Wirecard Bank Ag & Anor v Scott & Ors

For personal liability under the Company Directors' Disqualification Act 1986, a person need not be a registered director. The statutory test extends to anyone concerned, directly or indirectly, or taking part, in the management of the company. A person who acts, or is willing to act, on instructions from a person known to be disqualified may also incur liability. In a fraud claim, a representation that a business intends to supply goods is actionable where it is false when made and relied upon. The judgment also illustrates that conspiracy may be inferred where those controlling a company had no genuine intention to perform the promised transactions.

The claimants provided credit-card processing facilities to Xclusive Leisure and Hospitality Ltd, a ticket agency controlled in substance by the defendants. Xclusive sold Olympic tickets but delivered none, and its funds were largely paid out in cash. The claimants sued the defendants in deceit, conspiracy to injure by unlawful means, and under section 15 of the Company Directors' Disqualification Act 1986.

The first defendant’s defence was struck out. The trial concerned liability only. The central issues were whether the second and third defendants participated in Xclusive’s management, whether they dishonestly represented that Olympic tickets would be supplied, whether they conspired to defraud the claimants, and what liabilities fell within section 15.

1. Outcome. Judgment was entered against all three defendants. The claims in conspiracy, deceit and under section 15 of the Company Directors' Disqualification Act 1986 all succeeded. Quantum was left to be determined separately if necessary.
2. Roles in Xclusive. Mr Shepherd controlled Xclusive in substance. Mr van Meel had a subsidiary but real management role. His administrative functions, dealings with the claimants and Optimal, authority over payments, directorship and continued signing of cheques were sufficient to constitute involvement in management.
3. Conspiracy and deceit. No person acting for Xclusive genuinely intended to acquire the Olympic tickets. The purported supplier and supporting documents were fabrications. The representation that Xclusive intended to supply tickets was therefore false. The representation concerning tickets supplied by main sponsors was also false and was made recklessly, and in Mr van Meel’s case knowingly. The claimants relied on both representations.
4. Section 15. Mr Shepherd was involved in management while disqualified, satisfying section 15(1)(a). Mr van Meel was involved in management and acted on Mr Shepherd’s instructions while knowing of the disqualification, satisfying section 15(1)(b). Section 15(4) is not confined to registered directors and includes direct or indirect participation in management. The presumption in section 15(5) applied to Mr van Meel, and the contrary had not been shown.
5. The judge declined to decide definitively when the relevant contractual debts were incurred because the tort claims already succeeded and the issue was unnecessary to the result. He nevertheless stated that, if required, liabilities under the contract would arise at the earliest when the claimants made each payment to Xclusive, rather than when the contract was made.