New practice direction on directors' disqualification

Will the new practice direction (PD) on directors' disqualification bring disqualification proceedings up to date with modern court practice?

Original news

Practice Direction: Directors Disqualification Proceedings [2014]

The PD on directors' disqualification proceedings first drafted in 1999 has now been amended by committee and a new PD has been substituted in its place, with effect from 9 December 2014.

What is the reasoning behind the new PD?

The reasoning is set out in full in the notes to the new PD. In a nutshell, it has been updated because the old PD was drafted in 1999 and is therefore considerably out of date. Practice has evolved and developed through the courts since then, and this PD has been drafted to reflect the reality of the way that directors' disqualification proceedings are being dealt with day to day.

In particular, the old PD was out of date in a number of respects. It contained references to the 2000 Chancery Guide, cross-referred to old provisions of the Civil Procedure Rules no longer applicable, and ceased to reflect current Companies Court practice regarding uncontested hearings and pre-trial reviews.

Who drafted the new PD?

A number of people sat on the drafting committee for these rules, including:

• Chief Registrar Baister
• Michael Gibbon QC
• Morris Peacock of Howes Percival, and
• Catherine Doran of Radcliffe Chambers

Others also contributed such as:

• Malcolm Davis-White QC
• HHJ Abbas Mithani
• DJ Andrew Saffmann of the Insolvency Court Users Committee, and
• Colin Evans, head of the technical team at the Insolvency Service

What are the main changes contained within the new PD?

Below are some of the changes. This is not an exhaustive list, but are just some of the main points as set out in the notes to the new PD. The full PD should be reviewed for all changes by those practising in this area. For a tracked changed version of the old PD against the new, see :

PD Director Disqualification Proceedings (showing Dec 2014 amends)  Some of the key changes are:

• some parts of the old PD have been cut where they were not considered necessary--eg para 6.1 detailing the contents of the claim form when this is already set out in the annexed example

• para 7.3 confirms current practice concerning defendants who have not filed an acknowledgement of service by the time of the first directions hearing--they will be asked to provide an undertaking to file this before they can take part in the hearing

• para 8.3 allows for the court to ask for exhibits not to be lodged with the court until trial, in accordance with common court practice due to lack of court storage space

• para 8.5 now gives specific reference to when defendants must serve evidence on each other (although this is subject to court discretion where there are cut throat defences and it is therefore inappropriate)--the default position is to serve on each other when serving on the claimant

• para 10.2 now requires skeleton arguments in all cases, rather than in all but the simplest cases as is current court practice

• para 10.3 takes out the requirement for a chronology and a dramatis personae and leaves this in the advocate's discretion--the need for a list of references to the defendant has also been taken out, being all but ignored in practice

• a new para 11 deals specifically with uncontested disposals and the practice surrounding them

 What does this mean in practice?

This new PD has been a long time coming and seems to be a very sensible enhancement, as it incorporates current court practice so courts no longer have to work around the old PD. As is mentioned in the notes, the Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987, SI 1987/2023 would also benefit from some significant updating. However, this is a matter for the government to pick up in due course. Practitioners will find there is nothing controversial in this new PD that is different from their current practice, but this new PD consolidates what they have been doing in practice in any event.

Further reading

If you are a LexisPSL Subscriber, click the links below for further information on Directors Disqualification:

Directors Disqualification - an overview (Subscriber access only)

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First published on LexisPSL Restructuring and Insolvency

Eleanor Stephens, head of the Lexis®PSL Restructuring & Insolvency team.