Jersey Unreported Judgments
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URL: http://www.bailii.org/je/cases/UR/2022/2022_194.html
Cite as: [2022] JRC 194
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> In the matter of SPARC Group Limited [2022] JRC 194 (20 September 2022) URL: http://www.bailii.org/je/cases/UR/2022/2022_194.html Cite as: [2022] JRC 194 |
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Désastre - application for a disqualification order
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Before : |
R. J. MacRae, Esq., Deputy Bailiff, and Jurats Averty and Hughes |
IN THE MATTER OF THE REPRESENTATION OF THE VISCOUNT
AND IN THE MATTER OF SPARC GROUP LIMITED, EN DÉSASTRE
AND IN THE MATTER OF ARTICLE 24(7) OF THE BANKRUPTCY (DÉSASTRE) (JERSEY) LAW 1990
Advocate J. P. Rondel for the Representor.
The Respondent was not present.
EX TEMPORE judgment
the deputy bailiff:
1. Today we heard an application to make a disqualification order against Andrew Jeremy Mills, sole director of SPARC Group Limited ("the Company"). The Company was a property development business.
2. The relevant statutory provisions are as follows:
(i) Article 24(7) of the Bankruptcy (Désastre) (Jersey) Law 1990 ("the 1990 Law") provides:
(ii) Article 78 of the Companies (Jersey) Law 1991 ("the 1991 Law") says:
3. This is the first case to be decided since the maximum period for disqualification under the 1991 Law was increased from 5 years to 15 years in September 2002.
4. The same maximum period of disqualification applies under the current equivalent UK legislation namely the Company Directors Disqualification Act 1986. We were referred to the provisions of that Act, in particular section 12C which deals with the Court's power to determine unfitness and 12C provides inter alia that "whether a person's conduct as a director of one or more companies ... makes the person unfit to be concerned in the management of a company;" is to be determined in every case by the Court having regard to matters set out in paragraphs 1 to 4 of Schedule 1 to the Act. We considered that Schedule and note that the matters to be taken into account in all cases are listed at paragraphs 1 to 4:
And further there are additional matters to be taken into account where the person is or has been a director:
Plainly this Schedule and their paragraphs have no direct application in Jersey but nonetheless we agree with counsel for the Viscount that they are a useful reference point.
5. In particular it is important to refer to the contents of the Schedule as we were invited to have regard to the decision of the English Court of Appeal in Sevenoaks Stationers (Retail) Limited [1991] Ch 164. In that case Dillon LJ giving the judgment of the Court at page 173 noted that:
The judge went on to say on page 174:
6. Plainly this case is not binding upon us but aspects of the Sevenoaks decision have already been referred to and indeed adopted by the Courts of Jersey. The case of Dimsey [2000] JLR 401 is one such case. Dimsey case was decided prior to the incorporation of the European Convention on Human Rights as a matter of domestic law but the Court of Appeal noted nonetheless that the objective of the relevant provisions of the 1991 Law is not punishment but protection of the public, and accordingly the disqualification provisions to do not constitute a "penalty" within the meaning of the Convention but a protective step. In Dimsey, Smith JA giving the judgment of the Court of Appeal said this at page 409:
7. Having referred to the relevant principles, we now turn to the facts of this case. Under Article 18 of the 1990 Law, the debtor has a duty to cooperate with the Viscount in the various ways set out in the article:.
8. Mr Mills did not cooperate with the Viscount as he was required under Article 18. He was the sole director and the controlling mind of the Company, which was declared en désastre on 24th February 2020. As a result, Mr Mills was required to assist the Viscount in the realisation of the Company's property and the distribution of its proceeds. In fact Mr Mills, although he was prepared to discuss matters on the telephone with a representative of the Viscount from time to time, did not respond properly or (frequently) at all to the correspondence sent to him. He repeatedly promised to provide the director's questionnaire to the Viscount, which was sent to him on 2nd March 2020; he promised to do so "today" on more than one occasion but did not. Despite further deadlines and failed promises, he eventually sent the information in terms of a partially completed questionnaire to the Viscount on 11th June 2021 - over 15 months after he was first requested to do so. The questionnaire was, as we have said, partially completed and was described by the Viscount as "woefully inadequate". It led to a further extensive request for information in late June 2021 which Mr Mills has failed to reply to at all, although he has certainly received it and indicated that he would reply. The Viscount was forced to incur the costs of instructing an English law firm to assist her in making contact with Mr Mills and forced to instruct an enquiry agent as at one stage he moved home without notifying the Viscount of his new address. He repeatedly asked for additional time to assist the Viscount with her enquiries on the grounds of ill health, but he never evidenced that ill health despite being requested to do so. The Viscount's officer who swore the affidavit in support of the application expressed the view, with which we agree, that Mr Mills was "evasive".
9. The information requested in March 2020 has in large part not been received. A chronology prepared to us on behalf of the Viscount was shown to us and is detailed proof of the extent to which Mr Mills delayed, prevaricated, misled and ultimately failed to assist the Viscount. Furthermore, the Viscount discovered in November 2020 that Mr Mills had, shortly before he was initially contacted by the Viscount, and just after the declaration the Company was en désastre, incorporated an English company with a similar name to that of the Company. The date of incorporation was 2nd March 2020 and when Mr Mills last corresponded with the Viscount's representatives acknowledging receipt of this application he did so in his capacity (as recorded by the email) as CEO and Managing Director of SPARC Group Development Limited from an address at St James Place in London. Mr Mills has failed to explain any connection between the activities of this new entity and those formerly carried out by the Company.
10. Mr Mills has failed to reply to any substantive correspondence from the Viscount since promising a "reply early next week" on 25th June 2021, save to say that he was away until 9th July 2021 "staying with family". The Viscount did not hear from him again save in correspondence to acknowledge receipt of this application, in which he said that he was currently staying with friends in Somerset prior to leaving for South Africa and returning early next year. He has not obtained representation in relation to this application or corresponded with the Court or the Viscount setting out any reasons as to why this application should not proceed or be dealt with on its merits.
11. In short, Mr Mills has not cooperated with the Viscount, nor has he provided information requested in relation to the Company. He has, on the face of it, although there has been no investigation or prosecution, committed an offence under Article 18(2A) of the 1990 Law.
12. No assets have been realised, notwithstanding the fact that the claims filed in the bankruptcy amount to £212,808. The principal creditor provided indemnity funding of £10,000 to meet the costs of the administration of the bankruptcy. This sum has now been exhausted and the Viscount has incurred additional costs exceeding £5,000.
13. In our view Mr Mills has flagrantly breached the obligations he owed under the 1990 Law. He has misled the Viscount on numerous occasions and breached the obligations that he owed to the Viscount. This has affected the Viscount's ability to discharge her functions pursuant to the 1990 Law. He has refused to engage properly with the bankruptcy process and as we have said, breached the obligations he owed under the 1990 Law, Article 18 in particular. Bearing in mind that an order for disqualification is designed to protect the public and bearing in mind the position of Jersey as a finance centre and the need to ensure that directors in the place of Mr Mills comply with their obligations under statute a lengthy period of disqualification is warranted. We have no doubt that Mr Mills is a person unfit to be concerned in the management of a body corporate.
14. The Viscount argued that the term of disqualification in this case should be no less than 10 years and drew our attention to a decision of the English courts in 2016 where a Mr Samuel Henriot was disqualified for 10 years for failing to cooperate with an investigation conducted by the UK insolvency service. Unfortunately the reasoned decision in that case is not to hand but other authorities from Jersey and England and Wales have been drawn to our attention.
15. We have come to the decision, independent of the findings of the English Court in the Henriot case that the appropriate period of disqualification in this case is 10 years. Accordingly, Mr Mills is disqualified in accordance with Article 78 on the footing that he is unfit to be concerned in the management of a Jersey company for a period of 10 years and may not, without leave of the Court, be a director of or in any way whether directly or indirectly be concerned or take part in the management of a company; be a member of the council of a foundation incorporated under the Foundations (Jersey) Law 2009 or in any other way directly or indirectly be concerned or take part in the management of such a foundation; or in Jersey in any way whether directly or indirectly be concerned or take part in the management of a body incorporated outside Jersey.
16. In terms of the advertising of the Court's decision in respect of disqualification we order that the notice of disqualification be placed in the Jersey Gazette, the London Gazette and the equivalent publication in Dubai, and we order that Mr Mills pay the costs of this application on the standard basis to be taxed if not agreed.