Neil Davies comments on a key article by Judge Abbas Mithani QC and Dr John Tribe
I am pleased to share an article, reproduced in full below, that Judge Abbas Mithani QC and Dr John Tribe wrote on the high-profile collapse of the Kids Company charity and the dismissal of the director disqualification proceedings brought against the former chief executive and former directors of that company, which related to that collapse. The article was first published in the April 2022 issue of Corporate Rescue and Insolvency (Vol. 15.2) and the citation for it is (2022) 2 CRI 39. We are very grateful to the publishers of that journal, LexisNexis, for allowing the article to be distributed more extensively because of the potential wider implications it has to director’s potential exposure to being disqualified.
The article is critical of certain of the observations made by the Judge who tried the disqualification proceedings in that case. Any director thinking that they might escape disqualification simply because they ran a charitable company or because they provided their services to the company gratuitously or for insufficient remuneration would be well-advised to think again! The well-argued and impeccably-reasoned article demonstrates that the generous treatment of the judge towards the defendants in that case was based entirely or mainly on the facts of that case and the manner in which the charge against the defendants was formulated. Those matters are unlikely to be replicated in a future case.
This is a must-read article for anyone advising the directors of a company who are faced with, or may potentially be exposed to, disqualification proceedings. The brilliance of the article is reflected in the simple and clear way that past-case law on the subject is explained, leading to the inescapable conclusion that the judge’s observations can only be achieved if there is a change in primary legislation, which is highly unlikely and which, as the authors say, would be retrograde step for the Government to take.
There are some good points to take away for directors in the Kids Company case, which the article correctly recognises: Specifically:
- it is important for defendants have to be able to clearly ascertain the allegations and evidence against them;
- the Secretary of State has to pay particular emphasis on the requirements of balance and fairness in assembling reports and evidence and making submissions, and the decision whether to bring disqualification claims had to be reached with care;
- care has to be taken to minimise the risk that lengthy reports, and thus the presentation and conduct of the case, might amount to oppression; and
- the resources involved in bringing the proceedings, and the scale and nature of the case, have to be viewed in the overall context.
The Original Article
Neil Davies concludes
Like John and Abbas, I am privileged to be associated as an advisory editor to the leading and authoritative work on directors duties and director disqualification – Mithani: Directors’ Disqualification.
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