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To Restore or Not to Restore?

For any Occupational Disease practitioner out there, one issue that you may well have come across is whether there is a need to restore a dissolved company before proceedings are issued against them.

This one particular trap that has always caught out Claimant PI practitioners is the rule that a claim issued against a dissolved entity is a nullity, even more so where a Defendant is dissolved after proceedings have been issued.

We have seen many comments over recent times of cases where Defendant insurers have assured the Claimant’s solicitor that they would not require them to take this procedural step and incur the cost of restoring a company.  The worst examples of this that we have become aware of also had the Defendant solicitors refusing to pay the costs incurred in restoring a dissolved company, following on from the assurance of their instructing insurers that this step would not be necessary.

We understand that it is common practice with many insurers offering to ‘waive’ the need for restoration with a view to saving costs. But is that the right course of action for any Claimant solicitor to take, when pursuing a claim against a dissolved company?

Let’s face it, in the vast majority of occupational disease claims, there is a real risk that the Defendant employer / company will be dissolved. This is an issue that Claimant’s need to get right from the outset.

We would refer you back to the Court of Appeal decision in the case of Peaktone Ltd v Joddrell [2012] EWCA Civ 1035.

Joddrell had issued proceedings for a claim for NIHL against Peaktone Ltd. However, unbeknown to Joddrell when proceedings were issued, Peaktone Ltd had been struck off the company register and was dissolved.

In order to correctly commence proceedings, Joddrell sought an order from Companies Court asking for Peaktone Ltd to be restored to the company register but he had failed to disclose to Companies Court that he had already purported to issue proceedings against them.

Thereafter, Peaktone Ltd successfully applied to have the original claim struck out on a number of grounds but Joddrell appealed to the High Court in order to have that decision set aside.

So 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 High Court held that restoration to the register under section 1032(1) of the Companies Act 2006 did validate the original proceedings brought by Joddrell.

Peaktone Ltd took the matter on to the Court of Appeal who agreed with the High Court as to section 1032(1) of the Companies Act 2006 so that 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”.

These problems dealing with the dissolved Defendants continue to loom when pursuing claims for Occupational Disease cases but how does the Third Parties (Rights against Insurers) Act 2010 affect this? The reality is that it shouldn’t have too much of an impact for sometime.

The new Third Party Rights etc. Act is not retrospective and will only apply to insolvencies that occur after the date of commencement of the Act, so despite what Defendants might have you believe, you will need to continue restoring companies where the insolvent event was before 01.08.16.

This is always a tricky area where Claimant lawyers can be lulled into a false sense of security in believing that restoration of a dissolved company can be waived. The short answer is this, do not risk it, restore!

If you are not a member already as an Industrial Disease practitioner, why not come and join the "Industrial Disease Network”. This is a forum for Lawyers, Medical Professionals and others who work within this field to share ideas, network, and discuss topical and technical issues within the Occupational Disease arena. This group was founded by our very own Robin Selley and can be found here

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