Re Blackspur Group Plc (No 4); Eastaway v Secretary of State for Trade and Industry

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLady Justice Arden
Judgment Date10 May 2007
Neutral Citation[2007] EWCA Civ 425
Docket NumberCase No: A3/2006/0580 & A3/2006/0579

[2007] EWCA Civ 425

[2006] EWHC 299 (Ch)

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

(CHANCERY DIVISION) MR JUSTICE LIGHTMAN

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Lord Justice Tuckey

Lord Justice Rix and

Lady Justice Arden

Case No: A3/2006/0580 & A3/2006/0579

Between
Eastaway
Appellant
and
Secretary of State for Trade & Industry
Respondent

Matthew Collings QC (instructed by Messrs B C L Burton Copeland) for the Appellant

Malcolm Davis White QC & Jason Coppel (instructed by Treasury Solicitors) for the Respondent

Hearing dates : 27–28 March 2007

Lady Justice Arden
1

In 1992, the Secretary of State for Trade and Industry began proceedings against Mr Eastaway for his disqualification as a director. These proceedings culminated in Mr Eastaway giving an undertaking to the Secretary of State in May 2001 not to act as a director for 4 1/2 years. In July 2004, the European Court of Human Rights (“the Strasbourg court”) held that these proceedings had taken too long and had thus violated Mr Eastaway's rights under art 6 of the European Convention on Human Rights (“the Convention”). The crucial question on this appeal is: should the undertaking given in 2001 now be set aside?

2

As the undertaking expired on 31 December 2005, it may be asked why Mr Eastaway is concerned to have the undertaking set aside. The reason is Mr Eastaway contends that he continues to suffer prejudice as a result of the proceedings because of the threat of certain professional disciplinary proceedings hanging over him. I shall need to say more about this prejudice point later in this judgment. Mr Eastaway sought to persuade the judge, Lightman J, that the violation of art 6 found by the Strasbourg court gave him a further right in domestic law to have the disqualification proceedings dismissed and the undertaking set aside. By his order dated 2 March 2006, Lightman J rejected his application and made the order now appealed against.

3

Before I discuss the issues, I need to set out some of the background and the relevant legislative and Convention framework.

Background

4

Counsel for the Secretary of State, in their skeleton argument, described the litigation between Mr Eastaway and the DTI as “marathon litigation”. That label seems to be wholly justified as there have been numerous steps, some of which can be found in the summary in paras 7 to 31 of the judgment of Lightman J, now reported at [2006] 2 BCLC 489. It is not necessary for me to repeat all of that material. There were other defendants, apart from Mr Eastaway, but they play no part in this appeal. Accordingly, I have not referred to their role when describing these proceedings in this judgment.

5

Mr Eastaway was a director of the Blackspur group of companies, which went into receivership in July 1990. In July 1992, the Secretary of State brought disqualification proceedings against Mr Eastaway, based on his conduct as such director pursuant to the Company Directors Disqualification Act 1986 (“the 1986 Act”). These proceedings were stayed in May 2001 when Mr Eastaway entered into a disqualification undertaking pursuant to section 1A of the 1986 Act. Before giving this undertaking, Mr Eastaway sought to bring an end to the disqualification proceedings. He first brought proceedings for the judicial review of a decision of the Secretary of State to continue them and then proceedings under section 7 of the Human Rights Act 1998 (“the HRA”) on the grounds that there had been an excessive length of time taken by the proceedings. As a condition of obtaining an adjournment of the disqualification proceedings, Mr Eastaway gave an undertaking to the court (Hart J) on 13 September 1999 that if his application for judicial review was unsuccessful he would agree to the determination of the disqualification proceedings by means of the Carecraft procedure. It is not necessary to describe this procedure. It was established by the court's case law and was the forerunner of section 1A of the Act, which was inserted by the Insolvency Act 2000, with effect from 2 April 2001. The application for judicial review failed.

6

Mr Eastaway then applied for the proceedings to be dismissed. This application was heard by Sir Andrew Morritt VC in February 2001. The parties conducted the application on the basis that what Mr Eastaway had to show was that the proceedings had taken an excessive length of time, rather than that there had been any prejudice to Mr Eastaway. The Vice Chancellor rejected Mr Eastaway's application and gave directions for the trial. Mr Eastaway was refused permission to appeal from the Vice Chancellor's order both by the Vice Chancellor and this court. The disqualification proceedings were stayed on 25 May 2001 on the basis that Mr Eastaway would enter into a disqualification undertaking, and on 31 May 2001 Mr Eastaway duly gave an undertaking to the Secretary of State not to act as a director for 4 1/2 years.

7

Thereafter, Mr Eastaway petitioned the Strasbourg court, which gave judgment on 20 July 2004 (reported at [2006] 2 BCLC 361) that the continuance of the proceedings had violated his Convention rights under art 6. The case was what is sometimes called a “length of proceedings” case. As just satisfaction, the Strasbourg court awarded Mr Eastaway compensation for his legal costs of the proceedings to establish the violation both in the English court and in the Strasbourg court.

The prejudice point

8

Counsel for Mr Eastaway, Mr Matthew Collings QC, informs us that Mr Eastaway is a tax and accountancy expert and is held in high esteem. During the currency of the disqualification undertaking, the court gave permission to Mr Eastaway to become a director, on 9 June 2003, of the Chartered Institute of Directors and the Institute of Taxation and, on 25 May 2004, of WJB Chiltern Group Plc. These orders are some recognition of the professional standing of Mr Eastaway.

9

Nonetheless, the disqualification proceedings continue to cast a shadow over Mr Eastaway's career. Mr Eastaway is a member of the Institute of Chartered Accountants in England and Wales, and the Chartered Institute of Management Accountants, and disciplinary proceedings by those bodies will proceed if the disqualification undertaking remains on his record. Disciplinary proceedings were started against him by (as we understand it) each body, but they have been successively adjourned and are now adjourned pending the outcome of this appeal.

10

Moreover, on Mr Collings' submission, the position of Mr Eastaway has been exacerbated by comments made by the judge in para 45 of his judgment to the effect that there was a public interest in the professional bodies knowing what happened in the past and that there had been “unattractive episodes” in Mr Eastaway's past. I do not consider that these are matters of which Mr Eastaway can properly complain. The judge was right to say that the disciplinary matters are for the professional bodies, and that there is a public interest in their carrying out that function. The judge was also right to say that it is a matter for them to decide what action needs to be taken by them. They will be able to consider if they think fit the allegations by the Secretary of State which led to the agreed statement of facts on the basis of which the undertaking was given. We have not been invited to consider any of those allegations.

11

We are not concerned with the merits of the disciplinary proceedings or whether they will in fact take place. Whether they do or not, for the purposes of this appeal we have assumed that they will. The question for us is whether it follows from the violation of art 6, which Mr Eastaway has now proved, that he is entitled to have the undertaking set aside.

Legislative Framework

Company Directors Disqualification Act 1986

12

A brief explanation of the provisions of the 1986 Act is required. In the 1986 Act, Parliament has provided, for the protection of the public dealing with limited companies, that directors should in certain circumstances be disqualified from acting without the leave of the court as directors or in certain other capacities. In particular, section 6 of the 1986 Act provides that the court must disqualify a director of a company that has become insolvent if his conduct as a director makes him unfit to be concerned in the management of a company. The minimum period of disqualification is two years and the maximum period is fifteen years. The trial of proceedings for the disqualification of a director on this ground are often long and complex, and the courts developed a practice of determining, with the consent of the parties, whether a director should be disqualified and if so for how long, on the basis of an agreed statement of the facts, as a means of disposing of disqualification proceedings without a trial (see generally, Re Carecraft Construction Co Ltd [1994] 1 WLR 172). Parliament has gone further and the Insolvency Act 2000 has amended the 1986 Act to enable the Secretary of State to accept and enforce undertakings in return for not pursuing disqualification proceedings (sec 1A, 1986 Act). The person who gave the undertaking may apply to the court to discharge the undertaking or to reduce the period for which it is to be in force (section 8A of the 1986 Act as amended).

13

Proceedings under section 6 of the 1986 Act must be brought within two years of the company becoming insolvent. Proceedings which, as in this case, are brought at the end of the two-year period are liable to be struck out, if there is inordinate or inexcusable delay: re Manlon Trading Ltd [1995]...

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