Goldberg v Secretary of State for Trade and Industry

Directorial unfitness is assessed cumulatively, by reference to the director’s responsibility for the company’s insolvency and any improper transactions or preferences. The court must consider whether conduct fell below the standards of probity and competence appropriate for company directors, including any extenuating circumstances. An appellate court should respect the trial judge’s factual findings and experience, but may intervene where the primary facts are substantially undisputed and the conclusion on fitness is inconsistent with the evidence. A nine-year disqualification fell within the appropriate range and was not plainly wrong.

The Secretary of State applied for the disqualification of Warren Goldberg under the Company Directors Disqualification Act 1986. The Registrar dismissed the application. On the Secretary of State’s appeal, a deputy High Court judge allowed the appeal and made a nine-year disqualification order.

Mr Goldberg appealed to the Court of Appeal. He challenged the judge’s interference with the Registrar’s findings, relied on his asserted honest belief that the company could continue trading, sought to adduce fresh evidence, and argued that the period of disqualification was excessive. The central issues were whether his conduct made him unfit to manage a company and whether the appellate court should interfere with the judge’s conclusions.

1. Appeal dismissed. The application to adduce fresh evidence was not pursued and, in any event, the evidence did not satisfy the requirements governing fresh evidence. The principles in Ladd v Marshall remained relevant under the Civil Procedure Rules.
2. The relevant question under the Company Directors Disqualification Act 1986 was whether Mr Goldberg’s conduct as a director made him unfit to be concerned in the management of a company. If so, the court had a duty to disqualify him.
3. Fitness had to be assessed by examining the director’s responsibility for the company’s insolvency and for transactions or preferences liable to be set aside under the relevant insolvency legislation. Conduct had to be viewed cumulatively, with any extenuating circumstances taken into account, to determine whether it fell below the standards of probity and competence appropriate for company directors. The formulation in Re Grayan Building Services Ltd was applied.
4. An appellate court should give considerable weight to the decision of a specialist trial judge, particularly where that judge had heard and seen the witnesses. However, where the primary facts were little disputed and the appellate court was satisfied that the conclusion on fitness was wrong, it could intervene. The Registrar’s focus on Mr Goldberg’s stated beliefs gave insufficient weight to the established acts and omissions. There was a mismatch between the facts and the conclusion that he was fit.
5. The cumulative evidence, including the deteriorating finances, lack of accounting information, banking difficulties, payments to Mr Goldberg and associated companies, transfer of the wholesale business, continued ordering of stock on credit, non-payment of suppliers and substantial deficiency, established unfitness.
6. The nine-year period was high but fell within the top end of the second bracket identified in Re Sevenoaks Stationers (Retail) Ltd. The appellate court should not interfere with the period absent an error of principle or a plainly wrong exercise of discretion. The order was therefore upheld. It remained open to Mr Goldberg to apply under section 17 of the Company Directors Disqualification Act 1986 for leave to act as a director.

• Court of Appeal (Civil Division) — [2001] EWCA Civ 1237: appeal dismissed; the nine-year disqualification order was upheld.
• Chancery Division — A deputy High Court judge allowed the Secretary of State’s appeal from the Registrar and made the disqualification order.
• Registrar — dismissed the Secretary of State’s originating summons.