IN THE MATTER OF ASSET LAND INVESTMENT PLC

The Secretary of State sought disqualification orders under section 6 of the Company Directors Disqualification Act 1986 alleging that Mr Nigel Lord had allowed Asset Land Investment plc to operate an unauthorised collective investment scheme in breach of the Financial Services and Markets Act 2000 (sections 19, 21 and 235) and had allowed misrepresentations to be made to customers. The Second and Third Defendants gave undertakings and the trial proceeded against the First Defendant only. The court reviewed the applicable legal tests for unfitness (including principles from Secretary of State v Chohan and authorities on director responsibility, delegation and the standard required to prove incompetence or abrogation of duty), and considered the FCA correspondence and advice obtained from solicitors (SJ Berwin), the factual findings made in the FCA proceedings and the evidence of investor witnesses.

Material findings were that the Company had been held by the courts to operate an unauthorised collective investment scheme, and that core oral representations were made to investors. The judge found that Mr Lord participated in an advisory, non-executive role and was involved in instructing and dealing with SJ Berwin and in responding to regulatory and investigatory enquiries. On the evidence there was insufficient proof that Mr Lord had wholly abrogated his duties or was grossly incompetent in a way that made him unfit under section 6(1)(b) CDDA: his conduct did not amount to total inactivity, and the primary operational responsibility rested with Mr Banner-Eve. The claim against Mr Lord was dismissed.

Background and nature of the application

• This was an application under section 6 of the Company Directors Disqualification Act 1986 by the Secretary of State for Business, Energy and Industrial Strategy for disqualification orders by reference to conduct as directors of Asset Land Investment plc.
• The Second and Third Defendants (Mrs Victoria Grace and Mrs Bronwen Banner-Eve) provided 3-year disqualification undertakings before trial; the substantive hearing proceeded only against the First Defendant, Mr Nigel Lord.

Parties and procedural posture

• The Secretary of State relied on investigatory material from the Insolvency Service, contemporaneous FCA correspondence and the prior FCA civil proceedings (in which the Company and related entities were found to have operated an unauthorised collective investment scheme).
• Mr Lord resisted the application. He accepted a non-executive, advisory role focused on taxation and fiscal matters via LATBC and said he engaged with SJ Berwin to address FCA concerns.

Issues framed

1. Whether Mr Lord was a director of an insolvent company (s.6(1)(a)) — not disputed.
2. Whether Mr Lord’s conduct as a director made him unfit to be concerned in the management of a company (s.6(1)(b)) — the primary issue: the Secretary of State alleged (a) that Mr Lord allowed the Company to operate an unauthorised collective investment scheme and (b) that he allowed misrepresentations (misselling) to be made to customers.
3. What steps, if any, Mr Lord ought to have taken to supervise or ensure the implementation of legal advice obtained by the Company and to prevent the unlawful conduct.

Court’s reasoning and findings

• The court accepted the factual findings made in the earlier FCA proceedings that Asset Land (and related entities) sold plots on the basis of core oral representations about re‑designation/obtaining planning permission, onward sale and sharing of proceeds, and that those arrangements fell within section 235 FSMA and breached the general prohibition in section 19 and the financial promotion restriction in section 21.
• As to Mr Lord, the judge found that he was involved in instructing and dealing with SJ Berwin and the FCA, and in handling Insolvency Service enquiries. SJ Berwin provided advice and the Company revised documentation and engaged with the FCA; the FCA closed its enquiries in 2008 on the basis of the information then provided.
• The Secretary of State’s pleaded case was not always tightly particularised and evolved in parts; the court applied the established principles that the claimant is limited to the case and evidence advanced and that allegations must be sufficiently clear to be met.
• The court rejected a finding of total abrogation: Mr Lord had an advisory non-executive role and did participate in management in relation to legal advice and regulatory correspondence; the primary operational role for land promotion lay with Mr Banner-Eve. Given the evidence, the passage of time, and the paucity of contemporaneous documents, the Secretary of State had not proved that Mr Lord’s conduct demonstrated incompetence of the high degree needed for disqualification where dishonesty is not alleged.

Conclusion

• The application against Mr Lord was dismissed. The judge concluded there was insufficient proof that Mr Lord’s conduct made him unfit under section 6 CDDA.

The application for a disqualification order against the First Defendant, Mr Nigel Lord, is dismissed. The court held that, although the Company operated an unauthorised collective investment scheme and core misrepresentations were made, the Secretary of State did not prove that Mr Lord personally had wholly abrogated his duties or was guilty of the degree of incompetence necessary to make him unfit under section 6(1)(b) CDDA. The judge relied on the division of responsibility within the company, Mr Lord’s advisory/non-executive role and his involvement with solicitors and regulators, together with the insufficiency and incompleteness of evidence linking him personally to the operative misconduct.