England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE Pro forma

COURT OF APPEAL (CIVIL DIVISION )

(MR JUSTICE JONATHAN PARKER )

Royal Courts of Justice

Strand

London WC2

Tuesday, 9th June 1998

B e f o r e :

LORD JUSTICE SWINTON THOMAS

LORD JUSTICE WALLER

-and-

LORD JUSTICE CHADWICK

- - - - - - - -

THE SECRETARY OF STATE FOR TRADE AND INDUSTRY

- v -

(1) RONALD ALLWYN BAKER

(2) JAMES EDWARD RIDLEY BAX

(3) GEOFFREY HARRY BROADHURST

(4) ANTHONY JOHN GAMBY

(5) ANTHONY JOHN DAVID HAWES

(6) IAN WILLIAM HOPKINS

(7) GEORGE ANGUS MACLEAN

(8) PETER MICHAEL RUSSELL NORRIS

(9) ANDREW MARMADUKE LANE TUCKEY

(10) MARY MARGARET WALZ

- - - - - - - -

(Computer Aided Transcript of the Stenograph Notes of

Smith Bernal Reporting Limited

180 Fleet Street, London EC4A 2HD

Telephone No: 0171-421 4040/0171-404 1400

Fax No: 0171-831 8838

Official Shorthand Writers to the Court)

- - - - - - - -

MR C HOLLANDER and MR J DHILLON (instructed by Fox Williams, London EC2A 1UU) appeared on behalf of the Appellant.

MISS E GLOSTER, MR M DAVIS-WHITE and MR E NOURSE (instructed by the Treasury Solicitor, London SW1H 9JS) appeared on behalf of the Respondent.

- - - - - - - -

J U D G M E N T

( As approved by the Court )

Crown Copyright

- - - - - - - -

Tuesday, 9th June 1998

LORD JUSTICE SWINTON THOMAS: I will ask Lord Justice Chadwick to give the first judgment.

LORD JUSTICE CHADWICK: This is an application for leave to appeal from a decision of Mr Justice Jonathan Parker given in the course of proceedings brought by the Secretary of State for Trade and Industry under the Company Directors Disqualification Act 1986 against former directors of Barings Plc and associated companies. The circumstances in which the application is made cannot be regarded as other than unsatisfactory.

The Barings Group collapsed in February 1995, following the discovery of unauthorised trading on a massive scale on the part of an individual trader in its Singapore office. Administration orders were made on 26th and 27th February 1995 in the High Court in London in relation to Barings Plc itself, one of its principal operating subsidiaries, Baring Brothers and Co Limited ("BB & Co"), and operating subsidiaries of BB & Co, Baring Securities Limited ("BSL") and Barings Securities (London) Limited ("BSLL"). On 21st February 1997 the Secretary of State commenced the present proceedings against ten former directors. Disqualification orders have since been made, either under the Carecraft procedure or without opposition, against seven out of those ten directors.

The substantive trial in relation to the remaining three directors commenced before Mr Justice Jonathan Parker on 12th May 1998. It was estimated to last several weeks. On the first day of the trial the Judge was told that one of the Respondents, Mr Ron Baker, wished to apply for a stay of the proceedings against him. No previous indication of that intention had been given to the court or to counsel for the Secretary of State; notwithstanding that there had been an earlier pre-trial review at which counsel instructed on behalf of Mr Baker had been present. In the event, the Judge was obliged to hear the application immediately following the opening speeches and before any evidence had been called. He delivered judgment on Friday, 5th June 1998. That was the twelfth day of the trial. He dismissed the application for a stay and refused leave to appeal from that decision. But, as he was bound to do in the circumstances, he adjourned the further hearing of the trial so that Mr Baker might have an opportunity to seek leave to appeal from this Court. It is that application which is now before us.

We have heard the application for leave as a matter of urgency - with the appeal itself listed to be heard before us if leave were granted - so that, whether or not leave is granted, the trial (which, in any event, continues against the other two directors) can proceed without further disruption. The effect has been that other appeals, listed to be heard at the beginning of this week, have been displaced; no doubt to the considerable inconvenience of the parties and their advisers. This unsatisfactory position could have been avoided if notice of Mr Baker's intention to seek a stay of these proceedings had been given - as it should have been given - at the pre-trial review. As the Judge rightly observed, counsel's failure to give notice of so fundamental an application at the appropriate time has led to disruption and delay which is unfair to the other parties in these proceedings - and, I would add, to the parties whose appeals have been displaced to make way for this application - and has thrown the timetable for the trial into chaos. The course adopted has made a mockery of the case management of these proceedings. It is essential that counsel in heavy proceedings should recognise and fulfil their responsibilities, in this respect both to the court and to other court users in relation to orderly and effective care management. Having said that, I am conscious that I may not have a full appreciation of the constraints under which counsel for Mr Baker may well have been labouring in the present case. In those circumstances it is inappropriate to criticise him personally.

The basis of Mr Baker's application to the Judge for a stay was that the present proceedings constitute an abuse of the process of the court; in that they infringe the principle against double jeopardy - alternatively, subject him to unacceptable unfairness, oppression and injustice - in the circumstances that he has already had to face disciplinary proceedings brought by the Securities and Futures Authority ("the SFA") in respect of what is said to be substantially the same conduct as that upon which the present disqualification proceedings are founded.

The SFA proceedings extended over a period from 20th July 1995 (when Mr Baker was sent a notice of investigation) until 23rd September 1997 (when the Disciplinary Appeal Tribunal finally disposed of all matters before it). In the course of the SFA proceedings Mr Baker attended, with solicitors and counsel, at a 15 day oral hearing before the SFA Disciplinary Tribunal and conducted his appeal in person over five days before the Appeal Tribunal. All charges against him were dismissed. The Appeal Tribunal ordered the SFA to pay £50,000 towards Mr Baker's costs. It is not surprising that Mr Baker feels that "enough is enough". It is understandable that he feels that the Secretary of State is acting oppressively in pursuing the present proceedings in which - as Mr Baker sees it - the same ground will be raked over again in minute detail and at huge expense. It is impossible not to feel sympathy for a Respondent faced with the enormous stress of resisting prolonged disqualification proceedings brought by a government department with all the resources of the State behind it. That sympathy is no less in circumstances in which no allegation of dishonesty is made; and in which his conduct has already been vindicated before the body having regulatory powers under the Financial Services Act 1976.

But, as the Judge appreciated, sympathy for Mr Baker in his predicament is not a ground for staying proceedings brought against him under the Disqualification Act of 1986. It is not in dispute that the proceedings were commenced because it appeared to the Secretary of State that it was expedient in the public interest that a disqualification order under the section 6 of the Act should be made against Mr Baker. That is the necessary precondition prescribed by section 7 of the Act. Nor is it in dispute that the Secretary of State continues to take the view that, notwithstanding the outcome of the appeal in the SFA proceedings, it remains expedient in the public interest that a disqualification order should be sought. The decisions whether or not to commence, and thereafter to pursue, applications to the court for disqualification orders have been entrusted by Parliament to the Secretary of State. It is for her, and not for the court, to make those decisions: see the judgment of this court in In re Blackspur Group Plc [1998] 1 WLR 422, at 426H. A court is not entitled to intervene and stay proceedings because it may take the view that the Secretary of State is acting in a manner that it may regard as over-zealous. That would be to substitute the court's view of what is expedient in the public interest for her view. That is no part of the court's role.

The basis upon which the court can interfere, by granting a stay of proceedings, is to protect its own process from abuse. The existence of the jurisdiction is not open to doubt. It was affirmed by Lord Diplock in Hunter v Chief Constable of the West Midlands Police and Others [1982] AC 529, at page 536A, when he spoke of:

"... the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedure rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right thinking people."

Hunter was a case in which the abuse lay in the attempt to mount a collateral attack in civil proceedings on a final decision reached in a criminal court of competent jurisdiction. It is accepted that, as the Judge found, the present case does not involve a collateral attack on the findings of the SFA Tribunals. But, as Lord Diplock acknowledged in the sentences following that to which I have just referred:

"The circumstances in which abuse of process can arise are very varied. ... It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power."

Lord Justice Stuart Smith took the same view in Ashmore v British Coal Corporation [1990] 2 QB 338 at page 352D, when he said:

"... it is dangerous to try and define fully the circumstances which can be regarded as an abuse of the process, though these would undoubtedly include a sham or dishonest attempt to relitigate a matter. Each case must depend upon all the relevant circumstances."

The application of the principle to cases of double jeopardy - in which the defendant is at risk of being tried twice for offences arising out of the same facts - is well illustrated by two decisions in the Supreme Court of New South Wales: Cooke v Purcell (1988) 14 NSWLR, and Gill v Walton (1991) 25 NSWLR 190. The latter case went, on appeal, to the High Court of Australia, sub. nom. Walton v Gardiner [1992-1993] CLR 378. The judgment of the majority (Mason CJ, Deane and Dawson JJ) contains the following statement of the law in Australia:

"The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the process and procedures of the court, which exists to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness."

The overriding consideration, as it seems to me, is the need to preserve public confidence in the administration of justice. The court is entitled - indeed bound - to stay the proceedings where to allow them to continue would threaten its own integrity. In the words of Lord Diplock, proceedings should be stayed where to allow them to continue would bring the administration of justice into disrepute among right thinking people.

Right thinking people will not rush to a conclusion that - in refusing to stay the disqualification proceedings - the court is allowing its process to be used as an instrument of oppression, injustice or unfairness - in short, that the process of the court is being abused - without taking care to understand the nature of the SFA proceedings and of the present disqualification proceedings and the interrelation between them. It is necessary, as the Judge appreciated, to examine whether the issues upon which the court will need to adjudicate in the present proceedings are the same, or substantially the same, as those which have already been investigated and adjudicated upon in the SFA proceedings.

The Securities and Futures Association is a "self-regulating organisation" for the purposes of the Financial Services Act 1986 ("FSA 1986"). Members of the SFA are authorised persons within Chapter III of Part 1 of that Act. As such, they can carry on investment business in the United Kingdom without committing an offence under section 4 of that Act. Mr Baker became a registered person under the rules of the SFA in 1988. It was necessary for him to do so because the firm for which he was working was itself a member of the SFA and so bound by the SFA Rules. Rule 2-24 requires that a firm which appoints a person to the position of senior executive officer, compliance officer, finance officer, registered director, partner, manager, representative, trader or yellow jacket (that is to say, a person working on the floor of London International Financial Futures and Options Exchange) must ensure that that person is a registered person. In practice, therefore, a person in the position of Mr Baker must be and remain a registered person under the rules of the SFA if he is to obtain employment within an organisation which carries on investment business. As such, he, himself, became subject to the SFA Rules; and, in particular, to the "Principles", issued by the Securities and Investments Board on behalf of the Secretary of State under section 47A FSA 1996, which are intended to form a universal statement of the standards expected in the conduct of investment business: see rule 2-24(3). An applicant for registration must satisfy the "fit and proper person" test set out in Appendix 3 of the SFA Rules.

Chapter 7 of the SFA Rules contains provisions for enforcement. In the present case, following the publication on 18th July 1995 by the Board of Banking Supervision of its report into the circumstances of the collapse of Barings, the SFA gave notice to Mr Baker that it intended to carry out an investigation into his involvement in that collapse. It suspended his registration. On 14th March 1996 the SFA gave notice to Mr Baker of its decision to institute disciplinary proceedings against him. The grounds stated were these:

"1. During the period between 1 January 1994 and 24 February 1995 Mr Baker failed to act with due skill, care and diligence in breach of principle 2 of the SIB's Statements of Principle in that he failed properly to understand and monitor the proprietary trading activity undertaken by Baring (Futures) Singapore Pte Ltd or to ensure that this was done, which is an act of misconduct;

2. During the period between 1 January 1994 and 24 February 1995 Mr Baker failed to organise and control the internal affairs of the Financial Products Group in breach of principle 9 of the SIB's Statements of Principle in that he failed to ensure that there be adequate arrangements for the proper supervision of staff and that there be well defined compliance procedures, which is an act of misconduct;

3. Further, or in the alternative, Mr Baker has ceased to be fit and proper to be registered by SFA as a director."

Barings Futures (Singapore) Pte Limited ("BFS") was the company in Singapore through which Barings carried on trading on the Singapore International Monetary Exchange (SIMEX). It was managed on a day-to-day basis by Mr Nick Leeson, who was based in Singapore. It was an operating subsidiary of BSL. Its activities, or certain of its activities, fell under the supervision of Mr Baker as head of the Financial Products Group. The complaints made against Mr Baker by the SFA, as set out in its notice of institution of disciplinary proceedings dated 14th March 1986, were, in substance, that he failed properly to understand the nature of the switching business carried on in Singapore but simply accepted the explanations given to him by Mr Leeson; that he failed properly to consider the capital implications of the funding of the business; that he failed properly to monitor the trading activity - relying only on information provided by Mr Leeson; and that he failed to ensure that the positions taken by Mr Leeson were reduced promptly when he, Mr Baker, was instructed to do so on 25th January 1995.

The Disciplinary Tribunal addressed those three grounds of complaint, or "charges" as they were described in the decision which it delivered on 18th December 1996. The Tribunal recorded in paragraph 1.1 of that decision that the SFA had made it plain throughout the proceedings before it, that it was no part of the SFA's case that the alleged acts or omissions of Mr Baker had in anyway contributed to the collapse of Barings. The Tribunal dismissed the charges under grounds 2 and 3. In relation to ground 3 the Tribunal said this:

"9.8.4. In our judgment, none of the evidence we heard went any distance towards establishing, even on the barest balance of probabilities, let alone according to the higher end of the flexible standard of proof that we have adopted for the reasons set out above, that Mr Baker is by virtue of our findings, in any way not a fit and proper person to be registered by SFA as a director."

The Tribunal was not satisfied, under ground 1, that the SFA had established that Mr Baker had failed properly to understand the proprietary trading (or switching) activity undertaken by BFS. But the Tribunal was satisfied that Mr Baker had failed properly to monitor that activity. Mr Baker appealed against that finding to a Disciplinary Appeal Tribunal under the chairmanship of Lord Bridge of Harwich. The Appeal Tribunal gave its decision on 11th June 1997. It drew attention to the inconsistency between the statement in paragraph 1.1 of the decision below that it was not part of the SFA's case that the alleged acts or omissions of Mr Baker had in any way caused or contributed to the collapse of Barings - to which I have already referred and which was repeated in the fist sentence of 9.1 - and the observation in the fourth sentence of paragraph 9.1 that it was a central part of the SFA's case that had Mr Baker properly understood and monitored and managed the switching business conducted by BFS, which was the business for which Mr Baker had formally accepted responsibility in his defence of 7th May 1996, the unauthorised activities of Mr Leeson could have been uncovered at an earlier stage. The Appeal Tribunal held that the Tribunal below had misdirected itself in treating any potential link between the switching business and Mr Leeson's unauthorised trading, which a timely investigation by Mr Baker could have uncovered, as a relevant factor on which the SFA relied. The Appeal Tribunal reached the conclusion that that misdirection, coupled with the absence of any direct evidence as to the steps which a competent person in the position of Mr Baker would have taken in monitoring the switching business beyond those which Mr Baker had taken, vitiated the findings, in paragraphs 9.4.9 and 9.5.19 of the decision below, that Mr Baker fell short of the standards of a reasonably prudent manager in failing adequately to monitor BFS's trading activities and to take action in response to the extraordinarily large revenues which those activities had appeared to generate.

Mr Baker became a director of BB & Co on 27th April 1992. It is not alleged that he was a director of BSL, BSLL or BFS. The conduct in issue in the SFA proceedings was Mr Baker's conduct as head of the Financial Products Group, an amalgam of the derivatives businesses of BSL and the financial products operations of BB & Co. His conduct as a director of BB & Co, owing duties as such to BB & Co under the Companies Act 1985 and under the general law, was not in issue in the SFA proceedings. The charges against him in those proceedings were that he failed to act with the due care and skill of a prudent manager - that is to say, that he had fallen below the standards observed by ordinarily skilled and competent members of his profession. In effect, that he was guilty of professional negligence. That this was the basis on which the issues were approached both by the Tribunal and the Appeal Tribunal appears from the analysis at section 5.3 in the judgment of the Tribunal; an analysis expressly approved by the Appeal Tribunal at pages 19 to 21 of its written decision. The Appeal Tribunal put the point in these terms:

"The 'profession' practised by Mr Baker was, it seems clear, one requiring a high degree of specialisation and an exceptional expertise. How then was it to be shown that he fell short of the standard required of a reasonably competent member of that profession and that in the situation which confronted him in January 1995, any competent member of the profession would have taken steps to monitor Leeson's conduct of the switching business beyond those which Mr Baker had taken and which the Tribunal appeared to have accepted as adequate 'throughout 1994'."

It is because the enquiry was into the professional competence of Mr Baker as a manager that the question whether or not his alleged failure adequately to monitor Mr Leeson's activities contributed to the collapse of Barings was, indeed, irrelevant to the issues which the Tribunal had to consider.

By contrast, Mr Baker's conduct as a director of BB & Co is central to the disqualification proceedings. Section 6 of the Disqualification Act of 1986 requires the court to make a disqualification order if, but only if, it is satisfied that his conduct as a director of the company which has become insolvent makes him unfit to be concerned in the management of a company. Section 9 of that Act requires the court, when considering whether a person's conduct as a director of any particular company makes him unfit to be concerned in the management of a company, to have regard, as respects his conduct as a director of that company , to the matters mentioned in Schedule 1 to the Act. Those matters include, at paragraph 6 in Part II of Schedule 1:

"6. The extent of the director's responsibility for the causes of the company becoming insolvent."

The disqualification proceedings, therefore, will necessarily involve an investigation into the very matter which was held not to be relevant in the SFA proceedings - namely, what responsibility did Mr Baker have as a director of BB & Co, for the insolvency of BB & Co. That may well require consideration of what Mr Baker did, or did not, understand or do about Mr Leeson's activities in Singapore; but the consideration will take place in a different context. The relevant question will be whether Mr Baker's acts or omissions fell so far short of the competence required of a director of BB & Co that the court ought to reach the conclusion that he is unfit to be concerned in the management of a company - that is to say, any company. That is not at all the same question as that which the Tribunal had to consider - namely whether Mr Baker was a fit and proper person to remain on the SFA register.

The Judge appreciated the distinction. He pointed out that the test of "fit and proper person" under the SFA Rules is materially different from that which the court is required to apply under the Disqualification Act of 1986. He appreciated that the underlying purpose of disqualification under the Act is materially different from deregistration under the SFA Rules. He said this:

"I am unable to see how the underlying purpose of the Disqualification Act could be fully achieved, or the Secretary of State's public duty under that Act properly fulfilled, if her ability to apply for a disqualification order where it appears to her expedient in the public interest to do so is liable to be (in effect) foreclosed by an earlier decision of a disciplinary tribunal in proceedings over which he had no control and in which he did not participate."

I agree with that view. The question for us on this application is whether to give leave to appeal against the Judge's decision to refuse a stay of the disqualification proceedings against Mr Baker. To put the case for Mr Baker at its highest, an appeal could not succeed unless this Court were persuaded that to allow the disqualification proceedings to proceed would risk bringing the administration of justice into disrepute among right thinking people having a proper understanding of the different nature of the regulatory provisions which affect him; the one under the SFA Rules and the other under the Disqualification Act of 1986. I am not satisfied that that test could be met.

Accordingly, an appeal would serve no useful purpose and this application should be refused.

LORD JUSTICE WALLER: I agree that this application for leave to appeal must be refused. It was common ground before the Judge and it was common ground before us that the court has jurisdiction both under Ord.18, r 19 and its inherent jurisdiction to stay proceedings that are an abuse of its process. It is furthermore common ground that the limits of that jurisdiction are not clearly defined; that they go beyond circumstances in which the doctrines of res judicata or issue estoppel is clear. The jurisdiction indeed exists if proceedings are being used for some improper or collateral purpose. However, it is not a jurisdiction that will be exercised lightly, and it is not for the court to interfere in the decisions of parties to litigate and bring their proceedings to court unless there is an abuse, that is to say some factor which makes the continuation of the proceedings "manifestly unfair to a party in litigation before it, or would otherwise bring the administration of justice into disrepute among right thinking people": see Lord Diplock in Hunter v Chief Constable of the West Midlands in the passage quoted by the Judge at page 7 of his judgment and already quoted by my Lord.

The central plank on which Mr Hollander, on behalf of Mr Baker, rests his submissions in this case is the principle of double jeopardy by reason of the proceedings instituted by the Securities and Futures Authority ("SFA"), backed by the assertion that the continuation of the disqualification proceedings would subject Mr Baker to unacceptable injustice, oppression and unfairness.

I agree with the Judge that it is not an answer to Mr Hollander's submission simply to say that the SFA Disciplinary Tribunal or, indeed, the Appeal Tribunal is not a court of competent jurisdiction, therefore the question of double jeopardy does not apply. But I also agree with the Judge that Mr Hollander cannot succeed simply because he can show that to a great extent the same facts will be explored in the disqualification proceedings as were explored in the SFA Tribunals.

My reasons for believing the Judge was clearly right can be summarised as follows:

1. As explained by my Lord and the Judge, the question to be answered in the different proceedings is in fact materially different. The SFA is concerned with whether the conduct is such as to render a director unfit to be registered in accordance with the SFA Rules. A finding that he was or a finding that he was not cannot necessarily answer the question which arises under disqualification proceedings which is whether he is fit to be a director of any company.

2. It cannot be right that the decision of the Secretary of State taken pursuant to her public duty, to bring or pursue proceedings under the Directors of Disqualification Act, can be foreclosed by proceedings brought quite independently under the SFA disciplinary procedures. I am not persuaded that it is arguable that because of the statutory context in which the SFA acts somehow the SFA is an emanation of the State so as to lead to the conclusion that in reality it is the same party who brought the disciplinary proceedings before the SFA as brings the disqualification proceedings now sought to be stayed.

3. If it could be argued that the Secretary of State had encouraged or controlled the SFA disciplinary proceedings, so as to bring them on prior to bringing the disqualification proceedings and so as to take advantage in some way of those proceedings, that might produce an entirely different situation. There is simply nothing to suggest that that was so. It is asserted that the Secretary of State is now seeking to use the judgment and other documents resulting from the SFA proceedings, but the use does appear exceedingly limited, and cannot, in my view, be said to support any abuse of the court's process in the light of the independence of the original SFA proceedings.

5. I am doubtful whether, but for the complexity and length of both sets of proceedings, an application on the grounds of double jeopardy would really have been contemplated. For example, if one envisages a one hour application before the SFA and a one hour application under the Directors of Disqualification Act, having regard to the very different aspects with which the two sets of proceedings are concerned, an application to prevent the Secretary of State exercising her discretion in favour of bringing the disqualification proceedings would be almost unthinkable. Unfortunately the complexity and length of both sets of proceedings is dictated by the subject matter. One must, of course, feel sympathy for any person who is involved in such proceedings.

What I would say, however, is that even now, if in the disqualification proceedings there were any sign of them being conducted in a way which was disproportionate in the sense of being more complex and more lengthy than the seriousness of the charges warranted, the court would still have the power to prevent its procedures being abused.

As I previously said, in my view an appeal by Mr Baker from the Judge's ruling would be unarguable and, in those circumstances, this application should be dismissed.

LORD JUSTICE SWINTON THOMAS: I have no doubt that in appropriate circumstances the court has power under its inherent jurisdiction to stay proceedings brought by the Secretary of State for Trade and Industry to disqualify a director under the provisions of the Company Directors Disqualification Act 1986 on the ground of abuse of process. However, where proceedings are properly constituted that power will be exercised only in exceptional circumstances: Hunter v Chief Constable West Midlands [1982] AC 529. Mr Hollander submits that such circumstances exist in the present case.

In R v Horseferry Road Court, ex parte Bennett [1984] AC 42, an extradition case brought initially before a Stipendiary Magistrate, Lord Griffiths said at page 62:

"I have no doubt that the judiciary should accept this responsibility in the field of criminal law. The great growth of administrative law during the latter half of this century has occurred because of the recognition by the judiciary and Parliament alike that it is the function of the High Court to ensure that executive action is exercised responsibly and as Parliament intended. So also should it be in the field of criminal law and if it comes to the attention of the court that there had been a serious abuse of power it should, in my view, express its disapproval in refusing to act upon it."

The same principle applies to proceedings under the 1986 Act. Lord Griffiths stressed that it was, however, a power to be sparingly exercised. However, having said that, if the court, having balanced all the factors, in particular the concept of fairness and the public interest, concludes that the continuation of the proceedings amounts to an abuse of process, they will not hesitate to grant a stay. It must be stressed that proceedings under the 1986 Act are brought in the interests of, and for the protection of, the public and that is one of the reasons why the power to stay must be sparingly used.

Of the many authorities cited to us by Mr Hollander, I have found In Re Blackspur Group Plc [1998] 1 WLR 442 the most helpful. Mr Hollander submits that Blackspur is a different case to the instant case. That is true, but it does not detract from the general principles set out in that case and it is of importance that, on page 426 of the report, Lord Woolf MR set out a heading: General observations on the Act of 1986 .

On page 424, the Master of the Rolls said:

"The issue is whether, in the face of undertakings offered to the court by Mr Vernon Davies, a respondent to two sets of proceedings under the Company Directors Disqualification Act 1986, the Secretary of State for Trade and Industry may properly continue the proceedings initiated with a view to obtaining disqualification orders against him. The refusal of the Secretary of State to discontinue the proceedings on those undertakings and her decision to press on with the proceedings have inspired two sets of applications. Both were dismissed by Rattee J [1977] 1 WLR 710 on 22 November 1996. The first set of applications seeks stays of the proceedings on the ground that it would be oppressive to Mr Davies, prejudicial to the interests of the public and a misuse of the procedure of the court for the Secretary of State to pursue them. The second is for leave to issue applications for judicial review of the decision to continue the proceedings and to refuse consent to stays on the basis of the undertakings offered."

On page 426, under the heading General observations on the Act of 1986 , Lord Woolf said:

"The instant issue should be viewed in the context of general considerations appearing in the regulatory scheme of the Act of 1986 and in judicial decisions interpreting and applying it.

(1) The purpose of the Act of 1986 is the protection of the public by means of a prohibitory remedial action, by anticipated deterrent effect on further misconduct and by encouragement of higher standards of honesty and diligence in corporate management, from those who are unfit to be concerned in the management of the company.

(2) Parliament has designated the Secretary of State as the proper officer to discharge the function of making applications to the court for disqualification orders. There is a wide discretion to do so in cases where it appears, in the prescribed circumstances, that 'it is expedient in the public interest that a disqualification order should be made.' In any particular case it may be decided that the public interest is best served by making and continuing an application to trial; or by not making an application at all; or by not continuing a pending application to trial; or by not contesting at trial points raised by way of defence or mitigation. All these litigation decisions are made by the Secretary of State according to what is considered by her to be 'expedient in the public interest.' They are not made by the court or by other parties to the proceedings.

(3) Once proceedings have been brought to trial, it is for the court, not for the Secretary of State or for any other party, to decide whether a disqualification order should or should not be made. A court can only make a disqualification order if it is 'satisfied' on the prescribed statutory matters. As the court must be 'satisfied' of those matters, it is not appropriate for the court to act, or even for the court to be asked to act, as a rubber stamp on a proposed consent order, without regard to its factual basis. ...

(4) Applications under the Act of 1986 are not ordinary private law proceedings, even when heard and determined by a civil court. They are made, and can only be properly made, in cases where it is considered 'expedient in the public interest' to seek a disqualification order in the specified statutory form which, when made, has serious penal consequences. The unique form of the order and the special procedure for obtaining it are prescribed by the Act of 1986. Significantly, the Act of 1986 does not expressly equip the court with a discretion to deploy the armoury of common law and equitable remedies to restrain future misconduct (injunction or undertaking in lieu of injunction), to punish for disregard of restraints imposed by court order (contempt powers of imprisonment or fine), to compensate for past loss unlawfully inflicted (damages) or to restore benefits unjustly acquired (restitution)."

Then, on page 433, the Master of the Rolls concluded his judgment by saying:

"In these circumstances the Secretary of State is entitled to take the position that it appears to her expedient in the public interest to prosecute these proceedings. It is impossible to say, on an objective assessment of all the relevant factors, that it is unfair, oppressive or a misuse of the process of the court for her to do so. She is entitled to rely on the statutory machinery, which provides for the making of a disqualification order on a basis that requires a factual foundation based on evidence, either contested or conceded by the respondent in court. ..."

We must apply those general principles to the instant case. In agreement with Jonathan Parker J, I have no doubt that Mr Baker and his family have suffered much hardship as a result of having to contest proceedings brought both by the SFA and by the Secretary of State. There is no doubt that proceedings such as these do bring very great hardship in their wake to the Respondents to them. In a case where the allegation against the Director or Directors is not one of dishonesty but is one which may be described compendiously as negligence as a Director, I trust that the Department and those who advise the Secretary of State think long and hard before they decide to institute proceedings or, as the case may be, to continue them. We, of course, were not a party to the decision making and there is no evidence before us which would suggest that that did not happen in this case.

In his very able submissions Mr Hollander relied primarily, albeit not exclusively, on the fact that proceedings were taken initially by the SFA and that Mr Baker was eventually acquitted of all the charges laid against him. Mr Hollander concedes that as a matter of principle the Secretary of State is entitled to bring disqualification proceedings following an acquittal in proceedings brought by the SFA. He concedes that the proceedings are properly constituted. He does not submit that there has been lengthy and undue delay in bringing the proceedings, and he does not submit that Mr Baker can no longer have a fair hearing. As I have said, he submits that if the court weighs all the circumstances of this case in the balance, the continuation of these proceedings is so oppressive as to justify a stay.

It is true that the underlying facts of the charges brought by the SFA and the Secretary of State are the same. However, as Lord Justice Chadwick has set out very fully in his judgment, the status, the issues and the consequences of the two sets of proceedings have very important differing features.

I agree with the judgments that have been given by Lord Justice Chadwick and Lord Justice Waller. For the reasons given I also would refuse leave to appeal.

ORDER: Application dismissed with costs.

_ _ _ _ _ _ _