Elb Securities Limited Against (first) Alan Love And (second) Prestwick Hotels Limted
| Jurisdiction | Scotland |
| Judge | Lady Smith,Sheriff Principal Mhairi M Stephen,Lady Paton |
| Judgment Date | 18 September 2015 |
| Neutral Citation | [2015] CSIH 67 |
| Court | Court of Session |
| Date | 18 September 2015 |
| Published date | 18 September 2015 |
| Docket Number | XA135/14 |
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2015] CSIH 67
XA135/14
Lady Paton
Lady Smith
Sheriff Principal Stephen QC
OPINION OF THE COURT
delivered by LADY PATON
in the cause
ELB SECURITIES LIMITED
Pursuers and respondents;
against
(FIRST) ALAN LOVE; (SECOND) PRESTWICK HOTELS LIMITED
Defenders and appellants:
Pursuers and respondents: Jones, Solicitor Advocate; bto
Defenders and appellants: G MacColl; John Mair Solicitors t/a Campbell Mair
18 September 2015
Tenant company’s dissolution and restoration to the register: effect on lease
[1] Prestwick Hotels Limited (“PHL”) had a tenancy of the fifth floor of 166 Buchanan Street, Glasgow, in terms of a lease between PHL and the executors of Peter Fox. On 24 January 2013, the landlords’ interest was purchased by the pursuers (hereinafter referred to as “the landlords”).
[2] On 14 June 2013, PHL was struck off the Companies Register and dissolved as a result of its failure to comply with statutory obligations, including a failure to lodge company accounts over a six‑year period. On 13 August 2013 the landlords raised an action in Glasgow Sheriff Court against PHL and a director Alan Love (“the defenders”) seeking their removal from the fifth floor. In September 2013 Mr Love petitioned Hamilton Sheriff Court to have PHL restored to the register. It was averred that there had been administrative oversight; accounts would be prepared and produced; PHL was solvent, carrying on business, and wished to continue leasing the fifth floor despite the landlords’ action of declarator and removing. The plea-in-law stated that, in the circumstances, it was just and proper that PHL should be restored to the register.
[3] On 3 October 2013 the sheriff at Hamilton restored PHL to the register, issuing an interlocutor in the following terms:
“The sheriff … orders that the name of the company Prestwick Hotels Limited be restored to the Register of Companies in terms of section 1031(1) of the Companies Act 2006 on the grounds that it is just and proper in the circumstances narrated and restores the company to the same position as if it had not been struck off …”
Thereafter, in their defence to the action for declarator and removing in Glasgow Sheriff Court, the defenders submitted that PHL having been restored to the register, the lease between PHL and the landlords continued as if there had been no interruption. By contrast the landlords’ contention was that, as a consequence of PHL’s dissolution and a notice of disclaimer issued by the Queen’s and Lord Treasurer’s Remembrancer (QLTR) dated 15 July 2013 (see paragraph [7] below), the lease with PHL had come to an end on 15 July 2013 in terms of the Companies Act 2006.
[4] After a debate in Glasgow Sheriff Court, Sheriff Crozier found in favour of the defenders. By interlocutor dated 4 April 2014 he dismissed the action for declarator and removing as irrelevant. The landlords appealed to the Sheriff Principal. By interlocutor dated 21 August 2014 Sheriff Principal CAL Scott QC allowed the appeal, recalled the sheriff’s interlocutor, and granted decree de plano for declarator that PHL was dissolved on 14 June 2013 and that the lease was at an end; and for removal of the defenders from the premises. The Sheriff Principal also remitted the case to the sheriff to determine further procedure in relation to the fourth crave for violent profits. The defenders appealed to the Court of Session.
Statutory scheme
[5] Chapters 2 and 3 of Part 31 of the Companies Act 2006 (“the 2006 Act”) provide inter alia as follows:
“1012 Property of dissolved company to be bona vacantia
(1) When a company is dissolved, all property and rights whatsoever vested in … the company immediately before its dissolution (including leashold property …) are deemed to be bona vacantia …
(2) Subsection (1) has effect subject to the possible restoration of the company to the register under Chapter 3 (see section 1034).
1013 Crown disclaimer of property vesting as bona vacantia
(1) Where property vests in the Crown under section 1012, the Crown’s title to it under that section may be disclaimed by a notice signed by the Crown’s representative … in relation to property in Scotland, the Queen’s and Lord Treasurer’s Remembrancer.
1014 Effect of Crown disclaimer
(1) Where notice of disclaimer is executed under section 1013 as respects any property, that property is deemed not to have vested in the Crown under section 1012.
(2) The following sections contain provisions as to the effect of the Crown disclaimer – … sections 1020 to 1022 apply in relation to property in Scotland …
1020 General effect of disclaimer
(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.
1021 Power of court to make vesting order
(1) The court may –
(a) on application by a person who … claims an interest in disclaimed property or is under a liability not discharged by this Act in respect of the disclaimed property, and
(b) on hearing such persons as it thinks fit,
make an order for the vesting of the property in or its delivery to any persons entitled to it, or to whom it may seem just that the property should be delivered by way of compensation for such liability …
(2) The order may be made on such terms as the court thinks fit.
(3) On a vesting order being made under this section, the property comprised in it vests accordingly in the person named in that behalf in the order, without conveyance or assignation for that purpose.
1022 Protection of persons holding under a lease
(1) Where the property disclaimed is held under a lease the court must not make a vesting order in favour of a person claiming under the company, whether –
(a) as sub-lessee, or
(b) as creditor in a duly registered or (as the case may be) recorded heritable security over a lease
except on the following terms.
(2) The person must by the order be made subject –
(a) to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property …
1029 Application to court for restoration to the register
(1) An application may be made to the court to restore to the register a company [that has been dissolved or struck off] …
1030 When application to the court may be made
(1) An application to the court for restoration of a company to the register may be made at any time for the purpose of bringing proceedings against the company for damages for personal injury …
(4) In any other case an application to the court for restoration of a company to the register may not be made after the end of the period of six years from the date of the dissolution of the company …
1031 Decision on application for restoration by the court
(1) On an application under section 1029 the court may order the restoration of the company to the register …
(c) if … the court considers it just to do so …
1032 Effect of court order for restoration to the register
(1) 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 …
(3) The court may give such directions and make such provision as seems just for placing the company and all other persons in the same position (as nearly as may be) as if the company had not been dissolved or struck off the register …
1034 Effect of restoration to the register where property has vested as bona vacantia
(1) The person in whom any property or right is vested by section 1012 (property of dissolved company to be bona vacantia) may dispose of, or of an interest in, that property or right despite the fact that the company may be restored to the register under this Chapter.
(2) If the company is restored to the register –
(a) the restoration does not affect the disposition …
(b) the Crown … shall pay to the company an amount equal to –
(i) the amount of any consideration received for the property or right or, as the case may be, the interest in it, or
(ii) the value of any such consideration at the time of the disposition,
or, if no consideration was received an amount equal to the value of the property, right or interest disposed or, as at the date of the disposition.
(3) There may be deducted from the amount payable under subsection (2)(b) the reasonable costs of the Crown representative … “
The QLTR’s disclaimer
[6] Section 1012 of the 2006 Act provides that when a company is dissolved, “all property and rights whatsoever vested in” the company are deemed to be bona vacantia, subject to the possible restoration of the company to the register. Section 1013 provides that where property vests in the Crown under section 1012, the Crown’s title to it may be disclaimed by a notice signed by the QLTR. Sections 1014 and 1020 to 1022 set out the effect in Scotland of the QLTR’s disclaimer. Sections 1029 to 1034 provide for restoration of a dissolved company to the register.
[7] In the present case, following upon PHL’s dissolution, the QLTR issued a notice of disclaimer dated 15 July 2013, disclaiming the Crown’s whole right and title in and to PHL’s interest in the lease (paragraph [4] of the Sheriff Principal’s opinion). The parties’ dispute concerns the effect of that disclaimer, and the proper construction of the 2006 Act, in particular section 1032.
Submissions for the defenders and appellants
[8] Counsel for the defenders submitted that section 1032 was a retrospective deeming provision which had the following “as-you-were” effects: (i) the company was deemed never to have been dissolved; (ii) the company’s property was deemed never to have...
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