Secretary of State for Business, Energy and Industrial Strategy v Rahman

This is a first instance claim under section 8 of the Company Directors Disqualification Act 1986 seeking a disqualification order against Mr Luthfur Rahman on the basis that he was a de facto director of Spiceroy Restaurant Ltd. The court applied the established principles for identifying a de facto director (focusing on whether the individual had assumed the responsibilities of a director and what he actually did), and considered evidence including statements taken by Home Office immigration officers, the fact that Mr Rahman was named as the premises licence holder and designated premises supervisor, and internet advertising that grouped restaurants under the "Viceroy South-West" heading.

The judge concluded that the claimant had not proved on the balance of probabilities that Mr Rahman was a de facto director. The evidence was too slender: only one of four workers mentioned the surname Rahman (and without the first name), there was no evidence Mr Rahman was present at the premises or supervised its operation, the premises licence was likely the result of a personal favour to enable trading, and the website was consistent with a loose marketing association rather than corporate control. The claimant had not obtained direct evidence from the workers or other third parties and had not shown financial control, benefit or management involvement by Mr Rahman. Accordingly the claim was dismissed.

Background and parties: The Secretary of State for Business, Energy and Industrial Strategy brought proceedings under section 8 of the Company Directors Disqualification Act 1986 against Mr Luthfur Rahman, alleging he was a de facto director of Spiceroy Restaurant Ltd, operator of the Viceroy Restaurant in Dunkeswell, where in June 2017 immigration officers discovered migrant workers without the right to work.

Nature of the application: The claimant sought a disqualification order (up to 15 years) on public interest grounds under section 8. The defendant denied being any kind of director; he conceded the employment of persons without right to work but maintained he had not assumed directorial responsibilities for the Dunkeswell company.

Procedural posture and evidence: The claim proceeded at first instance. The court received affirmations and heard oral evidence from Home Office officers and the defendant. No statements were provided from the migrant workers or from the companys de jure director, Mr Walie Sharof (who later gave undertakings to the Secretary of State and was not pursued).

Issues framed by the court: (i) whether Mr Rahman was a de facto director of Spiceroy Restaurant Ltd; (ii) if so, whether his conduct made him unfit to be concerned in the management of a company; and (iii) if both established, the appropriate period of disqualification.

Court's reasoning and conclusions: The judge applied authorities on de facto directorship emphasising the factual inquiry into whether a person had assumed the duties of a director. The claimant's case rested on three points: a workers reference to "Rahman" as the owner/boss, the premises alcohol licence in Mr Rahmans name, and the defendants inclusion on an advertising webpage grouping restaurants. The judge found the workers evidence too limited (surname only, possible confusion with the Yeovil Viceroy), the licensing arrangement likely a personal favour to enable trade rather than evidence of governance or supervision, and the website consistent with a marketing association rather than proof of control. The claimant had not adduced evidence of financial control, payments, management information, or third-party testimony that Mr Rahman acted as a director. On that basis the court found the claimant had not proved de facto directorship on the balance of probabilities and dismissed the claim. The judge added that, had de facto directorship been established, he would have found unfitness and (on the admitted facts) would have made a five-year order.

The claim is dismissed. The court held that the Secretary of State had not proved on the balance of probabilities that the defendant was a de facto director of Spiceroy Restaurant Ltd: the available evidence (a single worker's reference to the surname Rahman, the defendant's name on the premises alcohol licence, and a marketing webpage) did not demonstrate that the defendant had assumed the duties of a director or had governance or management control of the company. Accordingly no disqualification order was made.