SS for Trade & Industry v Hollier (Ch)
- Date: 17/07/2006
Full Name: The Secretary of State for Trade and Industry v (1) Dennis George Hollier (2) Jayson Wayne Hollier (3) Adrian Dennis Hollier (4) Barbara Ann Hollier (5) David Clarkson (6) Robert Anthony Bell
Citation: [2006] EW (1804)
Related Barrister: Tim Carlisle
In an application by the Secretary of State for a directors disqualification orders under section 8 of the Company Directors Disqualification Act 1986 against an individual (first Defendant), his two sons (second and third Defendants) and his wife (fourth Defendant) the Secretary of state maintained: that there was a connection between 4 companies that had recently been wound up by reason of the common involvement of the first defendant (a director of one of the companies and an alleged de facto director of the other 3 companies); that the second defendant was a de facto director of all 4 companies; that the third defendant was a de facto director of the first company and 2 of the other 3 companies; and that the fourth defendant was a de facto directors of the fourth company.
The judgment dealt only with the second, third and fourth defendants, the other Defendants having given disqualification undertakings. On the issue of how to define a de facto director, Mr Justice Etherton considered the authorities and set out the following principles to be applied in proceedings under the 1986 Act:
(1) The touchstone is whether the defendant was part of the corporate governing structure;
(2) Inherent in that touchstone is the distinction between someone who participates, or has the right to participate, in collective decision making on corporate policy and strategy and its implementation, on the one hand, and others who may advise or act on behalf of, or otherwise for the benefit of, the company, but do not participate in decision making as part of the corporate governance of the company. Accordingly, the test is not satisfied by someone who was at all times and in all material decisions subordinate to the de jure directors.
(3) The defendant may have been a de facto director even though he or she did not have day to day control of the company’s affairs, and even though he or she was only involved in part of the company’s activities.
(4) The issue is to be determined objectively on the basis of all the relevant facts. Whether the defendant was held out by the company, or claimed or purported, to be a director, and whether the defendant had access or the ability to obtain access to relevant company information is likely to be highly relevant and may be decisive. Factors such as a family relationship with other admitted directors and defendant’s financial interest in the company may also be relevant, sometimes supporting and sometimes negating the allegation that the defendant was a de facto director.