Secretary of State for Trade and Industry v Baker (No 2)

A stay of properly constituted proceedings under the Company Directors Disqualification Act 1986 for abuse of process is exceptional. The inherent jurisdiction protects the court’s process from manifest unfairness and from proceedings that would bring the administration of justice into disrepute. It is not confined to res judicata, issue estoppel or fixed categories. However, the fact that earlier regulatory proceedings examined substantially the same facts does not itself justify a stay. The court must compare the issues, legal status and consequences. A finding on professional competence and registration does not determine whether conduct as a director made a person unfit to manage any company. Statutory decisions to commence or pursue disqualification proceedings belong to the Secretary of State, subject to the court’s abuse jurisdiction.

The Secretary of State brought proceedings under the Company Directors Disqualification Act 1986 against former directors of Barings companies. During the trial of the remaining respondents, Mr Baker applied for a stay. He relied on earlier disciplinary proceedings brought by the Securities and Futures Authority concerning substantially the same conduct, in which all charges had been dismissed.

Mr Justice Jonathan Parker dismissed the stay application and refused leave to appeal. The trial was adjourned to enable Mr Baker to seek leave from the Court of Appeal. The central issue was whether continuation of the disqualification proceedings would constitute an abuse of process through double jeopardy, unfairness, oppression or injustice.

1. Disposition. All three Lord Justices agreed that the application for leave should be refused. An appeal would serve no useful purpose. The application was dismissed with costs.
2. Statutory role. Sections 6 and 7 of the Company Directors Disqualification Act 1986 distinguish the court’s statutory function from the Secretary of State’s public-interest decision whether to commence or pursue proceedings. Section 9 and paragraph 6 in Part II of Schedule 1 require attention to the person’s conduct as a director and the extent of his responsibility for the company’s insolvency. The court must not replace the Secretary of State’s view of what is expedient in the public interest merely because it considers the decision over-zealous. The general approach in In re Blackspur Group Plc [1998] 1 WLR 422 was applied.
3. Abuse of process. The inherent jurisdiction permits a stay where continuation would be manifestly unfair or would bring the administration of justice into disrepute. The categories are not closed. The jurisdiction can extend to double-jeopardy situations, but it is exercised sparingly and only in exceptional circumstances. Public confidence in the integrity of the administration of justice is the overriding consideration. The principles stated in Hunter v Chief Constable of the West Midlands Police and Others [1982] AC 529 and Ashmore v British Coal Corporation [1990] 2 QB 338 were applied.
4. Different proceedings. The SFA proceedings concerned Mr Baker’s professional competence as a registered investment-business person and whether he was fit and proper to remain registered. The disqualification proceedings concerned his conduct as a director of BB & Co and whether that conduct made him unfit to be concerned in the management of any company. Although the underlying facts overlapped, the issues, statutory purposes and consequences materially differed. The SFA findings therefore did not determine the disqualification question or foreclose the Secretary of State’s proceedings.
5. Separate observations. Waller LJ observed that the position might differ if the Secretary of State had encouraged or controlled the earlier proceedings to obtain a procedural advantage. He also noted that the court retained power to prevent later proceedings being conducted disproportionately to the seriousness of the allegations. Swinton Thomas LJ emphasised the public-protective character and serious consequences of disqualification proceedings.

• Court of Appeal (Civil Division): refused leave to appeal against the refusal of a stay and dismissed the application with costs.
• Chancery Division, Companies Court: Mr Justice Jonathan Parker dismissed the application for a stay and refused leave to appeal. The trial was adjourned to permit an application to the Court of Appeal.