Insufficient evidence of directorship to support disqualification

Spiceroy Restaurant Ltd (the company) carried on the business of a restaurant. In June 2017, immigration officers entered the restaurant and arrested four migrant workers who did not have permission to work.

The sole appointed director (“S”) offered a disqualification undertaking. The secretary of state alleged that in addition, the defendant (“R”) was de facto director of the company, and brought disqualification proceedings under Section 8 CDDA 1986.

The claim of de facto directorship was broadly based on the following:

  • When asked who was the "boss", one of the workers said that “Rahman” and S were the bosses and owners of the business.
  • It was alleged that R had held himself out to be the owner and operator of six restaurants, including this restaurant, on a web page.
  • R held the premises licence for the sale of alcohol at the restaurant.

Judge Paul Matthews dismissed the claim. The judge accepted R’s explanation for being the premises licence holder, and held that the remaining evidence was insufficient to support an allegation the R had assumed the responsibilities of a director of the company.

This is one of two recent high court decisions in which judges at first instance have declined to draw inferences from evidence in order to make a finding of de facto directorship. These cases serve as salutary reminders that where available, evidence on the actual roles and responsibilities assumed by a director (and perhaps the attempts to obtain such evidence where it is missing) may be required when making an allegation of de facto directorship.

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