Secretary of State for Trade and Industry v Bannister and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Morritt,Lord Justice Glidewell,ORDER |
| Judgment Date | 19 July 1995 |
| Judgment citation (vLex) | [1995] EWCA Civ J0719-2 |
| Docket Number | FC3 95/5635/B |
| Court | Court of Appeal (Civil Division) |
| Date | 19 July 1995 |
[1995] EWCA Civ J0719-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BIRMINGHAM DISTRICT REGISTRY
Order of his Honour Judge Micklem
Before: Lord Justice Glidewell Lord Justice Morritt Sir John May
FC3 95/5635/B
MR. DAVID STOCKILL & MISS M. BLEASDALE (Instructed by Messrs. George Green, 195 Cradley Heath, Warley, West Midlands, B64 5HW) appeared on behalf of the Applicant Defendant.
MR. LANCE ASHWORTH (Instructed by Messrs. Wragge & Co. 55 Colmore Row, Birmingham) appeared on behalf of the Respondent Plaintiff.
( )
On 24th February 1995 His Honour Judge Micklem sitting in Birmingham as a deputy judge of the High Court made an order under s.6 Company Directors Disqualification Act 1986 that R.W.Bannister be disqualified from "acting as a company director for a period of five years commencing 21 days from today". Mr Bannister's application to the judge for a stay of execution pending an appeal was refused. On 16th March 1995 Mr Bannister served notice of appeal and by a summons dated 29th March 1995 applied to the Court of Appeal for a stay pending the determination of that appeal. The Secretary of State contends that on the true construction of the relevant provisions of the Company Directors Disqualification Act there is no power to grant a stay or suspension of the disqualification order. Thus two points arise. First does this court have jurisdiction to grant the relief sought? Second, if it does, should it exercise it in the circumstances of this case?
First it is necessary to set out the relevant provisions of the Act. S.1(1) provides
(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 he shall not, without leave of the court -
(a) be a director of a company, or
(b) be a liquidator or administrator of a company, or
(c) be a receiver or manager of a company's property, or
(d) in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company
for a specified period beginning with the date of the order."
Sections 2 to 5 deal with disqualification in consequence of conviction of an indictable offence, persistent breaches of the companies legislation, fraud in a winding up and on summary conviction. So far as relevant s.6 provides
"(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).
(4) Under this section the minimum period of disqualification is 2 years and the maximum period is 15 years."
S.7 provides, amongst other things, that an application to disqualify under s.6 should, unless the court otherwise orders, be made within 2 years of the insolvency of the company in question. S.17 deals with the courts having jurisdiction to give leave to act notwithstanding the disqualification and provides
"(1) As regards the court to which application must be made for leave under a disqualification order, the following applies -
(a) where the application is for leave to promote or form a company, it is any court with jurisdiction to wind up companies, and
(b) where the application is for leave to be a liquidator, administrator or director of, or otherwise to take part in the management of a company or to be a receiver or manager of a company's property, it is any court having jurisdiction to wind up that company."
S. 21 provides that ss.6 and 7 are deemed to be included in Parts I to VII Insolvency Act for the purpose of the rule-making power contained in s.411 of that Act. That section provides that
"(1) Rules may be made -
(a) in relation to England and Wales, by the Lord Chancellor with the concurrence of the Secretary of State, or
(b) in relation to Scotland, by the Secretary of State,
for the purpose of giving effect to Parts I to VII of this Act."
Under that section the Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987 SI No: 2023 were made prescribing the procedure to be followed. So far as relevant those rules provide
"2. Form of application
An application to which these Rules apply shall be made -
(a) in the High Court, by originating summons (Form 10 in Appendix A to the Rules of the Supreme Court, with such adaptation as may be appropriate), and
(b) in a county court by originating application, such an application being nevertheless referred to in these Rules as a summons;
and the Rules of the Supreme Court 1965 or (as the case may be) the County Court Rules 1981 apply accordingly, except where these Rules make provision to inconsistent effect.
9. Commencement of disqualification order
Unless the court otherwise orders, a disqualification order takes effect at the beginning of the 21st day after the day on which the order is made."
The Secretary of State submits that there is no express provision in either the Act, those Rules or the Rules of the Supreme Court conferring any power on the court to stay or suspend the operation of an order for the disqualification of a director and that any implied power is ousted by the express provision of s.1(1) requiring the period of the disqualification to start on the date of the order. He points out that in the case of a company winding up petition s.147 Insolvency Act confers an express power to stay all further proceedings in the winding up. By way of contrast he relies of the provisions of Licensing Act 1964 ss 100 and 101; Gaming Act 1968 ss.24 and 25 and Road Traffic Offenders Act 1988 ss.37, 39 and 40. To illustrate this point it is only necessary to refer to sections 37 and 39 of the Road Traffic Offenders Act 1988 which provide
"37 Effect of order of disqualification
(1) Where the holder of a licence is disqualified by an order of the court, the licence shall be treated as being revoked with effect from the beginning of the period of disqualification.
(2) Where the holder of the licence appeals against the order and the disqualification is suspended under section 39 of this Act, the period of disqualification shall be treated for the purpose of subsection (1) above as beginning on the day on which the disqualification ceases to be suspended.
39 Suspension of disqualification pending appeal
(1) Any court in England and Wales (whether a magistrates' court or another) which makes an order disqualifying a person may, if it thinks fit, suspend the disqualification pending an appeal against the order."
This shows, so the argument runs, that when Parliament confers power on a court to disqualify a person from a specific date, but wishes it to have power to suspend the disqualification pending appeal it makes express provision for that purpose, including the reimposition of the disqualification for the full period if the appeal fails. By contrast in this case not only is there no express power to suspend the disqualification but the exercise of any implied power would shorten the period for which the lower court had made provision.
The Secretary of State submits further that there is no need for such a power as the court is expressly empowered by ss.1(1) and 17 to grant leave to act as a director etc. notwithstanding the disqualification order.
This is disputed by Mr Bannister. On his behalf it is submitted that the High Court and the Court of Appeal have inherent jurisdiction to stay proceedings including the stay or suspension of orders as recognised and preserved by s.49(3) Supreme Court Act 1981. It is submitted that it would require clear words to oust that jurisdiction and that Parliament cannot have intended to do so by the words in s.1 Company Directors Disqualification Act which are no more than a definition of what a disqualification order is. It is suggested that the time which inevitably lapses between the events in question and the order do not necessitate the order being effective forthwith and that the power to grant leave to act is no substitute for a power to stay an order pending an appeal.
As a riposte to the argument based on the inherent jurisdiction of the High Court and the Court of Appeal counsel for the Secretary of State pointed out that the County Court has no inherent jurisdiction so that if the argument for Mr Bannister were right it would reveal an inexplicable difference between the powers of the two courts before whom the application for a disqualification order might come. Counsel for the Secretary of State frankly accepted that on his argument Rule 9 of the Insolvent Companies (Disqualification of Directors) Rules was ultra vires as it did not on any view "give effect to" s.6 of the Company Directors Disqualification Act 1986 and the disqualification order as defined by s.1 of that Act which s.6 required to be made.
The only case to which we were referred in which these and related questions have arisen is Re Auto Electro and Powder Finishers in which Chadwick J gave judgment on 5th April 1995. In that case a disqualification order had been made and suspended pending an application for leave to act as a director of a specified company under s.17....
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