Secretary of State for Business, Energy and Industrial Strategy v Luthfur Rahman
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 14 August 2020 |
| Neutral Citation | [2020] EWHC 2213 (Ch) |
| Date | 14 August 2020 |
| Court | Chancery Division |
| Docket Number | Case No: CR-2019-BRS-000005 |
[2020] EWHC 2213 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
INSOLVENCY AND COMPANIES LIST (ChD)
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: CR-2019-BRS-000005
Simon Passfield (instructed by Gowling WLG) for the Claimant
John Dickinson (instructed by Gregg Latchams) for the Defendant
Hearing dates: 28–29 July 2020
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.
Introduction
This is my judgment on a claim brought by the Secretary of State for Business, Energy and Industrial Strategy against the defendant, Luthfur Rahman, for an order under section 8 of the Company Directors Disqualification Act 1986. The allegation against the defendant is that he was a de facto director (though not a de jure or a shadow director) of a company called Spiceroy Restaurant Ltd (“the company”), and that his conduct as such director makes him unfit to be concerned in the management of a company.
The company carried on the business of an Indian restaurant, known as ‘Viceroy Restaurant,’ in Dunkeswell, Honiton, Devon. The conduct complained of is the employment, in June 2017, of staff who did not have the right to be employed in the UK, contrary to the Immigration, Asylum and Nationality Act 2006. The defendant denies that he was any kind of director of the company. On the other hand, he does not deny that persons were employed by the company who did not have the right to work in the UK. Essentially, therefore, the defendant's defence is that he was not a de facto director of the company. The sole de jure director of the company was a Mr Walie Sharof, who has since given undertakings to the claimant and therefore is not pursued for an order under the 1986 Act.
The necessary notice of intention to proceed against the defendant was given under section 16 of the 1986 Act on 18 April 2018. On 14 January 2019, the claim form was issued. This is not a claim under section 6 of the 1986 Act, which only applies where a company has become insolvent. Instead, it is a claim under section 8 of the 1986 Act, which applies where the claimant considers that it is expedient in the public interest that a disqualification order should be made against a person who is, or has been, a director or shadow director of a company. For these purposes, as I say later, a de facto director is a director. If the court considers that a disqualification order should be made under this section, the court has the power to make such an order against the defendant for up to 15 years.
Evidence
The claim was supported by an affirmation from Mark Bruce dated 3 January 2019, and an affirmation from Gaynor Morgan dated 20 December 2018. Mr Bruce is an investigator in the Insolvency Service, and it is effectively on his recommendation that the claimant brings this claim. Ms Morgan is part of the Home Office's Civil Penalty Collection Team. The defendant made a witness statement in opposition to the claim dated 15 May 2019. By virtue of the Practice Direction for Directors' Disqualification Proceedings, para 8.1, written evidence in a claim under the 1986 Act is to be by affidavit or affirmation, and not by witness statement. At the trial, therefore, I received an undertaking from counsel on behalf of the defendant that the defendant would make an affirmation verifying the contents of his witness statement.
In response to the defendant's witness statement, further affirmations were made by Ms Morgan (on 26 June 2019) and Mr Bruce (on 27 June 2019), and also by Benjamin Chacksfield (on 21 June 2019) and Susan Allard (on 24 June 2019). Mr Chacksfield and Ms Allard were two of the five-person Home Office immigration service team that inspected the restaurant without warning on 2 June 2017 and discovered the illegal workers. No evidence was filed (by either party) from the illegal workers or from Mr Sharof.
At the hearing, there were tendered for cross-examination the following witnesses: Gaynor Morgan, Benjamin Chacksfield, Susan Allard, and Luthfur Rahman. The defendant did not require Mr Bruce to be so tendered. I will give here my impressions of those witnesses that I saw. Mr Chacksfield was a straightforward and honest witness, at times rather cautious, but obviously truthful. Ms Morgan was perhaps even more cautious, and more self-protective, but still telling the truth as far as she knew it. Ms Allard was a very open and straightforward witness, and again obviously truthful, though, as I say later, not necessarily correct in her recollection.
The defendant was a more complex witness. He saw everything in business terms, and looked at the big picture rather than the detail. He accepted fairly those points which went against him, but resisted any suggestion that he had any involvement in running the restaurant. His background and culture were different from those of the other witnesses and I made allowance for that. Overall, I was satisfied that he was telling me the truth, at least so far as he saw it. Again, that does not mean he was always right.
Facts found
In this case I find the following facts. The defendant is a restaurateur whose family settled in London, but he moved to the south-west of England, and opened a restaurant called “The Viceroy” in Yeovil. Subsequently he was concerned in other restaurants in the south-west. One of them was also called “Viceroy” (but without the definite article) in Dunkeswell in 2011. The company that originally ran this restaurant was called Bespoke Restaurant Ltd. The defendant gave up his economic interest in this company in 2012 but continued as a director until 2014, and Mr Sharof (whom he knew) was subsequently appointed a director. It appears that the business was carried on for some time, but then Mr Sharof gave it up.
From at least 2012 onwards, the defendant organised internet advertising for the restaurants in which he was concerned by gathering details of each restaurant, together with the distinguishing logo on a single webpage under the heading “Viceroy South-West”. Initially there were six such restaurants, each with contact details including telephone number, separate website and email address. One of these was “Viceroy” in Dunkeswell. The archived webpages that I was shown, giving a snapshot at various dates through to 2017, show that some restaurants joined the webpage and others left it. But the “Viceroy” in Dunkeswell was always there, even after 2012, when according to the defendant he had given up his interest, and during 2017, when the events the subject of this claim occurred, but the defendant said he had no interest. The defendant explained this as a cheap form of advertising. His evidence was that this did not show that he owned the restaurants, or even that he ran them. Instead it purported to show a group of Indian restaurants in the south-west which might attract customers who had been to one of them to visit another of them.
On 15 June 2016, the company was incorporated to carry on the business of the “Viceroy” in Dunkeswell. The sole director shown on the register was Mr Sharof. The defendant's evidence (effectively unchallenged) was that Mr Sharof owned all the shares and also the lease of the premises in Dunkeswell. At that time, those premises did not have a licence to sell alcohol, which would have considerably restricted its ability to trade as a restaurant. The defendant's evidence, which I accept, was that Mr Sharof was struggling, and needed to get an alcohol licence as soon as possible. In order to apply for a premises licence, a person who already has a personal licence must be nominated as the designated premises supervisor for the new premises. The defendant had such a licence. Mr Sharof did not.
On 11 February 2017 an application was made in the name of the defendant for a premises licence for the “Viceroy” in Dunkeswell. (Strictly, it was not necessary that it be in his name; it was only necessary that he be nominated designated premises supervisor.) In his evidence, the defendant explained this as a personal favour to Mr Sharof, whom he knew, and with whom he had been in business. He denied that it showed that he had an interest in this business. He explained that this enabled Mr Sharof to open the restaurant more quickly. If this is true, it may be that the defendant was exposing himself to prosecution under the licensing legislation. But I am not concerned with that now. The question is whether I accept his evidence. For the reasons given hereafter, I do accept this evidence. I find that the defendant had no interest in the restaurant at this date, and was merely doing Mr Sharof a favour. On 22 March 2017 (so within six weeks of application) the premises licence was granted.
On 2 June 2017, a team of five Home Office immigration officers visited and inspected the premises in the early evening, looking for migrant workers without permission to work. This team included Mr Chacksfield and Ms Allard (who was team leader). They arrested four migrant workers, whose surnames were Ahamed, Hussain, Ahmed, and Uddin. They also spoke to the chef (a Mr Ali) who was a UK national, and indeed gave him certain notices. Neither Mr Sharof nor the defendant was present. I will consider the evidence in more detail in a moment, but I accept that the immigration officers asked three of the four migrant workers who...
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