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‘Rehabilitated' director wins appeal against disqualification

Posted: 10th February 2021   In: Corporate Commercial

A disqualified director has been granted leave to run a company again after showing that he had overcome his drug and alcohol abuse issues and was a reformed character.

The director had been disqualified for failing to pay VAT following the sale of a plot of land. The company went into liquidation without any assets to pay HMRC.

Disqualification proceedings were brought against him and he entered into an undertaking that he would not act as a director for five years.  

Three years later he applied to have the disqualification lifted because at the time of his offence,

he had been suffering from mental health issues, and narcotic and alcohol abuse.

He said he had recovered and that he was rebuilding his business reputation. He submitted that his circumstances had changed which justified the exercise of the court's discretion to bring the undertaking to an end. The judge accepted his evidence of rehabilitation and granted the application under the Company Directors Disqualification Act 1986.

The Secretary of State opposed the decision and argued that rehabilitation alone did not justify revocation.

The High Court upheld the decision. It agreed that there had been some errors in the judge’s reasoning and the Secretary of State was correct that rehabilitation alone would not justify an order lifting disqualification.

However, an essential element of the undertaking was to allow a director to change his ways so the possibility of rehabilitation was foreseen and desirable. The law allowed the court to interfere if appropriate due to new facts or circumstances. 

To the director’s credit, he had obtained treatment and had recovered.

Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect

‘Rehabilitated’ director wins appeal against disqualification
Ch D (Bacon J) 14/01/2021
of company law.
Posted by: Sarah Liddiard
Corporate Commercial
Luton Office