Summary

Where an application was made for the disqualification of a director in her absence, the court had an unlimited power to set aside the order if appropriate.

Facts

Appeal by the Official Receiver ('OR') against a decision to adjourn directors' disqualification proceedings against the second respondent ('H'). The OR gave notice to H of proposed proceedings against her under the Company Directors Disqualification Act 1986. Proceedings were commenced and, in accordance with the provisions of r.5(1) Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987 SI 1987/2023, were served on H. Proceedings were also served on H by hand at an address known as The Glebe. A letter which accompanied the hand delivered proceedings requested that H telephoned the OR if she knew a contact address for the first respondent. It was apparent that H received the hand delivered proceedings because she telephoned the OR on the same day to inform him of the first respondent's address. A number of interlocutory hearings were held in H's absence where various directions were made. The OR attempted to inform H of the various directions ordered but received no response. In June 2000, it became apparent from investigations, that H had moved from The Glebe in November 1999. Further directions were made, inter alia, that H file and serve evidence in answer to the OR's evidence within seven days after service on her of the order or she was debarred from adducing such evidence ('the Unless Order'). At a further hearing, it was accepted by the court that H was aware of the proceedings, but the court was unable to proceed against her if she did not have notice of the final hearing. Accordingly, it was ordered that the application against her be adjourned. However, in November 2000, the matter was restored and the OR invited the court, inter alia, to dispose of the case as uncontested under the 1986 Act. That application was refused on the basis that H had not been served with the Unless Order. In those circumstances, the court considered that the only course of action that could be taken, was to adjourn the OR's application with liberty to restore if she was located. This was the OR's appeal from that decision on the grounds that the court fell into error when it concluded that it was precluded from dealing with the matter because of non-service of the Unless Order as the OR had not placed any reliance on the effect of it.

Held

(1) In its decision to adjourn the application against H, the court acted on an erroneous basis. What was apparent was that the application was adjourned on the ground that the Unless Order was not served on H. That was not the correct approach. (2) On any basis, there was no suggestion by the OR that he was seeking to debar H from defending the proceedings on the basis that she had not complied with the Unless Order. In any event, that was not the sanction imposed by the order. (3) The insolvency rules and legislation provided for a speedy method of dealing with directors who were in breach of their duties under the 1986 Act. The 1987 Rules also provided an unlimited power for the court to set aside or vary a disqualification order made in the absence of the director. (4) Accordingly, the appeal was allowed but the matter adjourned for relisting for the court to consider the OR's disqualification application.

Appeal allowed.