Secretary of State for Business, Innovation and Skills v Gifford & Ors  EWHC 3022 (Ch) (21 November 2011) - Directors' Disqualification - Mr Justice Floyd on s.7(2) CDDA86
Mr Justice Floyd has handed down an interesting judgment in Secretary of State for Business, Innovation and Skills v Gifford & Ors  EWHC 3022 (Ch) (21 November 2011). The case concerns directors' disqualification. In particular the learned judge had to consider whether the Secretary of State (SofS) could make applications for directors' disqualification pursuant to s.7(2) CDDA86, even though a period of two years had elapsed since the company had become insolvent. The section 6 unfitness related to HMRC related issues around non-payment of tax by the property development company which the case involved. The five allegedly miscreant directors were considered to be either de facto or shadow directors. Floyd, J undertakes a review of the salient authories that relate to s.7 CDDA86. He notes, inter alia,:
"The approach to be taken by the court in deciding whether to grant permission under section 7(2) has been considered in a number of cases. First, it is important to have in mind throughout that the two year period is not a limitation period, but merely a period during which proceedings can be brought without permission. After the period has expired a defendant director does not acquire an immunity from suit. All that occurs is that the Secretary of State needs to surmount an additional hurdle. Thus, in Re Blackspur Group plc, Secretary of State for Trade and Industry v Davies  4 All ER 289, Millett LJ said at 298j-299b:
"I do not find it helpful to describe s 7(2) of the 1986 Act as a limitation provision, or to regard the grant of leave as depriving the respondent of an accrued immunity from suit. The grant of leave is built into the two-year period. Parliament clearly recognised that the two-year period might not be sufficient in every case. Even before the period expires, proceedings cannot be brought unless the Secretary of State has first determined that it is expedient in the public interest that they should be brought; after it has expired, the further requirement is imposed that the leave of the court should be obtained. There are then two preconditions instead of one, but that is all. Once the two-year period has expired, delinquent directors are not immune from disqualification proceedings; they are immune from such proceedings brought without the leave of the court, but that is a very different thing."
Floyd, J granted permission to the SofS. For more on this and related areas see here.
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