Re Lo-Line Electric Motors Ltd
The purpose of disqualification is to protect the public, and ordinary commercial misjudgment is not enough to make a director unfit, but conduct showing a lack of commercial probity or gross negligence may be.
Facts
Mr Browne was a director of several companies that went into insolvent liquidation. He had continued trading while the companies were insolvent, and had failed to pay the Crown debts, using the money owed to the Crown to keep the companies trading. The Secretary of State applied to disqualify him.
Legal principle
Sir Nicolas Browne-Wilkinson V-C made a disqualification order for three years, and gave him leave to continue as a director of a family company, subject to conditions. He said that the primary purpose of the disqualification provisions is not to punish the individual, but to protect the public against the future conduct of companies by persons whose past records as directors of insolvent companies have shown them to be a danger to creditors and others. Ordinary commercial misjudgment is in itself not sufficient to justify disqualification, but conduct which displays a lack of commercial probity, or gross negligence or total incompetence, may justify it.
Related cases on company charges, insolvency and disqualification
- Agnew v Commissioner of Inland Revenue (Re Brumark Investments Ltd) [2001] UKPC 28, [2001] 2 AC 710
- Re Bank of Credit and Commerce International SA (No 8) [1998] AC 214
- BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL plc [2013] UKSC 28, [2013] 1 WLR 1408
- Re Continental Assurance Co of London plc [2007] 2 BCLC 287
- Re MC Bacon Ltd [1990] BCLC 324
- Morris v Bank of India [2005] EWCA Civ 693
- Re Panama, New Zealand and Australian Royal Mail Co (1870) LR 5 Ch App 318
- Re Patrick and Lyon Ltd [1933] Ch 786
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