The claimant company and the defendant entered into an agreement for the sale and purchase of properties. The claimant’s name was later struck off the register of companies. On the basis that that was an event of default under the agreement, the defendant served a notice terminating the agreement. The claimant subsequently applied for administrative restoration to the register pursuant to section 1024 of the Companies Act 2006, which application was granted. The claimant then commenced arbitration proceedings challenging the validity of the defendant’s termination of the agreement. By a partial award, the arbitrator determined that the agreement had been validly terminated and that the termination was not affected by the claimant’s subsequent restoration to the register. The claimant brought a claim under section 69 of the Arbitration Act 1996, appealing the award on a question of law. The principal question was whether section 1028(1) of the 2006 Act, which provided that the effect of administrative restoration was that the company was “deemed to have continued in existence as if it had not been dissolved or struck off the register”, meant that the defendant’s termination had to be re-assessed retrospectively as a result of the claimant’s restoration to the register such that the termination notice was to be regarded as ineffective.
On the claim—
Held, claim dismissed. Although the deeming provision in section 1028(1) of the Companies Act 2006 was of very wide effect, it was not mandatory and of universal application. It did not mean that everything that had in fact happened at a time when the company was removed from the register or dissolved prior to restoration, including acts by third parties in reliance on their knowledge of the then status quo, was deemed not to have happened and had to be unpicked. The deeming provision was directed towards the direct or automatic effects of the removal from the register or dissolution prior to restoration. Where a contractual party had a choice as to whether to terminate a contract upon a company’s removal from the register or dissolution, the termination of the contract did not flow from, and was not automatically a consequence of, dissolution, but rather flowed from the decision of the party to terminate, and as such the deeming provision in section 1028(1) of the 2006 Act was not engaged in such circumstances. The arbitrator had therefore been correct to conclude that the defendant’s termination did not fall to be re-assessed retrospectively (paras 107–109, 114, 115–116, 127–128, 129, 160).
David Lord QC and Sebastian Kokelaar (instructed by Richard Slade & Co plc) for the claimant.
Fiona Parkin QC and Patrick Harty (instructed by Ashurst llp) for the defendant.