Background
Following decisions made by district judges in the county court restoring a dissolved company (Prosecco (Leeds) Ltd (“PL”)) to the Register of Companies (“Register”) and extending the time for service of a claim form, PL appealed the orders, arguing that the claimant failed to meet the strict requirements of the Civil Procedure Rules (“CPR”) rule 7.6(3) and as such there was no jurisdiction to extend the time for service of the claim form.
The general rule under CPR 7.6(2) is that an application for an extension of time for despatching the claim form must be made:
(a) within the period specified by rule 7.5 (that is, the claim form's validity period); or
(b) where there is already an order extending the time period for despatch within the period for service specified by that order.
CPR 7.6(3) provides that, if the claimant applies for an order to extend the time for despatching the claim form out of time, the court may make such an order only if:
(a) the court has failed to serve the claim form; or
(b) the claimant has "taken all reasonable steps" to comply with CPR 7.5 but has been unable to do so; and
(c) in either case, the claimant has "acted promptly" in making the application.
In Carnegie v Drury [2007] EWCA Civ 497, the Court of Appeal confirmed that the test of whether a party took all reasonable steps to effect service in time under CPR 7.6(3)(b) is objective. It is a question of whether what that party did was objectively reasonable, in regards to the then prevailing circumstances. Further, the question of whether that party took all reasonable steps to effect service in time is to be assessed by reference to what they did before the date for service.
Applications to the court for restoration to the Register are made under section 1029 of the Companies Act 2006 (“CA 2006”). Under section 1032(1) of the CA 2006, the general effect of an order for restoration is that the company is deemed to have continued in existence as if it had not been struck off. Under section 1032(3), the court may give such directions as seem just to place the company itself, and other persons, in the same position as they would have been in, had the company not been struck off.
Key facts
The claimant (“C”) wished to bring a personal injury claim under the Occupiers' Liability Act 1957, following an alleged slipping accident on an icy pathway outside the entrance to a restaurant. C consulted solicitors and entered into a CFA with the benefit of ATE insurance in February 2012. C encountered difficulties in ascertaining the correct defendant to the claim, namely the occupier of the premises. There were a number of different landlords and two candidates for the identity of the tenant running the restaurant: companies Primo Restaurant Ltd (“P”) and PL. Both P and PL were insolvent and had been struck off the Register and dissolved.
C applied to the court to restore PL and P to the Register to enable proceedings to be brought against them and issued a claim form against five defendants, including PL and P.
P was restored to the Register. However the application against PL had been withdrawn as PL's former liquidator advised that he did not consent to the restoration of PL to the Register, stating that his additional costs arising from any restoration of PL would be at least £2,500 plus VAT and disbursements. C's ATE insurer declined to fund any costs claimed by the liquidator if the application proceeded and as such C felt that in the circumstances (and following receipt of information suggesting that PL was not the premises’ occupier) the application to restore PL should be withdrawn.
Following service of the claim form, P's liquidator wrote to C stating that P's assets were sold to PL on 28 October 2010 and, on that date, PL took up occupation of the restaurant, pursuant to a licence to occupy and with the landlord's consent. C subsequently discontinued the claim against P and successfully applied to restore PL to the Register and to extend time for serving the claim form on PL. The district judge granting the extension of time for service held that all reasonable steps had been taken to comply with CPR 7.5.
PL subsequently applied, unsuccessfully, to set aside the district judge's order extending time for service and thereafter appealed the order.
Judgment
HHJ Behrens upheld the district judge's decision to grant C an extension of time for service of the claim form on PL under CPR 7.6(3). He agreed with the district judge that in the circumstances prevailing, C had taken all reasonable steps to comply with CPR 7.5.
The judge held that the claim form was ineffective insofar as it named PL as a defendant. It was also impossible to serve the claim form on a non-existent defendant. He observed that the general effect of an order for restoration made under section 1032 of CA 2006 was that the company was deemed to have continued in existence as if it had not been dissolved or struck off.
Since the district judge who made the restoration order was not asked to direct that the limitation period did not run while the company was dissolved, the effect of his order was that PL was deemed to have continued in existence as if it had not been struck off and dissolved. It followed that the issue of the claim form against PL was retrospectively validated. It also followed that C had four months in which to serve PL, even though it was not in existence throughout that period.
The judge held that all reasonable steps had been taken and that the application had been made promptly, concluding that it was objectively reasonable for the claimant to withdraw the first application to restore PL to the Register. The prevailing circumstances included the difficulty in identifying the premises' occupier, the lease in favour of P and the fact that C's ATE insurers would not fund the former liquidator's potential costs. It was also relevant to consider the value of the claim, as it might well be objectively reasonable to take more steps in a higher value claim.
The judge found that there was no reason to disturb the district judge's finding that C had acted sufficiently promptly and on the "unusual facts of this case", the judge was satisfied that the district judge was correct in holding that the jurisdictional threshold was passed.
Conclusion
This decision highlights the importance of making an application under CPR 7.6(3) promptly, as well as considering whether a claimant has taken all reasonable steps to serve the claim form on time. Had there been any delay in seeking the restoration then the outcome may have been different.
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