Appellant: Alonzi; BCKM, Edinburgh

Respondent: McSporran, Solicitor Advocate, A.D; Crown Agent

16 May 2012

[1] On 28 October 2011 the appellant was convicted by verdict of the jury in the Sheriff Court in Edinburgh of a charge of contravening section 13 of the Company Directors Disqualification Act 1986 - "the 1986 Act". The terms of the amended libel of which the appellant was convicted are as follows:

"(001) having been disqualified for a period of 12 years by an order of the High Court of Justice Chancery Division, Companies Court, London made under section 6 of the aftermentioned Act dated 4 May 1999 you DAVID JAMES COULTER CUNNINGHAM did between 12 May 2003 and 30 November 2004, both dates inclusive at George Waterston (Security Printers) Ltd, Terston House, 1 Huly Hill Road, Edinburgh Interchange, Newbridge, Edinburgh and elsewhere act in contravention of said disqualification order in that you were concerned or took part in the promotion, or management of said company;

CONTRARY to the Company Directors Disqualification Act 1986, Section 13."

[2] The relevant part of the Order made by the Chancery Division of the High Court of Justice in London on 4 May 1999 is paragraph 1 which states:

"Pursuant to section 6 of the Company Directors Disqualification Act 1986 David James Coulter Cunningham shall not without the leave of the court be a Director of a company or be a liquidator or administrator of a company or be a receiver or manager of a companies [sic] property or be in any way whether directly or indirectly concerned or take part in the promotion, formation or management of a company for a period of 12 years."

[3] At the conclusion of the prosecution case, counsel for the appellant presented to the presiding sheriff a submission in terms of section 97 of the Criminal Procedure (Scotland) Act 1995 - "the 1995 Act" - that there was no case to answer. Put shortly the thrust of the submission was that since the prohibition in paragraph 1 of the Order made by the Chancery Division of the High Court was qualified by the words "without the leave of the court", it was necessary for the prosecutor to prove, by corroborated evidence, that leave had not been granted by the court to the appellant to carry out the activities libelled in the charge. While evidence had been given by a solicitor that she had checked the register of directors' disqualification orders to see whether any application for leave under section 17 of the 1986 Act had been granted and had found none, that evidence was said to be hearsay; the best evidence, it was submitted, would be a certified extract from the register. In opposing the submission the procurator fiscal depute contended, again put shortly, that it was not for the Crown to prove the negative - namely that no application for leave had been granted. Rather it was for the accused to show that he had sought and obtained such leave. Reference was made to among others paragraph 16 of Schedule 3 to the 1995 Act and Dickson on Evidence. The procurator fiscal depute also submitted that in any event other evidence of what the appellant had said to a retired management accountant and at a meeting of creditors was sufficient to allow the jury to infer that leave of the court had not been obtained for the activities in question. The sheriff repelled the submission of no case to answer. In his report the sheriff states that he agreed with the submissions of the Crown that they did not have to prove that the appellant did not have the permission of the court to act as alleged and on that account he repelled the submission of no case to answer.

[4] The appellant appeals against conviction on the ground that the sheriff wrongly repelled that submission and in advancing the appeal counsel for the appellant renewed and elaborated the submissions which had been advanced to the sheriff. Having heard the Advocate depute in reply and having adjourned to deliberate on the arguments advanced to us we came to the conclusion that the appeal failed. On the court reconvening we announced that decision and stated that reasons for the decision would be given later in writing, which we now do.

[5] In addressing the arguments advanced in this case we think it appropriate first to note the statutory provisions bearing, or potentially bearing, on the submissions.

[6] Section 1(1) of the 1986 Act provides:

"1.- Disqualification orders: general.

(1) In the circumstances specified below in this Act a court may, and under section 6 and 9A shall, make against a person a disqualification order, that is to say an order that for a period specified in the order-

(a) he shall not be a director of a company, act as receiver of a company's property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless (in each case) he has the leave of the court, and

(b) he shall not act as an insolvency practitioner."

Section 6 (being the provision in the 1986 Act under which the appellant was disqualified) provides in subsection (1):

"(1) The court shall make a disqualification order against a person in any case where, on an application under this section, it is satisfied -

(a) that he is or has been a director of a company which has at any time become insolvent (whether while he was a director or subsequently), and

(b) that his conduct as a director of that company (either taken alone or taken together with his conduct as a director of any other company or companies) makes him unfit to be concerned in the management of a company."

Section 13 of the 1986 Act provides:

"13.- Criminal penalties.

If a person acts in contravention of a disqualification order or disqualification undertaking or in contravention of section 12(2), 12A or 12B, or is guilty of an offence under section 11, he is liable-

(a) on conviction on indictment, to imprisonment for not more than 2 years or a fine, or both; and

(b) on summary conviction, to imprisonment for not more than 6 months or a fine not exceeding the statutory maximum, or both."

Section 17 deals with applications for leave for the purposes of section 1(1)(a) of the 1986 Act and is concerned with the court or courts to which such an application may be made. It was accepted by counsel for the appellant that in some cases more than one court might have the competence to grant leave to the disqualified person to do certain things otherwise prohibited by the order to which he was subject.

[7] Paragraph 16 of Schedule 3 to the 1995 Act is in these terms:

"Where, in relation to an offence created by or under an enactment any exception, exemption, proviso, excuse, or qualification, is expressed to have effect whether by the same or any other enactment, the exception, exemption, proviso, excuse or qualification need not be specified or negatived in the indictment or complaint, and the prosecution is not required to prove it, but the accused may do so."

[8] In advancing his contention that the prosecutor had the onus of proving that no court had granted leave to the appellant to carry out the activities prohibited by the order pronounced by the High Court of Justice, counsel for the appellant maintained that the Crown could not place any reliance on paragraph 16 of Schedule 3 to the 1995 Act because, he submitted, that paragraph applied only to words of exception, exemption, proviso, excuse or qualification which were contained in an enactment. But, it was submitted, in the present case the qualification or exemption "without the leave of the court" was found in the disqualification order pronounced in Chancery by the High Court in London and so was not an exception or exemption etc contained in any enactment.

[9] Since the proviso respecting the leave of the court was contained in the order pronounced by the High Court of Justice, the Crown therefore required to prove what counsel for the appellant sought to categorise as a "positive", namely that the appellant had failed to obtain leave of a court having competence to grant leave. That part of the order introducing the qualification of the leave of the court was thus implied as an averment in the libel and was thus integral to the offence. Counsel made reference to Muir v Grant & Company 1948 JC 42; Chalmers v Speedwell Wire Company Limited 1942 JC 42; and also R v Turner 105 ER 1026; (1816) 5 M&S 206. Analogy with offences such as driving a motor vehicle without insurance, where the existence of insurance cover was a matter peculiarly within the knowledge of the accused, was not appropriate in the present case because, said counsel, whether the disqualified person had the leave of the court was not peculiarly within his knowledge but might be ascertained by a search of the court records and the register of directors' disqualifications maintained pursuant to regulations made under section 18 of the 1986 Act.

[10] Accordingly, it was submitted, the sheriff had erred in declining to uphold the submission of no case to answer on the basis upon which he did.

[11] We take first the point advanced by counsel for the appellant to the effect that the Crown could not invoke paragraph 16 of Schedule 3 to the 1995 Act. It is correct that section 13 of the 1986 Act does not in itself contain words of exception or qualification. However, the possible excusal provided by the disqualified person's having the leave of the court is a statutory requirement of any disqualification order, being stipulated in section 1(1) of the 1986 Act. The disqualification order pronounced by the High Court of Justice in London naturally reflects that statutory provision. To that extent, we do not consider it right to dismiss paragraph 16 of Schedule 3 to the 1995 Act as having no possible relevance since the proviso to the disqualification order is one which is required by the scheme of the enactment contained in the 1986 Act.

[12] However, we think it important to appreciate that paragraph 16 of Schedule 3 is a statutory reflection of an underlying, and perhaps wider, principle respecting the onus of proof. While the decision in Muir v Grant & Company turned very much on the particular wording of the wartime emergency legislation in issue in that prosecution, we note in particular the observations of the Lord Justice General (Cooper) respecting section 19(3) of the Summary Jurisdiction (Scotland) Act 1908, which contained a provision approximately equivalent to that found in paragraph 16 of Schedule 3 to the 1995 Act. The Lord Justice General said:

"The typical case for the application of section 19(3) is where the accused is, or ought to be, able instantly to verify or readily to establish the exception, &c., on which he relies to exclude the inference of guilt."

The principle underlying such statutory provision is expressed by the Court of King's Bench in R v Turner. The criminal charge brought in that case was brought under statute (22 & 23 Car 2 ch.25) and was one of being in possession of game by a person who was not in any manner qualified or authorised to kill game. The issue before the court was whether the prosecutor required to prove the negative, namely that the accused was not qualified to kill game. Ellenborough CJ held, on largely pragmatic reasons, that it was not for the prosecutor to negative the qualification to the offence. Bayley J said, "I am of the same opinion. I have always understood it to be a general rule that if a negative averment be made by one party, which is peculiarly within the knowledge of the other, the party within whose knowledge it lies, and who asserts the affirmative is to prove it and not he who avers the negative." Holroyd J was of the same opinion. The court therefore held that the burden was on the defendant to prove that he possessed the qualification (to kill game) required by the Act.

[13] In our opinion, the appellant's not having the possible exemption envisaged in terms of the disqualification order to which he was subject in the formulation "without the leave of the court" (reflecting, as already noted, the statutory requirement for such exemption or proviso laid down in section 1 of the 1986 Act) constitutes such a "negative averment made by one party which is peculiarly within the knowledge of the other" to which Bayley J referred. Viewed also in terms of the formulation of the Lord Justice General in Muir v Grant & Company, it is a matter which the appellant was, or ought to have been able, readily to establish. Whether the appellant had sought and obtained the leave of a competent court to carry out - as an exemption from the prohibitions in the disqualification order to which he was subject - the activities with which he was charged, was plainly a matter within his knowledge. It may well be that with inordinate diligence the prosecutor might search every possible source of information and lead potentially innumerable witnesses to testify to the fruitless nature of their searches for evidence which might support the accused's having the benefit of the exception or exemption. But in our view that possibility does not mean that, properly understood, whether he comes within the exception or exemption or excuse is not a matter peculiarly within the knowledge of the accused. The results of the prosecutor's search might always be said to be, in some respect, potentially incomplete. Hence the wisdom of the rule that it be for the accused pleading a particular exemption or excuse peculiarly within his knowledge to establish that excuse or exemption.

[14] If the appellant had sought and obtained exemption from the prohibitions contained in the disqualification order pronounced by the Chancery Division of the High Court of Justice in London, he could instantly establish that fact by reference to the application made to a competent court and the grant of leave by that court. While section 18 of the 1986 Act makes provision for the establishment, by regulations (to which we were not referred), of a register of disqualification orders, we do not see the existence of that register as altering the fundamental, underlying principle. The register, dependent upon the provision of information from the courts, may be incomplete and, plainly, a person accused of acting in breach of a disqualification order could not be deprived of reliance upon a grant of leave simply because that grant of leave had not found its way into the register. It was never suggested in evidence that the appellant had any judicial sanction for the activities of which he was convicted.

[15] We therefore concluded that this appeal against conviction was not well-founded and having reached that decision we continued the case for hearing of the appeal against the sentence which was imposed by the sheriff.