Eastaway v Secretary of State for Trade & Industry (2007)
A ruling by the European Court of Human Rights that the length of director disqualification proceedings had violated the reasonable time provision in the European Convention on Human Rights 1950 Art.6 did not entitle a director to have his disqualification proceedings dismissed and a disqualification undertaking that he had given set aside.
The appellant (E) appealed against a decision ((2006) EWHC 299 (Ch); (2006) 2 BCLC 489) that director disqualification proceedings should not be dismissed and a director disqualification undertaking given by E should not be set aside, despite the fact that the European Court of Human Rights had ruled that the length of the proceedings had violated E's rights under the European Convention on Human Rights 1950 Art.6. E was a director of a group of companies that had gone into receivership in 1990. In 1992 the secretary of state had brought disqualification proceedings against E. In 1999 E had applied for judicial review of a decision to continue the proceedings and had given an undertaking that, if that application was unsuccessful, he would agree to the summary disposal of the disqualification proceedings under the Carecraft procedure. The application failed. E then applied for the proceedings to be dismissed because they had taken too long. That application was also refused. In 2001 E had entered into a disqualification undertaking pursuant to the Company Directors Disqualification Act 1986 s.1A and the proceedings had accordingly been stayed. The ECtHR had later ruled that the proceedings had taken too long and had thus violated E's rights under Art.6. As just satisfaction E was awarded compensation for his legal costs of the proceedings to establish the violation and for non-pecuniary damage. E claimed that the violation of his Convention rights gave him the further right under domestic law to have the disqualification proceedings dismissed and the undertaking set aside. The judge disagreed. E submitted that (1) the finding by the ECtHR of a violation of Art.6 meant that there could no longer be a fair trial of the action; (2) the judge should have held that the proceedings should have been struck out before E gave his undertaking; (3) the judge had been wrong to conclude that E had waived his right to complain of a violation of Art.6 because he had given the disqualification undertaking; (4) the judge had been wrong to hold that E ceased to be a victim for the purposes of the Human Rights Act 1998 s.7 once he had been awarded compensation by the ECtHR; (5) the disqualification undertaking should be set aside because of the adverse effect that it had on E's professional standing.
(1) The ECtHR's conclusion was that there had been a violation of Art.6 because the proceedings were not determined within a reasonable time. There was no finding that there could be no fair trial of the disqualification proceedings despite the delay. Such a finding was not implicit in its decision that Art.6 had been violated because of the delay, Attorney General's Reference (No2 of 2001), Re (2003) UKHL 68, (2004) 2 AC 72 applied. (2) No case had been made on the application to dismiss that a fair trial was not possible. E had not shown on that application that, as a result of delay in prosecuting the proceedings against him, there could no longer be a fair trial of those proceedings. There was no seriously arguable case that a fair trial would not have been possible in 2001. (3) It had not been obligatory for E to give the 1999 undertaking or the disqualification undertaking. He had not been faced with a choice between a fair trial and none at all or an unfair trial. He had been given the option of disposing of the proceedings on mutually agreed terms. That had benefits for him in that it avoided the cost and publicity of a full trial. Under s.7 of the 1986 Act the secretary of state could only accept a disqualification undertaking if it was expedient in the public interest to do so. Waiver of a guaranteed Convention right was permissible where that did not run contrary to any important public interest. In the instant case there was no important public interest that prevented the waiver of the right to a fair trial by the giving of either the 1999 undertaking or the disqualification undertaking. (4) It was not right to say that because E had received compensation from the ECtHR for his legal costs and for non-pecuniary damage in the form of distress, anxiety and frustration, he could not therefore be a victim for the purposes of s.7 of the 1998 Act. E would have been a victim for the purposes of s.7 if he had been entitled to assert a seriously arguable claim, which he was not. (5) The evidence was quite inadequate to support a conclusion that the prolongation of the proceedings resulted in sufficient substantial prejudice to justify the dismissal of the proceedings.