County Leasing Asset Management Ltd & 5 Ors v Mark Glenn hawkes (2015)

4th December 2015


Bridget Williamson


2015] EWCA Civ 1251
CA (Civ Div) 04/12/2015
LIMITATIONS : REGISTER OF COMPANIES : RESTORATION : COMPANIES ACT 2006 s.1032, s.14A, s.1031(1)(c), s.1029, s.1032(1), s.1032(3) : LIMITATION ACT 1980 s.32


The court gave guidance on the discretion to make a limitation direction, when making an order for the restoration to the register of a dissolved company, to order that the running of time for the company to bring claims was suspended during the period when the company was dissolved. The court had to ask itself whether, had it not been dissolved, the company would have commenced the relevant proceedings within time.


The appellants appealed against an order under the Companies Act 2006 s.1032 for the restoration to the register of a dissolved company and the suspension of the limitation period whilst the company was dissolved ("a limitation direction").

Such an order was known as a limitation direction. The company was formed in 1976 but dissolved in 2009. The company entered into a sale and leaseback transaction with the appellants in 2004 but the company did not receive the full purchase price for the sale of its assets. The respondent company director applied for a limitation direction in 2010. A restoration order was made in 2011 for the purpose of the continuation of its liquidation under a new liquidator who had assigned the company's causes of action against the appellants to the respondent a year before the restoration order. It was accepted that those actions had a real prospect of success and that the primary limitation period in respect of them expired two years before their assignment. The judge made a limitation direction in favour of the company. She considered that the observations in Regent Leisuretime Ltd v NatWest Finance Ltd (formerly County NatWest Ltd) [2003] EWCA Civ 391, [2003] B.C.C. 587, which drew a distinction between applications by third party creditors and those by companies themselves, were obiter.

HELD: (1) The observations in Regent Leisuretime on the issue of discretion were not obiter. The court was bound by the dicta about the exercise of the discretion to make a limitation direction in favour of a company to the effect that (a) it could only be exercised in exceptional circumstances; (b) its effect was to completely override the statutory limitation regime; and (c) fairness would 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 Limitation Act 1980, Regent Leisuretime explained. The starting point to achieve the purpose of the discretion under s.1032(2) of the 2006 Act was to recognise that time would have run against the company if it had not been dissolved in exactly the same way as it had in fact run, while it was dissolved. The court had to ask itself whether, had it not been dissolved, the company would have commenced the relevant proceedings within time. The court then had to ask itself whether it would be just to provide that opportunity, after the event, by a limitation direction. In the instant case, where the company had been dissolved by its liquidator at the conclusion of its liquidation, it was not clear why it would 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 of the public interest that stale claims should be prevented (see paras 24-25, 30-31 of judgment). (2) There were serious difficulties with the judge's approach. She had concentrated on why the company had not pursued the claims by the time of its dissolution and not analysed whether the claims would have been pursued in time had the company not been dissolved. She had found that there was only a possibility that the liquidator had misconducted himself. Such a conclusion was a wholly inadequate basis upon which to find that a limitation direction should be made. The judge gave no consideration to the question of whether it was just to deprive the appellants of a litigation defence. The use of the judge's discretion could not stand and the court re-considered the issue. The application for a limitation direction fell at the first hurdle. Nothing in the evidence suggested that the respondent would have brought the proceedings before they became statute-barred in 2010. Putting the company in the position it would have been in if there had been no dissolution would not have led to the claims being pursued in time and nothing in the evidence disclosed circumstances which made it just to give the company a second chance. The limitation direction was set aside (paras 41-45, 47-48, 50).

Appeal allowed

For the first to fourth appellants: Christopher Boardman
For the fifth and sixth appellants: Geraint Jones QC, Mark Brittain (Direct Access)
For the respondent: Bridget Williamson

For the first to fourth appellants: Summers Nigh Law LLP
For the respondent: Shakespeares 


LTL 10/12/2015

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