Cowley v LW Carlisle & Company Ltd

Where proceedings are issued or purportedly served against a company dissolved before that time, the court cannot assume that valid service occurred because the company did not then exist. A later restoration order may retrospectively validate proceedings under the Companies Act 2006, but earlier orders must be judged on the facts then before the court. Under the Civil Procedure Rules 1998 and the overriding objective, the court may strike out a claim against a non-existent company, considering delay, the absence of restoration or a stay, the effect on other defendants and proportionality. Jurisdictional arguments based on CPR 11 are unavailable where they depend on assuming valid service.

The appellant claimed damages for noise-induced hearing loss against four former employers. One employer, LWC, had been dissolved before proceedings were issued. The appellant purported to serve the claim and later sought restoration, while the former insurers purported to act for LWC and applied to strike out the claim under CPR 3.4 and CPR 11.

The District Judge struck out the claim. HHJ Rawlings dismissed the appellant’s appeal on 14 November 2018. The central issue was whether the claim could properly be struck out before LWC was restored, notwithstanding arguments concerning jurisdiction, submission and retrospective validation.

1. Appeal dismissed. The Court of Appeal upheld the order striking out the claim against LWC and left undisturbed the costs order made by HHJ Rawlings.
2. The effect of restoration under section 1032(1) of the Companies Act 2006 was considered in Joddrell v Peaktone Ltd [2012] EWCA Civ 1035. Restoration may retrospectively validate proceedings begun during dissolution. However, the present appeal concerned orders made when LWC had been struck off and did not exist. The court had to assess those orders on the facts then known. It could not assume that service had been effected on a non-existent company.
3. The jurisdictional arguments based on CPR 11 were therefore unavailable. The circumstances differed from Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203, which concerned a functioning company. The Court did not need to decide whether the insurers had authority to act for LWC or whether that authority revived on restoration.
4. The District Judge was entitled to use the case-management power under CPR 3.4. The overriding objective justified considering whether the continued presence of a non-existent defendant served any useful purpose. Relevant matters included the substantial delay in seeking restoration, the absence of a stay application or evidence of prompt restoration, the effect on the proceedings against the other defendants and proportionality. The strike-out decision fell within the proper ambit of discretion.
5. Obiter guidance was given that insurers discovering such a claim should notify the claimant, invite or require restoration and seek a stay. They should notify the court if the claimant does not co-operate. If nothing is done within a sensible time, the court may eventually strike out the proceedings. The court also indicated that the appellant’s solicitors should not expect the appellant personally to bear the costs caused by commencing proceedings against a company known to be dissolved.

• Court of Appeal (Civil Division): appeal dismissed; the order of HHJ Rawlings dismissing the appeal from the strike-out order was upheld.
• Stoke-on-Trent County Court and Family Court: HHJ Rawlings dismissed the appeal from District Judge Etherington’s order of 31 May 2018 striking out the claim against LWC.