Limited Companies

[MS2139]

Good afternoon.
I'm currently in dispute with somebody. Essentially, we asked for some work to be done and it wasn't of the agreed quality. Instead of fixing the problem - they instead chose to abandon the project.
The work has now been concluded and has been signed off.
My question is one regarding who the contract was with. On the quote that I have - it mentions a company name (which existed - it has now been closed by the director/owner) but it is missing the word "limited" and there is no company registration number.
I have been told by a retired solicitor who unfortunately no longer lives in the UK that this means that we have a strong case that the contract existed with the individual who did the work as opposed to their now closed limited company.
The defendant is adamant that the claim that I have raised is not with them - but is actually with the limited company.
On top of this and it may/may not be important is that all of the invoices quoted a personal bank account in the defendants name as opposed to a business bank account in the limited companies name. I suspect that this is just bad practice and not entirely relevant.

My question is whether or not this claim is worth pursuing. As the limited company no longer exists clearly any claim would be a waste of time. What I'm looking for - is a law e.g. Companies Act 2006, section 24 that I can quote. My goal is not to go to a hearing and instead to come to a settlement that while it won't appease us completely - will avoid the expense of a hearing.

Obviously - professional legal advice is probably required here. However, before I do that - I'm impressed with the informed knowledge on this site and I'm curious as to the response.

Finally - again - a very wide question but can anybody share the formula for awarding costs. I'm thinking here that if we do pursue this claim - the defendant will employ solicitors and should I fail - then I will be liable for his costs. The claim is in the "fast - track" section.

Clearly this claim has already gone some distance and I know that the defendant has incurred some costs already. I just want to make sure that I don't end up with not only the loss of the problems of his work - but also covering his costs as well.

Thanks in advance.

[Pezza54]

Hi
Welcome to LB
The registered name of a company must be used and displayed when carrying out any kind of business activity
Most limited companies trade under their official registered name to avoid confusion
However a business can also use a trading name. This means that the company can use a different name for branding and marketing purposes. The company stationery and websites must clearly state this is a trading name

The word Limited or Ltd must be included on invoices along with the registered company number and VAT number if applicable

You stated that the work is concluded and signed off. Did you have to get another company in to complete the work?

How much is the claim worth? Are you able to assess the claim value? Is it over £10k?

A limited company has a legal requirement to maintain a separate business bank account. Mixing personal and business finances (which the director has done in this case) can lead to complications in financial management, compliance and legal liability

Non compliance with the legislation to maintain a separate business bank account can result in:

Companies House imposing penalties, and directors held personally liable for any financial discrepancies

Investigations by HMRC potentially resulting in fines, interest or even criminal prosecution for tax evasion

[PallasAthena]

I have been told by a retired solicitor who unfortunately no longer lives in the UK that this means that we have a strong case that the contract existed with the individual who did the work as opposed to their now closed limited company.

From what you have posted my lay-person's view is that I agree with that solicitor. Many years ago I had to do a course on company law in connection with my work and I recall there is case law that if a company failed to include the word Limited/Ltd in its contractual document it could not claim the protection of being a limited laibility company.

If I were in your position (depending on how much £££ we are talking about) I would think it worthwhile seeing a solicitor and getting them to review all the paperwork with a view to proceeding against the individual.

One question you always have to satisfy yourself about in any case like this is whether you would be able to enforce the court judgement if you won. Does the individual have any money/assets? Often recommended that if you know his personal home address go to the Land Registry and download a copy of the title for it and see if he owns it.

Of couse the individual will have other defences available to him that you will have to deal with - whether the work actually was unsatisfactory etc etc

[MS2139]

From what you have posted my lay-person's view is that I agree with that solicitor. Many years ago I had to do a course on company law in connection with my work and I recall there is case law that if a company failed to include the word Limited/Ltd in its contractual document it could not claim the protection of being a limited laibility company.

If I were in your position (depending on how much £££ we are talking about) I would think it worthwhile seeing a solicitor and getting them to review all the paperwork with a view to proceeding against the individual.

One question you always have to satisfy yourself about in any case like this is whether you would be able to enforce the court judgement if you won. Does the individual have any money/assets? Often recommended that if you know his personal home address go to the Land Registry and download a copy of the title for it and see if he owns it.

Of couse the individual will have other defences available to him that you will have to deal with - whether the work actually was unsatisfactory etc etc

Many thanks for your reply. The claim is > 10k and yes, we are coming to the conclusion that we are now probably in the position where we are going to have to start to seek some professional help. Our friend has been invaluable getting us to this position however, that help is really too far away and representing us in a hearing would probably be invaluable. The cost for this advice has appeared prohibitive up to now but

Do you have access or a reference to that case law you mentioned. It would be interesting to read and to see what similarities there are. Personally, I'd rather avoid going to a hearing, I'd rather get it settled.

Yes, we have got the work completed and signed off and yes despite giving them the opportunity to fix the problems - they chose to ignore it and walk away.

Again - many thanks for your reply.

[MS2139]

Hi
Welcome to LB
The registered name of a company must be used and displayed when carrying out any kind of business activity
Most limited companies trade under their official registered name to avoid confusion
However a business can also use a trading name. This means that the company can use a different name for branding and marketing purposes. The company stationery and websites must clearly state this is a trading name

The word Limited or Ltd must be included on invoices along with the registered company number and VAT number if applicable

You stated that the work is concluded and signed off. Did you have to get another company in to complete the work?

How much is the claim worth? Are you able to assess the claim value? Is it over £10k?

A limited company has a legal requirement to maintain a separate business bank account. Mixing personal and business finances (which the director has done in this case) can lead to complications in financial management, compliance and legal liability

Non compliance with the legislation to maintain a separate business bank account can result in:

Companies House imposing penalties, and directors held personally liable for any financial discrepancies

Investigations by HMRC potentially resulting in fines, interest or even criminal prosecution for tax evasion

Many many thanks for your reply. Yes, the claim is worth over £10k. I have seen comments regarding the separate bank account on the govt's website. It has been allocated to the "fast track" and from what I read - the advice is to seek professional help. That is probably exactly what we are going to do and in fact have already been looking. The price of that advice is surprisingly steep. I suppose what I don't want to do, is to throw good money after bad. Our funds aren't limitless and there are several draws upon them. That said- we also believe in justice - why should somebody make a mess of something and then just waive all their responsibility - play the system and get away with it. Leaving us - the victims far worse off. People make mistakes - but they should sort them out. Kind of do the right thing.

Apologies - I'm on a ramble.... :-)

Our plan is to get a settlement and have requested that we go to mediation. Should the case go to a hearing - I'm hoping that this action whether it is taken up by the defendant will go in our favour and the court will look kindly upon us.

One thing that our retired solicitor has done, is to ensure that we have followed the protocols/procedures correctly and that we have done. It all comes down to whether we are sueing the right person or not. Should it be the limited company - in which case that is pointless as that company no longer exists or whether albeit due to a technical error on their part (missing out the word "limited") we can sue the individual.

Yes, they do have assets (a house) and from what I can see from Companies house - they have created and closed multiple companies all in similar industries - with one currently trading. I presume in order to protect them from other similar claims to ours. A rather horrid practice and one there should be legislation to protect consumers from.

Sorry - as the victim - I do feel passionately about all this and am one to go off on a bit of a ramble/rant. :-)

Your comments above are very useful and do give me confidence that we do have a case. We just need to be brave and go for it.

[PallasAthena]

Do you have access or a reference to that case law you mentioned. It would be interesting to read and to see what similarities there are.

Sorry no, just a faint recollection from long ago.

[Pezza54]

Please read Legal Case Summary at www.lawteacher.net/cases/salomon-v-salomon.php
The corporate veil can be pierced. Sham, facade and fraud
What would the creditors think if they found out that your money had been paid into the director's personal bank account and not the company bank account?

Although Salomon v Salomon confirms the principle that a limited company is a stand alone entity other cases get a mention where the corporate veil has been pierced

[Pezza54]

I suspect the solicitor that you decide to appoint will be more interested in your payments being made to the director's personal bank account before the company went into liquidation

There are articles available about Lifting of the Corporate Veil and fraudulent trading on the internet

[pc52straw]

I may be wrong but I have an inkling this whole "piercing the corporate veil" concept (especially the way it's treated as a job for the litigant in person, not a team in the business centre that could run a web service check to get an authoritative answer in 90% of cases) is going to have to be reviewed in this Parliament.

One reason is the sheer weight of backlog in civil courts needing some way to deal with rogue traders and cynical medium-large enterprises who routinely obfuscate their identity with customers knowing it'll trip them up.

Another reason is, the ability of serial bad actors to get away with pulling this stunt for years erodes public confidence in the efficacy of the civil court system. Why would you sue your local cowboy for a refund if the local grapevine is well aware of him getting away with it over and over again.

And the third reason is more of a matter of wider public perception that it's one law for the rich and celebrities, and another for everyone else. Katie Price's holiday / surgery / sudden £50k available to lawyer up despite apparently being pot-less, being a great example.

If the digital form for money claims was thought out properly, the courts could be routinely reprimanding dodgy business owners for not complying with the Companies Act instead of having to contend with unrepresented litigants in person being stymied by a moving of the goalposts.

There is something far more precise than adding a LTD prefix to a free-text field... Why not just add a "Company No." extra field to the digital claim form? If the company owner changes the trading name or limited company name to move the goalposts a little bit while the claim's in a 9 month limbo, the claimant has a job to prove that they filed it right and the facts have been altered.

But if the company number's used at the start and that can't change without a more significant alteration of facts...

[MS2139]

Just a short note to thank all of you for your comments. We are currently discussing engaging a solicitor to support us. As I mentioned earlier - I've always found the law to be very interesting albeit very complicated. I never expected to be starting a thread on a case that I'd initiated.

Thanks again for your help and support.