NOTE IN PETITION OF GARY BUCKLEY AGAINST HER MAJESTY'S SECRETARY OF STATE FOR BUSINESS, ENERGY AND INDUSTRIAL STRATEGY
OUTER HOUSE, COURT OF SESSION
[2017] CSOH 105
P567/17
NOTE BY LADY WOLFFE
in petition of
GARY BUCKLEY
Petitioner
For leave to act as a director
under section 17 of the Company Directors Disqualification Act 1986
against
HER MAJESTY’S SECRETARY OF STATE FOR BUSINESS, ENERGY AND INDUSTRIAL STRATEGY
Petitioner: Ower; BBM Solicitors
Respondents: MacGregor; Shepherd & Wedderburn
21 July 2017
Background
[1] This matter called before the court on the petitioner’s motion for leave under section 17 of the Company Directors Disqualification Act 1986 (“the Act”) to act as a director in respect of a specified company. The application for leave was necessary because the petitioner had granted a disqualification undertaking of three and one-half years’ duration, and which was very shortly to come into operation. Part of the petitioner’s motion was to dispense with the hearing and to have matters dealt with administratively on the papers.
[2] As is common practice, it was proposed that leave be granted subject to conditions. These conditions had been canvassed in correspondence with the Secretary of State for Business, Energy and Industrial Strategy (“the Secretary of State”) whose remit includes the disqualification of company directors under the Act. The Secretary of State was content with these conditions as sufficient to protect the public interest.
[3] The petitioner’s agents proposed that the order granting leave should narrate that this leave should subsist:
“ …but only for so long as each of the following conditions set out at paragraphs 1 to 8 below is and remains satisfied (so that if at any time any such condition is not satisfied, the permission hereby granted shall immediately cease and shall not without further order of the court be capable of reinstatement by the subsequent fulfilment of the condition ….”
[4] The Secretary of State did not lodge answers but he did write through his Agents to advise the court of his position on the merits (which was essentially neutral) but also to argue that, contrary to the petitioner’s motion to dispense with it, a hearing on the application for leave could not be dispensed with.
[5] I was not prepared to deal with the matter on the papers and a hearing was fixed. The Secretary of State was represented at the hearing.
Incidental Procedural Issues
[6] The purpose of this Note is to address the incidental procedural issues that have arisen, namely:
- whether section 17 of the Act requires a hearing;
- whether the Secretary of State requires to attend any hearing; and
- the terms of the proposed order.
I heard limited submissions on these matters. To the extent that authorities were cited, these were directed principally to the issue of whether the Secretary of State was entitled to his expenses. As it happened, parties agreed the amount of expenses payable to the Secretary of State.
Comment on Procedural Issues
Issues (i) and (ii)
[7] It has always been a feature of the Act that a disqualified director may nonetheless seek leave of the court to act as a director in respect of one or more specified companies. This is provided for in section 17 of the Act. Section 17(5) of the Act states that: “On the hearing of an application for leave for the purposes of section 1(1)(a) or 1A(1)(a)”, that is where there has been a disqualification order pronounced by the court or a disqualification undertaking granted by the individual, “the Secretary of State shall appear and call the attention of the court to any matters which seem to him to be relevant, and may himself give evidence or call witnesses”.
[8] In submissions reference was made to the observation of Dillon LJ in Secretary of State for Trade and Industry v Worth and Another Re Dicetrade Limited [1994] BCC 371 at 373 G and 374D-E. That case was concerned with the Secretary of State’s entitlement to costs and the court doubted that there was any general principle that would entitle him to costs for having attended automatically at a hearing under section 17(5). The observations on that issue were premised on the basis, not seemingly disputed in that case, that a hearing would always be held at which the Secretary of State would appear. While the observations about expenses in that case were doubted by the Court of Appeal, in the case of Secretary of State for Trade and Industry v Collins and others Re TLL Realisations Ltd [2000] BCC 998 at 1014G per Peter Gibson LJ, there was no demur from the underlying premise that the Secretary of State should appear at hearings for leave. Reference was also made in submissions to paragraph 15-72 of Walkers & Davis-White, Directors’ Disqualification (2nd ed) where it is stated that the Secretary of State is under a mandatory obligation to attend a hearing for leave.
[9] In respect of this matter, it was stated in the letter from the Secretary of State sent to the court in relation to these proceedings that:
“…we note that in the normal course, the Court would not fix a hearing on a petition in the event no answers were lodged. That said, it is the practice of the court to fix a hearing in relation to a Petition under section 6 [of the Act] seeking a disqualification order, even if no answers are lodged. This is of course so that the [Secretary of State] can address the court on matters of misconduct and the period of disqualification.”
After quoting section 17(5), the Secretary of State’s letter continued:
“This provision (and in particular, the reference to ‘shall appear’) would suggest that a hearing will be fixed by the Court which the [Secretary of State] must attend (although there is no specific rule providing for this). On that basis, our client would expect a hearing to be fixed even in the present circumstances where the [Secretary of State] has not lodged Answers and will take a neutral position in relation to the Petition.”
[10] I agree with the Secretary of State’s contention that a hearing should be fixed for an application for leave under section 17(5). The reference to calling of witnesses and leading of evidence, points to the assumption that applications for leave will be determined after a hearing in court. In my view a hearing is likely to be necessary for consideration of an application for leave under section 17(5) or a hearing in court is, at least, highly desirable. As with an application for a disqualification order, the court is being asked to weigh in the balance a variety of factors (which it is not necessary here to set out) and to determine what is in the public interest. Generally, the court will be greatly assisted by submissions in respect of such matters and for the opportunity to pose questions to, and seek explanations from, the applicant and the Secretary of State. There may be a particular need to do so if the court from which leave is sought is unfamiliar with the circumstances leading to the disqualification, as will inevitably be the case in the grant of an undertaking.
[11] At one point in oral submissions, it appeared to be suggested on behalf of the Secretary of State that, while a hearing was mandatory, the attendance of the Secretary of State at such a hearing was not. If that were the submission, I do not accept it. The language of section 17(5) ‑ “shall appear” — could not be clearer. There is no good reason, consistent with the scheme of the Act, to construe those words as merely directory. As noted by the Court of Appeal in Re TLL Realisations, the first appeal against the grant of leave under section 17(5), the Secretary of State has a special position in relation to applications for leave. In my view, having regard to the language of the sub-section and the purposes of the hearing, the attendance of the Secretary of State is required at hearings on applications for leave under section 17(5). For completeness, I note that there are circumstances where persons other than the Secretary of State may appear in a like capacity (eg an official receiver in England). I express no concluded view on whether a like requirement to attend a hearing applies, though it would be surprising if the procedural requirements were different.
Issue (iii)
[12] The remaining incidental issue is the proposed narrative in the court order about the
conditionality, as it were, of the conditions: see paragraph [3], above. I raised the
competency of this with Counsel. Neither had any submission. It was explained that this was a standard form of language used if conditions were imposed with the grant of leave.
[13] In my view, this form of words is incompetent. It may be to state the obvious, but the order of a court is intended to have, and has, legal effect. It must be stated with sufficient precision that parties and any third party having regard to it know the scope of any right conferred or curtailed. Certainty is one of its hallmarks. Subject to prescription, an order of the court subsists unless it is corrected, recalled, reversed or reduced. The proposed form of wording is in my view inimical to these qualities of a court order. If used, they would create uncertainty and may well lead to unfruitful arguments, for example, as to whether a particular act or omission constituted a breach and, if so, from what date. I have declined to include this formulation in the order for leave I have granted.