Tuesday, 19 March 2024

Practice - Welsh Ministers v Price

Statue of Dylan Thomas in Swansea
Author Ham II  Licence CC BY-SA 4.0 Deed  Source  Wikimedia Commons


































Court of Appeal (Sir Terence Etherton MR, Lords Justices Longmore and Irwin) The Welsh Ministers v Price and another (Rev 1) [[2017] WLR(D) 749, [2018] BCC 93, [2017] EWCA Civ 1768, [2018] 1 All ER (Comm) 1108, [2018] 1 WLR 738, [2018] 2 All ER 860, [2018] 1 BCLC 1, [2018] WLR 738

This is not a recent case but I chose to discuss it because it was referred to by the Court of Appeal in Flitcraft Ltd and others v Price and another [2024] EWCA Civ 136 on 27 Feb 2024 and by Ms Pat Treacy sitting as a deputy judge of the High Court in Wise Payments Ltd v With Wise Ltd and others [2024] EWHC 234 (IPEC) on 9 Feb 2024.  It is about 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.  It also relates to the copyright in a photo of Dylan Thomas and Caitlin Macnamara after their wedding on 11 July 1937 by Vernon Watkins ("Mr Watkins") and an action for infringement of copyright in that photo by Pablo Star Media Ltd which I discussed in n Copyright in Photographs - Pablo Star Media Ltd v Bowen on 15 Oct 2017 in NIPC Law.

The Copyright

A copy of the photo appears between paras [2] and [3] of His Honour Judge Hacon's judgment in Pablo Star Media Ltd v Bowen [2017] EWHC 2541 (IPEC) (13 Oct 2017). Mr Watkins died in 1967 and his copyrights in that and another photo of Dylan Thomas and his bride passed to Mr Watkins's widow Gwendolyn.  Mrs Walkins sold her copyrights in those photos to Pablo Star Ltd. for £350.  On 21 May 2014 Pablo Star Lrd. purported to assign the copyrights to Pablo Star Media Ltd.

The Company

Pablo Star Ltd was incorporated on 13 Aug 2003 with objects that included "intellectual property consultancy".  Hadyn Price ("Mr Price") was its only shareholder and director.  On 4 Feb 2013, Mr Price applied for the company to be struck off the register.  His application was granted on 18 Feb 2014.  On 14 April 2024, he applied for the company to be restored so that it could sue New Directions Publishing Inc. the Welsh Ministers and Nancy Galbraith for infringing copyright in the photo.  His application was granted by Registrar Derrett on 13 June 2014 subject to certain undertakings. Registrar Derrett varied his order to enable the company to sue more defendants on 18 June 2015. Mr Price undertook to transfer all his copyrights and trade marks to Pablo Star Media Ltd which he had incorporated on 14 May 2014.

The Application

As they were about to be sued, the Welsh Ministers applied to be joined to the proceedings to restore Pablo Star Ltd to the register.  They did so in order to argue that Registrar Derrett's orders of 13 June 2014 and 18 June 2015 should be declared invalid.  Registrar Barber granted their application on 2 March 2016.   

Judge Behrens

Mr Price appealed to the judge in chambers, His appeal was heard by His Honour Judge Behrens QC sitting as a judge of the High Court on 14 Oct 2016.   In Price v The Registrar of Companies and another  [2017] WLR 299, [2016] WLR(D) 563, [2016] EWHC 2640 (Ch), [2017] 1 WLR 299 Judge Behrens allowed the appeal and set aside the registrar's order.  He was referred to the judgments of the Court of Appeal in Stanhope Pension Trust v Registrar of Companies [1994] BCC 84 and Re Blenheim Leisure (Restaurants) Ltd [2000] BCC 554 and the of Lord Glennie in Spring Salmon & Seafood Ltd v A-G of Scotland [2010] CSOH 82

Judge Behrens noted at para [33] of his judgment that in Stanhope Lord Justice Hoffmann (as he then was) had distinguished between a case where a third party had rights that were directly affected by an order to restore a company to the register and a case where the third party merely wanted to say that the proposed proceedings by the revived Company have no prospects of success.  He concluded that the court should allow joinder in the first case but not in the second.  In Re Blenheim, landlords who had re-entered premises that had been let to a company which had been struck off the register were entitled to join the proceedings to restore the company because they had an interest that was threatened by the company's restoration. In Spring Salmon & Seafood, Lord Glennie refused to allow officers of a company that HMRC wished to restore to the register to investigate its tax affairs to join the proceedings because the restoration would only have placed the officers in the position they would have been had the company not been struck off in the first place.

His Honour accepted that an appeal court should not normally interfere with a case management decision of the court below but he believed that the registrar had erred in principle,  He said at para [49]:
"I accept that joinder of [the Welsh Nibisters] may assist the court in determining whether the court was misled. I do not, however accept that a desire by a third party to assist the court in this way is a proper basis for joinder. 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 LJ and Tucker LJ to which I have referred it is a limited exception which will not result in large numbers of proceedings being turned into major litigation."

He continued in the next paragraph that the Registrar of Companies and not concerned third parties was responsible for ensuring compliance with the restoration proceedings of the Companies Act 2006 and not third parties:

"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 Court of Appeal

The Welsh Ministers appealed to the Court of Appeal. Their appeal was heard by Sir Terence Ethertoon, Master of the Rolls and Lords Justice Longmore and Irving on 17 Oct 2017. Their lordships handed down judgment on 16 Nov 2017 in The Welsh Ministers v Price and another [2017] WLR(D) 749, [2018] BCC 93, [2017] EWCA Civ 1768, [2018] 1 All ER (Comm) 1108, [2018] 1 WLR 738, [2018] 2 All ER 860, [2018] 1 BCLC 1, [2018] WLR 738). They dismissed the appeal and upheld the decision of Judge Behrens.

Their lordships' starting point was CPR 19.2 (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."

Their lordships reasoned that 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. Those conditions 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.
They considered that CPR 19.2 (2) ought to be given a wide interpretation.  The words "in dispute" should be read as "in issue".  Referring to Dunwoody Sports Marketing v Prescott [2007] EWCA Civ 461 the Court opined that it can add a party even after judgment.

As the issue was whether Pablo Star should be restored to the register, the Court of Appeal thought that  Registrar Barber had been right to consider the application of the Welsh Ministers was capable of falling within CPR 19.2 (2) (a).   Their lordships did not, however, consider it desirable for the Welsh Ministers to be party to the proceedings.  The reason why the Welsh Ministers' application was capable of falling within CPR 19,2 (2) (b) was that the issue of the validity of the assignment, which they wished to challenge in connection with claims for copyright infringement against them, was connected to the making and revocation of Registrar Derrett's orders. In considering whether or not it would be desirable to add a new party pursuant to CPR 19.2 (2) the two lodestars were the policy objective of enabling parties to be heard if their rights might be affected by a decision in the case and the overriding objective in CPR Part 1.

Sir Terence Etherton, who delivered the lead judgment, said between paras [60] and [62]:

[60] ....... 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.
[61] 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.
[62] 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."

The Court of Appeal agreed with Judge Behrens that the Welsh Ministers' rights were not affected by the copyright assignment in the photo of Dylan Thomas and his bride to Pablo Star Media Ltd. If they had infringed that copyright the only difference was that they would be liable to a different claimant.   They contrasted the position of the Welsh Ministers to that of the landlord in Blenheim.

Their lordships disagreed with Judge Behrens that Parliament had entrusted the policing of restoration applications to the Registrar of Companies and that it was for the Registrar alone to raise breaches of undertakings or misleading witness statements. No statutory authority had been offered to support that proposition.  The Registrar's functions are largely administrative and he or she lacks the resources to police compliance with the Companies Act 2006.  

In an appropriate case, the Registrar would favour the joinder of a third party to bring before the court a complaint that it had been misled or an undertaking had been broken and the court had power under CPR 19.2 (2) to allow such joinder in an appropriate case.   This was not an appropriate case.  In their lordships' view, this was not an appropriate case. The Welsh Ministers would have no real prospect of persuading the court that the order to restore Pabli Star Ltd. should be revoked.

The Claim against Mr Bowen

I have already referred to Pablo Star Media's action against Richard Bowen who had cropped the image of Dylan Thomas's face from Mr Watkins's photograph which had been reproduced on the Visit Wales website and inserted it onto a website to advertise holiday lets in Wales,  The Visit Wales website was operated by a department of the Welsh government for which the Ministers were responsible.  It was that website which had featured in the appeals to Judge Behrens and the Court of Appeal.  Mr Bowen admitted infringement and at a damages only hearing on the IPEC small claims track District Judge Cary awarded Panlo Star Media £250 plus £3 interest.  However, the district judge also ordered the claimant to pay Mr Bowen's travelling expenses of £164.10 leaving a balance of £88,90 to the company,  The company appealed to the Enterprise Judge but Judge Hacon declined to interfere with the district judge's order.

Comment

Although the appeal focused on the joinder of parties to proceedings to restore a company to the register it does have some lessons which is why the Court of Appeal and Ms Treacy referred to it.  First, CPR 19.2 is to be given a wide interpretation.  The court has the power to join a party to proceedings even after it has given judgment,  Two conditions have to be satisfied.  The first is that the new party can assist the court to resolve all the matters in dispute in the proceedings.  The second is that it should be desirable to add the new party to achieve that end.  In Wise Payments Ms Treacy equated that analysis as follows in para [37] of her judgment:
"(i) does the case against the party to be joined have a real, as opposed to fanciful, prospect of success. This is to be assessed by testing: (i) whether the pleaded case carries a degree of conviction; (ii) whether it is coherent and properly particularised; and (iii) whether there is evidential material which establishes a sufficiently arguable case against the party in question; and
(ii) does the likely benefit of granting the application to join another party and the inevitable related application to permit consequential amendments satisfy the IPEC costs benefit test as well as the requirements of the relevant parts of the CPR."
Anyone wishing to discuss this point further may call me on 020 7404 5252 during office hours or send me a message through my contact page,

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