GENERAL CORPORATE

Ability of company restored to the register to bring a claim expired under the Limitation Act 1980

In County Leasing Asset Management Ltd & Ors v Hawkes [2015] EWCA Civ 1251 the Court of Appeal considered whether a company, which had been restored to the register, was able to bring a claim when the statutory period within which the claim could be brought had expired. The Court of Appeal disagreed with the court of first instance and held that the claim remained statute barred.

The Companies Act 2006 (s.1032) states that the general effect of restoring a company to the register is that “the company is deemed to have continued in existence as if it had not been dissolved” and the court “may give such directions and make such provision as seems just for placing the company … in the same position (as nearly as may be) as if the company had not been dissolved”. The question for the court was how this discretion should interact with the detailed limitation regime under the Limitation Act 1980 (the “Act”).

The court, considered:

  • the only other reported case (Regent Leisuretime v Natwest Finance Limited [2003] EWCA Civ 391) where the question had previously arisen, which established that the court’s discretion could only be exercised in exceptional circumstances and fairness will generally require that the company, like any other claimant, should be subject to the Act; and
  • the essential features of the limitation regime under the Act.

The court concluded that the discretion conferred by the Companies Act 2006 was not simply a question of “putting back the clock to the date of dissolution”; the court was required to ask what would have happened during the period of dissolution, if dissolution had not occurred. The question was therefore “whether the dissolution of the company was the real cause of its being disabled from pursuing its claim”. Finding no evidence that the claim would have been pursued if the company had not been dissolved before the claim became statute barred, the court allowed the appeal.

Impact – the case is particularly interesting because it is only the second case to consider the exercise of the court’s discretion to permit a claim, otherwise statute barred, in favour of a restored company (rather than a third party such as a creditor).  It  suggests that a restored company may only bring a claim outside the statutory time period if it is established that the company’s dissolution was the “real cause of its being disabled from pursuing its claim”.

OTHER ITEMS

  • The ICAEW has published key questions it recommends are asked by those involved in preparing annual reports to improve the “front half” of annual reports. Questions include, “Is everything in the report material?” and “Does the remuneration report explain high pay?”. The report notes that the ICAEW will publish a more detailed report on corporate reporting in early 2016.