Court of Appeal upholds strike out of deafness claim following failure to restore dissolved company to the Register
Cowley v LW Carlisle Company Limited
Court of Appeal
25 February 2020
Patrick McBrien of DWF's Legacy Claims team acted for the defendant/respondent and its insurers in this occupational deafness case where we have just had judgment from the Court of Appeal. Following an application by the defendant, the claim was struck out on the basis the purported defendant was dissolved and therefore not a legal entity. The Court of Appeal has now upheld the District Judge's original strike out decision.
Background and decision at first instance
The defendant/its insurers applied to strike out a purported claim on the basis that the claimant had not taken the fundamental step of restoring the defendant company to the register before starting the litigation. The application asserted that as a result of this failure the proceedings were a nullity and therefore the court should make a declaration under CPR 11 that it had no jurisdiction to hear the claim, or in the alternative that the court should strike the claim out pursuant to CPR 3.4(2)(c).
The claimant resisted the application and his solicitors served a witness statement relying on the Court of Appeal's judgment in Peaktone Ltd v Joddrell (2012) that proceedings served on a company which had been dissolved were retrospectively validated on the company later being restored to the register. Significantly as things would transpire, the claimant did not explain in the statement what steps had been taken to restore the defendant to the register nor was any evidence given within that witness statement as to the reasons why the defendant had not been restored. The witness statement did not explain either what further period of time the claimant would need to resolve matters.
During the actual hearing of the application before District Judge Etherington the claimant made an application for a stay of proceedings so that the defendant could be restored to the register and relied on the fact that once restored the proceedings would be retrospectively validated (in accordance with Peaktone) and pointed to the prejudice that would be caused to the claimant if his claim was struck out.
However, the judge noted that the claim was low value as it was limited to £5,000; there were three further defendants who would be caused delay by a stay and that there was no evidence before him explaining why LW Carlisle had not been restored previously. Most pertinently, the judge was concerned that despite the application to strike out having been made a period of months prior to the hearing there was still no evidence from the claimant’s solicitors that restoration proceedings had been started. The judge, in robust terms, went onto strike the claim out under CPR 3.4(2)(c). Importantly he did not make a declaration as to whether the court accepted or declined jurisdiction.
The claimant appealed the decision of the District Judge and that appeal was heard by HHJ Rawlings in November 2018. The appeal was dismissed.
HHJ Rawlings said it was clear that DJ Etherington had not struck the claim out on the basis that the court lacked jurisdiction to hear the claim. He held that simply because an application was made in the alternative for the court to decline jurisdiction which had been either explicitly or implicitly rejected by the court, this did not prevent the court from case managing the case under its inherent powers. He noted the broad and largely unfettered discretion afforded to the court under CPR 3.1(2)(m) and in light of this HHJ Rawlings believed that DJ Etherington was not only entitled to consider his powers of case management but indeed obligated to do so pursuant to the overriding objective.
HHJ Rawlings stated that he could see no basis for interfering with the exercise of the court’s discretion below.
The first appeal was therefore dismissed with an order for costs in favour of the defendant.
Court of Appeal
The claimant appealed to the Court of Appeal. There were various grounds to the appeal but the Court of Appeal effectively narrowed the question before it to the following: 'whether the District Judge was entitled to strike out the claim under CPR 3.4 and was he correct to do so?' (paragraph 32).
In answer to this key question, the Court of Appeal found as follows:
"…the District Judge had this action before him, involving a number of defendants. He was entitled to consider how best to progress it in the exercise of his case management powers. 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" (paragraph 33).
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.