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Scottish Court of Session Decisions
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URL: http://www.bailii.org/scot/cases/ScotCS/2013/2013CSOH98.html
Cite as: [2013] ScotCS CSOH_98

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OUTER HOUSE, COURT OF SESSION

 

[2013] CSOH 98

 

P280/13

 

OPINION OF LORD HODGE

 

in the petition of

 

HER MAJESTY'S SECRETARY OF STATE FOR BUSINESS INNOVATION & SKILLS

 

 

Petitioner;

 

against

 

SAQIB DIN

 

Respondent:

 

FOR A DISQUALIFICATION ORDER UNDER THE COMPANY DIRECTORS DISQUALIFICATION ACT 1986

__________

 

 

Petitioner: Duthie; Shepherd & Wedderburn LLP

 

 

30 April 2013

 


[1] This application by the Secretary of State for disqualification of the respondent comes before me unopposed, as the respondent did not lodge answers. I am satisfied that the petition was served on the respondent timeously and that the application is therefore properly before me.


[2] It is established, first, that the respondent was the Director of STH Commodities Ltd when it went into insolvent liquidation on 5 April 2011. It is also established that Mr Din was the director of the company throughout its trading life and took an active part in its management. He was the sole shareholder and was in effect the principal of the company. Thirdly, I am satisfied that his conduct makes him unfit to be concerned with the management of the company. The issue therefore is the period of disqualification.


[3] Having considered Mr Duthie's submissions together with the petition, the productions and the cases, to which I will refer, I am satisfied that the Secretary of State is justified in the submission that this case falls in the middle of middle bracket of periods of disqualification set out in Re Sevenoaks Stationers (Retail) Ltd [1991] Ch 164. In particular, I consider that the following matters point towards that conclusion. First, there have been, throughout the life of the company, repeated breaches of duty under sections 386, 384 and 394 of the Companies Act 2006 to prepare and keep adequate accounting records. Secondly, there is evidence of substantial bank transactions, including the payment of large sums to the respondent, which cannot be reconciled with the accounts which the company had lodged with the Registrar of Companies. Thirdly, there is evidence of the deliberate destruction by the respondent of the company's accounting records by burning them. Fourthly, there was a clear breach of his statutory duty through his complete failure to co-operate with the liquidator, contrary to section 235 of the Insolvency Act 1986.


[4] As a result of the respondent's failures and misconduct, the liquidator cannot ascertain the purpose or regularity of many of the substantial transactions involving the company's bank account. The purpose of payments and the propriety of the withdrawals of large sums in favour of the respondent remain a mystery. Nor can it be estimated what are the appropriate sums to be paid to HM Revenue & Customs in respect of VAT and income tax. It appears, as Mr Duthie recognised, that the shortfall to creditors in the winding up is not large (£18,978). But, as he submitted, the true extent of the company's liabilities including the sums due to HM Revenue & Customs, will never be known.


[5] These factors lead me to the conclusion that Mr Din has systematically abused the privilege of trading with limited liability by his failure to comply with the statutory and other duties which accompany that privilege.


[6] In support of his submission Mr Duthie referred me to Mithani, Directors' Disqualification Vol.1, paragraphs 1494 and 1538, Re Brooks Trnasport Ltd [1993] BCC 766, Official Receiver v Hubbard 26 June 2007 (unreported but summarised in (2008) 323 Disqualification Newsletter (May)) and Secretary of State for Business Innovation & Skills v Malcolm Kirkcaldy Sheriff Court 6 April 2011, Sheriff Braid (unreported).


[7] In the circumstances I am satisfied that it is appropriate to order the disqualification of the respondent for a period of 8 years.

 

 

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URL: http://www.bailii.org/scot/cases/ScotCS/2013/2013CSOH98.html