The Secretary of State for Business and Trade v Kieron Lloyd Junior Minto-St Aime

In proceedings under the Company Directors Disqualification Act 1986, knowingly overstating turnover in a Bounce Back Loan application may constitute misconduct demonstrating unfitness, even where the sum involved is relatively modest. The court must determine the case by reference to the misconduct alleged and proved. Matters outside that case may assist mitigation, but cannot aggravate the sanction. A compensation order requires loss caused by the conduct for which disqualification was imposed. Its exercise remains discretionary and must avoid unfairness, double recovery and oppressive or futile orders.

The Secretary of State sought the disqualification of the sole director of St.Aimie’s Sports Academy Community Interest Company under section 6 of the Company Directors Disqualification Act 1986, together with a compensation order under section 15A. The claim arose from a Bounce Back Loan application stating that the company’s 2019 turnover was £100,000, although its accounts showed turnover of £41,830. The company obtained a £25,000 loan, exceeding its entitlement by £14,543.

The defendant denied responsibility for the information, asserting that his accountant had guided him by telephone. The court rejected that evidence, found that he knowingly entered the false figure, and considered whether the conduct demonstrated unfitness and whether compensation should be ordered.

1. Disqualification. The court found that the defendant completed the application himself and knowingly overstated turnover. The statement caused the company to obtain £14,543 more than it was entitled to under the Bounce Back Loan scheme.

2. The statutory question under section 6 of the Company Directors Disqualification Act 1986 uses ordinary language and is ultimately a question of fact. Applying the three-stage approach identified in Re Structural Concrete Ltd, the court asked whether the conduct amounted to misconduct, whether it justified a finding of unfitness, and what period of disqualification was appropriate.

3. Knowingly providing false turnover information in a government-backed loan application was misconduct. The scheme depended substantially on directors giving truthful information because applications were self-certified and were not subject to ordinary verification. In the circumstances, the conduct demonstrated unfitness.

4. The period of disqualification had to reflect only the misconduct alleged and proved. Personal benefit, lack of contrition and the manner in which the defence was conducted could affect mitigation, but could not be used as additional aggravating misconduct. The appropriate period was eight years.

5. The court declined to determine hypothetically whether a director could rely on professional advice, since the factual case that such advice had been given was rejected.

6. Compensation. The statutory conditions for a compensation order were satisfied. Using hindsight and common sense, the excessive lending caused the relevant creditor loss of £14,543. However, the court retained a discretion under sections 15A and 15B. The order had to reflect the conduct for which disqualification was imposed, avoid double recovery, and take account of prior contributions, the defendant’s impecuniosity, the existing eight-year disqualification and the risk of an oppressive or futile order.

7. The compensation application was dismissed. The defendant was disqualified for eight years under section 6, beginning 21 days after the order. Costs and consequential matters were left for agreement or further directions.

First-instance decision. No appellate history was stated in the judgment.