Secretary of State for Trade and Industry v Hall
| Jurisdiction | England & Wales |
| Judge | Mr Justice Evans-Lombe,Mr. Justice Evans-Lombe |
| Judgment Date | 28 July 2006 |
| Neutral Citation | [2006] EWHC 1995 (Ch) |
| Date | 28 July 2006 |
| Court | Chancery Division |
| Docket Number | Case No: 4359 of 2005 |
[2006] EWHC 1995 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. JUSTICE EVANS-LOMBE
Case No: 4359 of 2005
Mark Cunningham QC (instructed by Howes Percival) for the Claimant
The first Defendant did not attend and was not represented
Nigel Adams (Lay representative) for the 2 nd Defendant
Hearing date: 29 th & 30 th June 2006
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is am application by the Secretary of State for Trade and Industry ("The Secretary of State") under the Company Directors Disqualification Act 1986 (" CDDA") against Ken Hall ("Mr Hall") and John Andrew Henry Nuttall ("Mr Nuttall") as directors of Mercury Solutions UK Ltd ("Mercury") for their disqualification from acting as directors under section 6 of the CDDA.
The background facts of these proceedings are as follows: Legal Directors Ltd ("LDL") was incorporated on the 9 th May 1997. At all material times since its incorporation Mr Nuttall and his brother Philip Nuttall have each held one of LDL's two issued shares. From incorporation until the 6 th April 1999 LDL's only director was a company, Procris Holdings Ltd. Thereafter from the 6 th April 1999 until the 17 th July 2003 Mr Nuttall was LDL's only director.
LDL was used by Mr Nuttall for the purpose of a business of providing secretarial and other administrative services to businessmen who wished to conduct their business through limited companies. One of the services was the provision of corporate directors of such companies.
On the 21 st December 2000 Mercury was incorporated and on the 12 th February 2001 LDL was appointed a director of Mercury. LDL became a corporate director of a number of other companies including Shearing Ltd, Vallis Vale Developments Ltd, See More Business Ltd, Pacifico Software Consultancy Ltd, Sunquest Holidays Mallorca Ltd and Walkers of Banbury 2000 Ltd ("the Six Companies").
Mercury commenced trading in May 2001 its business being the provision of foreign language translation. On the 10 th January 2003 Tom Ahlmann ("Mr Ahlmann") was appointed a director of Mercury in addition to LDL. On the 15 th May 2003 Mercury ceased trading and it was placed in insolvent liquidation on the 7 th July 2003. A statement of affairs of Mercury verified by affidavit by Mr Ahlmann shows a deficiency against creditors of £45,512. The Liquidator does not anticipate that any dividend will be paid in the liquidation. It seems that the business of Mercury was managed by Mr Ahlmann and Mr Hall who were the only directors who were paid a salary, £18,000 each in 2001 and thereafter £1,500 a month for five months. It seems that Mercury had a turnover of up to £23,000 a month during its period of trading. An unsuccessful attempt was made to increase this to £40,000 per month by the employment of additional staff and advertising. In the result Mercury's collapse was precipitated in April 2003 by the loss of an important client who contributed £15,500 per month of its turnover.
These proceedings were originally commenced against Mr Ahlmann in addition to Mr Hall and Mr Nuttall. On the 22 nd May 2003 Mr Ahlmann entered into an undertaking with the Secretary of State not to act as a director of companies for a period of five years and, in consequence, the proceedings were discontinued against him. Mr Hall, although duly served, has not reacted to the proceedings in any way. I was informed that he lives in Denmark. He did not appear when the case was called on before me. He has failed to comply with an "unless" order of Mr Registrar Jacques of 21 st November 2005 to file evidence in opposition.
In the affidavit of Mr Elliott Burns, a chief examiner in the investigations directorate of the Insolvency Service, at paragraph 52, there is set out a "statement of matters determining unfitness" in respect of Mr Hall and Mr Nuttall as follows:-
"Ken Hall
He failed to ensure that Mercury maintained or preserved proper accounting records; alternatively he failed to deliver them to the Liquidator. As a consequence of this the liquidator is unable to establish or verify matters concerning the company's trading life and position including the following specific matters:
• Mercury's turnover cannot be established or verified, and nor can its expenditure. In particular it cannot be established or verified whether cheques totalling £180,419 and described in the bank statements as "Encashed cheque" or "Cash" were spent to the benefit of Mercury. Nor can the company's expenditure on wages, salaries and outsourced work be established or verified.
• The position regarding the company's compliance with its obligations regarding PAYE, NIC and VAT cannot be established or verified.
• Mercury's position regarding its liabilities to trade and expense creditors cannot be established or verified.
• The details of various transactions that appear to relate to property cannot be established or verified. Nor is it possible to establish or verify that these transactions were to the benefit of Mercury.
Jonathan Andrew Henry Nuttall
Mercury
(i) He abnegated his duties as a director of Mercury by failing either to be involved, or to be adequately involved, in the management of Mercury.
(ii) As a director of Mercury he abnegated his responsibilities to ensure that Mercury maintained or preserved proper accounting records; alternatively he failed to deliver them to the Liquidator. As a consequence of this the liquidator is unable to establish or verify matters concerning the company's trading life and position including the following specific matters:
Mercury's turnover cannot be established or verified, and nor can its expenditure. In particular it cannot be established or verified whether cheques totalling £180,419 and described in the bank statements as "Encashed cheque" or "Cash" were spent to the benefit of Mercury. Nor can the company's expenditure on wages, salaries and outsourced work be established or verified.
The position regarding the company's compliance with its obligations regarding PAYE, NIC and VAT cannot be established or verified.
Mercury's position regarding its liabilities to trade and expense creditors cannot be established or verified.
• The details of various transactions that appear to relate to property cannot be established or verified. Nor is it possible to establish or verify that these transactions were to the benefit of Mercury.
Legal Directors Limited
By reference to the matters set out in the draft affidavit of Mr John Jones, which l believe will be sworn and filed in these proceedings:
(iii) He caused Legal Directors Limited to fail to file at Companies House, as required by the Companies Act 1985, documents on behalf of the following companies: Walkers of Banbury 2000 Ltd; Shearing Limited; Pacifico Software Consultancy Limited; Vallis Vale Developments Limited; See More Business Limited; and Sunquest Holidays Mallorca Limited."
The allegations against the Mr Nuttall with relation to LDL arise form the conviction of LDL in the Cardiff Magistrates' Court on the 29 th April 2003 and 22 nd May 2003 arising from its failure to deliver annual returns and from four prior convictions for similar failures. Particulars of these convictions are set out in affidavit of John Jones a manager in the prosecuting solicitors office in Companies House between paragraph 9 and 12 as follows:-
"FAILURES TO FILE DOCUMENTS
Legal Directors, being a director of the companies set out in the table below, was summonsed to appear at Cardiff Magistrates Court on 29 April 2003, in respect of allegations made against it by the Secretary of State for Trade and Industry and which are summarised in the table that follows.
On 29 Apri1.2003, after hearing evidence from Clare Purkiss, Cardiff Magistrates Court convicted Legal Directors of the offences alleged against it in respect of.the above companies (JALJJ1 pages 37–41).
| Company Name | Summary of Allegation |
| Shearing Limited (JALJJ1 pages 1–4). | Failed to deliver to the Registrar of Companies House a copy of the accounts of the company in respect of its financial year ended 31/12/00. |
| Shearing Limited | Failed to deliver to the Registrar of Companies House a copy of the accounts of the company in respect of its financial year ended 31/12/01. |
| Vallis Vale Developments Limited (JALJJ1 pages 5–9) | Failed to deliver to the Registrar of Companies House a copy of an annual return for the year 2002. |
| Vallis Vale Developments Limited | Failed to deliver to the Registrar of Companies House a copy of the accounts of the company in respect of its financial year ended 30/11/00. |
| Vallis Vale Developments Limited | Failed to deliver to the Registrar of Companies House a copy of the accounts of the company in respect of its financial year ended 30/11/01. |
| See More Business Limited (JALJJ1 pages 10–14) | Failed to deliver to the Registrar of Companies a copy of an annual return for the year 2002. |
| See More Business Limited | Failed to deliver to the Registrar of Companies House a copy of the accounts of the company in respect of its financial year ended 30/11/00. |
| See More Business Limited | Failed to deliver to the Registrar of Companies House a copy of the accounts of the company in respect of its financial year ended 30/11/01. |
| Pacifico Software Consultancy Limited (JALJJ1 pages 15 18).. | Failed to deliver to the Registrar of Companies House a copy of an annual return for the year 2001. |
| Pacifico Software Consultancy Limited | Failed to deliver to the... |
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