Restoration of Companies to the Register in NIHL claims

The Court of Appeal recently handed down a decision of particular interest in noise-induced hearing loss (“NIHL”) claims. Cowley v LW Carlisle & Company Ltd [2020] EWCA Civ 227 deals with the thorny issue of restoration of a company to the register. Whilst this is not an issue specific to NIHL claims only, it is of particular relevance to limitation issues and is worthy of close attention given the legacy nature of many industrial disease claims.

The Claimant appealed the initial decision of the District Judge (upheld on first appeal by the Circuit Judge) to strike out the claim, which had been issued and served prior to restoring the Defendant company to the register. At the time of issue the Claimant’s solicitors were aware of the dissolution of the Defendant and had intimated that they would restore them to the register in due course. They proposed a stay for that purpose and stated their intention to rely on Peaktone Ltd v Joddrell [2013] 1 WLR 784 to retrospectively validate service once the Defendant was restored.

The Defendant, through its insurers, filed an Acknowledgement of Service contesting jurisdiction and applied under CPR 3.4(2) to strike the claim out as an abuse of process. The Claimant argued that, notwithstanding the dissolution of the Defendant, the proceedings had been properly served on it at its last known place of business and that an order restoring the company to the register would validate that service retrospectively, citing Peaktone. Crucially however, at the time the application was made, and at the hearing before the District Judge, no application to restore the Defendant had been lodged.

McCombe LJ, giving the lead judgment in the Court of Appeal, held as follows at [30]:

“Whatever may be the retrospective effect of the order restoring LWC to the register of companies may be, and whilst it may well be that (as in Peaktone) many, if not all, of the steps taken in the action would now be validated, we have to judge whether the orders below were properly made on the basis of the facts before the judges who made those orders. When they each reached their decisions LWC had been struck off and had been dissolved. The company no longer existed, and the judges had to work on that basis.”

His Lordship went on at [33]:

“In our judgment, therefore, he was entitled to consider whether the overriding objective was properly served by the continued presence in the action of the name of a non-existent company. He was entitled to consider whether he should exercise the power to strike out the claim purportedly brought against LWC and he did not err in principle in making the strike out order that he did for the short reasons that he gave. The good reasons for making that order were also properly articulated by Judge Rawlings in the passages of his judgment which we have quoted above.”

A further issue arose relating to the Defendant insurer’s application. The question was whether or not the insurer (and therefore any solicitors who they appointed to act), had authority to make the application given the dissolved status of the company. Whilst such authority may vest under an insurance policy by way of subrogated rights, such rights were considered to be lost by the fact of dissolution. Albeit obiter, the Court of Appeal suggested that were this situation to arise in future, the insurer should notify the Court of the dissolved entity and invite them to case manage that issue accordingly; and, thereafter, if no application restore were made, to strike out the claim: see [36].

If right, an issue would then arise as to the insurer’s locus standi at any future hearing, so that they might not be heard on an issue directly affecting them and, as a dissolved company, the insured would not be a party to the proceedings either (until restored). It is arguable that CPR 3.1(2)(m) provides sufficient ambit to allow the Court to permit a non-party to attend and make submissions on a point in issue. CPR 19.2(2)(b) would not help since a dissolved company, even if named on a Claim Form, cannot be an “existing party” considering the guidance to CPR 19.1, under which a party is described as a “person“. That, in turn, is “taken to mean a human being or entity which is recognised by the law as the subject of rights and duties”: see the commentary at 19.1.2 of the White Book 2020.

Plainly, the law does not recognise a dissolved company due to its lack of status and, in turn, it cannot hold or be subject to any rights or duties for the same reason. An interesting side-note to the judgment which will, no doubt, be re-visited!