to the Courts for an order to restore both Prosecco (Leeds) Limited and Primo Restaurants Limited. Could you please advise the reasons for restoring Prosecco (Leeds) Limited.

After looking through the documentation, we note that Prosecco (Leeds) Limited are not named in lease and the registered address for Prosecco (Leeds) Limited is not where the accident occurred.

22. Mr Jamieson points out that this email, to put it no higher, contains a suggestion that Prosecco was not the occupier of the premises. It makes no mention of the Licence to Occupy or the fact that Prosecco was in fact running the restaurant at the premises.
23. Cohen Cramer replied to this email on the same day setting out its belief that Primo Restaurant was the trading name of Prosecco and asking Zurich to confirm the relationship between Prosecco and Primo. Cohen Cramer attempted to chase Zurich with telephone calls on 18, 19, 20, 24 and 25 March 2015. The only information Cohen Cramer received was that "they are still investigating the sale of the land".
24. Following a telephone conversation on 11 March 2015 on 12 March 2015 the former liquidator of Prosecco sent a letter to Cohen Cramer stating that he did not consent to the restoration of Prosecco to the Register. He pointed out that once the company was live on the register, it would be subject to all of the statutory, filing and reporting requirements. He said that the basic cost of dealing with these obligations was £2,500 plus VAT and plus disbursements. He said that these costs would increase further should there be any additional work required. He invited Cohen Cramer to stand down the proceedings in the interim to avoid any further unnecessary costs.
25. Perhaps unsurprisingly Cohen Cramer interpreted this letter as a claim by the liquidator for its additional costs if the application proceeded. Accordingly Cohen Cramer consulted the ATE insurer. The ATE insurer declined to fund the £2,500 or any other sum that might be claimed by the liquidator.
26. Thus Cohen Cramer found themselves in a position where:

1. They had no way of knowing who was in occupation of the restaurant.

2. The lease showed Primo as the tenant,

3. Zurich, on review, had pointed out that Prosecco was not the tenant and, by inference suggested that it was not in occupation.

4. The liquidator of Prosecco had indicated that he would not consent to the restoration of Prosecco and would incur costs of least £2,500 if Prosecco was restored to the register. The costs of an opposed application would no doubt be higher than those of an unopposed application. Cohen Cramer were not in funds.

27. In those circumstances Cohen Cramer decided to withdraw the application to restore Prosecco and proceeded only with the application in respect of Primo. 9 further chasing phone were made to Zurich in April 2015 without response.
28. As noted above the proceedings were served on all the Defendants but Prosecco on 1 June 2015. It was only when Cohen Cramer received the letter dated 21 July 2015 from Primo's liquidator that they were informed of the sale of the assets to Prosecco and the Licence to occupy dated 28 October 2010.
29. The second application to restore and the application to extend the time for the service of the claim form were made on 17 August 2015.

3. The law

Effect of Dissolution

30. Prosecco entered into creditors' voluntary liquidation ("CVL") on 13 November 2013. On 19/2/2014 it was struck off the register. In the result under s 201(2) of the Insolvency Act 1986 it became dissolved 3 months later.
31. The effect of dissolution was described by Scott LJ in Workvale (No 2) [1992] BCLC 544 at 546 c – d.

It is worth pointing out that when the company became dissolved the primary limitation period applicable to Mr Macdonnell'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, Mr MacDonnell's 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.

32. Thus, in this case the claim form was ineffective in so far as it named Prosecco as a Defendant. It was also impossible to serve it on a non-existent Defendant.

Restoration

33. There has been power to restore companies since at least 1908. However the terms of the provisions have changed in succeeding statutes. In the Companies Act 1985 there were 2 relevant provisions – section 651 was a general provision which could be invoked if the Company had been dissolved for any reason; section 653 was concerned only with cases where the claim had been struck out under section 652 (provisions relating to defunct companies).
34. The relevant parts of section 651 provided:

'(1) Where a company has been dissolved, the court may, on an application made for the purpose by the liquidator of the company or by any other person appearing to the court to be interested, make an order, on such terms as the court thinks fit, declaring the dissolution to have been void.

(2) Thereupon such proceedings may be taken as might have been taken if the company had not been dissolved.'

35. This was in contrast to section s 653 which provided:

'(1) Subsection (2) applies if a company or any member or creditor of it feels aggrieved by the company having been 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.

(3) On an office copy of an order . . . being delivered to the registrar of companies for registration the company . . . 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.'

36. A person in the position of Mrs Instone had to apply under s 651. It was held by Sir John Knox in Philip Powis [1997] 2 BCLC 481 that a personal injury claim that came to an end on the dissolution of the Company was not re-instated by an order under s 651. He noted however the difference between the wording in s 651 and s 653.

There is a difference between s 653(3), which has been aptly described as an 'as you were' provision, and s 651(2), which is prospective save for the future perfect in the phrase 'declaring the dissolution to have been void', and has frequently been commented upon in the context of the legislative predecessors of ss 651 and 653 of the 1985 Act.

37. The 2006 Act made significant changes to the regime for restoring the Company to the register. It introduced provisions for administrative restoration to the register in cases where the Company was struck off as a defunct company. Applications to the court (including those relating to personal injury claims) are now made under s 1029. The effect of an order is set out in s 1032 which provides (so far as relevant):

(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.

…

(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.

38. It will thus be seen that the effect is the same as under s 653 of the 1985 Act. One of the directions the Court is sometimes asked to make is to direct that the limitation period does not run whilst the Company was dissolved. However DJ Goldberg was not asked to make such a direction and did not do so.
39. It follows, in my view, that the effect of DJ Goldberg's order of 5 October 2016 is that Prosecco is deemed to have continued in existence as if it had not been struck off and dissolved. It follows in my view that the issue of the claim against Prosecco on 2 February 2016 was retrospectively validated. It also follows that Mrs Instone had 4 months to serve the claim form on Prosecco even though Prosecco was not in existence throughout those 4 months.

Extension of time for service of claim form

40. CPR 17.6 provides as follows:

Extension of time for serving a claim form

(1) The claimant may apply for an order extending the period for compliance with rule 7.5.

(2) The general rule is that an application to extend the time for compliance with rule 7.5 must be made—

(a) within the period specified by rule 7.5; or

(b) where an order has been made under this rule, within the period for service specified by that order.

(3) If the claimant applies for an order to extend the time for compliance after the end of the period specified by rule 7.5 or by an order made under this rule, the court may make such an order only if—

(a) the court has failed to serve the claim form; or

(b) the claimant has taken all reasonable steps to comply with rule 7.5 but has been unable to do so; and

(c) in either case, the claimant has acted promptly in making the application.

41. I was referred to 3 cases where CPR 7.6 has been considered.
42. Carnegie v Drury [2007] EWCA Civ 497 concerned an application under CPR 17.6(3) to extend time in defamation proceedings. The detailed facts do not matter save that the Court of Appeal allowed an appeal by the Defendant and set aside the extension. The case was relied on by Mr Smith in relation to observations by Lady Justice Smith in the course of her judgment.
43. In paragraph 37 she put the matter thus:

It seems to me that the right approach is to consider what steps were taken in the four month period and then to ask whether, in the circumstances, those steps were all that it was reasonable for the claimant to have taken. The test must, in my view, be objective; the test is not whether the claimant believed that what he had done was reasonable. Rather it is whether what the claimant had done was objectively reasonable, given the circumstances that prevailed.

44. In paragraph 40 she drew attention to the intentions behind the CPR:

This court has on more than one occasion stressed that one of the intentions behind the Civil Procedure Rules is that litigation should proceed expeditiously and that time limits should be taken seriously: see for example Vinos v Marks & Spencer PLC [2001] 3 AER 784 at 789-790. Also, this court has warned litigants of the dangers of leaving until the last minute the taking of a procedural step governed by a time limit: see for example Anderton v Clwyd County Council (supra) at page 3184. If repetition of this warning is necessary, let this case provide it. A litigant is entitled to make use of every day allowed by the rules for the service of a claim form. But it is well known that hitches can be encountered when trying to effect service. A litigant who leaves his efforts at service to the last moment and then fails due to an unexpected problem is very unlikely to persuade the court that he has taken all reasonable steps to serve the claim in time. Without such a finding, the court will be unable to extend time for it is only if both sub-paragraphs (b) and (c) of Part 7.6(3) are satisfied that the court has any discretion to grant relief. A litigant who delays until the last minute does so at his peril.

45. Mr Smith also referred me to the summary of the decision in Cecil v Bayat [2011] EWCA Civ 135 which is contained on page 383 of the 2016 White Book:

The question of whether a reason connected with funding amounted to good reason was considered by the Court of Appeal in Cecil v Bayat [2011] EWCA Civ 135, [2011] 1 WLR 3086, CA. Before the four month period expired the court granted an extension of six months for service in a high value contract claim on the basis that the claimant needed time to secure funding for the claim. Within that period, during which limitation expired, the claimant applied for and was granted a further six month extension. Both applications were made ex parte. After a CFA with ATE insurance were agreed, the claim form was served 11 months after issue. The Court of Appeal, overruling the judge, upheld the defendant's application to set aside the extensions on the grounds that the court may exercise its discretion to extend time for service under r.7.6(2) only where there is good reason to do so and generally, that reason, must be a difficulty in effecting service. While without a CFA and ATE insurance it was not viable for the claimant to take the claim to trial, they could have commenced the claim and served their claim form without them. The claimant's deliberate decision to secure their position as to costs by delaying service until funding was in place for the whole of the proceedings did not provide a good reason for extending time under r.7.6(2), and in the circumstances, the claimant should have served the claim form in the period of its initial validity and then, if they were not in a financial position to proceed with the claim immediately, applied inter partes for a stay, or an extension of the time for procedural steps to be taken. The starting-point is that a defendant has a right to be sued, if at all, by means of originating process issued within the statutory period of limitation and served within the period of its initial validity for service.

46. Mr Smith relied on the decision in relation to the funding of the application. Mr Jamieson submitted that this case was very different from Cecil. In this case Cohen Cramer were threatened with a claim for £2,500 by the former liquidator of Prosecco prior to the service of the proceedings on Prosecco. The ATE insurers were not prepared to fund that sum.
47. Mr Jamieson, without referring to it in detail drew my attention to a decision of HH Judge Peter Hughes QC in Hyfield Estates v Thomas Eggar [2015] EWHC 3773 (QB). That case has some similarities with the present. It involved a claim against 9 Defendants which was issued on 26 November 2014. One of the Defendants had been dissolved and needed to be restored to the register. No application was made to restore it until 3^rd March 2015. The Company was not restored before 26 March 2015 and an application was made under CPR 7.6(3) on 21^st April 2015. The application was refused by Master Kaye QC and the appeal was dismissed by Judge Peter Hughes QC. In the course of his judgment Master Kaye QC had said:

"What I am concerned with, however, is whether the claimant had taken all reasonable steps to comply with 7.5. It had been unable to do so. It is perfectly clear that the claimant sought to serve on the third defendant's old office, but they were unable to do so. Of course they were unable to do so because the third defendant no longer existed. That was obvious to them on 24 November. It was obvious to them on 24 November that the third defendant needed to be restored to the company registry. There is no explanation, save that the claimant is a small company and I understand Mr Sillett to be speaking for the claimant. There is no explanation for why it did not take proceedings or start proceedings to have that company restored to the register at an earlier stage. I am told that it was assumed that this matter would go through very simply and very easily. I am told that they often do. That is no guarantee that they will go through in a very straightforward manner. It may take longer. In my view the claimant has failed to demonstrate that it took all reasonable steps to comply with the rule when it failed to make an application for the company to be restored until three months it had issued the claim form."

48. As I have noted the appeal was dismissed. In paragraph 14 of the judgment Judge Hughes QC criticised the Claimant for not making a precautionary application under CPR 7.5. With great respect to Judge Hughes QC I find it difficult to see how an application could have been made at a time when the Company did not exist. In any event in paragraph 15 Judge Hughes QC based his decision on the fact that the Claimant should have applied much earlier to restore the Company to the register.

4. The Judgment of DJ Kelly

49. In her careful decision DJ Kelly set out CPR 7.6(2) and (3) in full. She went on to refer to Cecil v Bayat, and two other cases. In paragraph 8 she made the point that it is unusual for an application to be made where there is no physical difficulty in serving the claim form. However she considered that the court could extend time providing a claimant could show that what has been done is "the performance of all reasonable steps to comply with the rules for service". She asked herself "Have all reasonable steps in fact been taken?"
50. In paragraph 9 she described the case as unusual. She pointed out that it was one of those cases where no-one was quite sure who was physically responsible for the area where Mrs Instone slipped despite enquiries being made over the full 3 years since the accident.
51. In paragraphs 10 and 11 she referred to the email from Zurich dated 2 February 2015 and the letter from Prosecco's liquidator of 12 March 2015 which she said "only served to muddy the water".
52. In paragraph 13 she accepted that efforts had been made throughout the 3 year period and that initial steps were taken to restore Prosecco in January 2015. She held that the application had been stopped because of the response of the liquidator of Prosecco in relation to costs and the email of 2 February.
53. In paragraph 14 she pointed out that it was only when Cohen Cramer received the email from the liquidator of Primo's solicitors on 21 July 2015 that the position with regard to Prosecco was made clear.
54. In paragraph 15 she held that all reasonable steps had been taken. In paragraph 17 she held that the application had been made promptly.

5. Discussion and Conclusions

55. In my view the decisions in Cecil and Hyfield are distinguishable from this case on their facts. It may well have a reasonable step on the facts of Cecil for the Claimant to have served the claim form even though it did not have the funding required but Cohen Cramer's position was different. They could not serve the claim form on Prosecco without restoring it to the register. In order to restore Prosecco they faced a possible claim for costs in the sum of £2,500 which was unfunded.
56. An important feature of Master Kaye QC's decision in Hyfield was that no explanation was given for the failure by the Claimant to make the application to restore the Company to the register earlier. In this case Cohen Cramer did provide an explanation. As already noted I have difficulty with Judge Hughes QC's view that an application could have been made under CPR 7.5(2) before the Company had been restored and thus at a time when the Company did not exist and the proceedings against the Company were a nullity. It is true that if and when the restoration order was made the deeming provision in s 1032(1) of the 2006 Act would come into operation but I do not for my part see how the Court could make a prospective order based on a deeming provision which might or might not come into play.
57. In my view the correct test is that enunciated by Smith LJ in paragraph 37 of her judgment, which is, of course, binding on me. The Court must look at the steps taken in the four month period and ask itself whether in the circumstances, those steps were all that it was reasonable for the claimant to have taken. The test is objective, the court must ask whether what the claimant had done was objectively reasonable, given the circumstances that prevailed.
58. Mr Smith's criticism of Mrs Instone/Cohen Cramer was the failure to take effective steps to get Prosecco restored to the register earlier. Indeed he put the matter rather higher because Cohen Cramer withdrew the first application to restore Prosecco to the register in March 2015. Indeed in his closing submissions he submitted that, as a matter of law, the action of withdrawing the application could not be a reasonable step because it inevitably meant that no service would be possible in the 4 month. He submitted that the decision to withdraw the restoration application was a conscious decision by Cohen Cramer and it should not now be allowed to go behind that decision by being allowed to serve the claim form out of time.
59. I do not accept that submission. No doubt the fact that the first application was withdrawn and the fact that the withdrawal was a deliberate decision are factors to be taken into account. However the ultimate question is whether what Mrs Instone/Cohen Cramer did was objectively reasonable in the circumstances that prevailed. Those circumstances included the matters set out in section 2 of this judgment including the difficulty in knowing who was in occupation of the restaurant, the terms of the lease in favour of Primo, the emails from Zurich, the letter from Prosecco's former liquidator and the fact that the ATE insurers were not prepared to fund the potential costs mentioned in the former liquidator's letter. It also seems to me that the potential value of the claim is relevant to this issue. It might well be thought to be reasonable objectively to take more steps in a high value claim than in a modest claim. It will be recalled that this is a relatively modest claim.
60. In all the circumstances I have come to the conclusion that it was objectively reasonable for Mrs Instone to withdraw the first application to restore Prosecco. That was the view of DJ Kelly and I agree with it substantially for the reasons she gave.
61. The position changed when Cohen Cramer received the letter dated 21 July 2015 from the solicitors acting for Primo's liquidator. That letter (for the first time) explained about the sale of assets to Prosecco on 28 October 2010 and the licence to occupy granted by Primo to Prosecco with the consent of the landlord. Within a relatively short time Cohen Cramer made the application under CPR 7.5(3) and the second application to restore Prosecco to the register.
62. DJ Kelly held that Cohen Cramer had acted sufficiently promptly in making the application and I see no reason to interfere with that finding.
63. Mr Smith accepted that if the jurisdictional threshold was passed he could not challenge the exercise of DJ Kelly's discretion. For the reasons I have given I am satisfied that DJ Kelly was right to hold that the jurisdictional threshold was passed on the unusual facts of this case.
64. It follows that I would dismiss this appeal.