The Secretary of State for Business and Trade v Alexander David Greensill

Under section 6 of the Company Directors Disqualification Act 1986, responsibility for the causes of a company’s insolvency is not a jurisdictional threshold. The court’s jurisdiction depends on the statutory conditions that the person has been a director of an insolvent company, or of a company dissolved without becoming insolvent, and that the person’s conduct as a director makes them unfit.

Responsibility for the causes of insolvency is instead one factor, among those in Schedule 1, to which the court must have regard when assessing unfitness and the period of disqualification. The Secretary of State has a continuing duty to act fairly and keep the public-interest decision under review, but no general duty to interview every third party or obtain every potentially relevant document. Investigative deficiencies ordinarily go to the merits at trial, rather than requiring strike-out.

The Secretary of State brought proceedings under section 6 of the Company Directors Disqualification Act 1986 against Alexander David Greensill, a director of Greensill Capital UK Limited and Greensill Limited. The Secretary of State alleged misconduct concerning Katerra transactions, Catfoss insurance and non-disclosure of insurance issues to company boards.

Mr Greensill applied to strike out the proceedings or obtain reverse summary judgment. He argued that the Secretary of State had to prove a non-trivial connection between his conduct and the causes of the companies’ insolvencies, that the decision to proceed was unlawful, and that the investigation had been unfair because relevant evidence had not been obtained or disclosed. The central issues were whether connectivity was jurisdictionally necessary and whether the alleged investigative deficiencies made a fair trial impossible.

1. Application dismissed. The claim was not struck out, and reverse summary judgment was refused. The Secretary of State’s case did not allege that Mr Greensill’s misconduct caused or was responsible for the causes of the companies’ insolvencies.
2. Section 6(1) contains two freestanding jurisdictional conditions: the defendant must have been a director of a company which became insolvent or was dissolved without becoming insolvent, and the defendant’s conduct as a director must make him unfit. The provision contains no additional requirement that the conduct caused or contributed to the insolvency.
3. Section 6(1A) identifies conduct connected with or arising out of an insolvency as conduct to be taken into account where it occurs. It does not require such conduct to exist in every case, and conduct arising out of an insolvency may occur after the insolvency and therefore cannot itself have caused it.
4. The comparison with section 8 does not establish a connectivity threshold. Although sections 6 and 8 differ in their statutory conditions, time limits, mandatory or discretionary character, minimum period and investigative powers, both use section 12C and Schedule 1 in determining unfitness. The extent of responsibility for the causes of insolvency is therefore an evaluative factor, not a hard-edged threshold.
5. The authorities relied on did not establish a contrary rule. The cases concerned the court’s assessment of responsibility and other Schedule 1 matters, rather than a jurisdictional pre-condition. The interpretation in Keeping Kids was consistent with this conclusion.
6. The Secretary of State had a continuing duty to act fairly and keep the public-interest decision under review. However, Stakefield correctly stated that there is no established general duty to interview or obtain documents from third parties or to ensure that investigations are carried out. A defendant may obtain missing evidence and challenge deficiencies at trial. Even an investigative breach will not ordinarily justify strike-out where evidence capable of establishing unfitness has been assembled.
7. The financial position of the companies was relevant context for the alleged misconduct, although causation of insolvency was not part of the case. Mr Greensill had not shown illegitimate prejudice, abuse of process or that a fair trial was impossible. Questions concerning potentially exculpatory evidence were matters for trial.
8. Section 15A did not alter the result. A compensation order requires a disqualification order and conduct causing loss to creditors of an insolvent company; it does not require proof that the conduct caused the company’s insolvency.