Housemaker Services Ltd v Cole & Anor

A limitation direction following restoration of a dissolved company requires a two-stage inquiry. The applicant must first prove, on the balance of probabilities, that dissolution caused the failure to issue proceedings within time; a mere window of opportunity is insufficient. The court must then decide whether granting the direction would be just. For a company seeking the direction for its own claim, the circumstances must be exceptional, because the direction overrides the statutory limitation regime. Conduct by directors that results in striking-off through failures to comply with company obligations may be treated like deliberate dissolution. A direction should also be refused where the proposed claim is obviously unmeritorious, meaning that it has no real prospect of success.

The claimant company sought directions under sections 1028(3) and (4) of the Companies Act 2006 to discount the 608-day period during which it had been struck off and dissolved. The proposed underlying claim concerned unpaid invoices for building services supplied to the defendants.

The company had been restored administratively before the application, but had not issued the substantive proceedings. It relied on drafted particulars of claim and evidence that its director and solicitors knew of the limitation deadline. The defendants argued that the evidence showed only a possible opportunity to sue, and that the circumstances did not justify overriding the limitation regime.

1. Application dismissed. The claimant failed at the first stage. It did not prove on the balance of probabilities that dissolution caused the failure to issue proceedings before expiry of the limitation period.
2. The applicable test has two stages. First, the applicant must establish a clear causal link between dissolution and the failure to bring proceedings in time. A window of opportunity is insufficient; the court is concerned with probability, not possibility. Secondly, even if causation is established, the court must decide whether it would be just to give directions placing the company and others, as nearly as possible, in their former position.
3. The drafted particulars of claim, prepared ten days before expiry, provided only slender evidence of a likely issue. The need to chase the director for funds, the absence of a draft claim form, the failure to issue proceedings after restoration, and the five-month delay before making the present application pointed against the necessary probability.
4. For a direction in favour of the restored company itself, the circumstances must be exceptional. The court is generally to leave the company to the comprehensive limitation regime under the Limitation Act 1980. The fact that the company was struck off without the director’s knowledge did not make the circumstances exceptional. Directors’ failures to comply with filing obligations, which result in striking-off, are relevantly equivalent to deliberate dissolution because compliance and rectification were within their control.
5. Obiter, the judge considered the proposed claim’s merits. The expression obviously unmeritorious was held to refer to the summary judgment test: whether the claim had no real prospect of success. The evidence concerning the contracting party, the invoices and the dormant accounts raised forensic issues but did not make the claim unreal, theoretical or fanciful.