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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Richmond Building Products Ltd. v. Soundgables Ltd. t/a Munster Radon Protection & Ors [2004] IEHC 382 (4 November 2004)
URL: http://www.bailii.org/ie/cases/IEHC/2004/382.html
Cite as: [2005] 1 ILRM 497, [2004] IEHC 382
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[2004]IEHC 382
THE HIGH COURT
RECORD NO. 2001 739S
BETWEEN
RICHMOND BUILDING PRODUCTS LIMITED
PLAINTIFF
AND
SOUNDGABLES LIMITED TRADING AS
MUNSTER RADON PROTECTION, JAMES BUTLER,
JOHN O'KEEFFE AND GERRY SPILLANE
DEFENDANTS
Judgment of Finnegan P. delivered on the 4th day of November 2004
By Summary Summons dated the 28th August 2001 the Plaintiff sought against the Defendants the sum of £39,566.83 together with interest in respect of goods sold and delivered. The goods were sold to the first named Defendant in the period 26th August 2000 to 31st December 2000. However the first named Defendant was struck off the Register of Companies on the 25th August 2000 and restored to the Register on the 20th April 2001. Accordingly at the dates relevant to this claim it was not in existence. The Plaintiff has obtained judgment against the first named Defendant and the third named Defendant the action being sent for plenary hearing as against the second named Defendant and the fourth named Defendant and it is the claim against those Defendants with which I am concerned.
Taking it that had the first named Defendant not been restored to the Register the Plaintiff could maintain a claim against the Directors what is the effect of the restoration of the first named Defendant to the Register on that claim? The Plaintiff contends that the claim survives while the Defendant relies on the provisions of the Companies (Amendment) Act 1982 section 12 as substituted by the Companies (Amendment) (No. 2) Act 1999 section 46 which provides in short that on restoration the company shall be deemed to have continued in existence as if the name had not been struck off.
The Companies (Amendment) Act 1982 section 12 as substituted by the Companies (Amendment) (No. 2) Act 1999 section 46 at 12B(3) provides in relation to a company struck off pursuant to section 12(3) to be restored by Order of the Court the effect of such Order being that the company shall be deemed to have continued in existence as if its name had not been struck off. Where a company is struck off under section 12A(3) an application can be made to the Registrar of Companies pursuant to section 12C(1) for the restoration of the company. While the matter proceeded before me upon the basis that the application to restore was made pursuant to section 12B(3) documentation introduced in evidence suggests that the application may in fact have been made under section 12C(1). This it seems to me makes no difference to the issue before me as if the application to restore was made under the latter provision the company is nonetheless deemed to have continued in existence as if its name had not been struck off. This is so notwithstanding the provisions of section 12B(1) which provides in relation to an application pursuant to section 12(3) as follows –
"The liability, if any, of every director, officer and member of a company the name of which has been struck off the Register under section 12(3) or 12A(3) of this Act shall continue and may be enforced as if the company had not been dissolved."
This provision I am satisfied is intended to operate where the company is not restored and in any event affects a director, officer or member qua director, officer or member and does not relate to liability incurred by any such person by purporting to act in the name of the company while the company was dissolved.
Again it may be that the restoration was effected pursuant to the provisions of section 311A as inserted by the Companies Act 1990 and amended by the Companies (Amendment)(No. 2) Act 1999 section 49 by an application to the Registrar. Again the effect will be the same as a company so restored is deemed to have continued in existence as if its name had not been struck off.
The effect of such an Order pursuant to the Companies (Amendment) Act 1992 was considered in Re Amantiss Enterprises Limited (2000) 2 ILRM 177. For the Petitioner in that case it was argued that the effect of the statutory provision was to validate all acts done by the company between its dissolution and its restoration. For the Notice Parties it was submitted that the effect of the section was merely to restore the status of incorporation to the company as to its identity but did not have the effect of validating retrospectively acts done between dissolution and restoration to the Register. The Court held in favour of the Petitioner. In his judgment O'Neill J. relied upon Tymans Limited v Craven (1952) 2 Q.B. 100 the majority decision in which was relied upon by the Petitioner. He cited with approval a passage from the judgment of Evershed M.R. –
"In my judgment the final words of the subsection can properly and usefully be regarded as intended to give to the Court, where justice requires and the general words would or might not themselves suffice, the power to put both company and third parties in the same position as they would have occupied in such cases if the dissolution of the company had not intervened. More generally the final words of the section 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 word 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 words is prima facie, and their consequence."
The Plaintiff before me relied upon in Re Brown Bayley's Steelworks Limited 21 T.L.R. 374. In that case Buckley J. was considering the provisions of the Companies Act 1880 section 7(5). Section 7 provided for the striking off of a company not carrying on business. Subsection (5) provided for the restoration of the company's name on application to the Court and provided that if the Court was satisfied that it was just so to do it "may order the name of the company to be restored to the Register" and provided that – "thereupon the company shall be deemed to have continued in existence as if the name thereof had never 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 never been struck off." In the course of his judgment Buckley J. said –
"From the time when the company was struck off there was no corporation and its officers were personally liable for the engagements made as its agents. By simply making an order to restore the name to the Register his Lordship would not relieve them – the personal liability would still remain. The Court could make an order under section 7(5) giving such directions that the officers would be relieved from liability. His Lordship would not make that order, but would make an order which would not relieve them, by simply ordering the name of the company to be restored on the terms of its making the proper returns and paying the costs of the Board of Trade."
Further Counsel for the Plaintiff argues that section 12C(3) in its terms refers to the rights or liabilities of the company and not to those of the directors. Section 12C(3) provides as follows –
"Subject to any order made by the Court in the matter, the restoration of the name of a company to the Register under this section shall not affect the rights or liabilities of the company in respect of any debt or obligation incurred, or any contract entered into by it, to, with or on behalf of, the company between the date of its dissolution and the date of such restoration."
This provision does not avail the Plaintiff. It enables the company to sue and be sued on any contract entered into by it or on its behalf: it has nothing to say as to the position of those purporting to act on the company's behalf.
In the United Kingdom an opposite view appears to have been taken to that of Buckley J. in Re Brown Bayley's Steelworks (Limited) in a series of cases on successive Companies Acts commencing with Morris v Harris 1927 A.C. 252 and followed in Tymans Limited v Craven – the "as you were" position. This line of authority has been consistently followed in the United Kingdom – see Re Rugby Auto Electric Services Limited (14th December 1959) Unreported Roxburgh J, re Huntington Poultry Limited 1969 1 All E.R. 328, re Lindsay Bowman Limited 1969 3 All E.R. 601, re Priceland Limited (1997) 1 B.C.L.C. 467. The effect of these cases is that the Directors on the company being restored do not remain personally liable.
In Re Lindsay Bowman Limited 1969 3 All E.R. 601 an application was made for the restoration of the company which had been struck off the Register and also as the company was insolvent a winding up order. The petition was supported by a creditor with debts incurred prior to the dissolution and after the dissolution. The creditor sought a Rugby Auto Electrics clause in the Order if the company was to be restored. That clause reads as follows –
"Is to be without prejudice to any remedy which any creditor who became such on or after the date of dissolution might otherwise have against any person prior to the date of this order taking effect."
In short the creditor sought to have preserved rights against the directors personally which on the restoration of the company would otherwise be lost. Megarry J. distinguished the Rugby Auto Electrics Clause cases from Re Donald Kenyon Limited 1956 3 All E.R. 596 where creditors who were not statute barred at the date of dissolution were statute barred at the date of restoration and a provision was included in the order that the period between dissolution and restoration was not to be counted for the purposes of any statute of limitations. The effect of that order was to put that creditor, so far as the Statute of Limitations was concerned, in the same position as nearly as may be as if the name of the company had not been struck off. He went on to say in relation to a Rugby Auto Electrics Clause –
"In the present case, the position seems to me to be very different. 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."
In effect Megarry J. differed from Re Rugby Auto Electric Services Limited and held that there was no power to make the Directors personally liable for debts incurred during the period in which its name had been struck off. This is consistent with the well established principle in East End Dwellings Company Limited v Finsbury Council 1951 2 All E.R. 587 at 599 – "If one is bidden to treat an imaginary state of affairs as real, one must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it."
On the basis of the foregoing I am satisfied that the Order restoring the Company had the effect of releasing Directors from the personal liability which they had incurred while the Company was struck off.
If the company has been restored on foot of an application to the Registrar pursuant to section 12C(1) it was argued on behalf of the Fourth named Defendant that the effect of such restoration is limited by the words of section 12C(3) which I have set out above – the restoration shall not affect the rights or liabilities of the company in respect of any debt or obligation incurred, or any contract entered into by, to, with or on behalf of, the company between the date of its dissolution and the date of such restoration. However this argument ignores the provisions of section 12C(2) which provides as follows –
"Upon the registration of an application under subsection (1) of this section and on payment of such fees as may be prescribed, the company should be deemed to have continued in existence as if its name had not been struck off."
On the authorities I am satisfied that the effect of the restoration of the first named Defendant and whether effected under the Companies (Amendment) Act 1982 section 12(3), 12B or 12C is that the personal liability which might otherwise have attached to the directors is extinguished. Accordingly the Plaintiff fails in his claim against the Second named and Fourth named Defendants.
Approved: Finnegan P.