Nicholas Terry Brown v Competition and Markets Authority

Permission under section 17 of the Company Directors Disqualification Act 1986 requires an unfettered balancing exercise. The applicant bears the burden of showing that permission is appropriate in all the circumstances. The court must weigh the need for the director’s services and the consequences of refusal against public protection and deterrence, having regard principally to the seriousness and nature of the misconduct rather than merely the length of disqualification.

In competition cases, cartel conduct and concealment through false invoicing may make the public-interest considerations especially weighty. Evidence of real-world public perception may be considered, even where that perception is legally mistaken. Robust compliance arrangements are relevant and beneficial, but may not justify permitting the same director to remain at the head of the offending business throughout the disqualification period.

The claimant had given a seven-year undertaking under section 9B of the Company Directors Disqualification Act 1986 after admitting that, while a director of Brown and Mason Limited, he had participated in two competition-law infringements involving cover bidding, compensation payments and false invoices. Brown and Mason’s business had substantially transferred to Brown and Mason Group Limited, of which he was a director and sole shareholder of its holding company, NRLB Limited.

He applied under section 17 for permission to act as a director of BMG and NRLB. The Competition and Markets Authority opposed permission, relying on the seriousness of the conduct and the deterrent and protective purposes of the disqualification regime. The central issues were whether his demonstrated business need and the potential harm to BMG outweighed those public-interest considerations, and whether conditions could adequately manage the risk.

1. Applicable approach. The court’s discretion under section 17 is unfettered. The applicant bears the burden of establishing that permission is appropriate. Need is a usual but non-essential factor. The court must balance all relevant circumstances, including the nature and seriousness of the misconduct, the risk of recurrence, public protection, deterrence, public perception, the length of disqualification and the effect of proposed conditions.
2. Competition context. The seriousness of misconduct, rather than the disqualification period as such, is the principal guide. Cartel conduct, including cover bidding, is particularly serious. The admitted conduct was dishonest and included the later enforcement of compensation arrangements through false invoices. The public interest in the general deterrent effect of competition disqualification therefore carried substantial weight.
3. Perception and compliance. The court could consider evidence of actual public perception, including legally erroneous perceptions that permission reverses or nullifies disqualification. A fair-minded and informed observer is not a theoretical construct that excludes relevant real-world facts. BMG’s extensive compliance improvements reduced the risk of recurrence and were a public benefit, but they were less weighty where responsible governance required such measures after serious infringements and where the claimant would remain at the head of the offending business.
4. Outcome. The claimant had shown a cogent business need and refusal risked significant economic harm to BMG, its staff and those dealing with it. However, the public-protection and deterrence considerations outweighed that need for the full seven-year period. Permission to act for that period was refused in respect of both BMG and NRLB. To avoid undue harm from immediate cessation, permission was extended until 23.59 on 28 July 2024, subject to conditions to be addressed at the consequentials hearing.