Summary

Where an application for a director's disqualification order was made and the Carecraft procedure employed, no finding of dishonesty could be made by the Court unless such a finding was undisputed and agreed by the parties in their agreed statement of facts.

Facts

Appeal by a disqualified director against an imputation of dishonesty in the judgment. By an originating summons dated 30 June 1992 the Secretary of State applied to the court for a disqualification order under s.6 Company Directors Disqualification Act 1986 against the respondent. The application was based on the respondent's conduct as a director of three companies in the Brombard Group. The Secretary of State reached agreement for the proceedings to be dealt with in summary form as sanctioned by Ferris J in In Re Carecraft Construction Co Ltd (1994) 1 WLR 172. The facts were agreed with the respondent and the Secretary of State and the respondent were agreed that the judge should deal with the matter on those agreed facts. The case came before Harman J on 14 December 1994 and an extempore judgment was given. The judge expressed the view that the respondent had to be disqualified and expressed himself to be satisfied that counsel were correct in suggesting that the middle bracket of disqualification was the correct one. He imposed a period of disqualification of eight years. The respondent left the court without any imputation of dishonesty having been held proved against him. However on 17 March 1995 the respondent and his legal advisers received the transcript as amended and approved by Harman J which ended with the sentence: "He clearly acted for his own benefit and to the harm of the companies of which he was a director - that was dishonest".

Held

Harman J's amendment to the transcript of his extempore judgment made it clear that his conclusion that the respondent was unfit and that a disqualification period of eight years was appropriate was based in important part on a finding that the respondent's conduct had been dishonest. That being so the judge was right to make the amendment to the transcript and could not be criticized for having done so. But the judge was not entitled to make the finding of dishonesty. The case had come before him on agreed facts. If the Secretary of State had thought it right to pursue allegations of dishonesty against the respondent, either the respondent would have had to agree that his conduct had been dishonest or the Carecraft procedure could not have been employed. Where the Carecraft procedure was used, a judge could not, if dishonesty formed no part of the agreed or undisputed facts, properly conclude that the agreed facts disclosed dishonesty.

Appeal allowed. Order set aside and a fresh disqualification period of eight years calculated from 14 December 1994 imposed.