HOLMES v S&B Concrete Ltd  EWHC 2277 (QB): appeal judgment confirms that claimants in personal injury cases are not able to outflank a limitation defence by recourse to the rule that time for limitation purposes ceases to run on a resolution to wind up a defendant company
This judgment confirms that claimants in personal injury cases whose claims are brought more than three years after their cause of action accrued or their date of knowledge (if later) but where it would not be equitable to allow the claim to proceed under section 33 of the Limitation Act 1980 are not able to escape the consequences by the rule in Financial Services Compensation Scheme Limited v Larnell (Insurances) Limited (in liquidation)  EWCA Civ 1408. That case confirmed that in claims against a company, time does not run for limitation purposes beyond the date when liquidation commences. If, as a consequence of the liquidation, the company is dissolved and struck off the register (as will usually be the case) it must be revived before a claimant can rely upon the Third Parties (Rights against Insurers) Act 1930 (which continues to apply where the insured’s liability was incurred before 1 August 2016). However the result is that the liquidation is also revived and any limitation defence must remain confined to the period before the liquidation commenced. This ought not to apply to cases where the cause of action was not complete at the time of the winding up order (for example in a latent disease case where no actionable injury has by then been caused so as to complete the tort—though strictly there would have been in existence a claim for breach of contract).
The decision of HHJ Owen QC was upheld. He had dismissed the claim on the basis that the company should not have been restored until limitation issues had been resolved or conditions should have been imposed on such restoration (applying the procedure adopted in Smith v White Knight Laundry Ltd  EWCA Cave 660;  1 W.L.R. 616).
Martin Spencer J also distinguished FSCS v Larnell on the basis that this was a case of compulsory employers’ liability insurance well within the then minimum limit of indemnity (then £2 million, currently £5 million) and the claim was thus “outside the liquidation” so that time had not ceased to run before the Claim Form was issued. However there will be cases where insurance was not compulsory (or the claim exceeds the limit of indemnity) when that will not be the case.
At present there is nothing in the rules (or a practice direction—PD 49A) to require notice of an application to restore a company to the register to be given to anyone other than the Registrar of Companies. Martin Spencer J has recommended that the Rules Committee consider whether this is sufficient. Liability insurers will, therefore, still need to be astute to avoid any suggestion that they have acquiesced in the restoration of the company or have waived their right to object by inactivity when they become aware that it has happened by ensuring that the Business and Property Courts (or the County Court at Central London) to whom these applications are allocated are aware of their interest and that there may be a limitation issue in the case. If necessary applications to set aside the order for restoration may have to be made.
To view the approved judgment, please see here.
Michael Kent QC appeared on the appeal for the Respondent, instructed by Stephen Symington of DWF LLP.