Francis Oluwafisayo Falodun v The Secretary of State for Business, Energy and Industrial Strategy

Permission under section 17 of the Company Directors Disqualification Act 1986 is discretionary and unfettered. The applicant bears the burden of showing that permission is appropriate in all the circumstances. The court must balance the applicant’s need or the company’s need against public protection and deterrence. Need is relevant but is not a precondition or decisive factor.

An application must be made in good faith with full candour, including disclosure of material matters adverse to permission. Serious non-disclosure may itself prevent the court from being satisfied that the risk of recurrence is sufficiently controlled. Current compliance and proposed conditions will not ordinarily suffice where the evidence does not explain the original misconduct or demonstrate reliable safeguards.

The applicant had given an undertaking disqualifying him from acting as a director until 18 April 2027 after accepting that, while a director of Switch Leisure Limited, he had failed to ensure that adequate accounting records were maintained or delivered up.

He applied under section 17 of the Company Directors Disqualification Act 1986 for permission to act as a director of V1CE Limited, where he was central to the business. Interim permission had previously been granted and the application was adjourned for further evidence concerning the causes of the misconduct, disclosure, co-operation with the Official Receiver and proposed safeguards.

The central issues were whether the applicant had discharged the burden of establishing that permission was justified, and whether the evidence and conditions sufficiently protected the public and preserved the deterrent purpose of disqualification.

1. Permission refused. The applicant failed to establish, on the balance of probabilities, that permitting him to act as a director or participate in the management of V1CE Limited was justified.
2. Under section 17 of the Company Directors Disqualification Act 1986, the court has an unfettered discretion. The applicant bears the burden. The relevant exercise is to balance all the circumstances, including the nature and seriousness of the misconduct, the length of disqualification, the need for the applicant’s involvement, the risk of recurrence, public protection and deterrence. Company need is relevant but is not a statutory precondition.
3. The purposes of disqualification include protecting the public and deterring both the particular applicant and others from similar misconduct. Conditions may assist those purposes, but permission should not be granted unless the court can be satisfied that the safeguards are sufficient in practice.
4. The application had to be made in good faith and with candour. Material adverse matters had to be disclosed because the Secretary of State was not required to investigate the application extensively and much relevant information was within the applicant’s knowledge. The failure to disclose Mr McDonald’s previous involvement as the bookkeeper for Switch was material. It affected whether he and the proposed board could be relied upon to prevent recurrence.
5. The applicant also failed adequately to explain the accounting deficiencies, the missing transaction information, his responsibility for the failures and the steps taken to assist the Official Receiver. The proposed conditions, including board oversight, accountants’ involvement and automatic lapse upon breach, did not sufficiently overcome those evidential deficiencies. Current compliance by V1CE Limited and the importance of the applicant to its business could not outweigh the risks created by serious non-disclosure and unexplained past misconduct.
6. The court recognised the potential adverse consequences for V1CE Limited and indicated that an alternative approach might require a fresh application addressing the missing disclosure and information.

Not stated in the judgment. Interim permission had previously been granted by Chief ICC Judge Briggs and continued pending determination of the application.