This post is written by Spencer Turner. It provides a useful summary of Cowley, which was a NIHL claim rather than an asbestos case, but is of obvious and direct relevance to asbestos practitioners. It examines the principles set down in Peaktone v Joddrell, and the consequences of a failure to restore a company to the register prior to the commencement of proceedings.
In Cowley the Claimant brought a claim for noise induced hearing loss. The Defendant sought to strike out the claim on the basis that the Claimant had failed to restore the defendant company to the register prior to starting proceedings. The Defendant’s application submitted that, as a result of the failure to restore the company, the proceedings were a nullity and the court should either (i) make a declaration under CPR 11 that it had no jurisdiction to hear the claim, or (ii) strike out the claim pursuant to CPR 3.4(2)(c).
At first instance, the Claimant argued that the proceedings had been properly served on the Defendant at its last known place of business and that an order restoring the company to the register would validate that service retrospectively. The Claimant sought to rely on the judgment of Peaktone v Joddrell  EWCA Civ 1035 and advance the position that proceedings served on a company which had been dissolved were retrospectively validated on the company later being restored to the register. Crucially, the Claimant failed to explain what steps had been taken to restore the Defendant to the register and did not give any evidence as to the reasons why the Defendant company had not been restored at the time of the application. The District Judge held that the court would only allow a claim to proceed against a company that existed and would only correct errors in procedure where there was imminent restoration. The matter was struck out, but the judge did not make a declaration as to whether the court accepted or declined jurisdiction.
The decision was appealed. On appeal, HHJ Rawlings found that the District Judge had not decided the matter on the basis of an absence of jurisdiction under CPR 11 but that he had acted instead pursuant to the strike out power under CPR 3.4. He found that, whether or not a jurisdictional challenge might have been made, it remained open to the court to exercise its case management powers to strike out a claim on the basis that the purported defendant did not exist and no sensible steps had been taken on the Appellant’s behalf to procure the company’s restoration to the register. The judge then found that, under CPR 3.4, the District Judge had exercised that discretion and had not erred in principle in making the order that he did.
On appeal to the Court of Appeal the Claimant argued that the District Judge had been wrong to strike out the claim under CPR 3.4 in a case where the proper challenge was under CPR 11 and the provisions of that rule had not been complied with.
The Court of Appeal rejected the Claimant’s arguments concluding that:
‘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.’
The judgment in Cowley recognises that, whilst Peaktone provides Claimants with the opportunity to ensure that technical failures surrounding the restoration of a company to the register can be remedied, there is a risk of strike out where there is no imminent restoration of the company or if the Claimant cannot show what steps have been taken in pursuit of a restoration.
The Court of Appeal also provided a helpful non-prescriptive set of suggestions for parties to consider in similar cases:
- The insurer should notify the Claimant that the insured company is dissolved. The insurer should the invite a restoration application and a further application to stay the main claim in the meantime.
- If the Claimant fails to respond, the insurer should invite the court to stay the proceedings of its own motion.
- Once a stay has been imposed if the Claimant fails to restore the insured company to the register after a ‘sensible time’, a request should be made to the court to strike out the Claimant’s claim as against the insured company.