Summary

The court had power to impose conditions on the restoration of a company when exercising its jurisdiction under s.653 Companies Act 1985. However the imposition of conditions was not to be regarded as an opportunity for parties who were neither the company concerned or the Company Registrar to obtain benefits by way of those conditions.

Facts

Application by the second and third respondents to have conditions imposed on the restoration of Blenheim Leisure (Restaurants) Ltd ('the company') to the Companies' Register. The condition was that the company pay the respondents #180,000 which represented the outstanding rent and VAT due under three agreements between the parties. The issues were whether the court had jurisdiction to impose any conditions on restoration and, if so, whether the condition should be imposed. The applicants contended, inter alia: (a) The only jurisdiction to impose such conditions was to be found in the second limb of s.653(3) Companies Act 1985 since although Parliament had used the word 'may' in s.653(2) and s.653(2B), in light of the second limb in s.653(3), the word was not strong enough to carry any sort of condition. Instead the court had to make a decision whether to restore the company one way or the other. (b) Although the applicants accepted that the respondents were seeking to have the condition imposed pursuant to the word 'may' in s.653(2B) it meant that much of the reasoning of Megarry J in Re Lindsay Bowman Ltd (1969) 1 WLR 1443 would in practice be pointless; that the whole purpose of the second limb of s.653(3) would be undermined if the judge accepted he had jurisdiction to impose conditions. Relying on In re Brown Bayley's Steel Works Ltd (1905) 21 TLR 374, In re Moses & Cohen Ltd (1957) 1 WLR 1007 and In re Court Lodge Development Co Ltd (1973) 1 WLR 1097, all first instance decisions where the judges decided they could not impose, as a condition of restoration, a provision that the company paid the penalty laid down by statute for not having complied with a statutory requirement which had resulted in the company being removed from the register. (c) The Court of Appeal's decision in this case In Re Blenheim Leisure (Restaurants) Ltd (No 1)(1999) Times, August 13, 1999 meant that it was inappropriate to condescend into a detailed consideration of the issues between the objectors, the company and its supporters in the context of an application to restore a company to the register.

Held

(1) The word 'may' in s.653(2B) meant what it said: the court had a discretion, if the gateways in s.653(2) were satisfied, to order restoration.

(2) If the court considered it was just, right and fair to all the parties, bearing in mind the limited inquiries which the court carried out on restoration applications, that the restoration should be subject to something happening, it would have been surprising in the absence of authority for the court to be precluded from holding that the company should be restored only if that condition was satisfied. The second limb of s.653(3) did not seem to point the other way. The mere fact that the court was given a specific jurisdiction to do something in certain circumstances did not carry with it a necessary implication that it was debarred from imposing conditions to deal with some other circumstance.

(3) The line of authority culminating in Court Lodge (supra) appeared to be directed towards a limited issue of whether, if Parliament had imposed specific penalties to be paid and extracted in certain circumstances, the court could use restoration of the company as a means of holding over the company an obligation to pay those fines as a condition of restoration. There was established authority that that could not be done, however it did not follow that a condition such as the one sought could not be imposed. Furthermore it was common practice for the court to impose conditions where the company had been struck off and dissolved due to a failure to file accounts either by requiring an undertaking or, as in the more recent practice, ordering restoration in principle but directing that the order should not be drawn up and delivered to the Company Registry until there had been compliance. If the applicants' submissions had been correct then the court would not have had that power.

(4) It would have been surprising if the court did not have jurisdiction to impose conditions: Shire Court Residents Ltd & Anor v Registrar of Companies (1995) BCC 821 considered, in which Carnwath J imposed a number of conditions. The court took comfort from this decision. The reasoning of the majority in the Court of Appeal in Tyman's Ltd v Craven (1952) QB 100 was indirect support for the view that the second limb of s.653(3) was not to be treated as resulting in the court's discretion under the word 'may' in s.653(2B) being cut down.

(5) The observations of Tuckey LJ in this case in the Court of Appeal (supra), that restoration applications were administrative, was not to be taken as suggesting that the court was exercising merely an administrative function rather than a judicial function. There was an administrative element, which for the benefit of the courts, the public and the Registrar, was not to be seen as fully fledged proceedings. The court's power to impose conditions for the benefit of a party when exercising its jurisdiction under s.653 were to be limited and not regarded as an opportunity for parties who were neither the company concerned nor the Registrar to obtain benefits by way of conditions (Re Portrafram Ltd (1986) BCLC 533 considered). The court had jurisdiction to impose the condition sought. The order for restoration would not be drawn up until the company paid the #180,000.

Order accordingly.