The Secretary of State for Business, Enterprise & Regulatory Reform v Meade

An applicant seeking leave to act during a period of director disqualification must satisfy the court that the protective and deterrent purposes of the disqualification order will not be undermined and that there is sufficient reason to grant leave. The court may balance the applicant’s legitimate interests and the interests of a company or third party against the risk of repetition of the conduct giving rise to disqualification. Permission may be desirable rather than strictly necessary, but the court must assess the practical risk created by the applicant’s proposed role. Where the applicant is a dominant personality and proposes to undertake functions closely resembling those connected with the disqualifying conduct, a limited permission may be appropriate, even though an unrestricted permission is not justified.

The Secretary of State had obtained a two-and-a-half-year disqualification order against Mr Meade under Company Directors Disqualification Act 1986, section 6. Mr Meade applied under section 17 for leave to remain a director of Hadleigh Partners Limited, the holding company of a group employing approximately 420 people. He also sought postponement of the disqualification order’s operation, but no argument was advanced in support of that relief.

The central issues were whether continued directorship was critical to the group’s banking facilities or survival, whether Mr Meade’s strategic and management functions created the type of risk against which the disqualification order was intended to protect, and whether permission should be granted, and if so for what period and scope.

1. Approach under section 17. The purposes of a disqualification order include protecting the public from repetition of the conduct giving rise to the order and from associated risks, as well as serving a deterrent purpose. The burden therefore rested on Mr Meade to show that those purposes would not simply be negated and that there was sufficient reason to grant leave. Legitimate interests may include the applicant’s need to earn a living and the need of a company or third party for his assistance. In an appropriate case, desirability rather than necessity may suffice, but the court must ultimately balance the competing considerations.
2. Banking facilities and survival. The evidence did not establish that Mr Meade’s continued directorship of Hadleigh Partners was critical to the continuation of the group’s banking facilities or businesses. The audited accounts had been prepared on a going-concern basis and contained no indication that the disqualification proceedings threatened the facilities.
3. Risk from proposed involvement. Mr Meade intended to arrange finance and insurance and supervise management reporting and financial controls. Those functions closely resembled his previous activities in relation to the company connected with the disqualifying conduct. Given his dominant personality, there was a real risk that he would become involved in the subsidiaries and occupy the same type of position. This was not a case involving virtually no risk of the kind addressed by the disqualification order.
4. Disposition. Permission under section 17 was granted in respect of Hadleigh Partners Limited for a short, limited period to allow arrangements to be made with HSBC and for the company to continue without Mr Meade as a director. The court was to hear further submissions on the precise duration and whether the permission should extend to limited involvement in management of the group. The application to postpone operation of the disqualification order was not granted.

The judgment records that a disqualification order had been made on 19 July 2011 under section 6 of the Company Directors Disqualification Act 1986. No appeal is stated.