The Welsh Ministers v Price & Anor (Rev 1)

Joinder under the Civil Procedure Rules 1998 requires both a relevant issue and a finding that joinder is desirable. The rule is to be construed widely, so that “matters in dispute” includes matters in issue. That does not justify intervention by a person whose position is unchanged in substance by a company’s restoration.

A third party is ordinarily entitled to be heard only where restoration itself may directly affect its rights. A change in the identity of the person able to enforce an existing liability is insufficient. The court may, in an appropriate case, join a third party to raise material non-disclosure or breach of undertakings. Setting aside a restoration order requires a real prospect that the alleged non-disclosure would have produced a substantially different order.

Pablo Star Ltd was restored to the register so that it could pursue copyright claims. Its director later assigned copyright to another company under his control, while reserving certain claims. The Welsh Ministers, against whom copyright proceedings were contemplated or brought, applied to be joined to the restoration proceedings. They sought ultimately to revoke the restoration and variation orders, alleging material non-disclosure, misrepresentation and breaches of undertakings.

Registrar Barber granted joinder. On appeal, HHJ Behrens QC set aside that order and dismissed the application: [2016] EWHC 2640 (Ch). The Welsh Ministers appealed. The central issue was whether they could and should be joined under CPR 19.2 in order to challenge the restoration orders and the consequential validity of the copyright assignment.

1. Appeal dismissed. The Welsh Ministers could in principle bring their application within both limbs of CPR 19.2(2), but it was not desirable to join them. The court therefore upheld the refusal of joinder, although it did not accept all of the judge’s reasons.

2. CPR 19.2 is to receive a wide construction. The expression “matters in dispute” in CPR 19.2(2)(a) includes matters in issue. The power to add a party can also exist after judgment. The proposed challenge to the restoration and variation orders was therefore capable of falling within CPR 19.2(2)(a), and the connected issue concerning the assignment was capable of falling within CPR 19.2(2)(b).

3. The decisive question was desirability. A third party should be heard where restoration itself may directly affect its rights. The Welsh Ministers’ alleged copyright liability existed both before dissolution and after restoration. Retrospective validation of the assignment under Companies Act 2006 section 1032 changed only the identity of the person who might enforce that liability. It created neither a new asset nor a substantively different liability.

4. The Registrar of Companies does not have an exclusive statutory responsibility to police restoration applications. In an appropriate case, the court may join a third party to raise alleged material non-disclosure or breaches of undertakings. Such jurisdiction must, however, be exercised narrowly and consistently with the Overriding Objective.

5. The Welsh Ministers had no real prospect of obtaining revocation. Non-disclosure justifies setting aside an order only where disclosure would probably have led to a substantially different order. The undisclosed assignment preserved Pablo Star’s claims against the relevant proposed defendants and would not have led the court to refuse restoration. The usual response to breach of an undertaking is contempt proceedings, not revocation of the restoration order. Even dissolution in an extreme case would not retrospectively invalidate the assignment.

• Court of Appeal (Civil Division): dismissed the Welsh Ministers’ appeal and upheld the dismissal of their joinder application: [2017] EWCA Civ 1768.

• High Court, Chancery Division: HHJ Behrens QC allowed Mr Price’s appeal from Registrar Barber, set aside the joinder order and dismissed the Welsh Ministers’ application: [2016] EWHC 2640 (Ch).

• Companies Court Registrar: Registrar Barber had joined the Welsh Ministers to the restoration proceedings on 2 March 2016.