Neutral Citation Number: [2011] EWHC 3022 (Ch)
Case No: 3006/2011
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

IN THE MATTER OF INSTANT ACCESS PROPERTIES LIMITED

AND IN THE MATTER OF THE COMPANY DIRECTORS DISQUALIFICATION ACT 1986

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 21/11/2011
Before:
THE HON MR JUSTICE FLOYD
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Between:
	THE SECRETARY OF STATE FOR BUSINESS, INNOVATION AND SKILLS	
Claimant	
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	(1)	MARIA HELENA GIFFORD
(2)	LUMLEY MANAGEMENT LIMITED
(3)	BRADLEY JOHN ROSSER
(4)	JAMES BERNARD MOORE	

Defendants	
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Michael Green QC and Catherine Addy (instructed by Wragge & Co LLP) for the Claimant
Mark Cunningham QC (instructed by Clintons) for the Second Defendant
Mohammed Zaman QC instructed by Neil Davies & Partners LLP for the Third and Fourth Defendants
The First Defendant did not appear and was not represented

Hearing dates: 3rd-4th November 2011
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Judgment

Mr Justice Floyd: 

1.	This is an application by the claimant, the Secretary of State for Business, Innovation and Skills, for permission pursuant to section 7(2) of the Company Directors Disqualification Act 1986 (“CDDA”) to make applications for disqualification orders against the four named defendant directors of Instant Access Properties Limited (“the Company”), notwithstanding the fact that the period of two years, beginning with the date on which the Company became insolvent, has expired.
2.	The Company was involved in the business of sourcing residential property investment opportunities in the UK and abroad.  It derived its revenues from client membership fees and subscriptions, finder’s fees payable by members and commissions payable by developers. 
3.	The burden of the Secretary of State’s case against all four defendants is that between May 2003 and September 2008 the defendants and each of them caused or allowed the Company to structure its affairs in such a way that the UK tax authority, HMRC, received less money than was properly due to it, by (a) creating a sham arrangement which diverted income properly due to the Company to Leadenhall Group Limited, a BVI company (“Leadenhall”) and (b) misrepresenting the true position to HMRC.  
4.	Each defendant is alleged to have been a director, or shadow or de facto director as follows:
i)	Ms Gifford was, according to records at Companies House, appointed as director on 23rd October 2003 and remained a director throughout the relevant period;
ii)	Lumley was recorded in the records at Companies House as having been appointed a director on 31st October 2003, but, according to the minutes of a board meeting of the Company said to have been held on 23rd October 2003, it was resolved by the Company that Lumley be appointed as a director as of that date.  Mr Philip Donnison is one of the directors of Lumley.  Mr Donnison is also the senior partner of Jeffcote Donnison who were IAP’s tax advisors.  He does not accept that Lumley was made a director before 31st October; 
iii)	Mr Moore was appointed as a director, according to the Companies House records, on 1st March 2003.  He resigned this position on 23rd October 2003, but it is alleged by the Secretary of State that he was at all material times a de facto and/or a shadow director of the Company;
iv)	Mr Rosser was never appointed as a director of the Company, but it is likewise asserted against him that he was at all material times a de facto or shadow director of the Company.
5.	So far as shareholdings are concerned, Mr Moore has accepted that he has effective control, through a trust, of over 70% of the Company’s shares.  Mr Rosser has accepted that he could be considered to have an indirect shareholding of some 20%.  
6.	The Company was placed into administration on 19th September 2008.  About three months later, on 21st December 2008 the Company was placed into liquidation, the joint administrators becoming the joint liquidators. It is common ground that the period during which the Secretary of State could make an application for disqualification of directors without the permission of the Court expired on 20th September 2010, the two year anniversary (allowing for the fact that the period expired on a Saturday) of the date on which the Company was placed into administration.  In fact, the claim form was not issued until 13th April 2011, some seven months out of time.  No notice of the fact that the Secretary of State was still considering disqualification proceedings was sent to the defendants on the expiry of the two year period in September 2010.  Instead on 14th January 2011 a letter was sent to each of the defendants by the Insolvency Service indicating that the investigation was still continuing, and that careful consideration was being given as to whether it was appropriate to ask the Court’s permission to commence proceedings.  The letters stated that the directors should not assume that an application either would or would not be made, but that it was a possibility. The allegation of causing revenue that would otherwise have been the Company’s to be received by Leadenhall, and that Leadenhall purported to carry on activities which it did not in fact carry out, reducing IAP’s liability for corporation tax, was also summarised in the letter.
7.	The second to fourth defendants have served evidence (in the case of the second defendant through Mr Donnison) and have appeared on the application to resist the making of the order.  The first defendant has not appeared or been represented, although a letter which she has written, dealing with the prejudice she says she will suffer, was drawn to my attention. 
The legal approach
8.	The approach to be taken by the court in deciding whether to grant permission under section 7(2) has been considered in a number of cases. First, it is important to have in mind throughout that the two year period is not a limitation period, but merely a period during which proceedings can be brought without permission.  After the period has expired a defendant director does not acquire an immunity from suit.   All that occurs is that the Secretary of State needs to surmount an additional hurdle. Thus, in  Re Blackspur Group plc, Secretary of State for Trade and Industry v Davies [1996] 4 All ER 289, Millett LJ said at 298j-299b:
“I do not find it helpful to describe s 7(2) of the 1986 Act as a limitation provision, or to regard the grant of leave as depriving the respondent of an accrued immunity from suit. The grant of leave is built into the two-year period. Parliament clearly recognised that the two-year period might not be sufficient in every case. Even before the period expires, proceedings cannot be brought unless the Secretary of State has first determined that it is expedient in the public interest that they should be brought; after it has expired, the further requirement is imposed that the leave of the court should be obtained. There are then two preconditions instead of one, but that is all. Once the two-year period has expired, delinquent directors are not immune from disqualification proceedings; they are immune from such proceedings brought without the leave of the court, but that is a very different thing.”
9.	A second background factor which it is important to have in mind is that the Secretary of State is not seeking to vindicate a private right, but to act in the public interest to protect the public from the conduct of persons alleged to be unfit to be directors of companies: see for example per Millett LJ in Re Blackspur (above) at 296j-297a.  
10.	It is clear that the discretion of the court under section 7(2) is a wide and unfettered one, subject to the limitation that it must be exercised judicially.  Some of the important factors to be taken into consideration in the exercise of the discretion were summarised by Scott LJ in Re Probe Data Systems Ltd (No 3), Secretary of State for Trade and Industry v Desai [1992] BCLC 405, in which Scott LJ stated at 416:
“In considering an application under s 7(2) for leave to commence disqualification proceedings out of time the court should in my opinion, take into account the following matters: (1) the length of the delay, (2) the reasons for the delay, (3) the strength of the case against the director, and (4) the degree of prejudice caused to the director by the delay.”
11.	In Blackspur, Millett LJ rejected a submission that the reasons given by the Secretary of State for the delay had to reach a threshold of adequacy before the court could grant permission, irrespective of other considerations.   He said this at 299j-300a:
“The Secretary of State is, therefore, obliged to explain why he failed to issue the proceedings or serve the supporting evidence (as the case may be) in time.  But once an explanation is given it becomes a matter to be considered together with all the other relevant circumstances.  There is, in my opinion, no justification for treating the adequacy of the explanation as a free-standing or threshold test which must be satisfied before other considerations can be taken into account.  There is no support for such an approach in the authorities, and it is incorrect in principle as well as unworkable in practice.”  
     	However, Millett LJ continued:
“In the absence of a deliberate decision to disregard the rules, or to overreach or take an unfair advantage of the other side, there is no such thing as a reason for the delay which is ‘good’ or ‘bad’ in itself, regardless of the circumstances, or which is inherently unacceptable.”
12.	Mr Zaman QC, who appeared for the third and fourth defendants, stressed this latter sentence in support of a submission that the delay in the present case involved a deliberate decision to disregard the rules.  I return to that submission in context.
13.	Scott LJ’s third factor, the strength of the case against the director, was considered by Millett LJ in re Blackspur  not to refer to the strength or credibility of the evidence which the Secretary of State seeks leave to file but to the gravity of the charges which he makes.  In Secretary of State for Trade and Industry v Cleland [1997] 1 BCLC 437 at 447g Lloyd J considered a number of other authorities decided before Re Blackspur, and said:
“I conclude that, despite the observations of Millett LJ ... I have to consider not just the nature and gravity of the charges made on their face but also whether and to what extent they are fairly raised by the evidence.  It seems that I have to look at the respondents’ evidence as well, and in a normal case evidence in reply or its absence.  There is a risk, thus, of a leave application being weighed down by voluminous evidence.  But the court can only take a provisional view of the evidence. There is no cross-examination.  Even if the Secretary of State does not expressly take issue in reply with points made by the respondents it may be reasonably apparent that they would be likely to be in dispute at a full trial.”
14.	Clearly, if the evidence on an application for permission fails to disclose a fairly arguable case on the merits of the claim, then the court will not grant permission. So much is clear from the judgment of Balcombe LJ in  In Re Tasbian (No 3) [1993] BCLC 297 at 301-2:
“… what then is the test to be applied?  In my judgment, it is the same test as that which is used on any application to the court for leave to take some initiating procedure out of time, for example leave to appeal out of time.  There can be no point in extending the time if the application is going to fail.  If, however, the court is satisfied that the evidence shows a fairly arguable case on the applicant’s part, then on this ground alone, that is leaving aside the reasons for the delay and any questions of prejudice to the other party, the court will not refuse leave.”
15.	If the evidence passes this threshold, the court embarks on a balancing exercise in which both the gravity of the charge and the court’s provisional view of the prospects of the charges being established come into play.  At the stage of granting permission, without the benefit of full evidence or cross-examination or detailed submissions, it is extremely difficult for the court to come to a precisely graduated estimate of the prospects of success.  Nevertheless, these twin considerations, gravity and prospects of success, are a measure, admittedly an imprecise one, of the public interest in allowing the proceedings to continue.  They are inter-related.  There is little in the way of public interest in allowing a trivial case to go forward even if there are very good prospects of it being established.  Equally the public interest will not be particularly well served by allowing even a very grave allegation to go forward if it appears that it faces really significant difficulties of proof. 
The conduct relied on
16.	The matters relied upon by the Secretary of State in support of its claim that the directors are unfit can be summarised as follows.
17.	On 24th October 2003 the Company entered into a written agreement (“The IAP/Maesbury Agreement”) with Maesbury Homes Inc., a property development company based in the United States (“Maesbury”) under which the Company was appointed exclusive agent of Maesbury, for a period of one year, for the promotion of purchases of units in Maesbury’s developments in Florida. The IAP/Maesbury Agreement was stated to commence on 10th October 2003.  Prior to October 2003, the Company had sourced and marketed other developments in the USA belonging to US developers. 
18.	On 10th October 2003 Leadenhall was incorporated in the BVI.  It was later acquired off the shelf by the shareholders of the Company, chosen from a list of companies offered by company formation agents, and on the basis that it had an appropriate name. 
19.	By contrast to the juvenile status of Leadenhall, a file note of a meeting held on 6th November 2003, between Mrs Gifford and Mr Donnison, and signed by Mr Donnison, purports to record an approach made by Leadenhall to IAP in the following terms:
“The Company has been approached by an international property marketing company called Leadenhall.  This company has contacts with property developers in United States and would like to work with IAP on marketing sales off plan.
Maria has talked this through with the management and everyone agrees that this is a good idea as IAP does not have international property at present, even though their first priority is to formalise and develop UK property sourcing.
Maria has done some initial investigation into the US property market and found that it is easy to find property to sell but commissions being offered are generally between 4 and 5%.  We need to see how this would work out for our members where they would have to deal with the developer directly for purchasing.
Leadenhall have a development in mind at present so if we are ready to work with them, we could move into this market quite quickly. ...” 
20.	On 26th November 2003 the Company entered into an agreement with Leadenhall (“the Leadenhall/IAP Agreement”) which purported to appoint Leadenhall as its representative for the purposes of sourcing properties outside the UK.  The agreement was said to be effective from 1st October 2003.  The agreement also provided for an unsecured loan from the Company to Leadenhall for “working capital purposes”.  The Leadenhall/IAP agreement was signed on behalf of the Company by Mrs Gifford. 
21.	The Secretary of State points to a number of oddities with the Leadenhall/IAP agreement and the 6th November file note.  Firstly, the effective commencement date of the Leadenhall/IAP agreement is before the date of incorporation of Leadenhall.  Secondly by that date, and contrary to the position set out in the file note of 6th November, the Company had already succeeded in sourcing US property without any assistance from Leadenhall.  Thirdly, the loan of £500,000 for working capital purposes undermines the suggestion that Leadenhall was an established company that had approached the Company.  Fourthly, for the period 10th October 2003 to 31st December 2004 Leadenhall had no office expenses and paid no directors’ salaries or employees’ wages.  Fifthly, Leadenhall had no clients other than the Company in that period.  Sixthly Leadenhall did not trade before that period. 
22.	Amongst the Company’s papers reviewed by the joint liquidators was a number of letters purportedly written on behalf of Leadenhall, and addressed to Ms Gifford at the Company.  The earliest of these is dated 3rd August 2003 and purports to include a result of “Leadenhall’s extensive research” into the Florida property market, namely a development at Windward Bay. The letters are obviously dated before Leadenhall was incorporated.  Moreover the letters bear an address in Switzerland which Leadenhall did not acquire until January 2004.  Letters in similar terms were found dated 20th August 2003 (Silver Creek development), 6th September 2003 (Bahama Bay 1, a Maesbury Homes development).   The Secretary of State’s case is that these letters were fabricated in order to give the impression, contrary to the fact, that Leadenhall was introducing the Company to these developments, and therefore entitled to be remunerated by the Company.  
23.	The allegations of misrepresentation are based on two letters that were written by Jeffcote Donnison on behalf of the Company following enquiries made by HMRC into the Company’s corporation tax return for 2003-4.  In the first letter, dated 1st November 2006, it is asserted that “Leadenhall had obtained the necessary contacts, particularly in Florida, a very lucrative investment market, as well as the necessary skills to aggressively source and negotiate deals with developers that could then be offered to IAP members”.  Jeffcote Donnison have said that the letter was prepared from information provided by Mr Rosser.  Mr Donnison has confirmed that he reviewed the letter before it was sent. 
24.	In the second letter, dated 4th September 2007, it is asserted that Leadenhall had formed exclusive relationships with leading developers which would not be available to the Company other than through Leadenhall.  Jeffcote Donnison have again said that they prepared this letter from information provided by Mr Rosser.  Mr Donnison has accepted that he reviewed it.  It was copied by email to Ms Gifford, Mr Donnison and Mr Rosser. 
25.	Given that the Company already had the benefit of contacts with US developers, and that Leadenhall was a company which had only just been formed, the Secretary of State submits that these statements were untrue and made with the intention of misleading HMRC.  
Gravity and prospects of success
26.	The Secretary of State submitted that, if his allegations are established, the present case would be one at the top end of the “middle bracket” of cases identified by Dillon LJ in Re Sevenoaks Stationers (Retail) Limited [1991] Ch 164 at174 E-G.  That bracket is occupied by cases which are more than “not very serious” but less than “particularly serious”. Such cases merit disqualification for six to ten years.  None of the defendants submitted that the case, if made out against them, would not merit the description “serious”. I will proceed on the basis that the gravity of the charges can accurately be described as serious without expressing a view on precisely where it would fall in the middle bracket. 
27.	Mr Zaman submitted that the evidence did not establish a fairly arguable case, or alternatively was one which I should characterise as weak when balancing the various factors.  He submitted, firstly, that the case as advanced in the evidence did not set out whether Mr Rosser and Mr Moore were alleged to be de facto directors or shadow directors, or the periods for which that was so.  He drew my attention to what Millett J said in Re Hydrodan (Corby) Limited [1994] BCC 161 about the need to distinguish between the two.  Secondly he pointed to the difficulties of establishing a sham arrangement, which is the heart of the Secretary of State’s case.  He stressed that the Secretary of State had taken on that burden, as opposed to attempting to establish only that Leadenhall were paid excessive or unrealistic commission on a transfer pricing basis.   He submitted, further, that the Leadenhall/IAP Agreement was intended to create real obligations, such as the obligation to provide a loan which was actually made and repaid.  Equally, he submitted, the obligations on Leadenhall to provide services were real, and the money paid over to them was intended to be Leadenhall’s.  There was no intention that IAP should retain any interest in it. 
28.	I have come to the conclusion that the case advanced by the Secretary of State against Mr Rosser and Mr Moore is a fairly arguable one.  I do not regard the points taken about whether these defendants were shadow or de facto directors as going to the root of the case advanced against them at this stage.  The evidence adequately addresses the conduct of which complaint is made and the involvement of those individuals in it.  I accept that, in setting out to establish a sham trading arrangement the Secretary of State faces a more difficult task than merely establishing unrealistic transfer pricing, but the evidence, in particular the apparently fabricated letters which Mr Zaman did not attempt to address, are in my judgment sufficient to enable him to say that he has a reasonable prospect of being able to do so.  For similar reasons I do not feel able to accept Mr Zaman’s alternative submission that the case is a weak one.  On the material before me, and in the absence of any coherent explanation for the letters, I would express the provisional view that the case is reasonably strong.
29.	Mr Cunningham QC, who appeared for Lumley, also submitted that the case against Lumley either did not pass the threshold of being fairly arguable or should be treated as a weak case in the balancing exercise.  He pointed out that it was important to bear in mind (a) that it is Lumley and not Mr Donnison which is the subject of the claim, and (b) that Lumley was a non-executive director of the Company.  He also submitted that I should conclude that Lumley did not become a director until 31 October 2003, by which time the agreement with Leadenhall was in place.  He also drew attention to the fact that although the Secretary of State at one time had Mr Donnison himself in his sights, no proceedings have been launched against him, although he is a director of Lumley.  Mr Cunningham took me carefully through the evidence to see what specific facts were alleged against Lumley, as opposed to others. 
30.	The critical question in the case of Lumley will be whether it played a role in the conduct complained of sufficient to amount to “causing or allowing” it to occur.  At least so far as the “allowing” part of the case is concerned, the precise date on which Lumley was appointed as a director may not be of great significance.  If Lumley had the appropriate knowledge that the arrangements were a sham, then it is fairly arguable that it could have prevented them from continuing, at least from the date on which it was appointed.  Lumley plainly knew what Mr Donnison knew, and Mr Donnison was closely involved in setting up the arrangements.   So far as the misrepresentations are concerned, once it is accepted that Lumley was a director of the Company when the letters were sent and that Lumley had Mr Donnison’s knowledge, then there is adequate basis for the Secretary of State’s suggestion that Lumley caused or allowed the statements to be made.  
31.	Accordingly I conclude that the case against Lumley passes the threshold test, and that the case, although different from the case against other defendants, is also, on my provisional view at this stage, reasonably strong. 
32.	So far as Ms Gifford is concerned, having considered the evidence against her, I see no reason to classify her involvement in a significantly different way.
Delay 
33.	As Hoffmann LJ (as he then was) explained in Re Copecrest Limited [1993] BCC 844 at 850, the Scheme of the CDDA and relevant rules provides that the Secretary of State will normally have at least 18 months to consider information provided to him by a liquidator or other office holder about the unfitness of a director.  In the present case, the liquidators did not file a report under the Insolvent Companies (Reports on Conduct of Directors) Rules 1996 until 18th June 2009, whereas the date by which they should have done so was the six month anniversary of the appointment of the administrators, namely 18th March 2009.  So the report was three months late.  However, the report itself was submitted as a final return, on Form D2, and stated that there were no matters of which the joint liquidators have become aware which would require them to make a report under section 7(3) CDDA.  Accordingly the report was recorded on the Insolvency Service system as to use their jargon term “fitted”, meaning that there were no questions of unfitness which required to be investigated.  The practice of the Insolvency Service is to destroy such returns within a short period after their receipt.  
34.	In fact the evidence on this application shows that the return on Form D2 was accompanied by a letter dated 17 June 2009 from one of the joint liquidators which expressed serious concerns.  The letter stated that the case was “complex and high profile”, and that the “we believe that our investigations may well provide evidence of unfitness in respect of some or all the directors/shadow directors”. The letter apparently attached a copy of the report to creditors for October and December 2008.  Amongst the topics which the joint liquidators said that they were continuing to investigate was “Whether transactions with Leadenhall… represented tax evasion”.  The letter was therefore at odds with the D2 return.  Nevertheless, it appears that the Insolvency Service based their actions on the contents of Form D2, rather than the contents of the letter, and treated the matter as one not requiring any action.  
35.	 In consequence, the investigation by the Insolvency Service was not triggered until the joint liquidators subsequent filing of a D1 return on 27th November 2009.  The report was accordingly 8 months late, and was received some 14 months into the 24 month period allowed for commencing disqualification proceedings without the court’s permission.  Instead of the period of at least  18 months which the Secetary of State can expect to have in the ordinary case, only 10 months remained.
36.	Mr Michael Green QC, who appeared for the Secretary of State with Ms Catherine Addy, took me through the subsequent chronology of the Secretary of State’s investigation from the receipt of the D1 return.  I do not propose to give a narrative account of that investigation. It is sufficient to say that for the majority of the period officials in the department were engaged with reasonable diligence in gathering information relevant to the inquiry, and subsequently in drafting the detailed evidence on which the Secretary of State relies.  
37.	Mr Zaman, in submissions adopted by Mr Cunningham, pointed to the fact that the investigator had allowed the joint liquidators to conclude interviews with the defendants and others.  He also drew attention to the fact that the investigator was slow in obtaining access to computer records.  However he reserved his most trenchant criticism for the period around the expiry of the time limit, in August and September 2010.  Instead of working as hard as possible towards the deadline, the investigator took leave of absence in two periods amounting to some four weeks without any cover being arranged.  Moreover, at around the same time, it appears that expenditure on attempting to overcome difficulties in reading the computer files was suspended, pending a review of the case.  He submitted that there was a deliberate disregard of the rules of the kind Millett LJ would have been prepared to categorise as a “bad reason” for delay in Re Blackspur.
38.	I am unable to accept this latter submission. Whilst the conduct of the investigation in August and September 2010 lacked urgency, it is necessary to look at the totality of the period, rather than focus exclusively on any part of it. I am unable to regard the conduct of the investigation as a whole as evincing a deliberate intention to disregard the rules.  The investigation was a complex one.   By the time August 2010 arrived it must have been clear to the investigator that the date could not be met.  At that stage, even if further resources had been made available, it is unrealistic to suggest that the case could have been ready to be launched, together with the evidence, in time for the expiry of the period.  Meeting the date was by then an impossibility.  I do not think that a realistic recognition of that fact can be equated with a deliberate intention to flout the rules.
39.	In my judgment it is fair to say that the reason for a large part of the delay was the late start of the investigation.  Whilst various aspects of that late start may be described as unfortunate, there is no doubt that it set the investigation back by several months, thereby curtailing the period which the Secretary of State would have had to bring his case without the court’s permission.  Once the investigation was under way it proceeded for the most part with reasonable diligence.  It can be said with force that no special urgency was applied to the investigation, in particular by the application of resources additional to the sole investigator.  The Secretary of State is not entitled to assume that the court will automatically add on a period to that allowed by statute equivalent to the period for which his investigation was held up. Nevertheless, it seems to me that in the present case, given the nature and complexity of the investigation, the period up to the commencement of the application for permission is reasonably well explained.  
Prejudice
40.	I have explained that no warning letter was sent to the defendants that they were still at risk until January 2011, some three months after the period expired.    Each defendant says that they have suffered prejudice by reason of the overall delay in the present case.  Mr Zaman submitted, in my view correctly, that the January letters were not a “magic wand” meaning that no prejudice suffered thereafter can be taken into account.  Nevertheless, less weight is to be attached to activities undertaken after that date, as they were undertaken with a knowledge of the risk of proceedings being taken.
41.	There is inherent prejudice in delay in bringing proceedings.  To have proceedings of any kind hanging over one is productive of worry and stress.  The passing of time also causes the memories of witnesses to fade.  These are factors which are present in any case, but must nevertheless be recognised and taken into account.
42.	Apart from this inherent prejudice, each of the defendants has given evidence as to the specific prejudice which he or she will suffer individually if permission is given.  
43.	Mrs Gifford is the sole director of an accounting firm which is fundamental to her income.  In her letter she explains that the claim is putting her livelihood at risk, and that she is suffering mental stress by what she regards as an unfounded claim hanging over her head.  I accept that the ability to be a director is important to Mrs Gifford, and that the delay has increased the period during which disqualification remains a possibility.  That must, however, be the position in most cases where an extension is sought.  In my judgment, the points made by Mrs Gifford do not add much to the inherent prejudice points to which I have already referred.
44.	Lumley, as a corporate director, cannot of course complain of any mental stress.  Mr Donnison says that he is suffering prejudice by implication.  He is a professional man and he says that the allegations have caused and continue to cause him significant concern.  More specifically, Lumley was appointed as a director of a number of companies between September 2010 (when the time for bringing the proceedings without leave ended) and 14th January 2011.  Mr Donnison says that this would not have happened if he had been aware that proceedings might be brought against Lumley.  
45.	An individual’s acceptance of directorships outside the two year period and before notice of proceedings is given may undoubtedly qualify as the sort of specific prejudice which may weigh heavily in some cases against the grant of permission.  The reason is that the director may be placed in an embarrassing position when he or she has subsequently to resign on disqualification.  In the meantime there is a dilemma as to what should be said about the proceedings to the board of the company of which he or she is a director.   However the position of a corporate director is not the same.  If the corporate director is disqualified, the other companies of which it is a director may appoint another company in its place, a process which is likely, at least in the present context, to be much easier than the replacement of an individual director.  Whilst I accept that there is some prejudice to Lumley, its position is not really comparable to that of a natural person who is a director.  
46.	Mr Rosser is an entrepreneur with an apparently distinguished track record of appointments in the UK, including working for Sir Alan Bond in Australia and Sir Richard Branson in the UK. He left the UK with his family in August 2010 to return to live in Australia.  He says that he was expecting that the prospect of disqualification proceedings would soon be behind him.  He states that he has started a business with a partner, Simon Pinson, since the expiry of the two year period, having deliberately held off until the period expired.  The business, BSF Group, works with entrepreneurs and early stage businesses helping them to grow profitably.  Mr Pinson provides a letter in support, but does not explain exactly when the business was launched.  In fact, the company was not registered in Australia until 24th February 2011, and no details are given as to what steps had been taken before this date.  This was after the date of the Secretary of State’s warning letter. The website material which Mr Rosser produces does not enable one to date the commencement of activities.  Mr Rosser’s sister, in her letter in support, explains that before moving to Sydney Mr Rosser came to stay with her parents in Perth for a few months before the start of the school term.  It is again not clear what the timing of his move to Sydney was.  There is an almost complete lack of any specific evidence of activities before January 14, the date of the warning letter.  The closest Mr Rosser comes is to say that he has invested “significant effort and substantial money in BSF in the twelve months since the limitation deadline expired”.  This is the period September 2010 to September 2011; his statement is consistent with all the work and investment having been put in with full knowledge of the warning letter.  
47.	So far as investment is concerned, there is again no indication of how much has been invested by Mr Rosser or by others in Mr Rosser’s business.   If the figures were indeed significant, I cannot understand why the lengthy evidence does not set them out. 
48.	I do not regard the evidence of specific prejudice relied on by Mr Rosser as very weighty or compelling. 
49.	Mr Moore is a US resident.  He says that he put his career on hold until the expiry of the two year time period.  This has seriously interfered with his ability to earn a living, something which will continue if the disqualification proceedings are allowed to continue.  He also relies on the impact on his personal relationship.  I accept that Mr Moore will suffer some prejudice if the proceedings are commenced, but it is of the same kind as and an extension of the prejudice which the proceedings themselves would have caused if commenced within time.  
The balancing exercise in the present case
50.	I have come to the very clear conclusion that in the present case the balance of competing interests comes down in favour of giving permission.  The Secretary of State has in my judgment shown a good reason why permission should be granted.  The charges of misconduct if made out are serious.   The case against each defendant is coherent and, on a provisional assessment reasonably strong.  Whilst the delay in issuing the proceedings will have the expected consequence of extending the period of uncertainty for the defendants, there is an acceptable explanation for it.  There is little substance in the specific prejudice on which the defendants rely.   I propose accordingly to give permission for the claims to be brought.