Sean Mason Kiani V. Secretary Of State For Business Innovation And Skills For Judicial Review Of The Respondent's Decision To Apply For A Disqualification Order Under Sec
| Jurisdiction | Scotland |
| Judge | Lord Hodge |
| Judgment Date | 2013 |
| Neutral Citation | [2013] CSOH 121 |
| Court | Court of Session |
| Published date | 12 July 2013 |
| Year | 2013 |
| Date | 12 July 2013 |
| Docket Number | P713/12 |
| OUTER HOUSE, COURT OF SESSION | |
| [2013] CSOH 121 | |
| P713/12 | OPINION OF LORD HODGE in the cause SEAN MASON KIANI Petitioner; against SECRETARY OF STATE FOR BUSINESS, INNOVATION AND SKILLS Respondent: Petition for judicial review of the respondent's decision to apply for a disqualification order under section 8 of the Company Directors Disqualification Act 1986 ________________ |
Petitioner: Party
Respondent: D M Thomson & Duthie; Shepherd & Wedderburn LLP
12 July 2013
[1] The Secretary of State for Business Enterprise and Regulatory Reform ("the Secretary of State") applied for an order to wind up UK Bankruptcy Ltd ("UKB") on 8 December 2008. UKB is a company registered in Scotland but it carried on business in England and Wales. It offered a debt advice service to people who were insolvent. The service involved arranging the applications for their bankruptcy. Clients often funded UKB by use of their credit cards shortly before they were bankrupted. The Secretary of State in his application averred that he had instructed an investigation of UKB under Part XIV of the Companies Act 1985 ("the 1985 Act") after his department received complaints from the official receiver of several of UKB's clients. As a result of the report by inspectors in that investigation the Secretary of State applied for a winding up order against UKB on the basis that it would be expedient in the public interest (Section 124A of the Insolvency Act 1986).
[2] The petitioner in this application for judicial review, Mr Sean Mason Kiani ("Mr Kiani"), who was a director of and shareholder in UKB, had opposed the winding up application. He was not entitled to represent the company in the proceedings because of established case law authority in this jurisdiction which requires a company to obtain legal representation. After the Inner House gave guidance on the continued applicability of that authority in response to a report from me as the Lord Ordinary, I pronounced an order winding up UKB on 10 December 2010.
[3] The principal allegations on which the winding up application proceeded were:
(i) That UKB had no formal or fixed fee structure but charged excessive fees which often related to the funds available on their clients' credit cards. This increased the client's debt to the detriment of the credit provider. In addition UKB colluded with clients to give them in cash part of the fee obtained from a credit card.
(ii) That UKB encouraged clients to default on obligations which they had undertaken in an individual voluntary arrangement ("IVA") by alleging through a marketing organisation, the IVA Council ("IVAC"), that they had been mis-sold IVAs. IVAC operated a website that encouraged people to default on their IVAs and gave the impression that it was connected with the Insolvency Service.
(iii) That UKB had deficient financial management and failed to file accounts and an annual return in 2008.
[4] On 20 December 2011 the Secretary of State (now the Secretary of State for Business, Innovation and Skills) lodged a petition seeking the disqualification of Mr Kiani as a director under section 8 of the Company Directors Disqualification Act 1986. This section empowers the Secretary of State to apply for a disqualification order if from investigative material he considers that it is expedient in the public interest that such as order should be made. The petition founded on only the first of the three principal allegations (para [3] above). Mr Kiani opposed the application. He also sought to challenge the decision to seek the order by a judicial review application. As a party litigant he needed to obtain the approval of a Lord Ordinary to raise such proceedings. In his proposed petition he included assertions about the merits of the application, which were properly pleaded as a defence to the application rather than in a judicial review challenge. I refused his application but stated that there were three allegations which might be the subject of judicial review proceedings because they related to the propriety of the Secretary of State's actions in raising the proceedings rather than the merits of the application.
[5] The three matters were:
(1) that the Secretary of State had been improperly influenced by Mr David Mond in his decision to wind up UKB and the resulting application for a disqualification order;
(2) that the Secretary of State's department had acted with bias, which was evidenced by a statement made to Mr Kiani by Mr John Gardiner; and
(3) that the department had illegally prejudged the decision to apply for disqualification, which was again evidenced by Mr Gardiner's statement.
Mr Mond is an insolvency practitioner whose businesses were involved in IVAs and who had raised defamation proceedings against Mr Kiani in relation to his allegations of the mis-selling of IVAs. Mr Kiani alleged that Mr Mond's businesses lobbied the Insolvency Service and that he sat on a joint committee of the Insolvency Service and the British Bankers Association and an IVA Standing Committee. It was not suggested that the officials who carried out the Part XIV investigation knew of Mr Mond or had been influenced by him. The statement by Mr Gardiner referred to in the second and third heads above was an alleged statement made at a meeting with Mr Kiani at the Treasury on 13 February 2009 when officials of the Department of Business Enterprise and Regulatory Reform ("the Department") gave Mr Kiani an opportunity to make representations against the Secretary of State's proposal to seek a winding up order against UKB. Mr Kiani alleged that in the course of the meeting Mr Gardiner approached him and waved his finger in his face, stating "make no mistake about it, we are gunning for you".
[6] Mr Kiani produced a revised petition for judicial review. On 15 June 2012 I authorised him to raise the judicial review proceedings but only on the three limited grounds. I intended that he be allowed to use the petition address those matters, which could not be covered in his answers to the disqualification petition, when the court considered the application for disqualification. In August 2012 I allowed the parties to adjust their pleadings in the judicial review proceedings.
[7] On 8...
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