Davy v Pickering & Ors

The power to give consequential directions after restoring a dissolved company is wide, but it must be exercised consistently with the statutory purpose of placing the company and other persons, as nearly as possible, in the position they would have occupied if dissolution had not occurred. A limitation direction is not routine and requires proper grounds. The court should consider the Limitation Act 1980, but there is no additional requirement to prove that proceedings would certainly have been issued during the lost period. The power may also support a direction deeming a winding-up petition to have been presented earlier, where that is necessary to restore a lost opportunity caused by dissolution. The risk that restoration improves the claimant’s position may be accepted as the price of achieving the best attainable reconstruction of the counterfactual position.

The Company was struck off and dissolved following an application by its directors. It was later restored to the register on the claimant’s application, but the court adjourned consequential directions.

The claimant alleged that the Company had given negligent investment advice and sought directions under section 1032(3) of the Companies Act 2006. He requested that the period between dissolution and restoration be disregarded for limitation purposes, and that a winding-up petition presented within 14 days be deemed to have been presented on the date of dissolution. The central issue was whether those directions fell within the statutory discretion and were just on the facts.

1. The court had jurisdiction under section 1032(3) of the Companies Act 2006 to make both the Limitation Direction and the Petition Direction. The discretion is confined by the touchstone of justice and by the purpose of placing the company and all other persons, as nearly as possible, in the position they would have occupied if the company had not been dissolved or struck off.

2. A limitation direction is not a matter of routine. Proper grounds must be shown, and the court must have regard to the limitation regime in the Limitation Act 1980. However, Regent Leisuretime Ltd v NatWest Finance Ltd did not impose a general test of exceptional circumstances. Its observations concerned a different situation and were principally directed to the infrequency with which such a direction would be justified.

3. It was unnecessary to decide the claimant’s date of knowledge under section 14A of the Limitation Act 1980. It was sufficient that an earlier date was arguable and that a further direction might be required to achieve the statutory purpose. Nor was it necessary to establish that the claimant would in fact have commenced proceedings during the relevant period. The material question was whether dissolution had deprived him of a real opportunity.

4. The court could make a direction deeming a winding-up petition to have been presented on an earlier date, notwithstanding the passage of more than two years since the transactions. The claimant had lost a short window in which he might have established his claim and sought winding up. That loss resulted from the directors’ conduct in procuring dissolution without giving the required notice to a potential creditor.

5. The directions could improve the claimant’s position compared with the uncertain counterfactual position. That risk was acceptable where it represented the best attainable equation under section 1032(3). The Limitation Direction and Petition Direction were therefore ordered. Their ultimate effect remained subject to the limitation issue, the claimant’s status as a creditor, and any entitlement under the transaction-avoidance provisions of the Insolvency Act 1986.

First-instance decision on consequential directions following an earlier restoration order. No appellate history is stated in the judgment.