In Holmes v S & B Concrete  EWHC 2277 (QB) a novel argument was raised in relation to limitation for companies which had entered into voluntary liquidation. This is an argument which practitioners may occasionally have seen raised recently. However, this is the first time that I am aware of being determined at appeal level. The claim itself related to noise-induced hearing loss.
Facts of the case
The Claimant was employed by the Defendant between about 1986 and 1993 as a joiner at their prices in Barnsley. At first instance the circuit judge found that the Claimant’s date of knowledge was no later than mid-2007.
The Defendant had been dissolved on 19th August 1995 following voluntary winding up.
The Claimant made an application to restore the Defendant to the register in August 2018. The Claim Form for these proceedings was issued in May 2018, serving proceedings in August 2018.
The Claimant’s pleadings simply stated that the claim was in time or alternatively, a section 33 discretion should be granted.
The Claimant’s argument
However, in the Claimant’s skeleton argument and at the hearing itself a further argument was raised. Following the case of Financial Services Compensation Scheme v Larnell (Insurances) Ltd  EWCA Civ 1408 it was argued that the effect of a company being voluntary liquidation is that the limitation clock does not run. By restoring the company to the register, it was said, the effect was that between 1995 when the company was wound up and 2018 the company continued to be in voluntary liquidation throughout that period and therefore the limitation clock did not run at all.
At First Instance
At first instance, the judge also considered the case of Smith v White Night Laundry  1 WLR 616, which set out that the court should give consideration to any rights or the position of anyone who might be affected by the order for Restoration (albeit with regards to different sections of the Limitation Act).
The judge also noted that in personal injury claims, there is a benefit of employer’s liability insurance. The fact of/ status of the employer’s liability insurance is not affected because the company has dissolved.
The judge found that he was not bound by the Financial Services case. He also found that standing back it was not surprising this argument has not been raised previously by personal injury practitioners. He noted that counsel had not found any support for the argument. The judge pointed out that an unmeritorious claim on limitation could continue if the Financial Services case was to be applied in the way argued.
He then reiterated that when making application to restore a company to the register, the court should consider those who may be affected by it. The judge found this to be in keeping with principles of fairness comparable to those involved in a section 33 application. This had not been done in this case because the Claimant had not alerted the Defendants’ insurers of the application.
The appeal judge started by considering Section 1029 of the Companies Act 2006. The judge noted that subsection (3) gave the court power to direct that the period between dissolution of the company and the making of the order was not to be taken into account for the purpose of limitation. The judge found that if the interpretation of the Financial Services case was suggested by the claimant, this would be irrelevant and unnecessary in very many cases.
The Court also distinguished those matters which were “in the bankruptcy” those “outside the bankruptcy”. The judge found that in the vast majority of personal injury claims there will be employer’s liability insurance of £2 million. Accordingly personal injury claims could be considered to be ‘outside of bankruptcy’. The bankruptcy did not affect whether the employers’ liability insurance was in place or not. Accordingly, they would not have (or need) the benefit of any time stopping.
The judge found that the Financial Services case was not intended to apply to the situation which has arisen. It was also not intended to contradict the decision in Smith v White Knight Laundry. The court noted that Smith was not cited in the Financial Services case.
The Court noted that the Defendants’ insurers had not been given notice of the application to restore. This was described as being ‘unfortunate’. The judge encouraged the rules committee to give consideration as to a requirement to do so.
The judge considered, therefore, whether he should give permission to appeal against that original decision regarding restoration. However, he decided that the simplest solution was as the court at first instance in the main claim had dismissed the claim, then he would simply dismiss the appeal.
This case raises an argument that many practitioners may have been unaware of. Those that were aware of it were likely to be sceptical to its merits. This decision appears, therefore, to close off the argument. The strength of the argument has always been based on a technical point rather than equitable argument. It is, of course, possible that the argument could be pursued further. However, given the indication of the court, this does is not seem very likely.
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