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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Feld v The Secretary of State for Business, Innovation And Skills [2014] EWHC 1383 (Ch) (08 May 2014) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2014/1383.html Cite as: [2014] EWHC 1383 (Ch), [2014] WLR(D) 201, [2014] 1 WLR 3396, [2014] WLR 3396 |
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CHANCERY DIVISION
COMPANIES COURT
Strand London. WC2A 2LL |
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B e f o r e :
(sitting as a Deputy Judge of the Chancery Division)
____________________
MR ROBERT PHILIP FELD |
Appellant |
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- and - |
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THE SECRETARY OF STATE FOR BUSINESS, INNOVATION AND SKILLS |
Respondent |
____________________
Mr Tiran Nersessian (instructed by Wragge & Co LLP) for the Respondent
Hearing date: 25 March 2014
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Crown Copyright ©
Edward Murray (sitting as a Deputy Judge of the Chancery Division) :
"16. Mr Feld conducted business as a sole trader under the trading name of 'Aerospace and Technical Engineering' since about 1 December 2003. His business was that of precision manufacturing, serving various industrial sectors.
"17. ATEL was incorporated on 11 November 2003 and traded as a precision subcontract engineering machinist business. Its directors from incorporation were Mr Swan and Mr Scott The company's incorporation arose out of the fact [that] the lease of the premises from which Mr Feld traded had to be held in the name of the limited liability company and, as a result the employees and business of the sole tradership had to also be transferred.
"18. By application dated 13 April 2004, Mr Feld sought permission to act as a director pursuant to section 17 CDDA. Mr Feld's application was supported by affidavits from himself, Mr Swan and Mr Scott. The application came before District Judge Parker in the Croydon County Court on 22 June 2004. The order gave permission (the Order):
a. for Messrs Swan and Scott to appoint Mr Feld as a director of ATEL; and
b. for Mr Feld to serve as a director of ATEL.
"19. The permission given to Mr Feld was subject to the following express conditions:
'i) That the Third Claimant [Mr Feld] will (provided that the Third Claimant is at the time a director of the First Claimant),
a. Cease trading as a sole trader under the name of Aerospace and Technical Engineering.
b. Pay off, in full, his creditors.
ii) Transfer his business, without consideration, to the First Claimant, [ATEL]. That the First Claimant will trade in place of Aerospace and Technical Engineering.
iii) That as from the appointment of the Third Claimant as a director of the First Claimant, the following conditions will apply -
a. That the Second Claimant Stephen Swan will at all times remain a director of the First Claimant and will remain responsible for the finances of the First Claimant
b. That the Third Claimant will be eliminated from any responsibilities for, or to have any hand in, the finances of the First Claimant save those responsibilities imposed by law on the Third Claimant by virtue of being a director of the First Claimant and in attending board meetings.
c. That the Second Claimant Fraser Scott will at all times remain a director of the First Claimant.
d. That the Third Claimant and his wife Tam Feld wil continue to be shareholders of the First Claimant'
"20. Mr Feld was appointed director of ATEL on 13 January 2005. On 17 January 2005 he ceased to trade as a sole trader. At the material times ATEL's accountants were Sterling Milne LLP (latterly Reeves & Neylan) and its bankers were Barclays Bank.
"21. ATEL was placed into liquidation on 17 January 2008, The statement of affairs showed a total deficiency as regards creditors of £1,103,180.32. The largest category of creditors claims were HMRC and trade and expenses creditors at £480,000 and £296,548 respectively."
The order and judgment of Registrar Derrett
i) A court order, given its nature and the consequences for a person of breaching it, must be capable of being understood by the person to whom it is directed without significant difficulty: Serious Organised Crime Agency v Hyams [2011] EWHC 3599 (QB) (presumably at [8]).
ii) Condition (iii)(b) of the Order was, at best, "obtuse" in the sense that it was not capable of being understood without significant difficulty.
iii) Condition (iii)(b) was, at worst, incoherent in the sense that it contained two requirements that could not co-exist, namely, that Mr Feld, by virtue of his appointment as a director, must comply with all of the obligations and duties of a director and yet that he must not act as a director as far as the financial requirements of that role are concerned. This latter part of his case was accompanied by submissions intended to show that all or virtually all of the duties of a director require a high degree of involvement in its financial affairs, either directly or indirectly.
iv) If the Order was not capable of being understood without significant difficulty, any breach of the Order which might have occurred could not form the basis for a conclusion that he was unfit to be concerned in the management of a company. If the Order was incoherent, he could not be said to be in breach of it.
"I accept that if you did not appreciate that what you were doing did not comply with the order you would not know that you needed to go back to court, but it suggests that the District Judge having taken account of the background was concerned to ensure that the public was adequately protected and placed a further obligation on the applicants. It does in my judgment mean that if Mr Feld was in any doubt about what he was allowed to do he should have gone back to the court."
i) Mr Feld had been subject to a serious disqualification order imposed by Wood Green Crown Court in connection with his conviction for fraud (for which he was ultimately sentenced to six years' imprisonment); and
ii) Mr Feld had applied for and was granted permission under section 17 of the CDDA subject to a limited condition which he knowingly breached on multiple occasions.
The grounds of appeal
i) The judge erred as a matter of law in not finding the Order to be either obtuse or, worse, incoherent.
ii) The judge was led into error by her:
a) application of the principles of contractual interpretation to the Order and
b) holding that the intention and understanding of Mr Feld as to the interpretation of the Order was relevant to the court's interpretation of the Order.
i) the lack of clarity in the Order or
ii) the concession of the Secretary of State that there was no evidence that Mr Feld's conduct In breaching condition (iii)(b) of the Order had contributed to the failure of ATEL.
The interpretation of the Order
The "serious procedural irregularity" ground
The length of disqualification
Conclusion