Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2010] CSOH 20
	OPINION OF LORD GLENNIE in the Petition of CITY OF EDINBURGH COUNCIL Petitioners; for an order in terms of Section 653 of the Companies Act 1985 for the name of Scottish Council for Research in Education to be restored to the Register of Companies : ­­­­­­­­­­­­­­­­­________________

Petitioners: Sellar, Q.C.; Council Solicitor, City Chambers, High Street, Edinburgh

Respondents: S. Smith; Dundas & Wilson C.S. LLP

2 March 2010

[1] On 18 February 2010 I granted the motion by the petitioners for the restoration of the name of Scottish Council for Research in Education ("the Company") to be restored to the Register of Companies. I also made a direction that, in respect of any claims by the petitioners against the Company, the period between a certain date (being about one month after the date of its dissolution) and the date of the restoration of the Company's name to the Register should not be reckoned as part of any prescriptive period in terms of the Prescription and Limitation (Scotland) Act 1973.

[2] I was asked by counsel for the petitioners to write a Note about a procedural aspect of my decision.

[3] Answers to the petition were lodged by the University Court of the University of Glasgow ("the respondents"). They explained that in terms of Clause 2.7 of a Transfer and Management Agreement between the Company and themselves made in July 2002, they assumed the debts, obligations and liabilities of the Company as at that time or thereafter arising (the "Transferred Liabilities") and further agreed to free and relieve and to indemnify the Company from and against all such Transferred Liabilities. The restoration of the Company to the Register was designed to enable the petitioners to present claims against the Company and, in the name of the Company, to enforce the indemnity given by the respondents. The respondents opposed both the restoration of the Company's name to the Register and the making of a direction disapplying for a certain period the Prescription and Limitation (Scotland) Act 1973.

[4] Mr Sellar, Q.C., for the petitioners, argued that the respondents had no right to be heard in opposition to the petition. Under reference to re Forte's (Manufacturing) Limited, Stanhope Pension Trust Limited & Anor v Registrar of Companies [1994] BCC 84 and re Blenheim Leisure (Restaurant) Limited (No.1) [2000] BCC 554, he argued that a third party was not entitled to intervene on an application to restore a company to the Register unless the order sought would directly affect his rights. He argued that the respondents' rights were not directly affected. It was not the Company's claim against them which was revived by the prescription order. It was the petitioners' claims against the Company. The respondents were only affected indirectly as a result of a liability which might be established of the Company to the petitioners.

[5] Had the only order sought in the petition been an order for the restoration of the Company's name to the Register, there might have been some force in that argument. I do not need to decide that. However, the respondents' particular interest in this case is that they would be prejudiced by the prescription direction sought by the petitioners. The prescription direction is sought on the hypothesis that certain claims which the petitioners wish to make against the Company may have prescribed; but they will not have prescribed if the Court orders that some part of the period when the Company was struck off the Register should not be counted for prescription purposes. On this hypothesis, the making of such an order would allow the petitioners to make claims against the Company which they might not otherwise be entitled to make; and, by the same token, since the respondents accept that they are obliged to indemnify the Company, will render the respondents liable for such claims. In those circumstances the respondents have an interest which they are entitled to seek to protect by opposing the making of that order. The situation seems to me to be covered by the case of Regent Leisure Time Limited v Nat West Finance Limited [2003] BCC 587. It is sufficient to quote from paragraph 1 of the headnote: "Third parties who would be prejudiced by a limitation direction sought by the company must be entitled to be heard in opposition to it." That, so it seems to me, is an application of the "directly affected" test referred to in the cases to which I have referred earlier, and is not a contradiction of it. The respondents are as directly prejudiced by a prescription direction reviving the petitioners' otherwise prescribed claims against the Company as is any other third party who risks being faced with otherwise prescribed claims by a struck-off Company in whose favour a prescription direction is made.

[6] For those reasons I rejected Mr Sellar's argument that the respondents should not be heard. In the event, however, as I have indicated, I granted the order substantially in the terms sought.