The Court of Appeal rules on restoration of a dissolved company

Does an order made under section 1032(1) of the Companies Act 2006 restoring a company back to the register validate proceedings brought against the company while it was dissolved?

The Court of Appeal clarified the issue in the case of Peaktone Ltd v Joddrell [2012] EWCA Civ 1035. The facts of the case are that Joddrell (a former employee) issued proceedings for a personal injury claim against Peaktone Ltd (the company). However, unknown to Joddrell, Peaktone Ltd had been struck off the register and was dissolved.  In order to commence proceedings, Joddrell obtained an order from Companies Court asking for Peaktone Ltd to be restored to the register. However, Joddrell failed to disclose to Companies Court that he had already purported to commence proceedings against Peaktone Ltd.

Peaktone Ltd made an application to the County Court to have the original personal injury claim struck out on various grounds and also that the proceedings had not been properly served on Peaktone Ltd as it was dissolved at the time the proceedings were issued. The County Court agreed and struck out Joddrell’s claim.  Joddrell appealed and the High Court set aside the County Court’s order.

The High Court held that restoration to the register under section 1032(1) of the Companies Act 2006 validated the original proceedings brought by Joddrell.  However, on a further appeal by Peaktone Ltd, the Court of Appeal agreed with the High Court on the point that section 1032(1) of the Companies Act 2006 had a powerful effect and that the full force of its “retroactive aspects easily overrode procedural objections, such as the inability of the company to acknowledge service of proceedings while it was dissolved”. If a company is restored to the register, it is “deemed to have continued in existence as if it had not been dissolved or struck off the register”.  In the circumstances, the Court held that section 1032(1) meant that proceedings, which had purportedly been issued against a company while it was dissolved, were retrospectively validated upon that company’s restoration to the register.