Portland Place (Historic House) Ltd, Re

Permission under the Company Directors Disqualification Act 1986 is governed by an unfettered discretion. The court must balance the protection of the public and the deterrent purpose of disqualification against the applicant’s legitimate interests. Dishonesty is a highly significant factor, but it does not create an absolute bar to permission.

Permission may be limited to acts which do not expose the public to a real risk of harm. A disqualified person may therefore be permitted to give directions as beneficial owner under an effective trust, while remaining prohibited from conducting the company’s litigation or negotiations in place of its directors.

Mr Davenport had been disqualified for ten years under the Company Directors Disqualification Act 1986 following his conviction and imprisonment for fraud. He sought permission to give instructions to a company which held valuable property for him under a deed of trust, and to conduct or direct the company’s defence of mortgage possession proceedings and related negotiations.

A previous application to remain a director had been refused by the Companies Court Registrar. The present application was narrower. The issues were whether it was abusive or impermissible in light of the earlier refusal, whether the trust deed entitled Mr Davenport to direct the company, and what scope of permission was appropriate.

1. Application granted in part. Permission was granted under sections 1 and 17 of the Company Directors Disqualification Act 1986 to give instructions to the company in accordance with the deed of trust, if and insofar as that deed was effective between Mr Davenport and the company.
2. The statutory discretion was unfettered. The court had to consider all the circumstances, giving greatest importance to public protection, while also considering the deterrent purpose of disqualification and the applicant’s legitimate interests. Following fraud, permission would usually be inappropriate, but there was no rule preventing permission in every case. The court must not create statutory fetters: Re Dawes & Henderson (Agencies) Limited (No 2) [1999] 2 BCLC 317.
3. The second application was not an impermissible appeal against the Registrar’s decision. The relief sought was materially narrower. Nor was it an abuse of process. Applying the broad, merits-based approach in Johnson v Gore Wood [2002] 2 AC 1, the court considered the particular circumstances and the narrower relief sought.
4. Assuming the deed of trust was effective, it required the company, as nominee or bare trustee, to act on Mr Davenport’s directions concerning the property. Giving such directions would not itself create a conceivable risk of harm to the public, particularly since the company’s expenditure remained subject to control under the restraint arrangements. The directors’ duties to the company were consistent with complying with the trust.
5. Broader permission to act as the company’s agent, conduct the litigation, or negotiate with the bank was refused. The directors should retain control. Mr Davenport’s imprisonment restricted his ability to conduct litigation efficiently, and the directors could obtain his evidence and consider his directions. The available legal costs should be released to the company, the substantial defendant, rather than diverted to Mr Davenport.

The judgment describes an earlier application before Registrar Derrett, refused on 14 December 2011. Mr Davenport did not appeal that decision. The present, narrower application was determined separately by the High Court (Chancery Division).