Elb Securities Ltd Against Alan Love & Prestwick Hotels Ltd
| Jurisdiction | Scotland |
| Judge | Sheriff Principal C.A.L. Scott Q.C. |
| Court | Sheriff Court |
| Date | 26 August 2014 |
| Docket Number | A801/13 |
| Published date | 26 August 2014 |
SHERIFFDOM OF GLASGOW AND STRATHKELVIN AT GLASGOW
2014SCGLA46
A801/13
JUDGMENT
of
SHERIFF PRINCIPAL C A L SCOTT, QC
in the cause
ELB Securities Ltd
Pursuers
against
Alan Love & Prestwick Hotels Ltd
Defenders
Glasgow, 20 August 2014.
The sheriff principal, having resumed consideration of the appeal, allows same and recalls the sheriff’s interlocutor dated 4 April 2014; sustains the pursuers’ first, second, fourth and fifth pleas in law and repels the defenders’ pleas in law under exception of their sixth plea; (one) finds and declares that the company Prestwick Hotels Ltd (SC023305) was dissolved on 14 June 2013; (two) finds and declares that the lease between Carole Paul Fox-Robertson and Alison Mary Chisholm as executors of the late Peter Graham Fox and Prestwick Hotels Ltd (SC023305) of ALL and WHOLE those premises comprising the fifth floor at 166 Buchanan Street, Glasgow and registered in the Books of Council and Session on 12 October 2005 is at an end and that the parties thereto are no longer bound thereby, and that the pursuers are entitled to enter upon possession of the said premises and to dispose thereof at their pleasure; and (three) ordains the defenders’ servants, employees, tenants and others summarily to flit and remove themselves and their whole goods, gear and other effects from said fifth floor at 166 Buchanan Street, Glasgow and to leave same void and redd and that under pain of ejection and grants warrant to officers of court to eject the defenders, their servants, employees, tenants and others with their goods, gear and whole possessions from the said subjects; finds the defenders liable to the pursuers in the expenses of the debate on 17 February 2014 and the appeal; allows an account thereof to be given in and remits same, when lodged, to the auditor of court to tax and to report thereon; quoad ultra remits to the sheriff to determine further procedure in relation to the fourth crave of the writ.
NOTE:-
Introduction
[1] This appeal concerns the construction to be placed upon the terms of section 1032(1) of the Companies Act 2006, in the particular circumstances of the case. Section 1032(1) provides that:
“The general effect of an order by the court for restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off the register.”
[2] The pursuers are landlords of fifth floor premises at 166 Buchanan Street, Glasgow. The second defenders, Prestwick Hotels Ltd, (hereinafter referred to as “PHL”) were the tenants of those premises. On 14 June 2013, PHL were dissolved.
[3] Section 1012 of the 2006 Act provides that when a company is dissolved, “…all property and rights whatsoever vested in or held on trust for the company immediately before its dissolution…” including leasehold property, are deemed to be bona vacantia.
[4] In the present case, it fell to the Crown to decide whether its title to the lease should be disclaimed under section 1013 of the 2006 Act. The Crown representative in relation to property in Scotland, the Queen’s and Lord Treasurer’s Remembrancer (“QLTR”) disclaimed the Crown’s whole right and title in and to PHL’s interest in the lease by Notice dated 15 July 2013.
[5] Section 1020 deals with the effect of such a disclaimer. Its terms are as follows:
“(1) The Crown’s disclaimer operates to determine, as from the date of the disclaimer, the rights, interests and liabilities of the company, and the property of the company, in or in respect of the property disclaimed.
(2) It does not (except so far as is necessary for the purpose of releasing the company and its property from liability) affect the rights or liabilities of any other person.”
For the purposes of the appeal, it was agreed that the use of the word “determine” in sub-section (1) supra had the same effect as if the word “terminate” had been used.
[6] The foregoing statutory provision having served to terminate the lease, the pursuers (qua landlords) sought to repossess the premises and pursued that aim via the present proceedings, the initial writ being warranted on 13 August 2013.
[7] The first defender is a director of PHL. On learning that the company had been the subject of dissolution, he took steps to restore it to the register of companies. By interlocutor dated 3 October 2013, the sheriff at Hamilton ordered restoration.
[8] Accordingly, in the context of the present action, the pursuers, at debate before the sheriff, argued that the defences were irrelevant owing to the statutory termination of the lease under section 1020 supra and that decree as craved (under exception of crave 4) should be pronounced. In contrast, the defenders contended that given the terms of section 1032(1) supra all things had reverted to the status quo as it prevailed pre-dissolution, that the action was irrelevant and that it should, therefore, be dismissed.
Pursuers’ submissions
[9] In pronouncing his interlocutor of 4 April 2014, the sheriff agreed with the defenders’ submissions and dismissed the action. Mr Young, solicitor for the pursuers, maintained that the sheriff’s approach had been wrong. As a matter of general policy, he submitted that were the defenders’ arguments to prevail and were the restoration of PHL, in effect, to overrule the Notice of Disclaimer, uncertainty or absurdity would arise.
[10] Under reference to the sheriff’s note, Mr Young challenged the absence of any judicial reconciliation as between the provisions of section 1020 and section 1032. The following authorities were referred to:
Allied Dunbar Assurance plc v Fowle & Others [1994] BCC 422
Hindcastle Ltd v Barbara Attenborough Associates Ltd & Others [1996] 1 All ER 737
The Advocate General for Scotland, Petitioner [2010] CSOH 82
Beauchamp Pizza Ltd v Coventry City Council [2010] EWHC 926
RVB Investments Ltd v Alasdair Roderick Bibby (Case No ITF00604), 25 January 2013
Reference was also made to section 178(4) of the Insolvency Act 1986 and to Bennion on Statutory Interpretation (Twelfth Edition).
[11] With regard to the RVB & Hindcastle cases, Mr Young accepted that they had been distinguished by the sheriff (see paragraph [48] in the sheriff’s note) and also accepted that neither of those cases served to provide specific guidance as to resolution of the issue under consideration in the present appeal. Mr Young characterised the Allied Dunbar case as being the only authority directly in point. It concerned the earlier provisions of the Companies Act 1985. However, whilst the case dealt with the effect of a company’s revival after dissolution in so far as it concerned the rights and liabilities of sureties, there was, observed Mr Young, reliance upon the earlier case of Stacey v Hill [1901] 1 KB 660 and that case had subsequently been overruled in Hindcastle.
[12] Mr Young highlighted the provisions of sections 1017 and 1021 of the 2006 Act. Those sections explicitly empowered the court to make an order in favour of a person claiming an interest in disclaimed property or where that person was under a liability in respect of such disclaimed property not discharged by the disclaimer. As I understood his submission, Mr Young’s purpose in referring to the section 1017 and 1021 provisions was to highlight the fact that the construction placed upon section 1032 by the defenders had to be regarded as incorrect when other statutory provisions within the Act were considered.
[13] In other words, if section 1032 truly meant that all matters reverted to the status quo pre-dissolution, provisions such as those contained within sections 1017 and 1021 would be rendered meaningless. Mr Young queried why Parliament would have seen fit to empower the court to consider applications for the vesting of disclaimed property and, if so advised, to grant such applications when, if the defenders’ interpretation were to prevail, section 1032 might thereafter be used to “drive a coach and horses” through such orders of court.
[14] It was also suggested by Mr Young that, with effect being given to the defenders’ construction of section 1032, the way was open for court orders to be undermined without any form of due process. That feature was, he argued, enhanced by the category of persons who might apply for restoration of a limited company to the register. A wide range of such individuals was involved and the time limit for doing so was 6 years.
[15] Any contention that the present pursuers ought to have entered appearance and opposed the petition for restoration of PHL at Hamilton Sheriff Court was rejected by Mr Young. He submitted that sheriff courts the length and breadth of Scotland would require to be monitored for the appearance of any such restoration applications. He agreed with the proposition that the position adopted by the pursuers in the present case did not necessarily preclude the act of restoration to the register of companies.
[16] Mr Young also contrasted the detail of the statutory provisions as between ie section 1021, which provides for the property etc of a dissolved company to be deemed to be bona vacantia, and the situation where there has been a disclaimer. In section 1021, it is explicitly stated that section 1012(1) “…has effect subject to the possible restoration of the company to the register…” That sort of caveat was not to be found where there had been a disclaimer.
[17] Various passages from the twelfth edition of Bennion on Statutory Interpretation were referred to with a view to aiding the court’s approach to construction of the provisions in question. In particular, Mr Young founded upon the concepts of knowability and predictability discussed at pages 732 and 733. Mr Young highlighted the fact that a construction avoiding an absurd result was generally favoured by the courts and that “absurdity” included “…virtually any result which is unworkable or impracticable, inconvenient,...
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