Karen Allen and 2 others v Registrar of Companies and another (Montserrat)

A statutory director-disqualification order must be construed from the governing Act. Where section 66(1) refers to “the company”, the order should identify the company or companies whose mismanagement grounded the finding of unfitness. Section 65(2) separately extends the prohibition on being a director to any company during the disqualification period. Court-appointed inspectors’ reports under sections 518 and 519 are a recognised exception to ordinary rules governing hearsay and opinion evidence. Their weight is for the court after considering all the evidence; no general rule requires limited weight. The burden of proving unfitness remains the civil balance of probabilities. Unfitness is a fact-sensitive statutory question. It is not confined to dishonesty or serious incompetence: want of probity may independently justify disqualification.

The Registrar of Companies and the Financial Services Commissioner appealed, with special leave, from the Court of Appeal of the Eastern Caribbean Supreme Court’s order of 14 January 2022. Morley J had disqualified Steven Fagen, Marie Carole Lidbetter and Karen Allen from acting as directors of Montserrat companies for four, three and one years respectively.

The Court of Appeal confined the disqualifications of Mr Fagen and Ms Lidbetter to three named companies and set aside Ms Allen’s disqualification. The appeal concerned whether the Privy Council should set aside its special leave, the proper construction of sections 65(2) and 66(1) of the Montserrat Companies Act, and whether the judge had erred in his treatment of an inspector’s report and in assessing Ms Allen’s unfitness. The central issue was whether Ms Allen’s proved conduct justified disqualification despite the absence of dishonesty.

The Board allowed the appeal and advised His Majesty accordingly. The respondents’ application to set aside the grant of special leave failed.

1. Special leave. The Privy Council’s jurisdiction to grant special leave was separate from the Court of Appeal’s jurisdiction under sections 3(2) and 5 of the Montserrat (Appeals to Privy Council) Order 1967. The Board could therefore exercise its own discretion differently without implying that the Court of Appeal had erred or undermining its case-management powers.
2. Construction of the disqualification provisions. In the 2019 form of the Montserrat Companies Act, “the company” in section 66(1) meant the company or companies whose mismanagement had led to the finding of unfitness. The order should identify those companies. Section 65(2) separately prohibited the disqualified person from being a director of any company during the relevant period. The proper order was therefore an order relating to the named companies, together with a declaration of the wider effect of section 65(2).
3. Inspectors’ reports and proof. Reports made under sections 518 and 519 were a recognised statutory exception to ordinary rules on the admissibility and weight of hearsay and opinion evidence. The parties could adduce evidence in rebuttal, but the weight of the report remained for the court after reviewing the evidence as a whole. Secretary of State for Business, Enterprise and Regulatory Reform v Aaron [2008] EWCA Civ 1146; [2009] Bus LR 809 and In re Rex Williams Leisure plc [1994] Ch 1 supported that approach. The Court of Appeal had wrongly treated Rogers v Hoyle [2014] EWCA Civ 257; [2015] QB 265 as requiring such reports always to receive limited weight. The burden of proving unfitness was the ordinary civil burden, namely the balance of probabilities.
4. Unfitness. Following In re Sevenoaks Stationers (Retail) Ltd [1991] Ch 164, the statutory question was one of fact: what acts and omissions had been proved, and did they demonstrate unfitness to be concerned in company management? Guidance in authorities such as In re Lo-Line Electric Motors Ltd [1988] Ch 477 could not replace the statutory question with a rigid formula. The Board did not treat In re Barings plc (No 5) [2000] 1 BCLC 523 as establishing a general requirement that incompetence, absent dishonesty, must reach a high degree.
5. Application and order. The judge had properly assessed the inspector’s report alongside the other evidence and had conducted his own analysis. Ms Allen’s conduct in stripping the Andrianakos brothers of their shares involved want of probity sufficient by itself to establish unfitness. It was unnecessary to grade her incompetence. Her one-year disqualification therefore stood, with the orders to be expressed in accordance with sections 65(2) and 66(1).

• Privy Council — [2024] UKPC 26: allowed the appeal and restored Ms Allen’s one-year disqualification, subject to the proper expression of the statutory effect.
• Court of Appeal of the Eastern Caribbean Supreme Court (Montserrat) — order of 14 January 2022: allowed the appeal in part, confined Mr Fagen’s and Ms Lidbetter’s orders to three named companies, and set aside Ms Allen’s disqualification.
• Montserrat High Court — Morley J’s order of 7 May 2019: disqualified Mr Fagen, Ms Lidbetter and Ms Allen for four, three and one years respectively.