The Secretary of State for Business, Energy and Industrial Strategy v Mr Nigel Jonathan Robert Lord
| Jurisdiction | England & Wales |
| Judge | Greenwood |
| Judgment Date | 19 January 2022 |
| Neutral Citation | [2022] EWHC 21 (Ch) |
| Docket Number | Case Number CR 2020-001747 |
| Year | 2022 |
| Court | Chancery Division |
[2022] EWHC 21 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (Ch D)
IN THE MATTER OF ASSET LAND INVESTMENT PLC
AND IN THE MATTER OF THE COMPANY DIRECTORS DISQUALIFICATION ACT 1986
Royal Courts of Justice
7 The Rolls Building
Fetter Lane
London
EC4A 1NL
DEPUTY INSOLVENCY AND COMPANIES COURT JUDGE Greenwood
Case Number CR 2020-001747
Mr Christopher Buckley (instructed by The Insolvency Service) for the Claimant
Mr Daniel Lewis (instructed by Sylvester Amiel Lewin & Horne LLP) for the First Defendant
Hearing dates: 2, 3, 4 November 2021
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.
Deputy I.C.C. Judge
Introduction
This is an application made under section 6 of the Company Directors Disqualification Act 1986 (“the CDDA”) by the Secretary of State for Business, Energy and Industrial Strategy (“the Secretary of State”) for disqualification orders against the Defendants by reference to their conduct as directors of Asset Land Investment plc (“the Company”). Proceedings were commenced by Claim Form issued on 11 March 2020.
On 29 October 2021, shortly before the trial was due to begin on 2 November 2021, the Second and Third Defendants, respectively Mrs Victoria Grace and her mother, Mrs Bronwen Banner-Eve, both gave 3 year disqualification undertakings which were accepted by the Secretary of State under section 7 of the CDDA. The trial therefore proceeded substantively against only the First Defendant, Mr Nigel Lord, represented by Mr Daniel Lewis of Counsel; the Secretary of State was represented by Mr Christopher Buckley of Counsel.
Section 6(1) of the CDDA provides:
“ 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), and
(b) that his conduct as a director of that company (either taken alone or taken together with his conduct as a director of one or more other companies or overseas companies) makes him unfit to be concerned in the management of a company.”
By virtue of section 6(4), if an order is made, the minimum period of disqualification is 2 years, and the maximum is 15.
The Requirements of Section 6(1)(a) CDDA
As to Mr Lord, there was no issue in respect of the requirements of section 6(1)(a): he was a director of the Company, and it has become insolvent.
The Company was incorporated on 26 April 2005, with the name “ Asset Land Associates Limited”; it was re-registered as a public limited company and its name was changed to “ Asset Land Investments plc” on 13 January 2006; its current name was adopted on 14 July 2006. Mr Lord was appointed as one of its directors on 17 March 2006, and he resigned on 1 May 2012. Its other directors were Mr David Banner-Eve, who was appointed on 26 April 2005; Mrs Grace, who was appointed on 1 February 2008, and resigned on 14 November 2014; and Mrs Banner-Eve, who was first a director between 9 January 2006 and 31 January 2008, before being re-appointed on 20 May 2008, and resigning on 4 November 2014. Mr and Mrs Banner-Eve were married, and Mrs Grace is Mrs Banner-Eve's daughter.
The Company's shareholders are Mr Banner-Eve, who holds 23,750 ordinary shares (47.5% of those issued), Mrs Banner-Eve, who also holds 23,750, and Lord Associates Taxation and Business Consultants LLP (“LATBC”), of which Mr Lord is a designated member, which holds 2,500 (the remaining 5% of those issued).
As I have said, Mr Lord resigned as a director on 1 May 2012. Subsequently, almost five years later, on 15 March 2017, a winding-up order was made against the Company by Mr Registrar Baister, on a petition presented by the Financial Conduct Authority (“the FCA”) on 25 January 2017. The FCA's petition was presented on the basis of an unpaid interim payment order in the sum of £1,270,000 made against the Company by Andrew Smith J. on 22 March 2013, in proceedings (“the FCA Proceedings”) commenced on 14 June 2012 by the FCA against the Company, Mr Banner-Eve and others, although not against Mr Lord.
By virtue of the FCA Proceedings, and following unsuccessful appeals by the Company and Mr Banner-Eve to both the Court of Appeal (dismissed on 10 April 2014) and the Supreme Court (dismissed on 20 April 2016) it was established, amongst other things, that in contravention of section 19 of the Financial Services and Markets Act 2000 (“ FSMA”) in relation to plots of land at South Godstone in Surrey, and Liphook in Hampshire, the Company had operated what is sometimes referred to as a “land banking scheme” which comprised a “collective investment scheme” within the meaning of section 235 of that Act without being either an authorised or an exempt person. In respect of the regulation of collective investment schemes — described by Lord Sumption in his Judgment in the FCA Proceedings (at [65], [2016] UKSC 17) as being “ one of the more problematic features of the United Kingdom's system of statutory investor protection” — the case against the Company was the first to reach the Supreme Court.
Also as a result of the FCA Proceedings, Mr Banner-Eve was held to have been “ knowingly involved” in the Company's contravention of section 19 of FSMA. He was ordered by Andrew Smith J. to pay £10,000,000 to the FCA. Having not done so, and again, following the appeals referred to above, he was made bankrupt on 21 April 2017, on the FCA's petition presented in the Cambridge County Court. On 30 September 2019, the Secretary of State accepted a 14 year disqualification undertaking from Mr Banner-Eve, on the basis that he had “ caused or allowed” the Company to operate an unauthorised collective investment scheme, and “ caused or allowed” it to make misrepresentations to the public, such that customers had paid £5,910,677, but were unlikely to see any return on their investment, “ the Local Councils having described the land obtained by [the Company] as unlikely for future development, this being contrary to what the customers were told before making their purchase”.
In addition to the FCA Proceedings, there were also criminal proceedings brought against Mr Banner-Eve, as well as against Mr Stuart Cohen and Ms Susan Siggins (both of whom were also defendants to the FCA's claims) — but again, not against Mr Lord. I was shown and told very little about the criminal proceedings, but from a report in the “Newbury Weekly News” (exhibited to the evidence in support of the Secretary of State's case) it seems that the trial lasted 48 days, that the defendants were accused of a “ conspiracy to defraud” (that they “ conned” investors “ into putting £20m into a land banking scheme”), but that the prosecution was unsuccessful (the defendants having denied that “ they set out to rip off customers, blaming the wild claims about potential profits on unscrupulous brokers out to boost their commission”).
In respect of Mr Lord's professional background, experience and expertise, as described in his evidence, and in respect of the circumstances of his appointment as a director of the Company, there was no real dispute.
12.1. Mr Lord's professional career began in June 1982 with HM Inland Revenue, as a direct-entrant Executive Officer. He worked at the East Ham Tax Office until leaving the civil service in December 1985. In January 1986, he became a Tax Senior at the City of London office of Frazer Whiting, Chartered Accountants (as they then were), where amongst other things he managed a portfolio of personal tax returns and computations, and attended to HMRC enquiries. In November 1988, he moved to the City of London office of Neville Russell, Chartered Accounts (as they then were) again as a Tax Senior, with similar responsibilities, and in May 1989, he moved to the Woodford Green office of Haslers, Chartered Accountants, as a Tax Manager. He passed the Chartered Institute of Taxation AAT examination, and again, managed a portfolio of companies and other bodies, specialising in tax consultancy work. In June 1998, he moved to the City of London office of Ernst & Young as a Senior Tax Consultant. In January 2001, he became the Head of Taxation in their Jersey office. Having left Ernst & Young in 2001, after a period of ill health, he decided to establish a bespoke boutique tax consultancy (LATBC) which within five years of formation had about twelve personnel and a turnover of about £1 million per annum. His involvement with clients was, he said, in a “ high level tax planning role”.
12.2. Mr Lord met Mr Banner-Eve in about 1993/1994, when working at Haslers. Mr Banner-Eve became a client. In 2003, Mr Lord was contacted by Mr Banner-Eve who asked for his professional assistance to establish a structure for a new property investment and development business called “ Crown Central” and from about that time, LATBC advised Mr Banner-Eve on his personal and business taxation matters.
12.3. In 2005, Mr Lord was contacted by Mr Banner-Eve to discuss the proposed venture that in time became the business of the Company. Mr Lord told him that although he, Mr Lord, had no experience of property investment (other than in respect of tax planning) the business model might fall within the scope of the financial services regulations, and he recommended (as I set out further below) that legal advice be taken.
12.4. At about the end of 2005, or the beginning of 2006, Mr Banner-Eve...
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