Housemaker Services Ltd v Cole & Anor

This is my judgment on a Part 8 Claim commenced by Claim Form issued on 12 December 2016 in the Bristol District Registry. The Claimant is a limited company, acting by its director Wayne Williams. It gives its address as that of its registered office, which is that of its accountants. The claim seeks a direction from the Court under the Companies Act 2006, s 1028(3), (4), to the effect that the period of 608 days from November 2014 to July 2016, during which it was struck off the register and thus ceased to exist, should be discounted for the purposes of limitation in relation to the Claimant’s claim against the Defendants in respect of unpaid invoices delivered for building services.

The Companies Act 2006, s 1028 provides as follows:

“(1)

The general effect of administrative restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off the register.

(2)

The company is not liable to a penalty under section 453 or any corresponding earlier provision (civil penalty for failure to deliver accounts) for a financial year in relation to which the period for filing accounts and reports ended—

(a)

after the date of dissolution or striking off, and

(b)

before the restoration of the company to the register.

(3)

The court may give such directions and make such provision as seems just for placing the company and all other persons in the same position (as nearly as may be) as if the company had not been dissolved or struck off the register.

(4)

An application to the court for such directions or provision may be made any time within three years after the date of restoration of the company to the register.”

This provision is concerned with cases such as the present, where a company having been struck off or dissolved is restored to the register by administrative action, ie without an order of the court. It is in the same terms, mutatis mutandis, as s 1032, which deals with the case where the court makes an order restoring the company to the register. The case law to which I was referred and which I discuss below is all concerned with s 1032, but it was common ground between the parties that it applied just as much to s 1028 as to s 1032. I proceed on that basis.

The evidence filed on behalf of the Claimant company was a witness statement of Wayne Williams dated 6 December 2016, together with one exhibit. The evidence filed on behalf of the Defendants was a witness statement of Richard Norwood, the Defendants’ solicitor, dated 1 February 2017, to which there are several exhibits (called “appendices”). At the hearing on 3 April 2017, Joss Knight of counsel appeared for the Claimant, and Thomas Steward of counsel appeared for the Defendants.

No application was made for cross-examination of any witness. Accordingly, the evidence given in the filed witness statements, at least so far as consistent one with another, is unchallenged. So far as that evidence is inconsistent, the rule is that the court is not entitled to reject any written evidence as being untrue, unless on the basis of all the evidence before the Court the Court considers that that written evidence is simply incredible: see eg Long v Farrer & Co [2004] BPIR 1218, [57]-[61], applied in Shierson v Vlieland-Boddy [2005] 1 WLR 3966, CA, [56], Coyne v DRC Distribution Ltd [2008] EWCA Civ 488, [58]. This is a high threshold to reach. I add that in Mr Steward’s skeleton argument, at [49], he characterised Mr Williams’s account of how the company came to be dissolved as “simply not believable”. However, at the hearing, there were no further submissions on this point. In particular, I was not asked to disregard any of the written evidence on that basis.

In these circumstances, I find the following facts. The company was incorporated in April 2006, but until July 2008 had nominee director and secretary. The company’s registered address was care of Barry J Oversby and Company, then of First Floor, 4 Lord’s Hill, Coleford, Gloucs GL16 8BD. This firm is the company’s accountant. On 1 July 2008, Mr Williams was appointed director and his wife Mrs Sarah Williams was appointed secretary.

Before being appointed director in July 2008, Mr Williams had orally agreed with the defendants to provide building services at two of their properties. He rendered invoices for these services, dated 31 July 2008, 28 August 2008, 22 September 2008 and 14 October 2008. Each of these invoices was stated to be rendered by Mr Williams himself, who was described as “Wayne Williams Bricklayer and General Builder”, of 28a Trinity Way, Cinderford, Gloucestershire. This was his home address, where he lived with his wife. The first three of the four invoices gave Mr Williams’s VAT number. The fourth did not.

Further invoices were rendered to the defendants in respect of the building services. They were not in evidence themselves, but it was common ground that three such invoices, rendered by the company rather than Mr Williams, remain unpaid. These are an invoice dated 19 July 2010 in the sum of £17,736 odd, an invoice dated 3 May 2011 for about £3287, and an invoice also dated 3 May 2011 in the sum of £1980, a total of about £23,000. The defendants refused to pay the first of these invoices as unjustified in the light of the work completed to date and the quality of that work, which they said required rectification. Mr Williams declined to return to work and issued the two further invoices in May 2011. The defendants did not pay them either.

These three invoices were the subject of further discussions in the following years. The defendants’ complaints about the quality of the work done by Mr Williams led them to instruct an expert to report on the quality of the work, and even to issue a claim form in the County Court on 16 June 2014 (as I understand it, to preserve limitation pending an attempt to resolve the dispute between the parties). The defendant solicitors also wrote a long letter dated 22 August 2014, setting out their complaints in detail. The matter was not, however, resolved.

Meanwhile, unhappily, in 2010 Mr and Mrs Williams separated, and Mrs Williams resigned as secretary of the company on 30 April 2010. Mr Williams moved out of the family home at Trinity Way, Cinderford, to a new address in Bream, also in Gloucestershire, in about January 2012.

In 2013 Mr Williams and his accountant Mr Daniel Oversby discussed the affairs of the company and concluded that there was no real justification for the business to continue through a limited company. However, Mr Williams was concerned not to liquidate the company, as it was the company that had issued the unpaid invoices. They therefore agreed that the company would file dormant accounts, and this was done in December 2013 for the year ending March 2013.

There was some evidence that this had happened earlier as well. Entries in the company’s filing history state that accounts were filed on 21 January 2008 and 1 October 2008 as “Accounts with account type dormant”. This is repeated for 19 December 2013 and then for 18 July 2016. By contrast the entries for 20 August 2009, 28 October 2010, 22 December 2011 and 28 February 2013 read “Accounts with accounts type total exemption small”. But these entries were not further elucidated in the evidence before me.

In the papers there was also evidence of an unsatisfied judgment against the company of the Northampton County Court in the small sum of £477, dated August 2013. It is not clear whether this also bore on the decision to become a “dormant” company. The “dormant type” accounts of the company in 2013 showed assets of just £1. There was no mention of the claim for about £23,000.

On 5 August 2014, the Registrar of Companies issued a notice pursuant to section 1000 of the Companies Act 2006 stating that, unless cause was shown to the contrary, the company would be struck off. It was not in evidence what was the cause of the notice’s being sent out, but from the Companies House document at page 89 of the bundle, printed on 15 June 2016, showing that the company had been dissolved, but that the last annual return was made up to 3 April 2013, I infer that no annual return up to April 2014 had been received.

This notice was properly served on the company at its registered address, namely the offices of its accountants. It would appear that they did not open the letter, but simply sent it straight on to Mr Williams at what they thought was his home address. However, as already mentioned, Mr Williams had moved out of the home he shared with Mrs Williams in early 2012, and he did not receive the notice. In his evidence, Mr Williams sought to blame his former wife for not forwarding the letter to him. At the same time he gave no evidence of any communications he had with his wife on the subject of items delivered to her home but addressed to the company.

I have heard no evidence from Mrs Williams, and decline to make a finding as to why it was that the notice was not sent on to Mr Williams. But there can be no doubt that the notice was properly served at the company’s registered address, and that it was up to Mr Williams to ensure that a system was in place to receive any communications from third parties (including the Registrar of Companies) that were sent to the company at that address.

No response to the notice having been received, the company was struck off the register on 18 November 2014 by the registrar. Remarkably, Mr Williams did not realise that the company had been dissolved until, at the earliest, late June 2016. He does not give any evidence about how he found this out, or exhibit any document by which he did so. There is however a letter to Mr Williams from his solicitor dated the 20 June 2016 which has been exhibited to his witness statement. It reads as follows:

“Dear Wayne

Re. Dispute with Mr and Mrs Cole

The Barrister has agreed to prepare the Particulars of Claim for issue at Court by 6 July so that we can check it through for any amendments required and issue proceedings prior to the limitation date and also prior to me going on holiday.

I would be grateful if you would now send me £2000 on account of costs.

Yours sincerely

Glenn Pitman”.

This letter shows, first of all, that Mr Williams and his solicitor were aware of the forthcoming expiry of the limitation period. But the absence of any reference to the dissolution of the company shows that certainly the solicitor, and by inference Mr Williams, could not have been aware of the dissolution at that date. Nonetheless, once he knew, Mr Williams contacted Companies House by telephone, and was informed that he could make an application for administrative restoration to the register. The application was made on a form dated 6 July 2016, and was granted on 18 July 2016. The company was restored to the register on that date, although under a different name, consisting of the registered company number and the addition of the word “Limited”. I was told at the hearing that this was because, in the interim, another company had been registered with the same or a similar name to this one, and so restoration could not take place using the old name.

Mr Williams only became aware that the application had been granted on 20 July 2016. His correspondence details were updated on 1 August 2016. Subsequently, on 15 August 2016 the name of the company was changed again, to the present name “Housemaker Services Ltd”. But it was not until 12 December 2016 that the present Part 8 claim form was issued. An attempt to serve the claim form on the defendants at their home address (despite the fact that their solicitors had instructions to accept service) just before Christmas failed. In the event, service was effected on the solicitors in the New Year.

In the solicitors’ letter of 20 June 2016 a request was made for Mr Williams to pay £2000 on account of costs. Remarkably, there was no evidence given in Mr Williams’s witness statement, nor was there any document exhibited, to show whether this sum had in fact been paid. Mr Knight on behalf of Mr Williams told me there was a document, which he described as an invoice, showing that the sum of £3000 had been paid to the solicitors. This document was not formally in evidence, however, and Mr Knight did not offer to make it so. Mr Steward, who saw the document concerned, told me that it did not make clear in respect of what the sum mentioned had been paid. On the other hand, the Particulars of Claim were produced by counsel, and I was shown a copy. However, no claim form has so far been issued by the company in relation to the substantive claim on the unpaid invoices.

Three authorities, all decisions of the Court of Appeal, were cited to me by the parties: Regent Leisuretime Limited v NatWest Finance Limited [2003] BCC 587 (“Regent Leisuretime”), County Leasing Asset Management v Hawkes [2016] BCC 12 (“County Leasing”), and Pickering v David [2017] EWHC Civ 30. I was also referred to two passages from the work on Limitation Periods by McGee, seventh edition, in chapter 2.

In Regent Leisuretime the company had borrowed from a bank and directors of the company had personally guaranteed the loan. The company defaulted and the bank called on the guarantees. The guarantors defended on the basis that the bank had made fraudulent misrepresentations, on the basis of which they had entered into the guarantees. This defence succeeded on appeal. Meanwhile, the company had been struck off the register and dissolved. The guarantors applied for the restoration of the company with a view to its pursuing a claim against the bank for misrepresentation. The district judge granted the application, also making a limitation direction in respect of any claim of the company which was not statute barred at the date of dissolution. On appeal the judge varied the order by deleting the limitation direction. This meant that any claim against the bank would be statute barred.

The company appealed to the Court of Appeal against the deletion of the limitation direction. The Court of Appeal held that the court had jurisdiction to give a limitation direction and the jurisdiction was not confined to giving such a direction in favour of creditors. The court could give a limitation direction in favour of the company where it seemed just to do so. However the scope for giving such a direction was extremely limited and the jurisdiction ought to be exercised only in exceptional circumstances. In the present case there were no such exceptional circumstances, and the judge had been right to delete the limitation direction from the restoration order.

In County Leasing, a company which carried on the business of demolition and clearing works was in serious financial difficulty, and indeed facing a petition to wind it up. The sole director and shareholder, anxious to extract the company’s business from impending ruin, took part in a scheme whereby the company sold its assets to a third party on the basis that that third party would then lease the assets back to new companies formed by the director and shareholder. When the company went into administration, and then liquidation, the liquidator received only a small part of the price paid for the sale of the company’s assets. Although the liquidator investigated the transaction, he achieved no tangible result for the company before it was dissolved.

Subsequently the director and shareholder applied for the restoration of the company to the register, and also for a limitation direction, just as the primary limitation period for the company’s claims was expiring. The company was restored, the liquidation was continued, and the company’s causes of action against third parties were assigned to the director and shareholder. The judge made a limitation direction under section 1032(3) of the Companies Act 2006. She held that observations in Regent Leisuretime, drawing a distinction between applications by third-party creditors and those by companies themselves, were obiter.

The Court of Appeal allowed the appeal, holding that the observations of the court in Regent Leisuretime were not obiter but were part of the ratio of the case. On the hypothetical assumption that the company had not been dissolved, there was nothing in the evidence to suggest that the former director and shareholder would have instituted proceedings before they became statute barred. The appeal was therefore allowed.

Pickering v Davy concerned a company carrying on business as an independent financial adviser. It had been voluntarily struck off the register on the application of its sole director, after having sold its client list and ceased business, and having transferred its freehold assets to the director for no consideration. On the application of Mr Davy, who claimed to have suffered loss in reliance on what he alleged to be negligent advice given to him by the company, it was restored to the register by the district judge. Subsequently a judge gave a limitation direction in favour of Mr Davy. The company and its former directors appealed. The Court of Appeal allowed the appeal on the basis that Mr Davy had only been able to demonstrate that there was a window of opportunity for him to bring a claim against the company, and had not demonstrated on the balance of probabilities that he would have brought the claim if the company had not been dissolved.

I was also referred (on behalf of the defendants) to two paragraphs in chapter 2 of the book by McGee on Limitation Periods (footnotes omitted):

“2.025.

The barring of the remedy has been regarded as the usual response of the law to the expiry of the limitation period. Therefore, in an action founded on contract (simple or special) or tort, the effect of the expiry of the limitation period is generally said to be that the remedy is barred, but the plaintiff’s right is not extinguished.”

“2.029.

A number of potentially significant consequences follow from holding that the plaintiff’s right is not extinguished. Limitation is a matter which must be specifically pleaded by the defendant if he wishes to take advantage of it and the plaintiff’s cause of action is not regarded time-barred until that plea is made.”

On behalf of the claimant, it was submitted, in summary, that it was clear and obvious that the claim would have been brought in time if the claimant had not been struck off. For this purpose, the claimant relied on the fact that particulars of claim had been drafted and finalised by 8 July 2016 at a time when Mr Williams was unaware that the claimant company had been dissolved. Secondly, the letter of 20 June 2016 from the solicitors to him demonstrated that both Mr Williams and the solicitors were aware of the limitation deadline of 19 July 2016.

So far as the merits of the claim were concerned, the claimant submitted that the claim underlying the application was not “obviously unmeritorious,” and there was no need to go further than that at this stage in examining it. Arguments as to whether it was Mr Williams personally, or the claimant company, that had entered into the contract, or about the quality of the work, cost overruns and so on could be dealt with as part of the trial process. On the question of the justice of the application, the court should pay particular regard to the fact that the company had not been deliberately dissolved by the liquidator or other officers of the company. Instead, the company had been dissolved without Mr Williams’s knowledge or approval. Mr Knight submitted that, in considering whether a claim was “obviously unmeritorious”, the standard required was higher than that which was applied to applications for summary judgment, that is, that the relevant party had “no real prospect of success”. Mr Knight submitted instead that the proper analogy was with the concept of an application being “totally without merit”.

On behalf of the defendants, it was submitted, in summary, that the test for a limitation direction was twofold. The first stage was a question of causation: would the company have commenced proceedings if it had not been dissolved? Second, if the answer to the first question was Yes, would it be just to give a limitation direction? For this purpose, the defendants relied upon to the authorities cited, namely County Leasing and Pickering.

It was submitted that County Leasing showed that, in favour of a company, exceptional circumstances were needed to justify making a limitation direction. The normal course would be to leave the claimant company to meet the requirements of the statutory regime in the Limitation Act 1980. Where a company was struck off because of a director’s actions, it was not clear why it would be just to provide the company with a further opportunity to bring a claim after it had become statute barred.

The court would not give a limitation direction where the claim was “obviously unmeritorious”. Mr Steward said that this phrase meant “no real prospect of success”, that is, the same as the test for summary judgment. As for Pickering, it made clear that a window of opportunity was not sufficient. It was necessary to show that the claimant would on the balance of probabilities have brought the claim if the company had not been dissolved.

On the facts of this case, although Mr Williams asserted that the company would have issued a claim by 19 July 2016 (the last day of the limitation period), the defendants submitted that there was no contemporaneous evidence that the dissolution caused the claim not to be issued. What Mr Williams showed was a small window of opportunity, but this was not enough. Mr Williams said that he was not informed of the restoration of the company to the register until 20 July 2016, even though he was “in constant contact” with Companies House. He also says he was aware of the dissolution in June 2016, but no application for restoration was made until 6 July 2016. The present Part 8 claim was not issued until 12 December 2016, service of which was not attempted until 23 December 2016 (which failed), and that which was successfully served only on 5 January 2017. Even today, no claim form had been issued in the substantive claim, even though there was no need to wait, because a time bar under the Limitation Act does not apply unless and until it is pleaded by way of defence.

In summary, the defendants said that the claim was obviously unmeritorious, that the claimant and/or Mr Williams had behaved unreasonably, had failed to act in time and had failed to give any proper explanation for the dissolution of the company.

The context in which this application is made is that of limitation of actions. In County Leasing Briggs LJ (with whom Jackson and King LJJ agreed) explained the purpose and importance of limitation in these terms:

“28.

The limitation regime exists mainly to serve the public interest in the prohibition of stale claims. It confers a statutory defence to such claims by reference to an essentially mechanical computation of time, without regard to the merits of the claim, to any question whether the defendant deserves protection (otherwise than by reference to the elapse of time) and applies regardless of the reasons for a claim not having been brought earlier, such as the impecuniosity of the claimant or, in the case of a corporate claimant, negligence, laziness, or even disloyalty on the part of those fiduciaries or stakeholders responsible for its affairs. Both originally and by amendment, the regime does confer limited assistance to claimants, in cases of fraud, concealment or mistake, in cases whether there has been a receipt by the defendant of trust property, and in cases of latent damage. There are various other forms of relief available, for example in defamation or personal injuries proceedings, but those are of no relevance. There is of course provision for extension of time limits where the claimant suffers from a disability. Although this might appear to be slightly analogous to the incapacity which affects a dissolved company, I consider that the better view is that the incapacity which afflicts a company because of its dissolution arises because persons of sound mind, responsible for the company’s affairs, have put it there, either by failing to cause the company to comply with its obligations to make returns to the registrar or, as in the present case, deliberately at the conclusion of the company’s liquidation. By contrast, individuals do not ordinarily deliberately succumb to a relevant disability.”

There is a complete statutory code for limitation of actions of all kinds, contained in the Limitation Act 1980. It is perhaps curious that the general provisions of s 1032 of the Companies Act 2006 (and by extension those of s 1028, which are in identical terms, mutatis mutandis), which do not refer to limitation at all, have been held nevertheless to justify the court’s directing that limitation of a claim does not apply for all or part of a period during which a relevant company had ceased to exist, whether by dissolution or striking-off. One might perhaps have thought that general statutory provisions in ss 1028 and 1032 did not derogate from the special ones in the 1980 Act. But the caselaw, including the recent decisions of the Court of Appeal in Regent Leisuretime, County Leasing and Pickering, is clear, and sitting here I am bound by those decisions at least.

The authorities make clear that the court is to approach an application for a limitation direction in two stages. First, the court must consider whether the dissolution or striking-off was the cause of the failure to make the claim within the limitation period. As it was put in County Leasing by Briggs LJ,

“44.

The starting position was therefore that, as the Judge acknowledged, the Company appeared to have been put into dissolution by its liquidator after a decision that a claim could not longer be pursued and where, for the reasons which I have given, the burden must lie firmly on the Company or its assignee to demonstrate why it would be just to enable that abandoned claim to be pursued with the benefit of a limitation direction. A conclusion that there was only a possibility that Mr. Valentine had misconducted himself is in my judgment a wholly inadequate basis upon which to found a conclusion that a limitation direction in favour of the Company or its assignee should be made. A party seeking to discharge the burden of showing why it would be just to enable it (or him) to avoid the consequences of the limitation regime must do better than that. The court is concerned with probabilities, not possibilities.”

And in Pickering David Richards LJ (with whom Longmore and Lewison LJJ agreed) said:

“60.

The position is therefore that the making of a limitation direction under section 1032(3) requires the applicant to show a clear causal link between the dissolution and the failure to bring proceedings within the applicable limitation period. While Briggs LJ spoke of the court dealing with probabilities, Sir Raymond Evershed MR in Tyman’s Ltd v Craven referred to steps that the company or third parties “might well have abstained from taking” by reason of the dissolution. If there is any real difference in these ways of expressing the right approach, and I doubt if there is, the decision of this court in County Leasing makes clear that it is a test of probability.”

It is clear that demonstrating that there would have been a window of opportunity within which the claim could have been made will not be enough: Pickering, at[62]. The applicant must show that, were it not for the fact that the company was dissolved or struck off, the company would have made the claim in question. This is a question of probability, not possibility: see County Leasing at [44], Pickering at [60], quoted above.

Secondly, if the causation limb of the test is satisfied, the court must consider whether it would be “just” to give the direction sought, for the purpose of “placing the company and all other persons in the same position (as nearly as may be) as if the company had not been dissolved or struck off the register”: see Pickering, at [39]. This is the exercise of a (limited) judicial discretion. Even if the company shows it would have made the claim in time, the court may still properly decide not to give the direction sought.

As was common ground between the parties, the authorities establish that it is harder for the company to obtain a direction in its favour than it is for a third party creditor to obtain one in its. In Regent Leisuretime, Jonathan Parker LJ put it this way:

“89.

Although, for reasons given earlier, I have concluded that there is jurisdiction to give a limitation direction in favour of the company being restored, the scope for giving such a direction must in my judgment be extremely limited. To my mind, the jurisdiction ought only to be exercised in exceptional circumstances. My reasons for this conclusion are as follows.

90.

So far as I can see, the question whether a limitation direction should be given in favour of the company being restored to the register can only arise in circumstances where the company has an asset in the form of a claim based on a cause of action which was not statute-barred at the date of dissolution. The 1980 Act provides a detailed limitation regime under which, in certain specified circumstances, the running of time may be postponed (see, e.g., sections 14A, 32 and 33). The effect of a limitation direction under section 653(3) is completely to override that regime. Whilst considerations of essential fairness may justify the giving of a limitation direction in favour of third party creditors (as they did, for example, in Donald Kenyon), the same cannot so readily be said of a limitation direction in favour of the company being restored to the register: indeed, on the face of it fairness will generally require that the company, like any other claimant faced with a limitation defence, should be left to attempt to meet that defence by recourse to the statutory regime in the 1980 Act.”

And in County Leasing, Briggs LJ said:

“24.

In my judgment, [the decision of Jonathan Parker LJ in Regent Leisuretime] on the discretion issue was part of the ratio decidendi, for two reasons. First, as I have said, the case had proceeded before the judge on the basis of a concession that the primary limitation period had been extended so as to expire during the period of the company’s dissolution. That concession does not appear to have been withdrawn, and the close analysis of the limitation issue in the concluding part of Jonathan Parker LJ’s judgment was addressed only to the question whether under section 32 or section 14A of the Act the limitation period had been extended until after the company actually commenced proceedings. The second reason arises from the structure of his judgment, pursuant to which he arrived at the analysis of the limitation issue only by a route which required him to decide the jurisdiction and discretion issues first. Had he concluded that there had been no extension of the primary limitation period into the period of dissolution, then it would have been sufficient for him to conclude his analysis of the discretion issue by saying that, the claim having become statute-barred before dissolution, the discretion issue did not arise.

25.

The result is that this court is in my view bound by the dicta about the exercise of the discretion to make a limitation direction in favour of a company, to the effect that (i) it may only be exercised in exceptional circumstances, (ii) that its effect is completely to override the statutory limitation regime, and (iii) that fairness will generally require that the company, like any other claimant faced with a limitation defence, should be left to attempt to meet that defence by recourse to the statutory regime in the 1980 Act.

[ … ]

31.

Even if an applicant for a limitation direction (whether the company or its assignee) can demonstrate that, had the company not been dissolved, the claim probably would have been brought in time, the court must still ask itself whether it would be just to provide that opportunity, after the event, by a limitation direction. In a case such as the present, where the company has been deliberately dissolved by its liquidator at the conclusion of its liquidation, it is, without more, by no means clear why it should be just to provide the company with a further opportunity, to the prejudice of the persons who would thereby be deprived of the limitation defence, and to the detriment in the public interest that stale claims should be prevented. The company’s dissolution is not some accident which has befallen it, like an illness affecting a potential claimant under a disability, but the consequence of a deliberate decision by the company’s responsible officer.”

As to the first limb (causation), the Claimant relies on the fact that the Particulars of Claim had been drafted by counsel by 8 July 2016, some ten days before the end of the limitation period, which Mr Williams and his solicitor were both aware of, at a time when they were unaware that the claimant company had been dissolved.

In my judgment, this is a slender basis for satisfying the court that the claim would have been issued before the limitation period expired, but for the dissolution. It does establish that there was a window of opportunity. But that is not enough. It is clear from the letter from the solicitors dated 20 June 2016, asking for money to be paid on account, that provision of funds was an issue for Mr Williams. Less than one month from the expiry of the limitation period, he had to be chased to provide the funds that would enable the Particulars of Claim to be drafted. They were produced with just 10 days to go. It is not culpable to leave things to the last minute (though it is certainly risky), but, on the other hand, it does not show eagerness. And, although there are Particulars of Claim, there is no draft claim form that I have seen.

Moreover, when Mr Williams was informed on 20 July 2016 that the company had been restored to the register, he evidently did not instruct his solicitors to issue the substantive proceedings in respect of the disputed invoices straightaway. If he had done so, the claim would have been out of time by only a matter of a day or two, and it must be doubtful whether the defendants would have resisted the limitation direction being sought thereafter. But Mr Williams has not instructed his solicitors at any time since then to do so. It is now some nine months since the company was restored, and still there are no proceedings. As is made clear from the extracts from the book by McGee on Limitation Periods, there is nothing to prevent a claimant issuing a claim which is prima facie statute barred. If the defendant pleads the limitation defence, it will be open to the claimant to plead by way of reply why the limitation defence should not succeed, or indeed to make separate application under the Companies Act 2006 for a limitation direction. In that respect, it is also notable that the claimant company made no application for a limitation direction for five months.

To my mind, the inference to be drawn from all this is that the claimant company is short of money, and instead of getting on with the legal proceedings seeks instead to put pressure on the defendants to settle. That may be a legitimate tactic, but it does not demonstrate the degree of probability necessary to enable the court to make a limitation direction. In my judgment the claimant has not demonstrated on the balance of probabilities that, if the company had not been dissolved, it would have issued proceedings for the disputed debts before the expiry of the limitation period. Accordingly, this application fails at the first hurdle.

However, in case I am wrong, I go on to consider whether, if I were satisfied that the claimant would have issued the proceedings before the expiry of the limitation period if the company had not been dissolved, it would be just to give a limitation direction, whether as sought or otherwise. First of all, it is clear from the authorities that in order for the court to give such a direction in favour of the company itself, the circumstances must be exceptional, so that it is not appropriate simply to leave the company to seek to meet the requirements of the comprehensive limitation regime in the Limitation Act 1980.

For Mr Williams it is submitted that the court should have particular regard to the fact that the company was not deliberately dissolved by a liquidator or an officer of the company. Instead, the claimant company was dissolved without the knowledge or approval of Mr Williams. It is said that County Leasing should not apply, because that case was one where the actions of the liquidator of a company caused it to be dissolved. Here Mr Williams had no intention of having the claimant company dissolved.

I do not consider that the decision in County Leasing is confined to the case of deliberate action to cause a company to be dissolved. It is true that they were the facts of that case. But, earlier in his judgment, at [28], Briggs LJ had referred to

“the incapacity which afflicts a company because of its dissolution arises because persons of sound mind, responsible for the company’s affairs, have put it there, either by failing to cause the company to comply with its obligations to make returns to the registrar or, as in the present case, deliberately at the conclusion of the company’s liquidation.”

In my judgment, when the officers of a company so conduct its affairs, in breach of the rules applicable, that a notice is sent out warning that the company will be struck off and dissolved, and then, as a result of a further failure by those officers, to remedy the breaches, the company is in fact struck off and dissolved, then, for the purpose of considering whether there are exceptional circumstances in which a limitation direction should be given, this is as much the result of the behaviour of the directors as if they had deliberately decided to put the company into liquidation. It is entirely within the control of the directors of the company whether the rules are followed or not, and whether breaches are remedied. On the other hand, third parties such as the defendants have no control over this, and it is very hard to see why, as between the claimant and the defendants, they should take the risk of failures of this kind.

Mr Williams says that “it would be just in this case to allow the claim to proceed” because he was unaware the company had been dissolved, and because, once he knew that it had been dissolved, he “acted quickly to rectify the situation”. In my judgment this is not sufficient, let alone exceptional, so as to justify the giving of a limitation direction in favour of the claimant company. Even if Mr Williams made an application to the Registrar of Companies within a week or two (hardly “quick”) of learning that the company had been dissolved, he did not act quickly to rectify the situation. There is no evidence as to what he represented to Companies House as to the urgency of the situation, nor as to what efforts he made to discover the result, or how he learned it. As I have already said, no proceedings on the underlying substantive claim have ever been issued, and it took five months even to issue the present Part 8 claim for the limitation direction.

Accordingly, even if the claimant company had got over the first hurdle, in my judgment it would have failed on the second, namely whether it was “just” to give the limitation direction. The public interest in preventing stale claims should prevail.

If it were otherwise “just” to give a limitation direction, it would be necessary to consider whether the claim in this case sought to be advanced was “obviously unmeritorious,” because the court will not give such a direction in that case: see County Leasing, at [38]. Although, given my decision, this question does not strictly arise, nevertheless the matter was argued, and therefore I say this. I accept that the phrase “totally without merit” bears some linguistic resemblance to the phrase “obviously unmeritorious”. But the consequences of an application being totally without merit are more serious than one which has no real prospect of success. It may lead to a civil restraint order. The failure of a claim by reason of a summary judgment application without more will not. The purpose of excluding claims which are “obviously unmeritorious” from the scope of a limitation direction should not be to exclude claims which justify a civil restraint order, but rather those that could be dismissed by bringing a summary judgment application. Such claims do not justify overriding the limitation rules, because they are a waste of time and resources.

If the test for “obviously unmeritorious” were the same as the more serious “totally without merit”, potentially justifying a civil restraint order, there would be some claims which, whilst they had no real prospect of success, would nevertheless be given new life by means of a limitation direction. That cannot be right. Although the court dealing with an application for a limitation direction is not formally hearing an application for summary judgment, nonetheless the court can still look at the material presented to it and weigh it up as if it were such an application. “Obviously” in “obviously unmeritorious” here serves a similar qualificatory function as the word “summary” does in “summary judgment”: it is not a full determination of the question, but instead is looking to see if there is any need for a full trial. In my judgment therefore the phrase “obviously unmeritorious” is best understood as a reference to the test for summary judgment. If there is no real prospect of success, the claim is obviously unmeritorious, and the court should not give a limitation direction.

So I would need to consider whether the proposed claim had a real prospect of success.

As to that, it is one sought to be made by the claimant company in respect of three invoices which I have not seen. It is argued on behalf of the defendants that the only contract that was made with the defendants was one made by Mr Wayne Williams acting on his own behalf. Certainly, it is accepted that, at the time the original contract was entered into, Mr Williams was not a director of the claimant company. But the pleading in the Particulars of Claim is to the effect that Mr Williams was acting as a director or an agent of the claimant. On the other hand, the earlier invoices in 2008, to which I have already referred, were issued in his own name, usually giving his own VAT number. Yet, although I have not seen the disputed invoices, it is common ground that they were issued in the name of the company rather than Mr Williams. Mr Knight, for the claimant, says that since the company is suing on the invoices which are in its own name, the fact that earlier invoices were in the name of Mr Wayne Williams does not matter. Even if it did, the fact that further invoices were issued by the company and were moreover paid by the defendants, is evidence of an implied novation contract.

Mr Steward points out that the company accounts in the papers before the court do not mention the claim. For example, in the dormant company accounts for 2013, where the assets of the company are shown as £1, there is no reference either to the existence of a claim against the defendants for £23,000 or so, nor indeed any potential liability to the defendants on their counterclaim. Moreover, the accounts for 2009 would appear to be the accounts of a dormant company, as I have already pointed out, and yet that is the year in which the contract had been entered into. If it was indeed doing business in that year it was not a dormant company.

These are all interesting points. But they are forensic rather than conclusive. The case would turn on the oral evidence. Thus, if I were asking myself whether they demonstrated that the claimant company had no real prospect of success, applying the test that a real prospect of success is one which is unreal, theoretical or fanciful, I must have concluded that here the claimant company would have a real prospect of success.

Accordingly, if I had come to the conclusion that the claimant company had satisfied me that the dissolution was the cause of the failure to issue the claim in time, rather than some other reason and that it was otherwise just to give a limitation direction, I would not have been deflected from doing so by the argument that the underlying claim was “obviously unmeritorious”. However, I am not so satisfied, and, in all the circumstances, and for the reasons given, I dismiss the claim for a limitation direction.