Following the administration in 2017 of CFO Lending Ltd (“CFO”), a pay day lender, the Insolvency Service sought to disqualify its former directors in connection with their conduct in managing its affairs. Four directors submitted to disqualification undertakings but one (“K”) elected to defend the proceedings brought against him. K faced a single allegation of unfitness (based on alleged incompetence to a high degree) that he had caused or allowed CFO to misuse customer banking information, to make excessive use of continuous payment authorities (CPAs) and to fail to keep records which were adequate to accurately account for amounts due from customers between at least June 2011 and June 2014. In the pre-action (section 16) letter, it was indicated that the claimant considered a disqualification period of 10 years was appropriate.
After making various observations in relation to the way the claim was advanced (and specifically the absence from the evidence of specific reference to K’s role and responsibilities or to any specific acts or omissions by him) the Court went on (in the course of a judgment running to 63 pages (272 paragraphs)) to dismiss each of the three grounds comprised within the allegation, concluding that the claimant had either failed to establish that K was responsible for the relevant regulatory breach by CFO which underpinned the ground or that where he was responsible he had reasonably relied on professional advice.
The case involved careful scrutiny of a mass of documentation (running to c 3,000 pages), the findings of investigations by two regulatory bodies (the OFT and the FCA) and K’s involvement in ensuring compliance by CFO with its regulatory obligations and the extent to which he was entitled to rely on professional advice. Navigating the morass of documentary material (much of which was of peripheral, if any, relevance) involved a significant challenge, as did ensuring that the claimant’s case was confined to the narrow terms of the allegation.
Richard Ascroft has significant experience in defending directors disqualification proceedings and in securing permission to act following disqualification, is a contributor to the leading text in the field (Mithani: Directors’ Disqualification) and was previously a member of the Attorney General’s Regional Panel of Junior Counsel to the Crown.
To be kept up-to-date with our latest news and future events, please complete the short form.
A member of the clerking team will help you resolve your request.