S6 of the 1986 Act proceedings had been stayed pending criminal proceedings in which the defendant was eventually convicted of conspiracy to defraud, sentenced to imprisonment and given a two year disqualification order under s2 by the trial judge, at the invitation of the defendants own counsel. The Secretary of State then applied to restore the s6 proceedings, which was opposed on the grounds it would be unjust to do so in light of the order made under s2. It was said that there was such a degree of overlap between the criminal and civil proceedings that to allow the s6 application to proceed would effectively expose the director to double jeopardy.
Held: There was no abuse of process in reviving an application for a company director disqualification order which had been adjourned to allow criminal prosecutions to be concluded, after those proceedings had been finished. There was no double jeopardy as between civil and criminal proceedings, and the parties were different, as was the nature and statutory jurisdiction of the proceedings. In this case the Secretary of State was not party to and should not be bound by the form of adjournment.
Anthony Mann QC said: ‘I have been told that (not surprisingly) this sort of situation (criminal and civil disqualification orders potentially overlapping) is not uncommon. There are reported and unreported cases in which it is apparent that civil proceedings have continued after s 2 disqualification orders have been made in relation to the respondents to criminal proceedings (for example, Secretary of State for Trade and Industry v Tjolle [1998] BCLC 333, [1998] BCC 282 in which it can be seen that a 10 year disqualification under s 2 was followed by a 15 year disqualification under s 6). However, there is no authority which in terms addresses the points raised by Mr Ayres. Accordingly I have to approach this matter as one of principle. It seems to me that the following principles and factors should be applied and considered in resolving the issues which arise in this case.
(i) I do not think that the doctrine of former recovery is applicable bearing in mind the different parties to the two sets of proceedings, their different natures, the different interests of the two ‘prosecutors’ (for want of a better word) involved and the two different statutory jurisdictions involved. I can see how the doctrine, in its autrefois convict form, might apply if one disqualification under s 2 was sought to be followed by another s 2 disqualification based on the same facts. That, however, is not the case where the clash of proceedings is between criminal proceedings and civil proceedings under s 6 . .
(ii) Nor do I think that the doctrine of double jeopardy applies. The operation of the doctrine in relation to civil proceedings was considered in Saeed v GLC [1986] IRLR 2. In that case an acquittal on a charge of assault did not bar a domestic tribunal disciplinary charge based on the same alleged assault. Popplewell J cited Connolly v Director of Public Prosecutions [1964] AC 1254, [1964] 2 All ER 401, where there are dicta which refer to the impropriety of trying a man twice for the same crime and said:
‘Mr Geddes points out, and I accept, that double jeopardy cannot apply as between criminal and civil proceedings.’
I apply the same principles.
(iii) The correct principles to apply are those relating to abuse of process. That was the basis of the consideration of the Court of Appeal in Re Barings plc (No [3]) where the alternative proceedings were disciplinary proceedings . .
(iv) The burden is on the party alleging abuse to establish it – Johnson v Gore Wood and Co [[2001] 2WLR 72].
(v) The jurisdiction to stay or strike out proceedings as an abuse on the footing that a point has been decided in earlier proceedings is not a jurisdiction that will be exercised lightly. I should be looking for circumstances which demonstrate that it would be:
‘manifestly unfair to a party to litigation before it, or [it] would otherwise bring the administration of justice into disrepute among right-thinking people,’
if I were to allow the present proceedings to continue – Hunter v Chief Constable of West Midlands [1982] AC 529 at page 526, cited by Waller LJ in Re Barings plc (No 3) at page 257.
(vi) This point is even stronger where the person who is sought to be debarred in the second set of proceedings was not even a party to the first set. While a non-coincidence of parties is not necessarily a bar to a finding of abuse, it must be an important pointer against it.
(vii) It will be essential to examine:
‘whether the issues upon which the court will need to adjudicate in the present proceedings are the same, or substantially the same, as those which have already been investigated and adjudicated upon in the [criminal proceedings].’ (per Chadwick LJ in re Barings plc (No [3]) [1999] 1 BCLC 226 at page 253)
(viii) I must bear in mind that the Secretary of State is the person to whom Parliament has entrusted the task of considering whether to seek disqualification orders in the public interest under s 6. This court is not entitled to substitute its own view as to the desirability of continuing proceedings for the view taken by the Secretary of State – see again Re Barings plc (No [3]) [1999] 1 BCLC 226 at p 252. I can only intervene if the continuation of the proceedings amounts to an abuse of the process, and the public interest factor must be borne heavily in mind in considering that question. In this context it is again important to remember that the Secretary of State was not a party to the criminal proceedings; nor was he given an opportunity to appear. A finding that the Secretary of State’s continued pursuit of proceedings that he considers to be in the public interest is an abuse of the process on the basis of findings in proceedings to which he was not a party would be a strong finding. It might not be absolutely inconceivable; but it would require a very strong and clear case. It is no answer to say, as Mr Ayres says, that the prosecuting authorities and the Secretary of State are both ’emanations of the state’. That might be an accurate description is some contexts, but they are emanations with different functions and with different interests in mind.
(ix) It is important to bear in mind the difference in focus and emphasis of the criminal proceedings when compared to the civil proceedings. The purpose of the criminal proceedings is to consider the evidence with a view to determining whether the crime has been committed. That will usually involve considering the existence or non-existence of dishonesty. If there is a conviction, then disqualification may be considered as part of the sentencing process, but the focus of the criminal proceedings is such that any detailed consideration of the conduct of the directors in question, so far as it bears on their unfitness to be directors, is unlikely to take place during the trial and will arise, if at all, at the stage of sentencing by which time all the evidence has been given. The disqualification will be considered by reference to the facts germane to the conviction. Civil proceedings under s 6 are different. The whole focus of those proceedings is on the conduct of the directors and what it says about their fitness or unfitness to be directors, and that focus exists throughout the proceedings. One also has to bear in mind the differing standards of proof in the two sets of proceedings. There may be various things not proved to the criminal standard which might be provable to the civil standard in the civil proceedings, so that decisions in the former might justifiably be revisited in the latter.
(x) It seems to me that a combination of the last two points means that in most cases it is going to be unlikely that a disqualification in criminal proceedings will make concurrent civil proceedings an abuse of process. It is likely to be only in clear cases, which can clearly be said to be on all fours with each other, that it might be said that the criminal proceedings have covered all the bases in a way which makes the civil proceedings otiose and oppressive’
Anthony Mann QC
Times 03-Apr-2001, Gazette 17-May-2001, [2001] 2 BCLC 48
Company Directors Disqualification Act 1986
England and Wales
Cited by:
Appeal from – In Re Cedarwood Productions Ltd; In Re Inter City Print and Finishing Ltd; Secretary of State for Trade and Industry v Rayna and Another CA 26-Jun-2001
Company directors had had civil proceedings for disqualification suspended pending the outcome of criminal proceedings arising from the circumstances of the failure of their companies. They had variously suffered penalties including criminal . .
Cited – The Secretary of State for Business, Innovation and Skills v Weston and Another ChD 5-Sep-2014
The Secretary of State sought company director disqualification orders against the defendants saying they had been convicted of making false instruments. The Insolvency service had decided against such proceedings, and the Crown Court judge, when . .
Lists of cited by and citing cases may be incomplete.
Company
Leading Case
Updated: 01 November 2021; Ref: scu.81843
