Thomas James Francis & Ors v Silver Law LLP

A limitation direction under section 1032(3) of the Companies Act 2006 is available only where dissolution was the real cause of the claimant’s inability to sue in time. The court must assess the counterfactual position on the balance of probabilities and consider whether relief is just. A direction cannot improve the claimant’s position, exceed the period during which dissolution caused the disability, or relate back to the application date. A third-party claimant need not first issue an invalid claim or restore the company. Relief may be refused where the permissible extension has expired before the application and no proceedings or standstill agreement has been secured.

The applicants, former clients of the respondent LLP, alleged professional negligence arising from the loss of deposits paid for property purchases. The LLP had been dissolved and was later restored to the register. The applicants sought a direction under section 1032(3) of the Companies Act 2006 excluding the dissolution period from the applicable limitation periods.

The central issues were whether dissolution was the real cause of the applicants’ failure to bring claims in time, what period could properly be excluded, and whether it would be just to grant relief when no claim had been issued and no standstill agreement had been obtained.

1. Application dismissed. The court approached section 1032(3) of the Companies Act 2006 through two questions: whether dissolution was the real cause of the inability to sue in time, and whether it was nevertheless just to make a limitation direction. The governing principles were taken from Tradition Financial Services Ltd v Bilta (UK) Ltd ([2023] EWCA Civ 112; [2023] Ch. 343), County Leasing Asset Management v Hawkes ([2015] EWCA Civ 1251; [2016] BCC 102) and Davy v Pickering ([2017] EWCA Civ 30; [2017] Bus LR 1239).
2. For the real-cause issue, the relevant date was when the applicants first learned of the restoration order, namely 17 July 2025. If limitation had expired by then, dissolution could be the real cause of the inability to sue. However, where sufficient time remained to enter a standstill agreement or issue protective proceedings, dissolution was not the real cause. The applicants were not required to restore the LLP themselves or issue an invalid claim.
3. The court also had to ensure that relief did not place the applicants in a better position than if the LLP had remained in existence. The statutory power could not extend beyond the dissolution period. On the facts, the maximum relevant period was 64 days, from the applicants’ instruction of solicitors in April 2025 to restoration. A direction could not relate back to the application date.
4. Even on the applicants’ case, all limitation periods had expired before the application was issued, including with the maximum permissible extension. The applicants had still neither issued proceedings nor secured a standstill agreement. This was an insuperable obstacle to relief. It was unnecessary to decide whether the claims were unmeritorious, although the letter of claim showed more than a real prospect of success.