Juer v Lomas & Anor

A person entitled to apply for a company director disqualification order must also be a proper person to make the application. That requires a legitimate interest in the relief sought, rather than merely an interest in, or possible effect from, the outcome. An application under Company Directors Disqualification Act 1986, section 4, requires conduct amounting to serious delinquency; an error which is corrected promptly, without evidence of fraud or deliberate breach of duty, will not ordinarily meet that threshold. The Court of Appeal may refuse permission where neither the standing ground nor the substantive ground is arguable.

Mr Juer applied under Part 8 of the CPR for the disqualification of two insolvency practitioners involved in the administration and liquidation of Adbury Park Estates Ltd. He alleged that they had fraudulently admitted a proof of debt and paid dividends on a liability which belonged to him rather than the company.

Jacob J dismissed the application, holding that Mr Juer lacked sufficient standing and that the alleged conduct fell far short of the serious delinquency required by section 4 of the Company Directors Disqualification Act 1986. He also ordered indemnity costs. Mr Juer renewed his application for permission to appeal.

1. Application dismissed. Lord Justice Robert Walker held that there were no arguable grounds for overturning either ground of Jacob J’s decision or for challenging the indemnity costs order.
2. Under section 4 of the Company Directors Disqualification Act 1986, disqualification requires fraud or a breach of duty of the requisite seriousness. The liquidators accepted that they had made a mistake by admitting a proof which included a liability ultimately belonging to Mr Juer. They corrected the mistake by recovering the overpaid dividend with interest when it was brought to their attention. There was no evidence capable of supporting the allegations of fraud or conspiracy. The conduct therefore came nowhere near the standard of serious delinquency required for disqualification.
3. Section 16(2) permits an application by a member or creditor only where the statutory and procedural requirements are met. The applicant must also be a proper person to seek the relief. Following the guidance quoted from Deloitte & Touche v Johnson [1999] 1 WLR 1605, a legitimate interest in the relief sought is required; a mere interest in the outcome is insufficient. The principle reflected in Cavendish Bentinck v Fenn (1887) 12 AC 652 also supported the conclusion that a private creditor should not assume the functions of a public prosecutor in a matter with which he had no real concern.
4. An assignment to Mr and Mrs Juer of possible causes of action vested in another company could not increase the value of Mr Juer’s stake in Adbury Park Estates Ltd. It therefore did not establish the necessary legitimate interest or standing.
5. The renewed application was hopeless and was dismissed. The indemnity costs order was left undisturbed.

• Chancery Division, Companies Court: Jacob J dismissed Mr Juer’s application on 28 June 2001, holding that he lacked sufficient standing and that the alleged conduct did not satisfy section 4 of the Company Directors Disqualification Act 1986. Indemnity costs were ordered.
• Court of Appeal (Civil Division): Lord Justice Robert Walker dismissed the renewed application for permission to appeal on 18 October 2001.