Her Majesty's Secretary Of State For Trade And Industry V. Michael George Ferrier+raymond Brown For Disqualification Orders In Terms Of The Company Directors Disqualification Act 1986.
| Jurisdiction | Scotland |
| Judge | Lord Mackay of Drumadoon |
| Date | 26 September 2003 |
| Docket Number | P103/01 |
| Court | Court of Session |
| Published date | 26 September 2003 |
| OUTER HOUSE, COURT OF SESSION | |
| P103/01 P97/01
| OPINION OF LORD MACKAY OF DRUMADOON in the Petitions of HER MAJESTY'S SECRETARY OF STATE FOR TRADE AND INDUSTRY Petitioner; against MICHAEL GEORGE FERRIER and RAYMOND BROWN Respondents: for Disqualification Orders in terms of the Company Directors Disqualification Act 1986 ________________ |
Petitioner: Wright, Q.C., S. Wolffe; Biggart Baillie.
First Respondent: Ross; Bennett & Robertson
Second Respondent: Party
26 September 2003
Introduction
[1]In October 1999, the Petitioner raised the present petitions proceedings against the Respondents. In each set of proceedings, the Petitioner applies for a Disqualification Order, under the provisions of section 6 of the Company Directors Disqualification Act 1986 ("the 1986 Act"), in respect of one of the Respondents. These applications for Disqualification Orders arise out the Respondents' service as directors of a limited company known as Uppa Crust (South) Limited ("UCS").
[2]On 5 July 2001, a Hearing on the Petition and Answers was allowed in both sets of proceedings. The Hearings were conjoined and took place before me. Evidence was heard over thirteen days. Over two subsequent days, I received oral submissions from the parties. During those two days of submissions, reference was made to a number of documents, setting out proposed findings in fact and written submissions, which the parties had prepared. I am grateful to counsel and to Mr Brown, the second Respondent, who appeared on his own behalf throughout the Hearing, for the efforts that were put into the preparation of those documents. The documents have proved to be of assistance to me, in assessing the oral evidence and the extensive documentary productions that were placed before me during the Hearing. Whilst the detailed terms of those documents have in certain respects added to the complexities of the factual issues that arise, the contents of the documents have left me in no doubt as to the respective positions of parties in relation to the issues that are before me for my decision. The Hearings having been conjoined, it is a matter of agreement that I should issue one Opinion, covering both sets of proceedings.
[3]As I have indicated, these proceedings arise out of Mr Ferrier and Mr Brown having served as Directors of Uppa Crust (South) Limited. The limited company that came to be known as Uppa Crust (South) Limited ("UCS") was incorporated on 22 June 1995. Mr Ferrier was a Director of UCS between 5 July 1995 and 14 April 1997. He was also Chairman of UCS between the same dates. Mr Brown was a Director of UCS between 5 July 1995 and 25 September 1997. Mr Brown demitted office as a Director of UCS with effect from 25 September 1997, although it was established during the evidence that Mr Brown had given the Board of UCS notice of his wish to resign as a Director of that company on 11 June 1997 and had left the employment of the company during August 1997. The evidence I heard has made clear that Mr Brown was not personally responsible for any delay there may have been in intimating to the Companies Office his resignation as a Director of UCS.
The Respondents
[4]Mr Ferrier is 62 years of age. He is a Chartered Accountant and a Fellow of the Institute of Cost and Management Accountants. For over thirty years he has held a variety of positions in public and private companies, including a period of several years when he served as a director of Seaforth Maritime Limited. Since the mid-1980s, Mr Ferrier has invested in property and a number of private companies. Those investments have normally been effected through the medium of a privately owned company, Ferrier Holdings Limited. The investments have enabled Mr Ferrier to provide financial and managerial support to other companies, which, when the companies in question prospered, has brought financial benefit to Mr Ferrier. It is clear that before he became involved with UCS, Mr Ferrier had extensive experience in the governance of a large number of companies, both large and small.
[5]Mr Brown is aged 53. He has been employed in industry and commerce for approximately thirty years. After he left university, he initially worked abroad. He returned to Scotland during 1998. At that time Mr Brown set up a carpet retailing business, which he sold after 5 years. Mr Brown then set up an office cleaning business, which he eventually sold to Nevis Group Limited ("Nevis"), with whom he went to work. During 1994 Mr Brown became a Director of Uppa Crust Limited, a subsidiary company of Nevis. Despite the fact that Mr Brown has been in regular employment, since he left university, it is clear from the respective careers of Mr Ferrier and Mr Brown and from the evidence that they gave, that Mr Brown does not have the same knowledge, understanding and experience of corporate affairs and finance as Mr Ferrier does.
Undertakings given by other Directors of UCS
[6]When the present proceedings were commenced, the Petitioners also initiated similar proceedings against two other former Directors of UCS, James Anderson Clark and Gordon McRae Hope. Mr Clark and Mr Hope were Directors of UCS between 5 July 1995 and 25 September 1997. Both Mr Clark and Mr Hope defended the proceedings taken against them. On 15 April 2002, however, they gave separate undertakings to the Petitioner, in accordance with the provisions of section 1A of the 1986 Act. Those undertakings were to the effect that Mr Clark and Mr Hope would not, amongst other things, serve as a director of a company for a period of 21/2 years.
Law
[7]Sections 1(1), 6 (1), (2) and (4), 7(1), 9(1) and Schedule 1 of the 1986 Act are in the following terms:
"1.-(1) In the circumstances specified below in this Act a court may, and under section 6 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.
.....
6.-(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.
(2) For the purposes of this section and the next, a company becomes insolvent if -
(a) the company goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up,
(b) an administration order is made in relation to the company, or
(c) an administrative receiver of the company is appointed;
and references to a person's conduct as a director of any company or companies include, where that company or any of those companies has become insolvent, that person's conduct in relation to any matter connected with or arising out of the insolvency of that company.
.....
(4) Under this section the minimum period of disqualification is two years, and the maximum period is 15 years.
.....
7.-(1) If it appears to the Secretary of State that it is expedient in the public interest that a disqualification order under section 6 should be made against any person, an application for the making of such an order against that person may be made -
(a) by the Secretary of State, or
(b) if the Secretary of State so directs in the case of a person who is or has been a director of a company which is being wound up by the court in England and Wales, by the Official Receiver.
.....
9.-(1) Where it falls to a court to determine whether a person's conduct as a director of any particular company or companies makes him unfit to be concerned in the management of a company, the court shall, as respects his conduct as a director of that company or, as the case may be, each of those companies, have regard in particular -
(a) to the matters mentioned in Part 1 of Schedule 1 to this Act, and
(b) where the company has become insolvent, to the matters mentioned in Part II of that Schedule;
and references in that Schedule to the director and the company are to be read accordingly.
.....
SCHEDULE 1
MATTERS FOR DETERMINING UNFITNESS OF DIRECTORS
PART 1
MATTERS APPLICABLE IN ALL CASES
1.Any misfeasance or breach of any fiduciary or other duty by the director in relation to the company.
2.Any misapplication or retention by the director of, or any conduct by the director giving rise to an obligation to account for, any money or other property of the company.
3.The extent of the director's responsibility for the company entering into any transaction liable to be set aside under Part XVI of the Insolvency Act 1986 (provisions against debt avoidance).
4.The extent of the director's responsibility for any failure by the company to comply with any of the following provisions of the Companies Act 1985, namely -
(a) section 221 (companies to keep accounting records);
(b) section 222 (where and for how long records to be kept);
(c) section 288 (register of directors and secretaries);
(d) section 352 (obligation to keep and enter up register of members);
(e) section 353 (location of register of members);
(f) section 363 (duty of company to make annual returns);
(h) sections 399 and 415 (company's duty to register charges it creates).
5.The extent of the director's responsibility for any failure by the directors of the company to comply with -
(a) section 226 and 227 of the Companies Act 1985(duty to prepare annual accounts), or
(b)...
To continue reading
Request your trial