Cathie & Anor v The Secretary Of State For Business, Innovation & Skills

A court hearing an appeal from a director-disqualification order has jurisdiction to stay the order pending appeal and, where appropriate, prevent its registration. A stayed order ceases to have effect for the duration of the stay. It should not remain on the register, and any period during which the stay operates does not count towards the period of disqualification. If the appeal fails, the appellate court may set a later commencement date so that the effective disqualification period is preserved. The court may also stay enforcement of an interim costs order where enforcement creates a real risk of stifling an arguable appeal.

The appellants appealed against director-disqualification orders made by a District Judge in Manchester. They sought an interim stay and an order preventing registration of the orders pending appeal. One appellant relied on the risk of irreversible reputational damage to confidential professional relationships. Both appellants also sought a stay of an interim costs order on the ground that enforcement might prevent them from funding the appeal.

The central issues were whether the court had jurisdiction to stay the disqualification orders and restrain registration, what effect a stay had under the Company Directors Disqualification Act 1986, and whether enforcement of the costs order should be suspended.

1. Disqualification orders. The appeal was expedited and the court granted a stay of the disqualification orders pending appeal. The court had jurisdiction to make an ancillary order preventing registration, including under section 37 of the Senior Courts Act 1981. The absence of findings of fraud or dishonesty and the evidence of likely irreversible reputational damage supported the exercise of that jurisdiction.
2. Effect of a stay. Under section 18(3) of the Company Directors Disqualification Act 1986, an order that has ceased to be in force must be removed from the register. A stayed disqualification order ceases to have effect for so long as the stay remains in force. If registration has already occurred, the entry should be removed during the stay. If the appeal is unsuccessful, the appellate court may specify a later commencement date or otherwise adjust the order so that the period of effective disqualification is not reduced by the stay.
3. Jurisdiction on appeal. Paragraph 17.17(1) of the Insolvency Practice Direction gives the appeal court all the powers of the lower court. That includes power to grant a stay and, if necessary, to postpone the commencement of the disqualification period until after the appeal.
4. Costs. An appeal does not itself operate as a stay. On the evidence, enforcement of the £20,000 interim costs order created a real risk that the appellants would be unable to obtain counsel and present the appeal on an equal footing with the respondent. The balance of justice therefore required enforcement to be stayed.

The judgment states that permission to appeal had already been granted from the District Judge’s director-disqualification decision in Manchester. The appeal was expedited, with interim stays granted pending substantive determination. The lower-court citation is not stated in the judgment.