IN THE MATTER OF PURE ZANZIBAR LIMITED

The Secretary of State applied under section 6 of the Company Directors Disqualification Act 1986 for an order disqualifying Mr Tarquin Barnsby following the liquidation of Pure Zanzibar Limited. The Court found that, between 1 April 2017 and 19 December 2017, the director either caused or allowed the Company to make and continue to make holiday bookings that required ATOL protection when its ATOL had expired, in breach of Regulations 9 and 17(1) of the Civil Aviation (Air Travel Organiser’s Licensing) Regulations (the 2012 Regulations), and failed to comply with the CAA instruction to refund a customer contrary to Regulation 26(1)(b). The judge applied the "caused or allowed" formulation (noting Kappler and Selby), treated the director's oral evidence with caution where it contradicted contemporaneous documents, and concluded that the director had acted recklessly and incompetently to a marked degree though honestly, thereby rendering him unfit under s.6 CDDA. Regulation 16(b)(i) breaches (use of the ATOL logo and references to ATOL) and failures to instruct staff or to monitor and cancel licensable bookings were material to that conclusion. The court disqualified the defendant for seven years.

Background and parties: Pure Zanzibar Limited, a small bespoke travel agency, held an ATOL from 2010 until its licence expired on 31 March 2017. The Secretary of State for Business, Energy and Industrial Strategy brought a first-instance claim under the Company Directors Disqualification Act 1986 against the sole director, Mr Tarquin Barnsby, seeking disqualification under s.6 and a compensation order under s.15A. This judgment determines the disqualification claim.

Relief sought: A disqualification order under s.6 CDDA for conduct as a director; a compensation order under s.15A CDDA was sought but is to be addressed separately.

Facts and key issues:

• Following expiry of the ATOL on 31 March 2017, the CAA repeatedly informed the Company that it must stop taking licensable bookings, stop accepting payments for existing licensable bookings, remove ATOL references and refund affected customers.
• Between 4 May 2017 and 21 September 2017 the Company accepted payments for at least four bookings (Hladnik, Mardesic, Orr, Bramall) that required ATOL protection and did not issue ATOL certificates; a fifth customer (Welfare) was not refunded and a further payment was taken on 13 October 2017.
• The issues for the court included whether the defendant caused or allowed breaches of the 2012 Regulations (notably Regulations 9, 16, 17 and 26), whether he misled consumers by retaining ATOL references, whether he failed to instruct staff or monitor booking activity, and whether his conduct made him unfit under s.6 CDDA taking into account Schedule 1 paras 1–7.

Court’s reasoning:

• The judge analysed the statutory ATOL framework (Civil Aviation Act 1982 and the 2012 Regulations) and the meaning of "flight accommodation", "package" and "Flight-Plus" for the bookings in question and concluded the bookings were licensable.
• Contemporaneous correspondence showed that the Company had not provided required accounting information by the renewal deadline and that the CAA was seeking evidence of an improved financial position; the defendant’s attempt to blame the accountants was rejected where documentary evidence showed he had been dilatory in supplying information.
• The defendant’s credibility problems were identified: oral testimony diverged from affidavit statements and contemporaneous emails. The judge relied on contemporaneous documents where there was inconsistency.
• On conduct after expiry, the defendant consciously delayed removing ATOL references and elected to "wait and see"; the judge found he caused breaches by allowing the ATOL logo and references to remain and by instructing staff that tailor-made holidays did not require ATOL cover. He also failed to instruct staff to stop taking bookings that included flights or to monitor or cancel licensable bookings and failed to refund Welfare as required.
• The defendant acted honestly but recklessly and incompetently to a marked degree; that degree of incompetence, in a highly regulated industry and in the context of an insolvent company, rendered him unfit under s.6 CDDA.
• Applying sentencing guidance (Sevenoaks brackets and Westmid), and balancing aggravating and mitigating factors, the appropriate period of disqualification was fixed at seven years.

Procedural posture: First instance trial with evidence by affidavit and oral testimony; disqualification order ordered (costs to be addressed on handing down).

At first instance the court made a disqualification order under section 6 of the Company Directors Disqualification Act 1986 for a period of seven years. The judge concluded that the defendant had caused or allowed the Company, after its ATOL expired, to continue to make and accept payments for licensable bookings and to display ATOL references, and had failed to refund an affected customer; his conduct demonstrated recklessness and incompetence to a marked degree, rendering him unfit to be concerned in the management of a company.