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30-10-2020

Rwamba v  Secretary of State for Business, Energy And Industrial Strategy [2020] EWHC 2778 (Ch) was an appeal against the refusal of ICC Judge Prentis to give Mr Rwamba permission to act as a company director pursuant to section 17(3) Company Directors Disqualification Act 1986.

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Mr Rwamba had form. In 2009, following the administration of a company called Eulink (UK) Limited, he gave a disqualification undertaking for four years on the ground that he had caused the company to make investments totalling £525,000 to the detriment of HMRC. Later he was given permission to act.

With effect from 28 May 2015 Mr Rwamba was disqualified again pursuant to a further undertaking, this time for six years. The matters of unfitness this time included that “From at least 7 August 2010 I breached the terms of [the June 2010 Permission]… and as a result acted as a director of [MOL1] whilst I knew or ought to have known that I was disqualified from doing so. In particular:… I breached the s 17 Conditions in that I failed to procure and/ or ensure that MOL1: [complied with certain conditions subject to which permission to act had been given].”

It is perhaps unsurprising then that Judge Prentis refused Mr Rwamba’s application for permission to act as a director, focussing on the fact that he been disqualified twice: the second time for breach of an earlier permission to act, such that granting permission again “carried with it the unavoidable additional risk that the disqualification regime is perceived as lax and permissive, a perception which would lead to a lowering of corporate standards contrary to a purpose of the Act. So, the reasons in favour of permission are going to have to be that the more cogent if it is to be granted.” The judge found that they were not sufficiently cogent.

On appeal, Miles J noted that public protection and deterrence were, as he put it, “baked” into the disqualification regime, but went on to say that that did not mean special weight should be given to those factors. Finding that the judge below had given too much weight to deterrence, and taking into account matters pointing in favour of giving permission, he allowed the appeal and, exercising his discretion afresh, gave Mr Rwamba permission subject to conditions:

“I come back to deterrence, which was, in the end, why the judge refused leave. As already stated I do not think that a fair minded observer would consider that the grant of leave in the present circumstances would go against the grain of the disqualification regime generally or diminish the seriousness of the 2015 undertaking by which Mr Rwamba was disqualified as a director. The giving of leave is inherent in the disqualification regime, the public is fully protected by the conditions of leave (which have been considered and commented on by the Secretary of State), and there are good reasons for allowing Mr Rwamba to act as a director of the Companies.”

The case is, of course, fact specific. Reactions to the judgment will no doubt vary. Some readers will simply read the judgment as the fair minded observer by reference to whom Miles J reached his decision; others will think it another example of a lax and permissive regime.

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