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 were not satisfied and the Secretary of State was not entitled to rely on the section as the basis for the disqualification proceedings.
Held: Neither the company nor the appointor was party to the proceedings. It was not appropriate to challenge a debenture over company assets in director disqualification proceedings many years later.
Millett LJ: ‘So it comes about that we are asked to pronounce upon the conditional or unconditional nature of a debenture and guarantee and the validity of an appointment of an administrative receiver in proceedings to which neither the company which granted the debenture, nor the bank to which it was granted, nor even the administrative receiver whose appointment is challenged, are made parties. In my judgment the proceedings are completely misconceived. If the debenture and guarantee were indeed conditional and the condition was not satisfied, or if the appointment of the administrative receiver was invalid, then McIvor could have brought proceedings against the bank to have the appointment declared void. Despite the passage of more than five years since the administrative receiver was appointed, McIvor has never challenged the appointment. The administrative receivership is long since spent. The assets of McIvor have been distributed, no doubt to the prejudice of the unsecured creditors and to the advantage of the bank. The appellants, who remained directors of McIvor . . never took any steps either to replace themselves as directors of McIvor or to procure McIvor to bring proceedings to challenge the appointment of the administrative receiver. They themselves never had any standing to challenge the appointment even in proceedings properly constituted against the bank. But they seek to do so now in their own right as directors or former directors of McIvor and not as creditors, in the absence of McIvor and in proceedings brought by the Secretary of State to which the bank is not a party. In my judgment they have no standing to do so.’
Judges:
Millett LJ
Citations:
Times 05-Aug-1997, Gazette 17-Sep-1997, [1997] EWCA Civ 2162
Statutes:
Company Directors Disqualification Act 1986
Jurisdiction:
England and Wales
Cited by:
Cited – Cabvision Ltd v Feetum and others CA 20-Dec-2005
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 – Re Kaytech International plc; Secretary of State for Trade and Industry v Kaczer and others CA 1999
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 . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 09 November 2022; Ref: scu.89139