Secretary of State for Trade & Industry v Vernon Davies & Ors (2001)


Applications by the fifth defendant ('E'), who was the subject of disqualification proceedings under s.6 Company Directors Disqualification Act 1986


E applied for judicial review of the secretary of state's decision to continue with disqualification proceedings. The proceedings were then adjourned pending the outcome of that application on the basis of an undertaking by E that if his application failed or if it were successful and the Secretary of State for Trade and Industry thereafter decided to continue with the disqualification proceedings, he would sign a statement of facts that had been agreed through his solicitors with a view to the proceedings being disposed of under the Re Carecraft Construction Co Ltd (1994) 1 WLR 172 procedure. The application for judicial review failed and the secretary of state called on E to honour his undertaking. E then unsuccessfully applied for a declaration that the proceedings were in breach of or incompatible with Art.6(1) European Convention on Human Rights. On 2 April 2001 the Insolvency Act 2000 came into force, amending s.1 of the 1986 Act to permit the secretary of state to accept a disqualification undertaking from E. E offered to give such an undertaking, which the secretary of state indicated that he was prepared to accept provided that the grounds of E's unfitness, in the form of the Carecraft (supra) statement or some other substantially similar statement, were set out in a schedule to that undertaking. E refused to allow any such statement to be annexed to the undertaking. E's case was that the secretary of state had no power to insist on or even accept a disqualification undertaking to which was attached a statement of the facts of conduct and unfitness upon which the undertaking was offered and accepted.


Having regard both to the circumstances of the passage of the Insolvency Bill through Parliament, insofar as that material was admissible as an aid to construction, and also to the general scheme of the 1986 Act both in its original form and as amended, the secretary of state had power to require that the facts upon which he had concluded that a case of unfitness was made out be recorded as a part of any disqualification undertaking. Therefore, the secretary of state had not acted ultra vires by adopting the policy that led to the dispute in this case or in seeking to apply it to E.