Peaktone Limited v Kenneth Joddrell [2012] EWCA Civ 1035

Summary

The Court of Appeal has considered the meaning and effect of section 1032(1) of the Companies Act 2006 (the "2006 Act"), which provides that if a company is restored to the register, it is "deemed to have continued in existence as if it had not been dissolved or struck off the register". The Court of Appeal found that section 1032(1) operates to retrospectively validate an action purportedly commenced against a company during the period of its dissolution.

Background

Peaktone Limited ("Peaktone") was struck off the Register of Companies and dissolved on 31 March 2009. In August 2009, a former employee of Peaktone, Mr Joddrell (who was unaware that the company had been struck off) purportedly issued proceedings in the County Court against Peaktone, in respect of personal injury suffered which was attributable to his employment. The proceedings were purportedly served on the address which had been Peaktone's registered office immediately prior to its dissolution.

In June 2010, Mr Joddrell obtained an order pursuant to section 1029 of the 2006 Act that Peaktone be restored to the Register of Companies.

Peaktone successfully applied for the claim to be struck out pursuant to CPR 3.4(2)(b) for abuse of process and because the proceedings had not been properly served upon it (since at the time it had already been dissolved and had no legal identity). Mr Joddrell successfully appealed the strike out decision in the High Court.

Peaktone was granted permission to appeal to the Court of Appeal. Peaktone sought reinstatement of the order for strike out on the basis that the claim against it was a nullity as it had not existed at the date on which the proceedings were issued.

Issues

Section 1029 of the 2006 Act provides that various specified persons (including those with a potential legal claim against the company, or any other person appearing to the court to have an interest in the matter) can make an application to restore to the register a company which has been dissolved or struck off.

Section 1032 of the 2006 Act contains the following relevant provisions:

"(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."

The central question for the Court of Appeal to determine was whether an order for reinstatement of a company, made pursuant to section 1029 of the 2006 Act, has the effect of retrospectively validating an action purportedly commenced against the company during the period of its dissolution. The meaning and effect of section 1032(1) of the 2006 Act would determine the answer to this question.

Decision

The 2006 Act had assimilated what in previous legislation had been two separate procedures for judicial restoration (depending on whether the company had been dissolved or struck off) and had retained the retroactive wording which had applied to only one of the procedures. In doing so, Parliament was plainly seeking to carry forward the principle of retroactivity which, in a narrower context, had been repeatedly used in successive Companies Acts for over a century.

There was every reason for asserting that the jurisprudence in respect of the similarly worded legislation preceding the 2006 Act was not only highly relevant, but determinative. The case of Tyman's Ltd v Craven, in which the court had held that an order for restoration could validate retrospectively an application made by a company during the period in which it had been dissolved, served to clarify the meaning and effect of section 1032(1), in the same way that it had done in respect of the contemporaneous legislation. Both Tyman's and this case concerned purported proceedings which were originally a nullity because one of the parties did not exist and it was irrelevant that the previously dissolved company in that case was the claimant in the purported proceedings.

Upholding the High Court's decision, the Court of Appeal held that the effect of section 1032(1) was to retrospectively validate an action purportedly commenced by or against a company during the period of its dissolution. Both the issue and service of proceedings against Peaktone were validated by section 1032(1) and the appeal was dismissed.

Comment

This case highlights the far-reaching potential consequences of the restoration of a company to the register pursuant to section 1032 of the 2006 Act. Any procedural objections which can arise when a retrospective order is made (such as the inability of the company to acknowledge service of the proceedings while it is dissolved) can be countered by the court's power to give directions, pursuant to section 1032(3) of the 2006 Act.