PRACTICE DIRECTION: DIRECTORS DISQUALIFICATION PROCEEDINGS

In this practice direction:

(1)	‘the Act’ means the Company Directors Disqualification Act 1986 (as amended);

(2)	‘the Disqualification Rules’ means the rules for the time being in force made under section 411 of the Insolvency Act 1986 in relation to disqualification proceedings1;

(3)	‘the Insolvency Rules’ means the rules for the time being in force made under sections 411 and 412 of the Insolvency Act 1986Acts in relation to insolvency proceedings;

(4)	‘CPR’ means the Civil Procedure Rules 1998 and ‘CPR’ followed by ‘Part’ or ‘Rule’ and a number means the part or Rule with that number in those Rules;

(5)	‘disqualification proceedings’ has the meaning set out in paragraph 1.3 below;

(6)	‘a disqualification application’ is an application under the Act for the making of a disqualification order;

(7)	‘registrar’ means any judge of the High Court or the county court who is a registrar within the meaning of the Insolvency Rules;

(8)	‘companies court registrar’ means any judge of the High Court sitting in the Royal Courts of Justice in London who is a registrar within the meaning of the Insolvency Rules.

(9)

except where the context otherwise requires references to; (a)     ‘company’ or ‘companies’ shall include references to ‘partnership’ or ‘partnerships'’ and to ‘limited liability partnership’ and ‘limited liability partnerships’ (b)     ‘director’ shall include references to an ‘officer’ of a partnership and to a ‘member’ of a limited liability partnership: (c)     ‘shadow director’ shall include references to a ‘shadow member’ of a limited liability partnership and, in appropriate cases, the forms annexed to this practice direction shall be varied accordingly;

(10)	‘disqualification order’ has the meaning set out in section 1 of the Act and ‘disqualification undertaking’ has the meaning set out in section 1A or section 9B of the Act (as the context requires);

(11)	a ‘Section 8A application’ is an application under section 8A of the Act to reduce the period for which a disqualification undertaking is in force or to provide for it to cease to be in force;

(12)	‘specified regulator’ has the meaning set out in section 9E(2) of the Act.

This practice direction shall come into effect on 26 April 1999 and shall replace all previous practice directions relating to disqualification proceedings.

This practice direction applies to the following proceedings (‘disqualification proceedings’):

(1)

disqualification applications made: (a)     under section 2(2)(a) of the Act (after the person’s conviction of an indictable offence in connection with the affairs of a company); (b)     under section 3 of the Act (on the ground of persistent breaches of provisions of companies legislation); (c)     under section 4 of the Act (on the ground of fraud etc); (d)     by the Secretary of State or the official receiver under section 7(1) of the Act (on the ground that the person is or has been a director of a company which has at any time become insolvent and his conduct makes him unfit to be concerned in the management of a company); (e)     by the Secretary of State under section 8 of the Act (on it appearing to the Secretary of State from investigative material that it is expedient in the public interest that a disqualification order should be made); or (f)     by the Office of Fair Trading or a specified regulator under section 9A of the Act (on the ground of breach of competition law by an undertaking and unfitness to be concerned in the management of a company);

(2)	any application made under section 7(2) or 7(4) of the Act;

(3)	any application for permission to act made under section 17 of the Act for the purposes of any of sections 1(1)(a), 1A(1)(a) or 9B(4), or made under section 12(2) of the Act;

(4)	any application for a court order made under CPR Part 23 in the course of any of the proceedings set out in sub-paragraphs (1) to (3) above;

(5)	any application under the Act to the extent provided for by subordinate legislation2;

(6)	any section 8A application.

All disqualification proceedings are allocated to the multi-track. The CPR relating to allocation questionnaires and track allocation shall not apply.

Official receivers and deputy official receivers have right of audience in any proceedings to which this Practice Direction applies, including cases where a disqualification application is made by the Secretary of State or by the official receiver at his direction, and whether made in the High Court or a county court³.

Sections 2(2)(a), 3(4), 4(2), 6(3), 8(3) and 9E(3) of the Act identify the civil courts which have jurisdiction to deal with disqualification applications.

A disqualification application must be commenced by a claim form issued:

(1)	in the case of a disqualification application under section 9A of the Act, in the High Court out of the office of the companies court registrar at the Royal Courts of Justice;

(2)	in any other case, (a)     in the High Court out of the office of the companies court registrar or a chancery district registry; and (b)     in the county court, out of a county court office.

Disqualification applications shall be made by the issue of a claim form in the form annexed hereto and the use of the procedure set out in CPR Part 8⁴, as modified by this practice direction and (where the application is made under sections 7, 8 or 9A of the Act) the Disqualification Rules. CPR rule 8.1(3) (power of the Court to order the application to continue as if the claimant had not used the Part 8 Procedure) shall not apply.

When the claim form is issued, the claimant will be given a date for the first hearing of the disqualification application. This date is to be not less than eight weeks from the date of issue of the claim form⁵. The first hearing will be before a registrar.

Every claim form by which a disqualification application under the Act is begun and all affidavits, notices and other documents in the proceedings must be entitled in the matter of the company or companies in question and in the matter of the Act. In the case of any disqualification application under section 7 or 9A of the Act it is not necessary to mention in the heading any company other than that referred to in section 6(1)(a) or 9A(2) of the Act (as the case may be).

CPR Rule 8.2 does not apply. The claim form must state:

(1)	that CPR Part 8 (as modified by this practice direction) applies, and (if the application is made under sections 7, 8 or 9A of the Act) that the disqualification application is made in accordance with the Disqualification Rules6;

(2)	that the claimant seeks a disqualification order, and the section of the Act pursuant to which the disqualification application is made;

(3)

the period for which, in accordance with the Act, the court has power to impose a disqualification period. The periods are as follows – (a)     where the application is under section 2 of the Act, for a period of up to 15 years; (b)     where the application is under section 3 of the Act, for a period of up to 5 years; (c)     where the application is under section 4 of the Act, for a period of up to 15 years; (d)     where the application is under section 7 of the Act, for a period of not less than 2, and up to 15, years7; (e)     where the application is under section 8 or 9A of the Act, for a period of up to 15 years8.

(4)

in cases where the disqualification application is made under sections 7, 8 or 9A of the Act, that on the first hearing of the application, the court may hear and determine it summarily, without further or other notice to the defendant, and that, if the application is so determined, the court may impose a period of disqualification of up to 5 years but that if at the hearing of the application the court, on the evidence then before it, is minded to impose, in the case of any defendant, disqualification for any period longer than 5 years, it will not make a disqualification order on that occasion but will adjourn the application to be heard (with further evidence, if any) at a later date that will be notified to the defendant9;

(5)	that any evidence which the defendant wishes the court to take into consideration must be filed in court in accordance with the time limits set out in paragraph 9 below (which time limits shall be set out in the notes to the Claim Form)10.

Service of claim forms in disqualification proceedings will be the responsibility of the claimant and will not be undertaken by the court.

The claim form shall be served by the claimant on the defendant. It may be served by sending it by first class post to his last known address; and the date of service shall, unless the contrary is shown, be deemed to be the 7^th day following that on which the claim form was posted¹¹. CPR r. 6.7(1) shall be modified accordingly. Otherwise Sections I and II of CPR Part 6 apply¹².

Where any claim form or order of the court or other document is required under any disqualification proceedings to be served on any person who is not in England and Wales, the court may order service on him to be effected within such time and in such manner as it thinks fit, may require such proof of service as it thinks fit¹³, and may give such directions as to acknowledgment of service as it thinks fit. Section III of CPR Part 6 shall not apply.

The claim form served on the defendant shall be accompanied by an acknowledgement of service.

The form of acknowledgment of service is annexed to this practice direction. CPR rules 8.3(2) and 8.3(a) do not apply to disqualification applications.

In cases brought under section 7, 8 or 9A of the Act, the form of acknowledgement of service shall state that the defendant should indicate¹⁴:

(1)

whether he contests the application on the grounds that, in the case of any particular company – (a)     he was not a director or shadow director of that company at a time when conduct of his, or of other persons, in relation to that company is in question; (b)     his conduct as director or shadow director of that company was not as alleged in support of the application for a disqualification order; (c)     in the case of an application made under section 7 of the Act, the company has at no time become insolvent within the meaning of section 6; or (d)     in the case of an application under section 9A of the Act, the undertaking which is a company did not commit a breach of competition law within the meaning of that section.

(2)	whether, in the case of any conduct of his, he disputes the allegation that such conduct makes him unfit to be concerned in the management of a company; and

(3)	whether he, while not resisting the application for a disqualification order, intends to adduce mitigating factors with a view to reducing the period of disqualification.

The defendant shall:

(1)	(subject to any directions to the contrary given under paragraph 7.3 above) file an acknowledgment of service in the prescribed form not more than 14 days after service of the claim form; and

(2)	serve a copy of the acknowledgment of service on the claimant and any other party.

Where the defendant has failed to file an acknowledgment of service and the time period for doing so has expired, the defendant may attend the hearing of the application but may not take part in the hearing unless the court gives permission.

Evidence in disqualification applications shall be by affidavit, except where the official receiver is a party, in which case his evidence may be in the form of a written report (with or without affidavits by other persons) which shall be treated as if it had been verified by affidavit by him and shall be prima facie evidence of any matter contained in it¹⁵.

In the affidavits or (as the case may be) the official receiver’s report in support of the application, there shall be included:

(1)	a statement of the matters by reference to which it is alleged that a disqualification order should be made against the defendant16; and

(2)	a statement of the steps taken to comply with any requirements imposed by sections 16(1) and 9C(4) of the Act

When the claim form is issued:

(1)	the affidavit or report in support of the disqualification application must be filed in court;

(2)	exhibits must be lodged with the court where they shall be retained until the conclusion of the proceedings; and

(3)	copies of the affidavit/report and exhibits shall be served with the claim form on the defendant17.

The defendant shall, within 28 days from the date of service of the claim form¹⁸:

(1)	file in court any affidavit evidence in opposition to the disqualification application that he or she wishes the court to take into consideration; and

(2)	lodge the exhibits with the court where they shall be retained until the conclusion of the proceedings; and

(3)	at the same time, serve upon the claimant a copy of the affidavits and exhibits.

In cases where there is more than one defendant, each defendant is required to serve his evidence on the other defendants unless the court otherwise orders.

The claimant shall, within 14 days from receiving the copy of the defendant’s evidence¹⁹:

(1)	file in court any further affidavit or report in reply he wishes the court to take into consideration; and

(2)	lodge the exhibits with the court where they shall be retained until the conclusion of the proceedings; and

(3)	at the same time serve a copy of the affidavits/reports and exhibits upon the defendant.

Prior to the first hearing of the disqualification application, the time for serving evidence may be extended by written agreement between the parties. After the first hearing, the extension of time for serving evidence is governed by CPR rules 2.11 and 29.5.

So far as is possible all evidence should be filed before the first hearing of the disqualification application.

The date fixed for the first hearing of the disqualification application shall be not less than 8 weeks from the date of issue of the claim form²⁰.

The hearing shall in the first instance be before the registrar²¹.

The registrar shall either determine the case on the date fixed or give directions and adjourn it²².

All interim directions should insofar as possible be sought at the first hearing of the disqualification application so that the disqualification application can be determined at the earliest possible date. The parties should take all such steps as they respectively can to avoid successive directions hearings.

In the case of a disqualification application made under sections 7, 8 or 9A of the Act, the registrar shall adjourn the case for further consideration if –

(1)	he forms the provisional opinion that a disqualification order ought to be made, and that a period of disqualification longer than 5 years is appropriate23; or

(2)	he is of opinion that questions of law or fact arise which are not suitable for summary determination24.

If the registrar adjourns the application for further consideration he shall –

(1)	direct whether the application is to be heard by a registrar or by a judge25. This direction may at any time be varied by the court either on application or of its own initiative. If the court varies the direction in the absence of any of the parties, notice will be given to the parties;

(2)	consider whether or not to adjourn the application to a judge so that the judge can give further directions;

(3)	consider whether or not to make any direction with regard to fixing the trial date or a trial window;

(4)	state the reasons for the adjournment26.

On the first or any subsequent hearing of the disqualification application, the registrar may also give directions as to the following matters:

(1)	the filing in court and the service of further evidence (if any) by the parties27;

(2)	the time-table for the steps to be taken between the giving of directions and the hearing of the application;

(3)	such other matters as the registrar thinks necessary or expedient with a view to an expeditious disposal of the application or the management of it generally28;

(4)	the time and place of the adjourned hearing29; and

(5)	the manner in which and the time within which notice of the adjournment and the reasons for it are to be given to the parties30.

Where a case is adjourned other than to a judge, it may be heard by the registrar who originally dealt with the case or by another registrar³¹.

If the companies court registrar adjourns the application to a judge, all directions having been complied with and the evidence being complete, the application will be referred to the Listing Office and any practice direction relating to listing shall apply accordingly.

In all disqualification applications, the Court may direct a pre-trial review (‘PTR’), a case management conference or pre-trial check lists (listing questionnaires) (in the form annexed to this practice direction) and will fix a trial date or trial period in accordance with the provisions of CPR Part 29: the Multi Track as modified by any relevant practice direction made thereunder.

At the hearing of the PTR, the registrar may give any further directions as appropriate and, where the application is to be heard in the Royal Courts of Justice in London, unless the trial date has already been fixed, may direct the parties (by Counsel’s clerks if applicable), to attend the Registrar at a specified time and place in order solely to fix a trial date. The court will give notice of the date fixed for the trial to the parties.

In all cases, the parties must inform the court immediately of any material change to the information provided in a pre-trial check list.

Trial bundles containing copies of –

(1)	the claim form;

(2)	the acknowledgment of service;

(3)	all evidence filed by or on behalf of each of the parties to the proceedings, together with the exhibits thereto;

(4)	all relevant correspondence; and

(5)	such other documents as the parties consider necessary; shall be lodged with the court.

Skeleton arguments should be prepared by all the parties in all but the simplest cases whether the case is to be heard by a registrar or a judge. They should comply with all relevant guidelines.

The advocate for the claimant should also in all but the simplest cases provide: (a) a chronology; (b) a dramatis personae; (c) in respect of each defendant, a list of references to the relevant evidence.

The documents mentioned in paragraph 12.1–12.3 above must be delivered to the court in accordance with any order of the court and/or any relevant practice direction³².

(1)	If the case is to be heard by a judge sitting in the Royal Courts of Justice, London, but the name of the judge is not known, or the judge is a deputy judge, these documents must be delivered to the Clerk of the Lists. If the name of the judge (other than a deputy judge) is known, these documents must be delivered to the judge’s clerk;

(2)	If the case is to be heard by a companies court registrar, these documents must be delivered to Room 409, Thomas More Building, Royal Courts of Justice. Copies must be provided to the other party so far as possible when they are delivered to the court;

(3)	If the case is to be heard in the Chancery district registries in Birmingham, Bristol, Caernarfon, Cardiff, Leeds, Liverpool, Manchester, Mold, Newcastle upon Tyne or Preston, the addresses for delivery are set out in Annex 1;

(4)	If the case is to be heard in a county court, the documents should be delivered to the relevant county court office.