Landlord granting lease to tenant – Tenant assigning lease to company – Company dissolved – Landlord serving rent review notice on company – Landlord applying for company to be restored to register in order to validate service of rent review notice – Whether company should be restored – Application allowed.
The applicant leased a property to J Sainsbury plc ("Sainsbury"), the third respondent, for 42 years commencing in 1963. In 1983 a license was granted to Sainsbury who assigned the lease to a company, Priceland Ltd. On the dissolution of Priceland the lease was vested in the Crown as bona vacantia. In purported compliance with the lease the applicant sent a rent review notice in June 1991 to Priceland, one of its directors and Sainsbury. A notification of increased rent was subsequently served. In 1994 the Crown disclaimed the lease.
The applicant applied for Priceland to be restored. It was common ground that if Priceland was re-registered Sainsbury would be liable under the lease for the reviewed rent because, by virtue of section 563(3) of the Companies Act 1985, on restoration Priceland would be treated as if it had not been struck off and therefore the notice would have been validly served. The applicant contended that section 653(2) of the Act applied because Priceland had been "carrying on business or in operation or otherwise that it was just that the company be restored" and therefore it should be re-registered. Sainsbury contended that Priceland had not been carrying on business or in operation at the time of striking off and that it was not just that it be restored and therefore section 653(2) did not apply. Sainsbury further contended in any event the court’s discretion should be exercised against restoration.
Held The application was allowed.
1. A company was "carrying business or in operation" unless it was completely dormant at the time of dissolution. Although an attempt to assign the lease by Priceland would have amounted to sufficient activity for the court to order restoration under section 653(2) the applicant had not shown that any such attempt was being carried out at time of the dissolution.
2. The applicant could rely on its desire to improve its position in respect of Sainsbury and the rent review as a matter which made it just for there to be restoration; see City of Westminster Assurance Co v Registrar of Companies unreported 28 June 1996.
3. The court could only exercise its discretion once it had decided whether there was jurisdiction to restore under section 653. Although Sainsbury would be financially liable if there was a restoration, that would not be attributable to the restoration, but to the terms of the lease and Sainsbury would have been liable if the company had not been struck off. Accordingly it was just to restore and it was not appropriate for the court to exercise its discretion against such restoration.
Paul Morgan QC and Catherine Taskis (instructed by the solicitor for the Waltham Forest London Borough Council) appeared for the applicant; Nigel Davis (instructed by Denton Hall) appeared for third respondent; J Sainsbury plc.
