Re Kaytech International plc; Secretary of State for Trade and Industry -v- Kaczer and others; CA 1999

References: [1999] 2 BCLC 351
Coram: Robert Walker LJ, Rimer J
Robert Walker LJ said that the expression ‘de facto director’ had been in use for a long time, and commented on the failure to distinguish in pleadings between pleas that someone was a shadow or a de facto director. The two different labels were not necessarily mutually exclusive. He said: ‘However the two concepts do have at least this much in common, that an individual who was not a de jure director is alleged to have exercised real influence (otherwise than as a professional adviser) in the corporate governance of a company. Sometimes that influence may be concealed and sometimes it may be open. Sometimes it may be something of a mixture, as the facts of the present case show.’ and ”the crucial issue is whether the individual in question has assumed the status and function of a company director so as to make himself responsible under the [Company Directors Disqualification Act 1986] as if he were a de jure dir’
Rimer J referred to Jabble, ‘In my judgment, the principle reflected in that case is applicable here. If, following the service of these proceedings on [the respondent], he wanted to challenge [the Secretary of State’s] assertion that [the company] went into liquidation in 1993, then his correct course was to apply promptly for a stay or adjournment of these proceedings so that he could in the meantime start separate proceedings challenging Mr Alexander’s status as liquidator, being proceedings in which all parties affected by the challenge would be joined as defendants. That would include Mr Alexander and presumably also [the company] itself. [Counsel for the respondent] submitted that such a course would not have been open to the [respondent], since he would have no locus standi to commence such proceedings. I am not convinced of that, since I consider it probable that his status as a respondent to the disqualification proceedings would have given him a sufficient interest, but whether that is right or not, he has anyway not sought to put it to the test, but simply expects the court to decide the point in proceedings to which neither Mr Alexander nor [the company] are parties.’
Robert Walker LJ spoke of the Tjolle cases, saying: ‘I do not understand Jacob J in the first part of that passage to be enumerating tests which must all be satisfied if de facto directorship is to be established. He is simply drawing attention to some (but not all) of the relevant factors, recognising that the crucial issue is whether the individual in question has assumed the status and functions of a company director so as to make himself responsible under the 1986 Act as if he were a de jure director.’
Statutes: Company Director Disqualifications Act 1986
This case cites:

  • Cited – Secretary of State for Trade and Industry -v- Jabble and Others CA (Times 05-Aug-97, Gazette 17-Sep-97, Bailii, [1997] EWCA Civ 2162)
    The Secretary of State sought company director disqualification orders. The defendants challenged the administrative receivership, saying that the appointment of the administrative receiver was invalid, and hence that the conditions of section 6 . .
  • Explained – Secretary of State for Trade and Industry -v- Tjolle and Others ChD (Gazette 18-Jun-97, Times 09-May-97, [1998] 1 BCLC 333)
    Delay and the probable short period of disqualification are proper reasons for Secretary of State to consider discontinuing proceedings. As to whether a person ‘assumes to act as a director’: ‘It may be difficult to postulate any one decisive test. . .

This case is cited by:

  • Cited – Cabvision Ltd -v- Feetum and others CA (Bailii, [2005] EWCA Civ 1601, Times 02-Jan-06)
    The company challenged the appointment of administrative receivers, saying there had been no insolvency.
    Held: No question arises of a derivative action arose here. The claimant had standing to apply for declaratory relief since they were . .
  • Cited – Holland -v- Revenue and Customs and Another CA (Bailii, [2009] EWCA Civ 625, [2009] STC 1639, [2009] STI 2026, Times, [2009] 2 BCLC 309)
    The appellant supported IT workers. Through his own company, he set up companies in which his company was a director, and which companies in turn employed the IT workers securing substantial savings in higher rate Corporation Tax.
    Held: The . .
  • Cited – Holland -v- Revenue and Customs and Another SC (Bailii, [2010] UKSC 51, UKSC 2009/0131, SC Summary, SC, [2010] STI 3074, [2010] 1 WLR 2793, [2011] BCC 1, [2011] 1 All ER 430, [2011] Bus LR 111, Bailii Summary)
    The Revenue sought an order under section 212 of the 1986 Act, for payment of the tax debts of the insolvent company by a de facto director. H had organised a scheme under which IT contractors had worked through companies created by him under a . .

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