Sir Terence Etherton MR :
- This appeal raises a point of practice as to the circumstances in which it is permissible and, where permissible, appropriate to join a third party to proceedings for restoration of a dissolved company to the register of companies.
- The proceedings concern Pablo Star Limited ("Pablo Star"), which was struck off the register of companies on 18 February 2014 on the application of the first respondent, Haydn Price, a director and the sole shareholder. It was restored to the register by order of Registrar Derrett on 13 June 2014 ("the Restoration Order"), on the application of Mr Price. The Restoration Order contained undertakings by Mr Price. The Restoration Order was varied by a further order of Registrar Derrett dated 18 June 2015 ("the Variation Order"), which contained new undertakings from Mr Price and released him from his undertakings in the Restoration Order.
- The purpose of restoring Pablo Star to the register was to enable proceedings for breach of copyright to be brought against various persons, including the appellants, the Welsh Ministers. The Welsh Ministers have applied to be joined to the restoration proceedings in order to argue, among other things, that the Restoration Order and the Variation Order should be revoked or the purported restoration be declared invalid and of no effect because of non-disclosure or misrepresentation leading to the making of the Restoration Order and the Variation Order or because of breaches of the undertakings given to the court by Mr Price.
- By order dated 2 March 2016 Registrar Barber joined the Welsh Ministers. This is an appeal from the order dated 24 October 2016 of His Honour Judge Behrens QC, sitting as a High Court Judge in the Chancery Division, allowing the appeal from Registrar Barber's order, setting aside her order and dismissing the Welsh Ministers' application to be joined to the proceedings.
The background
- The following is a brief summary of the factual background, in part taken from the judgment of Judge Behrens.
- As I have said, Mr Price is the director and sole shareholder of Pablo Star.
- In August 2011 Mr Price, acting on behalf of Pablo Star, purported to enter into an agreement with Gwendoline Watkins, pursuant to which Ms Watkins allegedly assigned to Pablo Star the copyright in a photograph of Dylan Thomas and Caitlin Thomas known as "Just Married" ("the Photograph").
- On 18 February 2014 Pablo Star was struck off the register of companies on the application of Mr Price, in his capacity as director of Pablo Star.
- By a claim form issued on 10 April 2014 Mr Price applied for Pablo Star to be restored to the register pursuant to section 1029 of the Companies Act 2006 ("CA 2006"). As is the usual practice, the Registrar of Companies, who is the second respondent to this appeal, was made the sole defendant. Mr Price's witness statement in support of the application stated that the sole reason for the application was to allow Pablo Star to pursue litigation for breach of copyright, which had a good chance of success. The witness statement said that it was not otherwise intended that Pablo Star would trade, and, once the litigation had been concluded, Pablo Star would be struck off the register.
- In the usual way, the Treasury Solicitor wrote to Mr Price outlining the terms on which the Registrar of Companies would not oppose the application for restoration. Those terms included an undertaking by Mr Price that the company:
"will not carry on business or operate in any way other than to take the necessary steps to: (i) pursue a claim against
seeking damages for alleged breach of copyright referred to [in Mr Price's witness statement]"
- The letter stated that the undertakings were required in view of the evidence in support of the application which indicated that the sole purpose for seeking restoration was to make a claim against a third party.
- On 21 May 2014 Mr Price, on behalf of Pablo Star, purported to execute an assignment ("the assignment") of, among other things, the copyright in the Photograph to Pablo Star Media Limited ("Media"), a company also owned and controlled by Mr Price. The assignment reserved to Pablo Star the right to sue New Directions Publishing Inc ("New Directions"), VisitWales.com ("the Welsh Ministers") and Nancy Galbraith ("Ms Galbraith"). VisitWales.com is the trading name of the administrative division of the Welsh Government that promotes tourism in Wales. It is not a separate legal entity. The Welsh Ministers are legally accountable for it.
- On 13 June 2014 Registrar Derrett ordered, by consent and on undertakings being given by Mr Price, that Pablo Star be restored to the register of companies. Among the undertakings given by Mr Price was an undertaking not to carry on business or operate in any way other than to take the necessary steps to pursue claims against New Directions, the Welsh Ministers and Ms Galbraith seeking damages for the alleged breach of copyright referred to in Mr Price's witness statement.
- Since July 2014 Media has commenced proceedings for alleged breach of copyright in the Photograph against many different parties.
- In February 2015, contrary to the undertakings given to the court by Mr Price on Pablo Star's restoration, Pablo Star issued proceedings in New York not only against the Welsh Ministers but also against Tribune Media Service, Pittsburgh Post Gazette, E W Scripps Co, Colorado Newsfeed, Travel Squire, Richmond Times Dispatch and Miami Herald Media Co; and it commenced proceedings in Ireland for alleged defamation by Ms Watkins.
- On 26 May 2015 Mr Price applied to the court to amend his undertakings. The Welsh Ministers were unaware of that application. In his witness statement in support of that application Mr Price said that:
"new facts have come to light not originally known when I first made my undertakings and some of my subsequent actions may have needed the courts permission".
- In paragraph 8 of that witness statement he said that on 18 March 2015 he had written to Companies House and explained that:
"Since filing my claim/undertakings to the court, further copyright infringements have come to light in relation to Visit Wales and third parties Visit Wales supplied with our images (without my knowledge before I had submitted my application to the court and in most case [sic] the infringements occurred after that application was submitted). As these parties are directly related to the Visit Wales claim, I have allowed our New York attorney to include some of these parties as co-defendants in [one of the actions]. I hope that the court accepts that this was the right course of action for us to take and I did not feel that I needed the prior permission of the court to do so
When Pablo Star Limited was restored to the register it recovered various copyrights and other property rights from the crown
In order to put the company's affairs in order now, so that its on-going sole purpose can be to pursue the claims above, I have also sold these items to a new standalone company Pablo Star Media Limited".
- He also stated in the witness statement that, once Pablo Star was restored to the register:
"It seemed logical to me that
the company could dispose of its assets and assign its rights to a third party like any other company on the register. I therefore established a new company to own these ongoing rights and the new owners could deal with any new infringements. This allowed the original company to continue for the solo [sic.] purposes of pursuing the agreed previous litigation. With the rights to sue any newly identified infringements assigned to a new company there would be not [sic.] affect [sic.] on the speedy resolution of the original matter for which the company was restored to address".
- By a consent order made on 18 June 2015 Registrar Derrett acceded to the application and made an order specifying new undertakings by Mr Price and releasing him from the undertakings in the Restoration Order. The new undertakings included an undertaking that Pablo Star would not carry on business or operate in any way other than to take the necessary steps to (1) transfer from its ownership all copyrights and trademarks held in its name mentioned in paragraph 8 of his witness statement, and (2) pursue claims against 14 named entities, including "Visit Wales", seeking damages for breach of copyright.
- Mr Price subsequently commenced further proceedings against The Welsh Ministers in the name of Media rather than Pablo Star.
- On 4 August 2015 Pablo Star and Media executed an addendum to the assignment, which amended clause 4 of the assignment reserving the right to sue New Directions, VisitWales.com and Ms Galbraith to Pablo Star. So far as concerned VisitWales.com, the clause was amended to read as follows:
"This agreement shall also not affect the Assignors potential actions in America and Canada against (3) Visitwales.com or the so called "Welsh Ministers" (for which the Assignors rights, remedies and potential actions are not transferred and its copyright ownership as far as it relates to those potential actions remains unchanged)".
- We were informed on the hearing of the appeal that the proceedings in New York against the Welsh Ministers have been dismissed, and that proceedings brought by Media against the Welsh Ministers in Ireland have also been dismissed. We were also informed that there are proceedings still on foot in Holland brought by both Pablo Star and Media against the Welsh Ministers and that those are currently the only outstanding proceedings against them by either Pablo Star or Media.
The joinder application
- By an application notice dated 12 November 2015 the Welsh Ministers applied to be joined as a party to the proceedings pursuant to CPR 19.2 and 19.4(2)(b). It also sought a declaration that the Restoration Order and the Variation Order were properly made, and the assignment of the Photograph to Media was valid and effective; or alternatively, an order that the Restoration Order and the Variation Order be revoked, a declaration that the purported restoration of Pablo Star to the register of companies was invalid and of no effect, and a further declaration that the assignment was invalid and of no effect and that ownership of the copyright in the Photograph remains vested in the Crown.
- In reality, as is made plain by the submissions made by the Welsh Ministers before Registrar Barber, Judge Behrens and before us, the Welsh Ministers wish to be joined to the proceedings in order to have the Restoration Order revoked, with the retrospective effect of nullifying the assignment, so as to deprive both Pablo Star and Media of any cause of action against the Welsh Ministers for infringement of the copyright.
- The application was supported by a witness statement of Michael Lindsey, the Welsh Ministers' solicitor. He lists the following as the complaints of the Welsh Ministers about the conduct of Mr Price.
(1) On the application for the Restoration Order, the court was misled: (a) about the true purpose as to why restoration was sought, the only reason given being to pursue litigation actionable by Pablo Star whereas the intention was also to assign copyright to Media in order to enable that company to conduct litigation to enforce the copyright; (b) as to which entity would own the copyright in the Photograph and pursue infringement actions after restoration; (c) as to which entities would be pursued for infringement after restoration; (d) that, after restoration, the copyright would be enforced against VisitWales.com only by Pablo Star, and not by Media; and (e) that the copyright would remain the property of Pablo Star following restoration, until it was dissolved again.
(2) Mr Price breached the undertakings in the Restoration Order by assigning the copyright out of Pablo Star to Media.
(3) Mr Price made a false representation to the Welsh Ministers that Media rather than Pablo Star had the right to enforce the copyright against it. In July 2014 Mr Price wrote to VisitWales.com asserting that Media owned the copyright in the Photograph and threatening to issue proceedings against VisitWales.com in multiple jurisdictions if it did not pay a substantial settlement sum to Media within seven days. In response to VisitWales.com's request to be shown a copy of the assignment, Mr Price provided a redacted copy of the assignment with VisitWales.com's identity as one of the three named defendants that were the subject of the saving provision hidden.
(4) Mr Price further breached those undertakings by commencing proceedings in New York in the name of Pablo Star against several other defendants, none of which was identified as a prospective defendant to the anticipated litigation in those undertakings.
(5) Mr Price further breached those undertakings by commencing defamation proceedings in Ireland against Ms Watkins.
(6) On the application for the Variation Order, the court was misled by untrue evidence when agreeing to permit Pablo Star to assign the copyright and to pursue infringement claims against an extended group of defendants beyond the three defendants named in the undertakings in the Restoration Order. Mr Price's evidence was that new circumstances had come to light after he gave his original undertakings and that some of his "subsequent actions may have needed the Court's permission" but in fact the assignment had been signed before the Restoration Order was made.
(7) Also the court was not told that the right to sue for past infringements, except for claims against the three persons named in the assignment and the Restoration Order, had been transferred to Media by the assignment. Mr Price's evidence that Pablo Star would pursue the claims it was specifically restored to enforce, and Media only new infringements, was untrue. Apart from the saving provision in the assignment, as amended by the addendum (Pablo Star retaining the right to sue VisitWales.com in the US and Canada), the only company with the right to enforce claims for infringement of the copyright in the Photograph is Media. In fact, it is Media which has pursued all claims against VisitWales.com, save in the New York proceedings.
(8) The assignment was in breach of the undertakings in the Variation Order, it not being an action permitted under those undertakings.
(9) The defamation action against Ms Watkins was also in breach of the undertakings in the Variation Order.
CPR 19.2
- The relevant rule of the Civil Procedure Rules 1998 on adding a party is CPR 19.2(2), which is as follows:
(2) The court may order a person to be added as a new party if
(a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or
(b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.
The judgment of Registrar Barber
- The application came before Registrar Barber on 2 March 2016 when, after a hearing that ran over the allocated time by some 75 minutes, she gave an immediate oral judgment.
- She said that she was very clear that the Welsh Ministers should be joined.
- She said that there was jurisdiction to join parties after judgment, and jurisdiction to join third parties for the purpose of applying to set aside or modify a restoration order.
- She held that CPR 19.2(2)(a) was satisfied because the Welsh Ministers are able to assist the court in resolving a material matter in issue in the context of the proceedings, namely whether the court ought to have restored Pablo Star in the first place and, if it ought not to have made the Restoration Order, the legal consequences which follow from that.
- Registrar Barber rejected the submission of Mr Price that the joinder application should be rejected in view of the long delay by the Welsh Ministers.
- Registrar Barber, having referred to a number of decided cases, said that "in order to earn their place at the table" the Welsh Ministers needed to show more than a simple desire not to be sued by a restored company. She said that she was satisfied they had cleared that hurdle for two reasons. First, they had brought to the attention of the court:
"what appears to be material which shows, at the very least, that the Court may have been seriously misled, not only in the course of granting the original order of restoration but also in the course of allowing the discharge of the original undertakings and their replacement with further undertakings."
- She said that those matters required fuller investigation and the court would be greatly assisted by the evidence, analysis and submissions provided by or on behalf of the Welsh Ministers in those respects. Earlier in her judgment she had referred to concerns as to the manner in which Mr Price had set about obtaining the Restoration Order including, from the evidence, "statements which appear patently false, together with half truths and a lack of full and frank disclosure."
- Secondly, she said that the Welsh Ministers were clearly directly affected by the restoration, not only in the sense of being a potential defendant to litigation, which was ongoing in more than one jurisdiction, but also by the role played by Media. She expanded, saying that, as a result of the restoration, not only are the Welsh Ministers exposed to being sued by the restored company, but they are also exposed to being sued by Media which, prior to Pablo Star's dissolution, had no right to sue them. She said that the impact of the restoration is retrospectively to give life to an assignment which would otherwise be of no effect whatsoever, the assignment having been executed post dissolution.
- Registrar Barber concluded by saying that she was "wholly satisfied that this is an appropriate case in which to grant joinder."
The judgment of Judge Behrens
- A rolled up application for permission to appeal the order of Registrar Barber joining the Welsh Ministers and, if granted, the appeal itself came before Judge Behrens on 14 October 2016. His judgment granting permission to appeal, allowing the appeal and refusing the application of the Welsh Ministers for joinder was handed down on 25 October 2016.
- The Judge said (at [30]) that the three most relevant cases cited to him were Stanhope Pension Trust Ltd v Registrar of Companies [1994] BCC 84 ("Stanhope"), Re Blenheim Leisure (Restaurants) Ltd [2000] BCC 554 ("Blenheim") and Spring Salmon & Seafood Ltd v Advocate General for Scotland [2010] CSOH 82 ("Spring Salmon"). They were decided under the Companies Act 1985 but the Judge noted that it had not been suggested by either party that any different principles apply under CA 2006 s.1029, which is the current relevant statutory provision for restoration of a company to the register of companies.
- The Judge set out part of the judgment of Hoffmann LJ in Stanhope ([1994] BCC 84, 90C-G) and observed (at [33]) that Hoffmann LJ had distinguished between a case where a third party had rights that were directly affected by a restoration order, where the court should allow joinder, and cases where the third party merely wanted to say that the proposed proceedings by the revived company have no prospects of success, where the court should not.
- The Judge noted (at [38]) that in Blenheim Aldous LJ approved that part of Hoffmann LJ's judgment in Stanhope, and (at [39]) that Tuckey LJ agreed with Aldous LJ.
- The Judge also referred to the decision of Lord Glennie in Spring Salmon, a decision of the Outer House of the Court of Session. He quoted (at [41]) a passage from the judgment, including a sentence in which Lord Glennie said that a person is not directly affected by the restoration of a company if all that happens is that he is restored to the position he was in, or would have been in, had the company not been struck off in the first place ([2010] CSOH 82 at [15]).
- The Judge concluded that Registrar Barber's decision was contrary to the principles laid down in the authorities.
- His first reason was that a desire by a third party to assist the court in determining whether the court was misled is not a proper basis for joinder. He elaborated that point as follows:
"49.
It could give rise to a multitude of claims from anyone with a grudge against or who wanted to complain about the company. It is quite clear from the authorities that the right to be joined into restoration proceedings is an exception to the ordinary practice of the Companies Court. Furthermore, as is clear from the passages from the judgments on Aldous and Tucker LJJ to which I have referred it is a limited exception which will not result in large numbers of proceedings being turned into major litigation.
50. Parliament has entrusted the policing of restoration applications to the Registrar of Companies. It is thus for the registrar to raise with the court issues of breach of an undertaking and/or misleading witness statements if he chooses to do so. If he does not do so, it is not in my view for anyone else to raise it with the court. All that a disappointed third party can do is to challenge the decision of the registrar in judicial review proceedings."
- The second reason was that he did not accept that the validity or otherwise of the assignment to Media affected the rights of the Welsh Ministers. He explained as follows (at [52]):
"It merely affects the identity of the person entitled to enforce the rights. WM [viz the Welsh Ministers] is potentially liable to Pablo Star for breach of copyright in the Photograph. It is common ground that WM is not entitled to be joined to oppose the restoration simply because it is a potential Defendant in the copyright proceedings. It is, to my mind, equally clear that WM is not entitled to be joined to oppose the restoration because Pablo Star may or may not have successfully assigned part of its rights to Media."
- He said (at [54]) that there was force in the statement of Lord Glennie in Spring Salmon that a person is not directly affected if all that happens is that he is restored to the position he was in, or would have been in, had the company not been struck off in the first place.
- Thirdly, in addressing an argument by counsel for the Welsh Ministers that it was not clear if the litigation outside the USA and Canada against the Welsh Ministers had been properly instituted because the power to assign the right to sue outside the USA and Canada was outside the scope of the undertakings, he said (at [56]) that the short answer was that unless and until the restoration order was revoked it was a valid order. He added that, more importantly, doubts about the validity of the assignment did not directly affect the rights of the Welsh Ministers.
- The Judge said that, in the circumstances, it was not necessary for him to deal with the other grounds of appeal. He did, however, deal with the question of the delay of the Welsh Ministers, as that point had been argued. He concluded, on that issue, that he would uphold the decision of Registrar Barber that the delay between August 2015 and January 2016, when the application for joinder was issued, was not fatal to the application for joinder.
The appeal: discussion and conclusion
- CPR 19.2 confers a discretion on the court to join a party if the conditions in 19.2(2)(a) or (b) are satisfied.
- The conditions in CPR 19.2(2)(a) are that (1) the new party can assist the court to resolve all the matters in dispute in the proceedings, and (2) it is desirable to add the new party to achieve that end.
- Registrar Barber considered that the Welsh Ministers can satisfy the first of those conditions because they are able to assist the court to resolve whether, in light of the events which have taken place, the court ought to have restored Pablo Star in the first place and, if it ought not to have made the Restoration Order, the legal consequences which follow from that and the orders which ought to be granted as a corollary of any set aside order.
- On its literal wording CPR 19.2(2)(a) is directed to a situation where, prior to the joinder of the new party, there already exists a dispute which is the subject of the proceedings. In the present case, aside from the issues which the Welsh Ministers wish to raise if they are joined, there is not and has never been, strictly speaking, any dispute. The proceedings were for the restoration of Pablo Star to the register of companies and the Registrar of Companies consented to the restoration. There is no suggestion that, even if the Welsh Ministers are not joined, the only other party to the proceedings, namely the Registrar of Companies, would wish to argue that some sanction should apply to Mr Price because the court was misled on the making of the Restoration Order or on the making of the Variation Order or because Mr Price was in breach of undertakings to the court.
- The provisions of CPR 19.2(2) ought, however, to be given a wide interpretation. The words "in dispute" ought to be read as "in issue". That is consistent with authority that the court's powers to add a party under CPR 19.2 can exist after judgment even though, on a literal approach, there is no longer a matter in dispute: Dunwoody Sports Marketing v Prescott [2007] EWCA Civ 461 at [23]; [2007] 1 WLR 2343. It is also consistent with cases such as Stanhope and Blenheim, in which the court permitted third parties to be joined to an application for restoration of a company to the register of companies and, for all practical purposes, it was only the intervention of the third parties which put in dispute whether or not the company should be restored.
- Stanhope was decided under the differently worded provisions of the former Ord. 15.r.6(2) of the Rules of the Supreme Court but both Aldous and Tuckey LJJ in Blenheim, which concerned the provisions now to be found in CPR 19.2(2), regarded the correct approach to be the same under both. In the first instance decision in Stanhope [1993] BCC 603 at 605G His Honour Judge Weeks QC quoted Lord Denning MR in Gurtner v Circuit [1968] 1 All ER 328 at 331-332, [1968] 2 QB 587 at 595, who said that the rule should be given a wide interpretation. Although the Court of Appeal allowed the appeal from his decision (on a substantive point of law), the Court of Appeal did not disagree with his view about the interpretation of the joinder rule and upheld his decision to order joinder of the third party. As Tuckey LJ said in Blenheim at 574G, the provisions of what are now CPR 19.2(2) "are drawn in wide general terms to ensure that parties whose rights may be affected by a particular decision have a right to be heard."
- The present proceedings were commenced to determine whether or not Pablo Star should be restored to the register of companies. That was the matter in issue (scil. "in dispute") in the proceedings. The Welsh Ministers wish to be joined in order to argue that the Restoration Order and the Variation Order should not have been made and should be revoked. Accordingly, Registrar Barber was correct to treat the application of the Welsh Ministers as capable of falling within CPR 19.2(2)(a).
- I do not consider, however, that the second condition of CPR 19.2(2)(a), namely that it is desirable to add the Welsh Ministers, is satisfied.
- As to CPR 19.2(2)(b), I consider that the application of the Welsh Ministers is capable of falling within that provision, since the issue of the validity of the assignment, which they wish to challenge in connection with claims for copyright infringement against them, is connected to the making and revocation of the Restoration Order and the Variation Order.
- I do not consider, however, that the second condition in CPR 19.2(2)(b) is satisfied, namely that it is desirable to add the Welsh Ministers to resolve the issues of the validity of the assignment and the making and revocation of the Restoration Order and the Variation Order.
- At the outset of considering the issue of the "desirability" of joining the Welsh Ministers, I should refer to Mr Price's submission that joinder should not be permitted because the only procedural route to achieve the revocation or setting aside of the Restoration Order and the Variation Order would be by way of appeal or starting a completely fresh set of proceedings. I do not accept that the latter would be necessary or appropriate. Further, it is not necessary on this joinder application to decide whether or not the correct procedure would be to appeal rather than revocation being dealt with by a registrar since the Welsh Ministers, if joined, could in any event in principle appeal out of time with permission.
- Judge Behrens identified two grounds on which Registrar Barber had justified the joinder of the Welsh Ministers: (1) the court will be assisted by the Welsh Ministers as to whether the court may have been seriously misled in granting the Restoration Order and in making the Variation Order; and (2) the Welsh Ministers are directly affected by the Restoration Order. Judge Behrens considered that neither of those grounds justify the joinder of the Welsh Ministers.
- It is convenient to address at this point the second of those grounds. I agree with Judge Behrens that the Welsh Ministers are not directly affected by the Restoration Order in a way that would justify their joinder.
- In considering whether or not it is desirable to add a new party pursuant to CPR 19.2(2) two lodestars are the policy objective of enabling parties to be heard if their rights may be affected by a decision in the case and the Overriding Objective in CPR Part 1. There are important practical considerations for strictly limiting the circumstances in which third parties are joined to applications to restore a company to the register, and they apply equally to applications to set aside an order for restoration. There may be many third parties who perceive that their interests may be indirectly affected by restoration and who may wish to advance all manner of reasons for seeking to prevent or reverse an order for restoration rather than wait to face and, where appropriate, resist actions of the company against them or others which the company perceives to be in its best interests. That is particularly true, in a case like the present, when it is sought to restore a company to the register of companies in order to resurrect an asset in the form of a cause of action against third parties.
- In such a case, it is well established that the court will not allow the intervention in proceedings for restoration by a third party who merely wishes to argue that the proceedings which the revived company proposes to bring against the third party have no prospect of success: Stanhope [1994] BCC 84 at 90D.
- By contrast, the court will allow intervention by a third party whose interests will be directly affected by the restoration and who would otherwise have no opportunity to be heard on the issue of whether, in the light of that direct effect, restoration is just: Blenheim at 574B.
- I agree with Judge Behrens that the Welsh Ministers do not fall within that category of third party. On the assumption that Pablo Star owned the copyright in the Photograph before it was dissolved and was entitled to sue for any infringement of that copyright, third-party infringers, such as the Welsh Ministers are alleged to be, are in no worse position after restoration than before. The fact that the Restoration Order retrospectively validated the assignment to Media (under CA 2006 s. 1032) does not affect this analysis. It merely had the consequence that, instead of being exposed to proceedings by Pablo Star, the Welsh Ministers might (always subject to the reservation to Pablo of its rights in the assignment) be exposed to proceedings by Media. It did not bring into existence a new asset or a new liability but merely changed the identity of the person who could enforce the copyright.
- The contrast with a case where a third party is directly affected is clear. Re Servers of the Blind League [1960] 1 WLR 564, Stanhope and Blenheim are all good examples.
- Servers of the Blind League was a decision of Pennycuick J, which was approved by the Court of Appeal in Stanhope. In that case a charitable company had gone into voluntary liquidation. After dissolution of the company a woman died who bequeathed to the company a quarter of her residuary estate. The effect of the company having ceased to exist was that the gift lapsed and accrued to the other residuary beneficiaries. The liquidator applied for an order declaring the dissolution void in order retrospectively to validate the legacy. Pennycuick J refused the order on the ground (stated at 565) that the order would "dispossess other persons who obtained a vested interest in the asset under a title not derived from the company".
- In Stanhope the Court of Appeal held that the first instance judge had been entitled to join two successive assignees of a lease to resist an application by the landlord to restore the original tenant to the register of companies. The landlord wished to restore the company because the lease had ultimately been assigned to a tenant which had been wound up and the landlord wished to recover all or part of the rent arrears by taking advantage of a statutory right of indemnity that the original tenant had against the assignee from that tenant. The assignees wished to be joined in order to argue that the restoration should not be permitted since it would bring into existence a different asset of the company and a different liability of the original tenant than had existed at the time of the original tenant's dissolution: at the time of that dissolution, the landlord had merely a right to prove as a contingent creditor since the ultimate assignee was then still trading and the amount of the contingent proof would have been very small and calculated on the basis of the difference in the value of the landlord's reversion with and without the covenant of the ultimate assignee tenant, but if the original tenant was restored at a time when the ultimate assignee had itself been struck off owing rent arrears, the proof of the landlord would be for the much larger crystallised debt equal to the rent arrears. The Court of Appeal did not agree with the first instance judge that the restoration of the original tenant in those circumstances was outside the scope and intent of section 651 of the Companies Act 1985 to declare a dissolution void (and allowed the appeal for that reason) but it held that the point was sufficiently arguable to justify the joinder of the assignees by the first instance judge.
- In Blenheim the directors of a company, who claimed that the company was a sub-tenant of premises, applied for restoration of the company to the register. At the time when the company was dissolved the landlords had served notices on the Treasury Solicitor (on the basis that any sub-tenancies had vested in the Crown as bona vacantia) determining the sub-tenancies. The landlords applied to be joined to argue that the company should not be restored because their notices would or might be retrospectively invalidated. The Court of Appeal allowed the appeal from the decision of the judge dismissing the landlords' application. The majority, Aldous and Tuckey LJJ, considered that the rights of the landlords would be directly affected by restoration and indeed that was conceded by the directors. Tuckey LJ said (at 575A):
"[The court] could I think quite properly only allow intervention in cases where the order for restoration itself would or might directly affect the rights of the intervener. This is such a case. In most cases restoration does not affect rights or obligations. For example a debtor whose creditor is struck off is not directly affected by any decision to restore since the debt exists both before and after restoration. All that changes is the identity of the creditor."
- The contrast with the present case is clear. So far as concerns the interests of the Welsh Ministers, restoration of Pablo Star to the register of companies did not create a new asset of the company which had not previously existed nor did it create a new or substantively different liability of the Welsh Ministers which had not existed immediately prior to Pablo Star's dissolution. On the assumption that the copyright in the Photograph was owned by Pablo Star immediately prior to dissolution, the liability of the Welsh Minsters for its infringement existed both before dissolution and after restoration, irrespective of whether it is Pablo Star or Media which can now enforce that liability and irrespective of whether or not the precise amount of that liability is now greater than it was prior to dissolution because of continued acts of infringement in the meantime.
- Regent Leisuretime Ltd v NatWest Finance Ltd [2003] EWCA Civ 391, [2003] BCC 587 is an example of a successful application by a third party to be joined in restoration proceedings for the purpose of varying the restoration order which had previously been made. The Court of Appeal held that a bank which was sued by a company that had been restored to the register had been rightly joined to the restoration proceedings in order to argue that the restoration order should be varied by deleting a direction that, in the case of any claim of the company which was not statute-barred on the date of dissolution, no period of limitation should run between that date and the date of the restoration order. That too was a case where the third party was directly affected by the restoration order in respect of a claim by the company based on a cause of action which had accrued prior to the date of dissolution.
- I turn, then, to the second ground identified by Judge Behrens as having been relied upon by Registrar Barber for joinder of the Welsh Ministers and with which he disagreed, namely that the court will be assisted by the Welsh Ministers as to whether the court may have been seriously misled in granting the Restoration Order and in making the Variation Order.
- Judge Behrens rejected that as (in his words) "a proper basis for joinder" for two reasons. First, he said it could give rise to a multitude of claims from anyone with a grudge against or who might want to complain about the company. Secondly, he said that Parliament has entrusted the policing of restoration applications to the Registrar of Companies, and so it is for the Registrar, and no one else, to raise with the court issues of breach of an undertaking or misleading witness statements.
- Mr Christopher Buckley, counsel for the Registrar of Companies on this appeal, made both written and oral submissions that the Judge was wrong to express the view that it is for the Registrar alone to raise such issues with the court. I agree.
- No statutory provision has been identified to support the Judge's proposition. Part 35 of CA 2006 sets out the functions of the Registrar of Companies. Other than the requirement to keep the register of companies, no role in respect of restoration applications, including their policing, is assigned by that Part to the Registrar. Part 31 of CA 2006 addresses dissolution and restoration of a company to the register. It does not confer any role on the Registrar in respect of applications to the court under section 1029 for restoration, other than administrative roles such as the requirement under section 1031(3) to publish notice of the restoration.
- As a matter of practice the Registrar of Companies is always made a respondent to restoration applications: see Practice Note (Companies Court: Claims for an Order Restoring the Name of a Company to the Register) [2012] BCC 880. The Registrar assists the court as to whether all relevant papers have been served and the requirements of CA 2006 s. 1029 are satisfied. The Registrar will suggest to potential applicants for restoration suitable undertakings to be given to the court. The Registrar is assisted by an administrative team. In the vast majority of cases, applications for restoration are dealt with by the court on the papers.
- Once jurisdiction for an order for restoration is established, the Registrar does not under current practice go on to consider, let alone address the court on, the issue of the suitability of restoration in any particular case. Nor does the Registrar monitor compliance with undertakings or refer any breach of undertakings to the court. Mr Buckley has emphasised that the Registrar does not have the in-house legal and other expertise and resources to investigate and, if appropriate, to pursue complaints such as those in the present case.
- The Registrar of Companies, therefore, while adopting a neutral position as to the outcome of this appeal, would in principle be in favour, in an appropriate case, of joinder to enable a third party to bring before the court a complaint that the court was misled when making the restoration order or that there has been a breach of undertakings given to the court when the order was made.
- I consider that the court does have power under CPR 19.2(2) to join a third party to restoration proceedings for such a purpose in an appropriate case.
- I do not consider, however, that this is an appropriate case. As I have said earlier, the jurisdiction to add third parties to company restoration proceedings is capable of providing an opportunity for all manner of opportunistic applications by persons who consider that they would be or might be adversely affected if the company was restored, including third parties against whom the company would have a cause of action. Such applications are capable of giving rise to huge costs, delay and the considerable deployment of court and judicial resources. The present application by the Welsh Ministers is a good example since the evidence discloses that very considerable sums have been deployed in pursuing the application before three different levels of the judiciary.
- Close consideration of the complaints about Mr Price's conduct shows that the Welsh Ministers, if joined, would not have any real prospect of succeeding in persuading the court that the Restoration Order or the Variation Order should be set aside. As Lord Brandon said in Livesey v Jenkins [1985] AC 424 at 445G-446:
"It is not every failure of frank and full disclosure which would justify a court in setting aside an order of the kind concerned in this appeal. On the contrary, it will only be in cases when the absence of full and frank disclosure has led to the court making, either in contested proceedings or by consent, an order which is substantially different from the order which it would have made if such disclosure had taken place that a case for setting aside can possibly be made good. Parties who apply to set aside orders on the ground of failure to disclose some relatively minor matter or matters, the disclosure of which would not have made any substantial difference to the order which the court would have made or approved, are likely to find their applications being summarily dismissed, with costs against them, or, if they are legally aided, against the legal aid fund."
- That was a case concerning non-disclosure by a husband in concluding an agreement leading to a consent order for financial provision and property adjustment in divorce proceedings. I see no reason for any different approach in applications to revoke or set aside an order restoring a company to the register.
- The fact that the assignment was not disclosed by Mr Price's evidence in support of the application for the Restoration Order is not a significant omission. It reserved to Pablo Star the right to sue New Directions, VisitWales.com and Ms Galbraith. Those were the three entities which Pablo Star was entitled to sue for breach of copyright in compliance with Mr Price's undertakings in the Restoration Order. The fact that the assignment transferred to Media the right to sue other entities could not possibly have been a material reason for refusing to restore Pablo Star to the register. If it had been disclosed, there is no reason to think that the Registrar of Companies would have opposed, or that the court would have refused to make, the Restoration Order. It follows that the failure to disclose that the Restoration Order would retrospectively validate the assignment is also not a significant omission; and, if it had been disclosed, it is inconceivable that the Registrar of Companies would have opposed, or the court would have refused to make, the Restoration Order.
- The Welsh Ministers rely on various alleged breaches of the undertakings by Mr Price in the Restoration Order but it is elementary that the usual sanction for a breach of undertakings by an individual is an application for a penalty such as a fine or imprisonment for contempt. No authority or principle has been cited to us to suggest that the sanction for breach of an undertaking in an order restoring a company to the register could be a revocation of the Restoration Order itself. I certainly see no prospect of revocation in the present case, which is far from an extreme case of serious and egregious misconduct, concerns a company which had no outstanding creditors at the date of restoration, where the company has, since restoration, successfully obtained final judgments against New Directions and Ms Galbraith for damages for infringement of copyright, and where past breaches of undertakings were referred to the court by Mr Price himself and effectively sanctioned in the Variation Order.
- It is conceivable that in an extreme case the court's sanction for breach of undertakings given on the restoration of a company to the register might be to dissolve the company. Indeed, the Restoration Order and the Variation Order reserve to the Registrar of Companies the right to do so for breach of one (and only one) of the undertakings, namely an undertaking by Mr Price to serve a witness statement on the Registrar of Companies every six months setting out what steps have been taken to progress the actions. As I have said, the present case is far from an extreme case of misconduct; and even if the Welsh Ministers were joined to the proceedings I see no more prospect of the court striking Pablo Star off the register than of revoking the Restoration Order. In any event, dissolution would not retrospectively invalidate the assignment. Accordingly, complaint about breaches of undertakings by Mr Price does not assist the Welsh Ministers in their objective of precluding Pablo Star and Media from commencing proceedings against the Welsh Ministers for breach of copyright in the Photograph.
- The Welsh Ministers complain about misrepresentations by Mr Price when, in July 2014, he threatened proceedings against VisitWales.com if they did not pay a substantial settlement sum to Media, asserting that the copyright in the Photograph was owned by Media. They criticise his conduct in supplying them, at their request, with a copy of the assignment but which was redacted so as to hide the reservation to Pablo Star of the right to sue VisitWales.com. On the face of it, that conduct of Mr Price is open to serious criticism; and it is to be noted that, despite extensive evidence and submissions by Mr Price, he has provided no explanation for that conduct. That conduct, however, has nothing to do with whether or not the application for the Restoration Order was flawed in some material way or the Restoration Order should be revoked.
- If, for those reasons, the Welsh Ministers have no real prospect of persuading the court that the Restoration Order should be revoked, it is difficult to see what advantage could possibly be gained by the Welsh Ministers if the Variation Order alone was revoked. In any event, I cannot see that the non-disclosure and misrepresentations relied upon by the Welsh Ministers in relation to the Variation Order could arguably satisfy the court that the Variation Order should be revoked. The Variation Order was made on the basis of the evidence of Mr Price that he and Pablo Star had acted beyond the scope of the Restoration Order and in breach of his undertakings. I do not consider the fact that he did not disclose that the assignment had been made before the Restoration Order and that he might have given the impression that it was made subsequently carries any significant weight. There is simply no reason to believe that that the Variation Order would not have been made if he had made it clear that the assignment had been made before and was validated by the Variation Order. Nor can I see that it would have made the slightest difference if Mr Price had made clear on the application for the Variation Order that, save for the limited circumstances specified in the addendum to the assignment, it was Media, and not Pablo Star, which had the right to sue for past infringements of the copyright in the Photograph. Even after the addendum was made, Pablo Star still had the right to sue VisitWales.com in the US and Canada.
- Again, so far as concerns alleged breaches of undertakings in the Variation Order, the usual sanction would not be revocation of the Restoration Order or of the Variation Order but proceedings for contempt. I certainly see no greater prospect of revocation of the Variation Order or of Pablo Star being struck off for breaches of the undertakings in the Variation Order than in the case of the Restoration Order for breaches of the undertakings in that order.
- Registrar Barber did not carry out any such analysis of the prospects of the Welsh Ministers, if joined, persuading the court to revoke the Restoration Order or the Variation Order. Mr Price has, however, consistently maintained that they would have no reasonable prospect of success and that Registrar Barber failed to give adequate weight to that fact. He so maintained in his witness statement of 9 May 2016 prepared for the hearing before Judge Behrens (paras. 16, 19 and 31) and in his supplementary skeleton argument dated 4 September 2017 for the appeal before us (paras. 4, 5 and 25). The point is not distinctly raised in Mr Price's respondent's notice on the appeal to us but he is not a lawyer and has acted for himself throughout. I consider that it has been sufficiently flagged up by him in the successive appeals from Registrar Barber. Mr Michel Todd QC, for the Welsh Ministers, had adequate opportunity during the day long hearing before us to address the questions from the Bench on the substantive merits of the complaints of the Welsh Ministers about the conduct of Mr Price and Pablo Star.
- For those reasons, even though I do not agree fully with the reasons of Judge Behrens for allowing Mr Price's appeal from Registrar Barber, I would dismiss the appeal on the grounds that it is not desirable for the Welsh Ministers to be joined for the purposes of CPR 19.2(2).
- It is not necessary in the circumstances to address Mr Price's cross-appeal in his respondent's notice that the joinder application of the Welsh Ministers should also be dismissed on the grounds of delay. For completeness, however, I would not have dismissed the appeal on that ground. I can see no error of principle by either Registrar Barber or Judge Behrens in deciding that the delay by the Welsh Ministers was not fatal to the application for joinder.
- It is also not necessary to address the submission advanced in Mr Price's supplementary skeleton argument, but not his respondent's notice or his oral submissions, that it would be contrary to EU law to revoke or set aside the Restoration Order.
- Finally, I would emphasise that nothing in this judgment should detract from the importance of full and frank disclosure to the court of all material facts on applications for restoration of a company to the register and any subsequent variations to the restoration order where, as here, they are effectively ex parte applications in view of the limited involvement of the Registrar of Companies. As I have made clear, in an appropriate case, where it is desirable for the purposes of CPR 19.2(2) and consistent with the Overriding Objective, there is jurisdiction to permit a third party to be joined to bring such matters before the court.
Lord Justice Longmore :
- I agree.
Lord Justice Irwin :
- I also agree.
