Secretary of State for Trade & Industry v Vohora & Anor

This is an Appeal from the decision of Mr Registrar Baister in this court made on 28^th March 2007 by which he ruled that an application by the Secretary of State for Trade and Industry (“The Secretary of State”) was within time for the purposes of Section 7(2) of the Company Directors Disqualification Act 1986. Section 7 empowers the Secretary of State to apply to disqualify directors of companies which have become insolvent from continuing to act as such in circumstances where the Secretary of State thinks that it is expedient in the public interest that such an order should be made: see Sections 6 and 7(1) of the Company Directors Disqualification Act 1986 (“The Act”). Section 7 sub-section (2) of the Act provides:-

“(2)

Except with the leave of the court, an application for the making under that section of a disqualification order against any person shall not be made after the end of the period of two years beginning with the day on which the company of which that person is or has been a director became insolvent.”

Section 6 sub-section (2) defines what is meant by the words “has … become insolvent” in sub-section 6(1)(a). In the present case an administration order was made against Dalefine UK Limited (“the Company”) of which the Appellants were directors. It is common ground that for the purposes of Section 6 of the Act the Company became insolvent on 7^th May 2002 and that accordingly, in order not to be out of time, any application for the disqualification of its directors had to be made by 7^th May 2004.

At paragraph 3 and following of his judgment the learned Chief Registrar described the background facts to this Appeal as follows:-

“3 The proceedings were brought in the Newcastle upon Tyne County Court but were transferred to this court by order of 7^th June 2005. The claim form was sent or delivered to the court under cover of a letter of 26^th April 2004. The letter bears a court date stamp of the same date. Miss Wilson-Barnes produced a copy of the receipt (No. 2803702) for the court fee of £130 which also bears that date. It is beyond doubt, therefore, that the papers were received by the court on 26^th April 2004, which is within the relevant two-year period.

4 The claim form languished in the court for some time before being sealed (the seal bears no date) and before an issue date was inserted on the front page. The date which was inserted was 17^th May 2004.

5 Dickinson Dees [The Secretary of State’s solicitors] must have received the sealed claim form on 18^th May 2004, since on that date it seems Mr Terry Phillips of that firm rang the court to complain. ”

The Registrar then sets out correspondence between Dickinson Dees and the court office of which the result was that, without reference to the Appellants, the date appearing on the claim form was altered to 26^th April 2004. The Chief Registrar’s initial description of the background to the case does not mention that on 29^th April 2004 Messrs Dickinson Dees contacted the court on the telephone to check whether the proceedings had been issued and had been told that they had been issued. That this happened is later mentioned in the Chief Registrar’s judgment and again is not in issue. In the course of the hearing there was produced to me a copy of the letter written by Messrs Dickinson Dees on 26^th April 2004 to the Newcastle County Court – Issue Section. So far as material that letter reads:-

“We act on behalf of the Secretary of State for Trade and Industry in relation to proceedings to be commenced against Rajesh Vohora and Shailja Vohora pursuant to Section 6 of the Company Directors Disqualification Act 1986. We enclose for issue the following documents:

1 Claim form together with two copies for sealing and return…”

Paragraph 1(3) of the Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987 (“the Rules”) applies the Rules to applications for the disqualification of directors by the Secretary of State. Paragraph 2(1) of the Rules applies the CPR to such applications except where the Rules make provision to inconsistent effect. Paragraph 2(2) of the Rules requires applications for disqualification of directors to be made by claim form and to be pursued under part 8 of the CPR. Part 7 of the CPR deals with the commencement of proceedings and provides at Rule 7.2:-

“7.2

– (1) Proceedings are started when the court issues a claim form at the request of the claimant.

(2)

A claim form is issued on the date entered on the form by the court.”

It is the Appellants’ submission that a claim form is issued consequent on a request by a litigant for the issue of a claim form in the form submitted at the time of the request, when the court has processed the claim form by giving it a number, prescribing the first hearing date and by stamping it and despatching it to the claimant. As the Chief Registrar accepted, that took place on 17^th May 2004. It follows, so it is submitted, that the claim form was correctly dated by the court by dating it 17^th May and court officials had no authority to re-date it 26^th April, a date upon which, on any view, the claim form was not “issued”. It follows, so the Appellants submit, that the proceedings were not started before 17^th May 2004.

It is the Secretary of State’s submission, in the first place, that the claim form was issued on 26^th April when it was received by the court and the letter accompanying it received the court stamp and a receipt for the court fee bearing that date was created.

It is the practice in the Newcastle County Court to treat a claim form as issued on the date that the letter of request is stamped by the court. It was submitted by Miss Wilson-Barnes for the Secretary of State that to do otherwise gives rise to appalling complications because, as this case shows, the date of commencement of proceedings may be vitally affected by the speed with which the court office can process and despatch claim forms.

The difficulty I have with this submission is that, in the absence of authority, I have to give the word “issue” its natural meaning when used as a verb in the sense of “issued to” or “issued out of”. Applying that meaning to CPR 7.2 it seems to me an unavoidable conclusion, subject to Miss Wilson-Barnes’ alternative submission with which I will shortly deal, that the proceedings in question were issued on 17^th May and that they were correctly given that date by the court. See St Helens Metropolitan Borough Council v Barnes [2006] EWCA Civ 1372 per Tuckey LJ at para. 7. It follows that these proceedings were commenced on that date.

Miss Wilson-Barnes’ alternative submission was based on paragraph 5.1 of the Practice Direction to part 7 which provides:-

“5.1

Proceedings are started when the court issues a claim form at the request of the claimant (see Rule 7.2) but where the claim form as issued was received in the court office on a date earlier than the date on which it was issued by the court, the claim is “brought” for the purposes of the Limitation Act 1980 and any other relevant statute on that earlier date.”

Paragraph 5.2 of the Practice Direction provides:-

“5.2

The date on which the claim form was received by the court will be recorded by a date stamp either on the claim form held on the court file or on the letter that accompanied the claim form when it was received by the court.”

The practice in the Newcastle County Court was therefore based on the assumption that the above paragraphs from the part 7 Practice Direction applied and, in effect, qualified the provisions of CPR 7.2.

In St Helens Metropolitan Borough Council v Barnesthe Court of Appeal was considering a case involving a personal injuries claim where a solicitor, whose injured client had recently received legal aid, attended the court office on the day before the expiry of the relevant period of limitation with a draft claim form and letter of request for the court to issue. However owing to a strike of court staff the claim form was not processed until after the limitation period had expired and it was dated after that date. The relevant statutory provision was Section 11 of the Limitation Act 1980 which provides that “an action [for personal injuries] shall not be brought after the expiration of … three years from the date on which the cause of action accrued.” Having set out the provisions of paragraph 5 of the Practice Direction to CPR part 7, Lord Justice Tuckey giving the lead judgment said this:-

“7 The question for us is when is a claim “brought” for the purpose of the 1980 Act under the procedural regime introduced by the CPR? Is it on the date which appears on the claim form when the court issues it and the proceedings are started as provided for by Rule 7.2, or is it when the court receives the request to issue it? I think the meaning of Rule 7.2 is clear: proceedings start on the date entered on the claim form by the court which is their date of issue. The question is whether this is also the time when the claim is brought as Mr Norman for the Defendant contends.”

In the result the Court of Appeal treated paragraph 5.1 of the Practice Direction as qualifying CPR 7.2 and were able to construe Section 11 of the 1980 Act so as to treat the proceedings there in question as having been “brought” on a date earlier than when the proceedings themselves started by the issue of a claim form, namely, when the draft claim form and the request for issue were handed to the court officials.

The judgments in the St Helens case refer to the case of Salford City Council v Garner [2004] EWCA Civ 364. Lord Justice Tuckey deals with this case at paragraph 12 of his judgment as follows:-

“The other post CPR case is [the Salford case] in which the court had to consider when proceedings were “begun” for the purposes of the statutory provisions in part V of the Housing Act 1996 dealing with introductory tenancies. The court held that proceedings were begun when they were started as provided by CPR 7.2. Issue of the claim form by the court was a transactional act. The proceedings were not begun on the day when the claim form was delivered to the court because this would cause difficulties: the tenant was entitled to rely on the date of appearing on the claim form as the date when the proceedings had begun and should not have to enquire of the court official whether it had been received on some earlier date. Counsel for the housing authority had relied by analogy on paragraph 5.1 of the Practice Direction.”

I turn to consider the judgments in the Salford case. The leading judgment was given by Lord Justice Chadwick and at paragraph 3 he describes the relevant statutory provision, part V of the Housing Act 1996 in the following way:-

“Before turning to the facts in this case – which are not in dispute – it is convenient to set out the relevant statutory provisions. Part V of the 1996 Act was enacted to give local housing authorities and other social landlords new powers to deal with antisocial conduct by tenants, their families or other visitors. Section 124 (1) of the Act gives a local authority or a Housing Action Trust power at its election to operate what is described as “an introductory tenancy regime.” Where such an election is in force – as it is in relation to tenancies granted by this local authority landlord – every periodic tenancy of a dwelling house entered into by the authority or trust shall, if it would otherwise be a secure tenancy, be an introductory tenancy unless certain conditions particular to the tenant are satisfied (which is not this case) see Section 124 (2) of the Act.”

Lord Justice Chadwick then rehearses the very complicated provisions of the Housing Act in particular the giving by the landlord of a notice before issuing proceedings for possession, in the process setting out the provisions of Section 130:-

“This section applies where the landlord has begun proceedings for the possession of a dwelling house under an introductory tenancy and:-

(a)

the trial period ends”

He then sets out the provisions of Section 128 (5) which are in these terms:-

“The court shall not entertain any proceedings for possession of the dwelling house unless they are begun after the date specified in the notice of proceedings.”

Lord Justice Chadwick then continues at paragraph 7:-

“7 The effect is that unless there has been compliance with Section 128 and, in particular, with sub-sections 1 and 5 of that Section, the court cannot entertain proceedings for possession of a dwelling house let under an introductory tenancy. But, if there has been compliance with Section 128 of the Act, then the court is required to make an order for possession at the behest of the landlord. There is no discretion to refuse such an order.”

At the conclusion of paragraph 8 of his judgement Lord Justice Chadwick, having summarized the effect of the statutory provisions, continues:-

“It is of obvious importance, therefore, that the point of time at which proceedings are “begun” for the purposes of part V of the 1996 Act should not be in doubt … ”

At paragraph 23 Lord Justice Chadwick distinguishes the case of Pritam Kaur v S Russell and Sons Limited cited to me at [1973] 2 WLR page 147 which was relied on by Miss Wilson-Barnes in support of her submissions. Lord Justice Chadwick says this in relation to that case:-

“23 The basis of the decision in Pritam Kaur is that, as a matter of construction, a statute which requires something to be done on a day on which the court is shut for business is to be read as if the act were to be done on the first day on which the court office is open after that day. So understood, the decision is of no assistance in the present case if, and it is only in those circumstances that the point is material – the trial period ended on 8^th November 2002. As I have said 8^th November 2002 was a Friday. The court office was open on that day. If the statute required that possession proceedings were begun on Friday 8^th November 2002 they could have been begun on that day. The principle in Pritam Kaur is of no assistance.”

It is of no assistance in the present case.

At paragraph 24 Lord Justice Chadwick, having distinguished cases where the relevant statute only required the delivery of documents to a court office from cases where the court was required to do something to or with the documents as so delivered, continued at paragraph 25:-

“Adopting that distinction, what is required in order to begin proceedings? The answer to that seems to me clear enough under the Rules. What is required to begin proceedings is that the proceedings should be started. And proceedings are started by the issue of a claim form by the court. That, in this case, took place on 11^th November 2002. In my view, that was the date on which the landlord began proceedings for possession for the purposes of Section 130 of the Housing Act 1996.”

At paragraph 33 Lord Justice Maurice Kay said:-

“I agree, and would add only this on the question of when proceedings are begun for the purposes of Section 130 of the 1996 Act. It is in my judgment axiomatic that the beginning of proceedings under that section must bear the same meaning as the start of proceedings as described in CPR 7.2, that point being defined as the point of issue of a claim form at the request of the claimant.”

Then, having set out paragraph 5.1 of the Practice Direction, he continues:-

“34 Mr Moor submits that the present situation is analogous to that specific provision which is based on the Limitation Act and the wording of when a claim is “brought”.

35 In my judgment there is no such analogy. That specific provision is, as my Lord has demonstrated, based on earlier authority decided in the context of the bringing of proceedings for the purpose of the Limitation Act. Here the language in issue is not the “bringing of proceedings” but the “beginning of proceedings”. Where there is a general provision aimed at a point of time at which the proceedings are started, it follows that the assimilation of when proceedings are begun and when they are started is conclusive. The extended meaning, given specifically in the context of the bringing of proceedings for the purposes of the Limitation Act, has no bearing on the present circumstances.”

The relevant words of Section 7 (2) of the Act for the purposes of this Appeal are “an application for the making of a disqualification order shall not be made…”

At one stage in the course of submissions I was inclined to take the view that what I was concerned with in giving effect to those words was the commencement of proceedings by the issue of a claim form. However, having had an opportunity to examine the Court of Appeal’s approach in the St Helens and Salford cases more closely, I am satisfied that I was wrong to do so. In my judgment “an application for the making of an order” has the same meaning as “the bringing of proceedings”, contrast the Salford case. Thus the Secretary of State’s case was “brought” on the day when the request and draft claim form were received by the court office – 26^th April.

I accept Miss Wilson-Barnes’ submission that Section 7 (2) of the Act comes within the words “any other relevant statute” in the Practice Direction, being a limitation provision. It follows that the Secretary of State’s proceedings to disqualify the Respondents were “brought” within the period specified by the sub-section.

It follows that this Appeal must be dismissed.