Secretary of State for Trade and Industry v Bairstow

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeThe Vice-Chancellor
Judgment Date11 Mar 2003
Neutral Citation[2003] EWCA Civ 321
Docket NumberCase No: A3/2002/0414

[2003] EWCA Civ 321

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM COMPANIES COURT

MR. JUSTICE PUMFREY

Before:

The Vice-Chancellor

Lord Justice Potter and

Lady Justice Hale

Case No: A3/2002/0414

Between:
The Secretary Of State For Trade And Industry
Claimant
and
Bairstow
Defendant

Mr. Michael Todd QC and Mr. Philip Gillyon (instructed by the Treasury Solicitor) for the Claimant

Mr. Charles Purle QC (instructed by Messrs Jones Day Gouldens) for the Defendant

The Vice-Chancellor

Introduction

1

The appellant, Mr John Bairstow, was the Chairman and joint managing director of Queen's Moat House plc ("QMH"). He was dismissed on 18th August 1993. Later that year he (and others of his co-directors) instituted proceedings against QMH claiming damages for wrongful dismissal. QMH claimed that he was rightly dismissed and alleged that he had been guilty of grave misconduct, neglect in the performance of his duty and breach of his service agreement. The action was tried by Nelson J between 6th October 1997 and 7th September 1998. Nelson J gave two judgments, the first on 23rd July 1999 and the second, after further argument, on 3rd December 1999. Limited leave to appeal was granted by Simon Brown and Rix LJJ to Mr Bairstow on 26th October 2000. That appeal was dismissed by the Court of Appeal on 17th May 200Leave to appeal was granted to Mr Bairstow by the House of Lords but, as the parties compromised their differences, has not proceeded.

2

In the meantime, in February 2000, the Secretary of State for Trade and Industry commenced these proceedings under s.8 Company Directors Disqualification Act 1986 (" CDDA") seeking a disqualification order, as defined in s.1, against Mr Bairstow (and three of his fellow directors of QMH) on the ground that his conduct in relation to QMH made him unfit to be concerned in the management of a company. The application is supported by affidavits of Mr Adrian Burn, a chartered accountant and one of the persons appointed by the Secretary of State under s.432(2) Companies Act 1985 to investigate the affairs of QMH, and Mr J.R.Sibley, then a director and the Deputy Inspector of Companies in the Company Law and Investigations Directorate of the Department of Trade and Industry. Mr Burn sets out at length and in detail the criticisms of the conduct of Mr Bairstow on which the Secretary of State relies and the facts and documents on which they are based. Exhibit "BAFB 5" contains statements made by persons other than the respondents to the application and extracts from transcripts of interviews with them. Mr Sibley describes the involvement of the Secretary of State in the appointment of inspectors and other matters relating to his decision to institute these proceedings under s.8 CDDA. In paragraphs 5 to 9 he draws attention to the proceedings before Nelson J, the substantial identity of the issues in those proceedings and the conduct of Mr Bairstow on which the Secretary of State relies in these and the conclusions of Nelson J in relation to those issues in the two judgments to which I have referred.

3

On 5th March 2001 Mr Bairstow swore an affidavit in answer to those of Mr Burn and Mr Sibley. It runs to 226 pages though much of it consists of quotations from transcripts of evidence given by others to the inspectors or to Nelson J. The various points made by Mr Bairstow (or other respondent) were dealt with by Mr Burn in a further lengthy affidavit sworn by him on 15th June 2001. On the same day Mr Gardner, the successor in office of Mr Sibley, swore another affidavit as to the course of Mr Bairstow's appeals from the judgments of Nelson J.

4

On 4th December 2001 there was a pre-trial review before Pumfrey J. The Secretary of State was represented by Counsel, Mr Bairstow appeared in person. Pumfrey J ordered, amongst other things,:

1) that [The Secretary of State] and Mr Bairstow be not entitled to challenge but be bound by the findings made by [Nelson J] in proceedings between Mr Bairstow (and others) and [QMH] by judgments dated 23rd July 1999 and 3rd December 1999…

…..

3) that Mr Bairstow be permitted to file and serve further evidence dealing with mitigation."

On 20th February 2002 Pumfrey J granted Mr Bairstow permission to appeal on the ground that the principle on which he had relied should be examined by the Court of Appeal.

5

Accordingly the issue for our determination is whether the judge was entitled to make the order he did. In his judgment Pumfrey J set out the basic facts, described the extensive overlap between the issues before Nelson J and these proceedings, considered the nature of disqualification proceedings and then turned to the principle on which the Secretary of State relies. That is the principle described and applied in Hunter v Chief Constable for the West Midlands [1982] AC 529 that it is an abuse of the process to initiate

"proceedings in a court of justice for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the court by which it was made."

6

Pumfrey J referred to a number of subsequent cases in which that principle has been considered and said:

"In my judgment, the over-riding question is, what approach is most likely to achieve justice? In my view, the interests of justice are unlikely to require a second investigation of facts which have already been the subject of exhaustive examination over many days in closely fought civil proceedings and in circumstances where the potential unfairness of the proceedings has already been examined by a court competent to do so and which has rejected the suggestion that there was any substantial unfairness in those proceedings. Of course, in making any pre-emptive decision there is always a risk of injustice, but the magnitude of that risk has to be assessed against the whole background of the case and, in particular, the nature of the previous proceedings. Here I do not consider that the question is in any way difficult to decide."

7

Pumfrey J considered particular submissions made to him by Mr Bairstow and concluded that

"I have come to the conclusion that once the facts have been established in the judgment of Nelson J it would require very compelling fresh considerations before a re-examination of those facts could be justified."

He determined that such a re-examination could not be justified and made the order under appeal.

8

Counsel for Mr Bairstow submits that the judge was wrong. He contends that the judgments of Nelson J are not binding by way of estoppel as between the Secretary of State and Mr Bairstow and, relying on Hollington v F.Hewthorn & Co.Ltd [1943] KB 587 and subsequent cases, that the factual findings and conclusions of Nelson J are not evidence of those facts. He submits that the wide powers conferred on judges by CPR Rules 3.1 and 32.1 do not enable them to make admissible as evidence that which in law is not. He contends that the principle relied on by the Secretary of State does not apply to one, such as Mr Bairstow, who has not initiated proceedings for the purpose of mounting a collateral attack on a final decision of a court of competent jurisdiction. Why, he submits, should a defendant or respondent such as Mr Bairstow be stigmatised as abusing the process of the court because he insists that the serious allegations made against him are proved by legally admissible evidence?

9

Counsel for the Secretary of State accepts that the judgments of Nelson J are not binding by way of estoppel as between the Secretary of State and Mr Bairstow. He contends that the decision of the Court of Appeal in Hollington v F.Hewthorn & Co.Ltd [1943] KB 587, insofar as it remains good law, applies only to prior decisions of a court exercising a criminal jurisdiction. But, he submits, even if the factual findings and conclusions of Nelson J are not admissible as evidence in these proceedings of facts so found the decision of the House of Lords in Hunter v Chief Constable for the West Midlands [1982] AC 529 and other cases to the same effect show that it can be and is an abuse of the process for Mr Bairstow to require the same issues to be relitigated.

Proceedings under the Company Directors Disqualification Act 1986

10

Before considering the extent and proper application of the principles on which each side relies it is necessary to explain the nature of the proceedings under CDDA and the procedure by which they are conducted. A disqualification order prohibits the person against whom it is made, otherwise than with the leave of the court, from acting as a director or liquidator of a company or as a receiver or manager of the property of a company or from being concerned or taking part, directly or indirectly, in the formation, promotion or management of a company. Such an order may be made in any of the circumstances prescribed by ss.2 to 8. In the case of applications under ss.6 to 8 an order may be made if the court is satisfied that the conduct as a director of a company of the person against whom the order is sought makes him unfit "to be concerned in the management of a company". (See ss.6(1)(b) and 8(2) CDDA)

11

In determining whether a person's conduct makes him unfit to be concerned in the management of a company the court is required by s.9 to have regard to the matters specified in schedule 1 part I and, where the company in question has become insolvent to the matters specified in part II. As QMH has not become insolvent...

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