Held, dismissing the appeal and the cross-appeal. The cross-appeal related to the class of persons liable where the business of a company in liquidation had been carried on for fraudulent purposes. The issue was the scope of the words in section 213(2) of the Insolvency Act 2006 “any persons who were knowingly parties to the carrying on of the business in the manner above-mentioned”. It was more consonant with the purpose of section 213 to interpret the phrase “parties to” in the wider rather than the narrower sense. It was also more consistent with authority. However, nothing the court said had to be taken as setting the outer limits of the scope of section 213. All that the court was asked to decide was whether a person could not fall within the scope of section 213 unless he had a controlling or managerial function within the company. Whether an “outsider” could be said to be party to the carrying on by a company of a fraudulent business might well be a question of fact and degree which required careful analysis. That question did not arise in the present case, because of the settlement agreement ( paras 106, 108, 114, 118, 119–120, 179, 180, 181).

The appeal raised the scope of the deeming provisions that applied when, as in the case of the third and fifth company, a dissolved company was restored to the register. Section 1032 of the Companies Act 2006 provided: “(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.” Consistent with the authorities, section 1032 (1) did not require the assumption that the directors in office at the date of dissolution remained in office throughout the period of enforced non-existence. Nor did section 1032 (1) require the judge to assume that there was in place “the minimum number of ordinarily competent directors”. Any potential injustice in that conclusion was readily capable of being prevented by an application for a direction under section 1032 (3). That was clear from the purpose identified in section 1032 (3); namely “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”. It was through the application of section 1032 (3) that questions of limitation were usually addressed. It was in that way that the court could balance the prejudice to the company in not having been able to begin proceedings and the prejudice to third parties who might be deprived of what would otherwise be a limitation defence. The approach of the court in relation to the making of a direction under section 1032(3) should also inform the approach to the interpretation and consequences of section 1032(1). The three particular points were: first the company’s dissolution had to have been the real cause of the company being unable to pursue its claim; second, the company should not be in a better position under section 1032 than it would have been if it had not been dissolved; and third what would have happened if the company had remained in existence was a question of fact. Those were all questions to be decided on the evidence, and not on legal assumptions (paras 126, 131–132, 142–143, 151,153, 179,180, 181).

As to whether the judge was entitled to make the costs order that he did, the judge’s decision on pre-settlement costs did not fall outside the generous ambit of his discretion and the cost appeal would be dismissed ( para 178).