SB Steel Ltd v Companies Act, 2014

• Jurisdiction: Ireland
• Judge: Mr. Justice Quinn
• Judgment Date: 27 July 2022
• Neutral Citation: [2022] IEHC 513
• Court: High Court
• Docket Number: [Record No. 2021/297 COS]

In the Matter of An Application by Maurice Elliot Sherling, First Named Applicant

and

In the Matter of An Application by Graham Charles Hudson, Second Named Applicant

and

In the Matter of (1) SB Steel Limited,

(2) NBT International Limited,

(3) Jamestown Metal Resources Limited,

(4) Silverwood Dublin Property Acquisitions Limited, and

(5) Trailglen Limited

and

In the Matter of the Companies Act, 2014

[2022] IEHC 513

[Record No. 2021/297 COS]

THE HIGH COURT

Disqualification – Companies – Companies Act 2014 s. 847(1) – Applicants seeking leave to act as directors of companies – Whether it was just and equitable to grant to the applicants relief

Facts: The applicants, Mr Sherling and Mr Hudson, applied to the High Court for orders in the following terms: (1) an order pursuant to s. 847(1) of the Companies Act 2014, granting the first applicant relief in whole or in part from any disqualification deemed to have arisen in respect of five companies by virtue of the operation of s. 840(2) of the Act; (2) an order pursuant to s. 847(1) granting the second applicant relief in whole or in part from any disqualification deemed to have arisen in respect of Jamestown Metal Resources Ltd (JMR) by virtue of the operation of s. 840(2); (3) an order extending the time for the filing of Forms B74a in respect of the companies.

Held by Quinn J that, having taken account of the serious approach adopted by the applicants when they realised the omission to comply with the statutory notification requirement, evidenced by the application made to the High Court of England and Wales and the affidavits before the court, and of the position of conditional neutrality adopted by the Director, it was just and equitable to grant to the applicants relief pursuant to s. 847(1) from the disqualification deemed to arise pursuant to s. 840(2), the relief being leave to act as directors of SB Steel Ltd, NBT International Ltd and JMR.

Quinn J held that the relief would be subject to certain conditions. In relation to the application of Mr Sherling, the conditions were as follows: (a) that Mr Rintoul or a similarly qualified and experienced person should remain in office at JMR for the remainder of the period of Mr Hudson’s deemed disqualification; (b) that Mr Rintoul or his replacement supervise compliance with competition law by JMR and its officers, supervise the applicants conduct and liaise with the CMA and the Competition and Consumer Protection Commission (if required) and implement the measures outlined in Mr Rintoul’s affidavit sworn 1 April 2022; (c) that Mr Heather, or a similarly qualified and experienced person remain as a non-executive director of JMR, SB Steel Ltd, and NBT International Ltd, for the remainder of the period of Mr Hudson’s deemed disqualification and continue to perform the roles and functions which Mr Rintoul and Mr Heather had described in their affidavits before the court; (d) that Mr Heather or his replacement shall supervise compliance with company law and good corporate governance by JMR, SB Steel Ltd, and NBT International Ltd, and their officers and implement the other measures outlined in Mr Heather’s affidavit; (e) that Mr Smith and Mr Crabb will each remain a director of JMR “for as long as is tenable” and may be replaced as directors of JMR; (f) that Ms Ross and Mr Murphy each remain as directors of SB Steel Ltd, and NBT International Ltd, for as long as is tenable and may be replaced as directors of those companies; (g) the relief granted pursuant to s. 847 would cease immediately and without further notice upon any failure to comply with the conditions. In relation to the application of Mr Hudson the conditions were as follows: (a) that Mr Rintoul, or a similarly qualified and experienced person, shall remain as a non-executive director of JMR for the remainder of the period of Mr Hudson’s deemed disqualification and continue to perform the role and function which Mr Rintoul and Mr Heather have described; (b) that Mr Rintoul or his replacement supervise compliance with competition law by JMR and its officers, supervise the applicant’s conduct and liaise with the Competition and Markets Authority and the Competition and Consumer Protection Commission (if required) and implement the other measures outlined in Mr Rintoul’s affidavit sworn 1 April 2021; (c) that Mr Heather, or similarly qualified and experienced persons shall remain as a non-executive director of JMR for the period of Mr Hudson’s deemed disqualification and continue to perform the roles and functions which Mr Rintoul and Mr Heather have described in their affidavits; (d) that Mr Heather or his replacement shall supervise compliance with company law and good corporate governance by JMR and its officers and implement the other measures outlined in Mr Heather’s affidavits; (e) that Mr Smith and Mr Crabbe shall each remain a director of JMR for as long as is tenable and may be replaced as a director of JMR; (f) the relief granted pursuant to s. 847 would cease immediately and without further notice upon any failure to comply with the conditions.

Relief granted.

JUDGMENT of Mr. Justice Quinn delivered on the 27 ^th day of July 2022

1 . This is the first recorded application pursuant to the provisions of s. 847 of the Companies Act 2014 (“ the Act”). That section provides that a person who is subject to a disqualification order pursuant to Part 14, Chapter 4 of the Act may apply for and may, if the court considers it just and equitable, be granted relief from the disqualification in whole or in part and on such terms and conditions as the courts deems fit.

2 . The applicants seek relief in circumstances where they have been the subject not of a disqualification order, but of a “deemed disqualification” pursuant to s. 840(2). This deeming provision arises from a failure to give notice to the Registrar of Companies of the fact that the applicants have been the subject of a disqualification under the laws of another state, in this case England and Wales.

Relevant provisions of the Act

3 . Section 149 of the Act requires that every company shall keep a register of its directors and secretaries and, at subs. (8), shall give notice to the Registrar of Companies in the prescribed form (a form B74a) of any change among its directors or of secretary, within fourteen days of the date of such change.

4 . Section 150 provides as follows:-

“(1) …a change among the directors for the purposes of that provision shall be deemed to include the case of a director's becoming disqualified under the law of another state (whether pursuant to an order of a judge or a tribunal or otherwise) from being appointed or acting as a director or secretary of a body corporate or an undertaking…” (emphasis added)

5 . Section 840 of the Act provides as follows:-

“(1) …“relevant change amongst its directors”, in relation to a company, means the change referred to in section 150 (1), namely the case of a director's becoming disqualified under the law of another state (whether pursuant to an order of a judge or a tribunal or otherwise) from being appointed or acting as a director or secretary of a body corporate or an undertaking;

…

(2) If—

(a) a company fails to comply with the requirement under section 149 (8) to send to the Registrar the notification of the relevant change amongst its directors and that failure is by reason of a default of the relevant director,

….

the relevant director shall be deemed, for the purposes of this Act, to be subject to a disqualification order for the period specified in subsection (3).

(3) The period of disqualification—

(a) commences—

(i) in the case of a failure referred to in subsection (2)(a), on the expiry of 14 days after the date on which the relevant director has become disqualified, as mentioned in the definition of “relevant change amongst its directors” in subsection (1), under the law of another state,…

…

and

(b) continues only for so much of—

(i) the period of foreign disqualification as remains unexpired as at the date of commencement referred to in paragraph (a)…”

The disqualification undertakings

6 . On 1 March 2021, each of the applicants entered into what are referred to in the United Kingdom as “competition disqualification undertakings” pursuant to the Company Directors Disqualification Act 1986, which undertakings became effective on 30 May 2021. The undertakings were given to the Competition and Markets Authority (“ the CMA”) arising from the activities of companies in England of which they were directors. The events giving rise to these undertakings are described in more detail below. This application is made in circumstances where the applicants were advised that the giving of such undertakings amounted to, or could amount to, a disqualification and that the requirement to give notice to the Registrar of Companies of the fact of such disqualification pursuant to ss. 149 and 150 of the Act applied. Therefore s. 840(2), referred to above, had the effect that by reason of the failure to give such notice each of them would be deemed to be subject to a disqualification order under the Companies Act 2014.

7 . The application before this Court is for orders in the following terms:-

• (1) An order pursuant to s. 847(1) of the Companies Act 2014, granting the first named applicant relief in whole or in part from any disqualification deemed to have arisen in respect of the five named companies herein (“ the companies”) by virtue of the operation of s. 840(2) of the Companies Act 2014

• (2) A declaration that the second named applicant is not deemed to be disqualified from acting as a company director by virtue of the operation of s. 840(2) of the Companies Act 2014.

  (At the hearing, the second named applicant did not pursue this relief and accepted that the deeming provision applied to him.)

• (3) In the alternative, an...