The Official Receiver (Applicant/Respondent) v Daniel Peter Hannan (Respondent/Appellant)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MORRITT,LORD JUSTICE WALLER,LORD JUSTICE SIMON BROWN,and |
| Judgment Date | 14 March 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J0314-11 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | CHANI 96/1607/B |
| Date | 14 March 1997 |
[1997] EWCA Civ J0314-11
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2
Lord Justice Simon Brown
Lord Justice Morritt
and
lord Justice Waller
CHANI 96/1607/B
MR A NEWMAN QC and MR K KHALIL (Instructed by Mills & Reeve, Cambridge CB2 1PH) appeared on behalf of the Appellant.
MR W CHARLES and MR MALCOLM DAVIS-WHITE (Instructed by the Treasury Solicitor, London SW1H 9JS) appeared on behalf of the Respondent.
THE SECOND RESPONDENT did not appear and was unrepresented.
Friday 14th March 1997
This is an appeal of the first defendant Mr Hannan, brought with the leave of the judge, from the order of Harman J made on 28th October 1996 whereby, pursuant to RSC Ord. 20 r.11, he corrected the order of HH Judge Bromley QC made on 9th July 1991 so as fully to accord with s.1 Company Directors Disqualification Act 1986. The appeal raises two issues, namely, whether that rule conferred jurisdiction to make, and if so whether in the exercise of his discretion Harman J should have made, the order he did.
Before turning to the facts of the case it is necessary to set out the material provisions of the Company Directors Disqualification Act 1986. They are ss.1(1), 6(1) and 13 which, so far as relevant, provide:
1. Disqualification Orders: general
(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 in the promotion, formation or management of a company for a specified period beginning with the date of the order.
…….
6. Duty of Court to disqualify unfit directors of insolvent companies
(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),
(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) make him unfit to be concerned in the management of a company.
…….
13. Criminal penalties
If a person acts in contravention of a disqualification order or of section 12(2), or is guilty of an offence under section 11, he is liable —
(a) on conviction on indictment, to imprisonment for not more than 2 years or a fine, or both; and
(b) on summary conviction, to imprisonment for not more than 6 months or a fine not exceeding the statutory maximum, or both.
Mr Hannan was a director of Cannonquest Ltd from shortly after its incorporation in 1976 until it was wound up by the court on 16th March 1988. It had carried on the business of heating and plumbing merchants and contractors under the style of Southern Heating and Plumbing Merchants. When it was wound up it was estimated that it had a deficiency with regard to its creditors of over £200,000.
On 15th November 1989 the Official Receiver commenced proceedings against Mr Hannan under the Company Directors Disqualification Act in respect of his conduct of the affairs of Cannonquest Ltd. As was conventional at the time the Originating Summons by which the proceedings were commenced sought an order under s.6 of the Act that Mr Cannon should not without the leave of the court be "a director of, or in any way whether directly or indirectly be concerned or take part in the promotion formation or management of a company" for such period between two and fifteen years as the court should think fit.
The Official Receiver's application came before HH Judge Bromley QC sitting as a deputy judge of the Chancery Division. On 8th July 1991 he gave judgment. Having set out the facts and his findings, he stated, at page 32 of the transcript
"In my judgment the allegations made by the official receiver have been more than fully made out in the respects I have indicated. This was a company hopelessly insolvent and with quite inadequate books before the end of 1986 to the knowledge of Mr Hannan and Miss Oxley, and they then proceeded to strip out it's assets in circumstances of grave irresponsibility for their own advantage. I am satisfied as to each that their conduct makes them unfit to be directors of a company or to be concerned in the promotion, formation or management of a company within the meaning of section 1 (1) (a) and (d) respectively of the Company Directors Disqualification Act 1986, without leave of the court."
"I appreciate that Mr Hannan is now running another company and effect on him, and I add perhaps on others, of any order I may make will be grave. Having reached the conclusion which I have it is however my duty to make orders under section 6 (1). I shall tomorrow hear counsel as to what period in each case I should specify."
The matter was then adjourned to the following day so that counsel might make submissions as to the length of the period of disqualification and in mitigation. At the commencement of that hearing the judge observed to counsel for Mr Hannan that the Official Receiver sought an "order under both section 1(1)(a) and (d)". Counsel agreed and indicated that she accepted that an order should be made "relating to both (a) and (d)" and her submissions would be confined to the period for which Mr Hannan should be disqualified. The judge commenced his judgment regarding the period of disqualification by observing that in the light of his judgment given the previous day he was required by the Act to impose some disqualification. After setting out the various considerations which had been urged on him he concluded, at page 59 of the transcript, that he proposed "to impose a six year disqualification in the case of Mr Hannan".
The order which was drawn up in consequence of those judgments provided
"pursuant to Section (6) of the Company Directors Disqualification Act 1986 that the Respondent..the said Daniel Peter Hannan..shall not without the leave of the Court be a director of a company or in any way whether directly or indirectly be concerned or take part in the promotion formation or management of a company for a period of six years beginning on 30th July 1991…"
On 4th October 1995 Mr Hannan was charged with "being a director in contravention of a disqualification order contrary to s.13 Company Directors Disqualification Act 1986" in that he had, so it was alleged, acted as such in relation to Frank Love Group plc and Premier Plumbing Centres plc between 29th July 1991 and 29th October 1992.
Shortly before then, on 23rd May 1995, Mr Robert Reid QC sitting as a deputy judge of the Chancery Division had decided in Re Gower Enterprises Ltd (1995) 2 BCLC 210 that a disqualification order within s.1 must contain a disqualification from acting in any of the capacities a) to d) set out therein. In so holding, though disapproving the then normal practice of only referring in the order to capacities a) and d), he was concurring in similar views previously expressed by Lindsay J in Re Polly Peck International plc (1994) 1 BCLC 574. The same conclusion was later reached by Blackburne J in Seagull Manufacturing Company Ltd (No.3) (1996) 1 BCLC 51 and Mr David Neuberger QC in Re Brian Sheridan Cars Ltd (1996) 1 BCLC 327. For reasons set out in a schedule to his written submissions the Official Receiver does not challenge those decisions.
However, in consequence of the decision of Mr Robert Reid QC, Mr Hannan took the point that he could not be guilty as charged because, whatever else it was, the order made by Judge Bromley was not a disqualification order within the meaning of those words in ss.1 and 13 because it omitted the capacities specified in s.1(1)(b) and (c). Accordingly, on 23rd July 1996, the Official Receiver applied to the court for an order for the insertion into the order of Judge Bromley of the missing capacities. The jurisdiction on which he relied is RSC Ord.20 r.11, colloquially known as the slip rule, and Insolvency Rule 7.47(1). It was not disputed that both rules are applicable to proceedings under the Company Directors Disqualification Act. They are in the following respective terms
RSC Ord. 20 r.11. "Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on motion or summons without an appeal."
Insolvency Rule 7.47 "Appeals and reviews of court orders (winding up)
7.47(1) [Powers of courts] Every court having jurisdiction under the Act to wind up companies my review, rescind or vary any order made by it in the exercise of that jurisdiction."
That application came before Harman J. He considered that he had jurisdiction under RSC Ord.20...
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