Cowley v LW Carlisle & Company Ltd

Factual and Procedural Background

The Appellant brought a claim for damages for noise-induced hearing loss allegedly sustained during his employment with four different companies between 1963 and 2000, with the total claim valued at approximately £5,000. One of the defendants, Company A, had been dissolved and struck off the register of companies before the proceedings were issued. The Appellant's solicitors were aware of this at all stages of the proceedings.

The claim against Company A was struck out by a District Judge on 31 May 2018 due to the company's dissolution and the absence of restoration to the register. The Appellant appealed this order to a Circuit Judge, who dismissed the appeal on 14 November 2018. Permission to appeal to the Court of Appeal was granted, and this judgment concerns that appeal.

Procedurally, the Appellant's solicitors issued the claim against all defendants, including Company A, and purported to serve Company A at its last known place of business despite its dissolution. The Appellant’s solicitors had also indicated an intention to seek restoration of Company A to the register, but no such application had been made before the strike out order. Subsequently, Company A was restored to the register on 5 February 2019, after the orders under appeal were made.

Legal Issues Presented

1. Whether the District Judge erred in striking out the claim against Company A under CPR 3.4 given that Company A was dissolved at the time of the proceedings.
2. Whether the proper procedural mechanism for challenging jurisdiction in this context was under CPR 11 and whether failure to comply with CPR 11 invalidated the strike out.
3. The effect of restoration of a dissolved company on proceedings commenced during the period of dissolution, particularly in light of the Companies Act 2006 section 1032(1) and the precedent set in Joddrell v Peaktone Ltd.

Arguments of the Parties

Appellant's Arguments

• The Appellant contended that service on the dissolved Company A was valid and that subsequent restoration would retrospectively validate the proceedings.
• It was argued that the District Judge was wrong to strike out the claim under CPR 3.4 because the proper challenge was a jurisdictional challenge under CPR 11, which had not been complied with.
• The Appellant relied heavily on the precedent in Joddrell v Peaktone Ltd, asserting that restoration of the company should validate the proceedings and that the insurer’s failure to comply with CPR 11 constituted submission to the court’s jurisdiction.

Respondent's Arguments (Insurers on behalf of Company A)

• The Respondents argued that, as Company A was dissolved and did not exist at the time, service could not have been validly effected.
• They maintained that the proceedings were a nullity until restoration and that the strike out was appropriate due to the Appellant’s failure to take timely steps to restore Company A.
• The Respondents also contended that the authority to act on behalf of Company A was questionable given its dissolution.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the procedural history and statutory framework, particularly the effect of section 1032(1) of the Companies Act 2006, which deems a restored company to have continued in existence as if never dissolved. The court emphasised that the orders under appeal were made when Company A was dissolved and did not exist legally. Thus, service on Company A at that time was invalid because a non-existent company cannot be served.

The court rejected the Appellant's argument that the strike out was procedurally improper because the jurisdictional challenge was not made under CPR 11, noting that the District Judge acted under CPR 3.4 case management powers. The court held that the District Judge was entitled to strike out the claim against a non-existent defendant where no steps had been taken to restore the company, especially given the claim's modest value and the delay in restoration.

The court also considered the insurers' authority to act on behalf of Company A as questionable given the company's dissolution, though it did not decide this point definitively. The court found that the District Judge and the Circuit Judge had not erred in principle in their decisions.

Finally, the court commented on the disproportionate costs incurred in relation to the modest value of the claim, attributing them largely to the Appellant's solicitors' failure to act promptly to restore Company A.

Holding and Implications

The Court of Appeal DISMISSED the appeal and upheld the strike out of the claim against Company A.

The direct effect is that the claim against Company A remains struck out due to its dissolution and the Appellant's failure to restore it in a timely manner. The costs order against the Appellant also stands. The court did not set any new precedent but reaffirmed established principles regarding proceedings against dissolved companies and the application of case management powers under CPR 3.4.

Additionally, the court advised insurers facing claims against dissolved companies to notify claimants and seek stays pending restoration applications, and if necessary, to invite courts to strike out proceedings to manage such cases effectively.

The court also noted that the Appellant's solicitors should bear responsibility for the substantial costs arising from their conduct, but the Appellant personally should not be liable for those costs.