Secretary of State for Trade and Industry v Langridge
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BALCOMBE,LORD JUSTICE LEGGATT,LORD JUSTICE NOURSE |
| Judgment Date | 12 February 1991 |
| Judgment citation (vLex) | [1991] EWCA Civ J0212-2 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 91/0047 |
| Date | 12 February 1991 |
[1991] EWCA Civ J0212-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR. JUSTICE MUMMERY)
Royal Courts of Justice.
Lord Justice Nourse
Lord Justice Balcombe
Lord Justice Leggatt
91/0047
MR. A.W.H. CHARLES and MR. D. RICHARDS (instructed by the Treasury Solicitor) appeared on behalf of the Applicant.
MR. E. BANNISTER (instructed by Messrs. Chapman & Wilson, Solicitors, Brighton) appeared on behalf of the Respondent.
We have before us two appeals:
1) An appeal, with the leave of the judge, by the Secretary of State for Trade and Industry ("the applicant") from an order of Mr. Justice Mummery dated 18th May 1990 directing that the applicant's originating summons applying for a disqualification order against the respondent, Graham John Langridge, under section 6 of the Company Directors Disqualification Act 1986 ("the 1986 Act") be struck out. This appeal raises a question of considerable general importance about the effect of section 16 (1) of the 1986 Act.
2) An appeal by Mr. Langridge from an order of Mr. Justice Mummery, also dated 18th May 1990, whereby he granted to the applicant leave to commence out of time proceedings against Mr. Langridge seeking a disqualification order under section 6 of the 1986 Act.
The facts, which are common to both appeals, are comparatively simple. Mr. Langridge was a director of Cedac Limited. On 22nd April 1987 an administrative receiver of Cedac was appointed and for the purpose of sections 6 and 7 of the 1986 Act Cedac became insolvent on that date—see section 6 (2) (c). That had the further result that, except with the leave of the court, no application under section 6 for a disqualification order against Mr. Langridge could be made after 21st April 1989, that being the date when the period of two years beginning with the date when Cedac became insolvent expired—see section 7 (2). Under section 16 (1) of the 1986 Act the applicant had to give not less than ten days' notice to Mr. Langridge of his intention to apply for a disqualification order. Under the law as stated by Mr. Justice Harman in Re Jaymar Management Ltd. [1990] B.C.C. 303 (in which judgment was delivered on 20th December 1989) that period of ten days had to be calculated exclusive of the day on which the notice of intention was given and of the day on which the proceedings were issued. The applicant does not now challenge this proposition. Accordingly the last day for service of the such a notice in the present case, if proceedings were to be commenced before the expiry of the two-year limitation period on 21st April 1989, was 10th April 1989. In fact a letter dated 10th April 1989 giving notice to Mr. Langridge of the applicant's intention to apply for a disqualification order was served on Mr. Langridge on 11th April 1989.
The applicant's originating summons applying for a disqualification order was issued on 21st April 1989. At that time neither party had appreciated that the letter served on 11th April 1989 had not given to Mr. Langridge the length of notice required by section 16 (1). That fact was first appreciated after the parties had learned of the judgment of Mr. Justice Harman in Re Jaymar Management Ltd. (supra). Thereupon Mr. Langridge on 22nd March 1990 issued a summons to strike out the applicant's originating summons of 21st April 1989 and on the following day the applicant issued an originating summons for leave to start new proceedings out of time, should that prove to be necessary. Both matters came on before Mr. Justice Mummery with the results I have indicated above.
Section 16 (1) of the 1986 Act is in the following terms:
"A person intending to apply for the making of a disqualification order by the court having jurisdiction to wind up a company shall give not less than ten days' notice of his intention to the person against whom the order is sought; and on the hearing of the application the last- mentioned person may appear and himself give evidence or call witnesses."
A number of points about the subsection are immediately obvious.
(1) The two parts of the subsection are concerned with wholly different subject matters. This case is concerned only with the first part of the subsection.
(2) The language of that part is mandatory—" shall give not less than ten days' notice…"
(3) The requirement to give notice applies only when the application for a disqualification order is to "the court having jurisdiction to wind up the company". As will be seen there are other courts which have power to make such an order.
(4) Apart from informing the recipient of the intention to apply for a disqualification order, the contents of the notice are not specified. In particular it is not provided that the notice should specify the grounds for the application.
(5) Of particular importance for the present case, neither the subsection nor any other provision of the 1986 Act specifies what is to happen if the requisite notice is not given.
The problem of what is the consequence when a statutory provision or regulation which ought to have been complied with, but is not, is one which has frequently occupied the courts. There is a long line of relevant authority, of which two of the most important cases are Howard v. Bodington (1877) 2 P.D. 203 and London & Clydeside Estates Ltd. v. Aberdeen District Council [1980] 1 W.L.R. 182. This line of authority was most recently considered by this court in In re T (a minor) [1986] Fam. 160. I wish to repeat what I said in my judgment in that case (at page 178) that nothing which I say in the course of this judgment indicates a view on my part that it is not necessary to comply strictly with the letter of section 16 (1) of the 1986 Act. Of course it is. Nevertheless it is still necessary to consider what is the effect of non-compliance with that provision.
I do not think it is necessary to repeat at this stage of this judgment the passages which I cited in In re T (a minor) (supra) from the judgment of Lord Penzance in Howard v. Bodinqton (supra); from the judgment of Sir Arthur Channel1 in Montreal Street Railway Co. v. Normandin [1917] A.C. 170; and from the speech of Lord Hailsham of St. Marylebone L.C. in the London & Clydeside Estates case (supra). The relevant principles are fairly summarised in the passage from de Smith's Judicial Review of Administrative Action, 4th edition, (1980) page 142 which I now repeat:
"When Parliament prescribes the manner or form in which a duty is to be performed or a power exercised, it seldom lays down what will be the legal consequences of failure to observe its prescriptions. The courts must therefore formulate their own criteria for determining whether the procedural rules are to be regarded as mandatory, in which case disobedience will render void or voidable what has been done, or as directory, in which case disobedience will be treated as an irregularity not affecting the validity of what has been done (though in some cases it has been said that there must be 'substantial compliance' with the statutory provisions if the deviation is to be excused as a mere irregularity). Judges have often stressed the impracticability of specifying exact rules for the assignment of a procedural provision to the appropriate category. The whole scope and purpose of the enactment must be considered, and one must assess 'the importance of the provision that has been disregarded, and the relation of that provision to the general object intended to be secured by the Act.' In assessing the importance of the provision, particular regard may be had to its significance as a protection of individual rights, the relative value that is normally attached to the rights that may be adversely affected by the decision and the importance of the procedural requirement in the overall administrative scheme established by the statute. Furthermore, much may depend upon the particular circumstances of the case in hand. Although 'nullification is the natural and usual consequence of disobedience', breach of procedural or formal rules are likely to be treated as a mere irregularity if the departure from the terms of the Act is of a trivial nature, or if no substantial prejudice has been suffered by those for whose benefit the requirements were introduced, or if serious public inconvenience would be caused by holding them to be mandatory, or if the court is for any reason disinclined to interfere with the act or decision that is impugned."
There was no dispute between the parties before us that these are the relevant principles. The problem, as always, is the application of these principles to the provisions of the particular statute or regulation in question. (Among the cases to which we were referred was Barker v. Palmer (1881) 8 Q.B.D. 9, a decision of the Queen's Bench Divisional Court. Notwithstanding the apparent approval of this case by another Queen's Bench Divisional Court in Reg. v. Pontypool Gaming Licensing Committee, ex parte Risca Cinemas Ltd. [1970] 1 W.L.R. 1299, I have to say that I find it difficult to reconcile the decision in Barker v. Palmer with the principles set out above).
It will be convenient to consider separately the following questions:
1) What is the scope and purpose of the 1986 Act?
2) What is the importance of the ten-day notice requirement in section 16 (1) ?
3) What is the relation of that requirement to the general object intended to be secured by the 1986 Act?
4) What are the relevant circumstances of the present case?
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