Companies House Hit For Costs

Companies House Hit For Costs is a case, where the Registrar of Companies was held wrong to require a Court Order and failed to remove documents whilst on notice that they had been misfiled. How did something that might appear to resemble a simple administrative issue cost a government agency a whopping £8,614.90 in costs?

Companies House Hit For Costs flows from the case of Peter Jones (China) Ltd, Re [2021] EWHC 215 (Ch) which had gone into Administration, the Administrators had misfiled a Statement of Affairs and called upon the Registrar of Companies (“Companies House“) to withdraw them.

The Administrators delivered up a Statement of Affairs that contained Schedules which were deemed unnecessary materials.

The Facts About Companies House Hit For Costs

In this case, as I shall explain, such schedules were incorrectly lodged. As requested, the Registrar originally did not register the statement of affairs (and Schedules) but returned them. However, later he did register the statement of affairs in its entirety and containing the Schedules. (As I understand it, he also registered the statement of affairs in a version that did not include the Schedules.) The Administrators asked the Registrar to remove such filing of the complete statement of affairs (including the Schedules) from the register. The Registrar refused to do so without court order.

Companies House Submissions On Costs

(1) The Applicants did not indicate sufficiently clearly the urgency of the matter and that a court application would be made. In my judgment, the Registrar by letters dated 16 October and 28 October made clear that he was not prepared to act and that a court application would be necessary. It is difficult to see how further communications would have persuaded him to take a different stance. The Administrators were clear that they reserved the right to make such application. Criticism is also made that an email of 4 November 2020 did not make clear how urgent the matter was. In my judgment, the urgency was clear from the situation. Further, it is said that little time was allowed between service of the proceedings and the hearing. However, that was a matter that I had dealt with in abridging time. Connected with this point, the TS suggests that the Applicants had used the Registrar’s general enquiries email when they served the court papers and notice of the hearing date rather than the “liquidations” team email. However, I notice all responses exhibited by the Applicants had come from the “enquiries” email, someone with responsibility for that email forwarding the same promptly to be dealt with by the liquidations team. In short, these are not matters which cause me to reduce the costs claimed or which cause me to revisit the order that I made that all the costs should be paid by the Registrar.

(2) Secondly, it is said that the situation was brought about by the applicants’ own error in filing the SOA with the Schedules attached. In my judgment this is not a good point. The Applicants acted quickly on the misfiling and asked for the position to be sorted by not registering the statement of affairs. The Registrar agreed to this course but then registered further copies and refused to remove them from the register. The substantive need for the proceedings was because of the Registrar’s failings. Further, the uncontradicted evidence (as opposed to assertion in correspondence) is that the Applicants did not lodge further copies of the statement of affairs with the Schedules but that the Registrar seems to have taken further copies attached to emails (for identification purposes) asking that the statement of affairs in that form previously lodged not be registered.

How Did Companies House Get It Wrong?

The judge said that Companies House was irrational and its refusal to remove the offending Schedules of unnecessary information was unlawful:

Under s1074 CA 2016, the Non-Compliant SoA was not therefore improperly delivered and the Registrar had a discretion whether to register the statement of affairs in its complete state as delivered or with the unnecessary material removed. It is unclear whether that discretion was exercised at all but, if it was, it was on the face of things exercised wrongly in a public law sense of being exercised irrationally or in a Wednesbury unreasonable sense. If the IR 2016 prohibit delivery of the Schedules to the Registrar it is difficult to see how it could be lawful for him to register them. In those circumstances judicial review would lie. The most appropriate remedy would, in my view, be removal of the Schedules and not (as sought by the Administrators) removal of the entire SoA. No point is taken that judicial review is the necessary procedure and in those circumstances it seemed to me right to order removal of the Schedules only. In essence this is to follow the approach in the Swarbrick case, the main difference being that the requirement that the Schedules not be lodged for registration derives from an express rule in this case rather than (as in Swarbrick) from a court order under what is now r3.34 IR 2016.

However, that is not the only route to the conclusion that I reached and order that I made. In my view, an alternative (and preferable) analysis is that the Registrar, having registered the SOA including the Schedules, had a discretion to remove the Schedules under s1094 CA 2016. He should have done this and his refusal to do so is unlawful and irrational within Wednesbury principles. There may be an issue as to whether he had “power” to register the Schedules. It might be said that he did not have power to do so in the light of what I have said in paragraph 33 above. The counter-argument, which I prefer but on which I did not hear detailed argument, is that the “power” referred to within s1094 CA 2016 is a reference to jurisdiction rather than a reference to whether as a matter of discretion on the facts it could be exercised in a particular manner. The same argument applies as regards the procedure (i.e. an application within the proceedings or judicial review) which I have already addressed

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