England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

		The Royal Courts of Justice The Strand London WC2 A2U
		19th April 2007

1. JUDGE PELLING: This is the second of two judgments I have given so far in this, the trial of an application for a disqualification order against the defendant under sections 6 and 7 of the Company Directors Disqualification Act 1986, the 1986 Act.
2. The essential background is set out in the opening paragraphs of my first judgment, given on an application by the defendant for an adjournment.
3. The issues I have to determine at this stage concern jurisdiction and the admissibility of evidence. It is, therefore, not desirable that I say anything more concerning the facts of the claim at this stage.
4. The terms "company" and "bank" defined in my first judgment have the same meanings in this judgment.
5. Jurisdiction.
6. The defendant lives and works in Austria. The company, in respect of which he admits he was a shadow director, was an English registered company.
7. His contention is that since his centre of main interest is Austria, the English Court has no jurisdiction to entertain the claim made in these proceedings.
8. I reject that submission and do so for the following reasons.
9. First, in re Seagull Manufacturing Company Limited [1994] Ch 91, Miss Mary Arden QC, as she then was, held that the reference to "company" in section 6(1) of the 1986 Act embraced any company wherever incorporated which could be wound up under the Insolvency Act 1986, and anyone, of whatever nationality, could be disqualified under the section for conduct rendering him unfit to be a director of a company, irrespective of where the conduct complained of occurred. The court had a discretion not to order service of disqualification proceedings out of the jurisdiction where there was a good arguable case that the conditions in section 6(1) had not been satisfied, but in the circumstances of the case before Miss Arden, the court could order service outside the jurisdiction for someone seeking disqualification of the director.
10. Whilst of course technically that judgment is not binding on me, nonetheless it would be wrong to depart from it unless I was satisfied that it was plainly wrong.
11. Not merely do I not think it was wrong, but I think it plainly right. As Miss Arden said at page 98, F:

"The court must enquire as to the person with respect to whom Parliament is presumed in this particular case to have been legislating."

As she said at page 104, letters A to H:

"The word 'company' in section 6(1) includes any company which may be wound up under the Act: see section 22(2). In this way, companies incorporated in other jurisdictions are included: see sections 220 and 221 of the Insolvency Act 1986. In the case of foreign companies the likelihood is that some of the directors will not be persons resident here, or even foreigners present here, when the conduct relied upon as rendering them unfit takes place. Accordingly, in my judgment, Parliament must be presumed to have been legislating, not simply for British subjects and foreigners who happened to be here at the relevant time, but also for other foreigners who were out of the jurisdiction at the critical time. Likewise, in relation to conduct, section 6(1) contains no territorial restriction. Accordingly, the court must ask what is the conduct in respect of which Parliament must have been presumed to have been legislating.

"There are two factors which, in my judgment, indicate that the conduct in question in section 6(1) need not be conduct which occurred within the jurisdiction. The first such factor is the definition of 'company' to which I have already referred. This includes foreign companies and the acts of the directors of those companies are likely to have taken place abroad, and Parliament must have been presumed to have been legislating with that in mind. Secondly, in these days of modern communications, a person may conduct himself as a director in such a way as to affect persons within the jurisdiction without himself ever entering the jurisdiction. Again, in my judgment, Parliament must be presumed to have been legislating with this in mind, and, accordingly, by plain implication, to be taken to have been referring to conduct wherever committed."

12. As I say, I find this reasoning compelling and have no hesitation in adopting it.
13. The defendant's point concerning centre of main interest, in my view is wholly irrelevant. That test applies and applies only in relation to proceedings to which the EC regulation on insolvency proceedings 2000 of the EC regulation applies.
14. Article 1 of the EC regulation limits the application of the regulation to "collective insolvency proceedings". Article 2 defines such proceedings to be those listed in annex A to the regulation.
15. That list is comprehensive as to the proceedings to which the EC regulation applies. It does not include proceedings of the type now before me.
16. In those circumstances, I reject the defendant's contention that the court has no jurisdiction over him. The suggestion that because the defendant was merely a shadow director the court has no jurisdiction, is clearly wrong. See section 6(3)(c) of the 1986 Act.

2. Admissibility.

17. The Official Receiver applies for permission to rely upon three additional affirmations sworn by the solicitor acting for the Official Receiver. The defendant consents to an order in these terms and so I have already given permission orally and rehearse it formally at this stage.
18. The issue of principle that arises concerns the judgment of Toulson J given in the Commercial Court proceedings between the bank company and the defendant referred to in a little more detail in the opening paragraphs of my first judgment in these proceedings.
19. The Official Receiver seeks a disqualification order on the basis of the findings of fraud made by Toulson J in the Commercial Court proceedings and for that purpose seeks to rely upon the contents of the judgment given by Toulson J as prima facie evidence of the alleged fraudulent conduct on the part of the defendant.
20. The reasons for this are pragmatic. The trial before Toulson J took 17 days, by reference to a trial bundle consisting of 87 lever arch files. If the judgment of Toulson J is admissible then the hearing before me will be shorter, some two to three days, and cheaper.
21. The Official Receiver submits that the judgment constitutes prima facie evidence only, and that any risk of prejudice to the defendant is eliminated by it being open to the defendant to attack particular findings made by Toulson J if he is able to do so by reference to relevant and admissible evidence.
22. It is submitted on behalf of the Official Receiver that the judgment is admissible under one or more of:

(a) Rule 3(2) of the Insolvent Companies Disqualification of Unfit Directors Proceeding Rules 1987, as construed by Morritt J, as he then was, in re City Investment Centres Limited [1992] BCLC 956, and by Vinelott J in re Moonbeam Cards Limited [1993] BCLC 1099; and/or:

(b) the principles identified in re Rex Williams Leisure plc [1994] Ch 350, as applied to section 6 proceedings by Secretary of State for Trade and Industry v Ashcroft [1998] Ch 71, and re Barings (No 5) [1999], 1 BCLC 433; and/or:

(c) under section 1 of the Civil Evidence Act 1995, to the extent that the judgment constitutes hearsay as opposed to merely opinion evidence.

23. It is, I think, important at the outset to emphasise that in the context of a judgment like a report of a statutory or non-statutory inspector or a regulatory body, the material consists broadly of: hearsay; that is the recital of the contents of relevant documents and of oral evidence given in the course of the trial to the judge concerned; and opinion evidence, which will include findings of primary and secondary fact of the judge as well as evaluative judgments by the judge.
24. Where hereafter I use the expression "opinion evidence" or "opinion", I refer to material which constitutes either a finding of primary or secondary fact by the judge or an evaluative judgment.
25. The effect of this analysis is that potentially two exclusionary rules are engaged where it is sought to rely upon a judgment in subsequent proceedings between different parties, the rule against hearsay and the rule against opinion evidence as set out in Hollington v Hewthorn [1943] KB 587.
26. As to the first of these, in my view, no real problem now arises. Section 1 of the Civil Evidence Act 1995 creates a very wide exception to the rule against hearsay in relation to civil proceedings. In my view, the exception is capable of applying to hearsay statements and judgments and there is no doubt that these proceedings come within the definition of proceedings to which the 1995 Act applies.
27. It is true that the Act contemplates the service of notices if hearsay evidence is to be relied on and that, in this case, formal notice was not given.
28. However, the court retains a discretion under the CPR to admit such evidence in the absence of a formal notice, and I would have no hesitation in exercising that discretion in this case because the judgment forms a central part of the evidence served in support of the application at the outset, so no prejudice could possibly have been caused by seeking at this stage to rely upon the judgment, in so far as it consists of hearsay material.
29. However, none of this provides an answer to the rule against opinion evidence which is the main hurdle that the Official Receiver has to overcome, since the primary desire of the Official Receiver is to rely upon the findings of fraud made by Toulson J against the defendant.
30. As to this, the general rule confirmed most recently in Secretary of State for Trade and Industry v Bairstow [2003] 1 BCLC 696 is that judicial findings are not admissible in subsequent proceedings between different parties: see paragraphs 26-27 of the judgment of Sir Andrew Morritt, Vice Chancellor, as he then was.
31. However, that case was a claim for disqualification under section 8, not sections 6 and 7, of the 1986 Act. It was conceded in that case that there was no statutory or common law exception to the common law rule against opinion evidence on which the Secretary of State in that case could rely, and thus it was not necessary for the Court of Appeal in that case to consider, and it did not in fact consider, the applicability of the exceptions relied upon by the Official Receiver in these proceedings.
32. Similarly, the points now relied on were not argued before Anthony Mann J in Secretary of State for Trade and Industry v Gee [2007] EWHC 350 Ch and paragraph 2 of the judgment in that case has to be read in that context.
33. Against that background, I turn to each of the exceptions relied upon by the Official Receiver. I call them "exceptions" because as they were at any rate primarily developed as exceptions to the rule against hearsay.
34. However, as will become apparent, the so-called implied exception based on the reasoning in re Rex Williams, has been extended to findings of fact and thus outside the strict confines of an exception to hearsay.
35. The express exception relied upon by the Official Receiver has not, thus far, been extended in this way. It is the submission of the Official Receiver that I should so extend it.
36. I turn first to the express exception point.
37. By Rule 1(3) of the 1987 rules:

"These rules apply with respect to an application for a disqualification order against any person ('the defendant') where made: (a) by the Secretary of State or the Official Receiver under section 7(1) of the Company Directors Disqualification Act, on the grounds that the person's unfitness to be concerned in the management of a company ... on or after the date on which these rules came into force."

38. I note in passing that by Rule 2(1) the Civil Procedure Rules 1998 and any relevant practice directions apply in respect of any application to which these rules apply except where these rules make provision to inconsistent effect.
39. Rule 3 provides as follows:

"A case against the defendant:

"1. There shall, at the time when the claim form is issued, be filed in court evidence in support of the application for a disqualification order and copies of the evidence shall be served with the claim form on the defendant.

"2. The evidence should be by one or more affidavits except where the claimant is the Official Receiver, in which case it may be in the form of a written report with or without affidavits by other persons, which shall be treated as if it has been verified by affidavit by him and shall be prima facie evidence of any matter contained in it."

40. In this case, the judgment of Toulson J forms part of exhibit CL3 to the first report of Miss Cheryl Lambert, an assistant Official Receiver, dated 12th January 2005, being the report referred to in and served with the claim form by which these proceedings were initiated.
41. On behalf of the Official Receiver it is submitted that the effect of exhibiting the judgment to the report in this way is to render it admissible under Rule 3(2) of the 1987 rules, both in relation to the material constituting hearsay within it and also the opinion evidence contained within it.
42. On the face of the rule, this seems a surprising outcome. Rule 3 is concerned to set out when, and in what form, the evidence in support of an application is to be made, and on the face of it, all Rule 3(2) is designed to do is to create an exception to the general rule that such evidence shall be in affidavit form in favour of the Official Receiver.
43. However, Morritt J held to the contrary in re City Investment Centre Limited [1992] BCLC 956 where in essence he said that the effect of the rule was to make the contents of a report "prima facie evidence of any matter contained in it", and there was no justification in distinguishing between something asserted in the body of the statement or affidavit and the contents of documents attached to it.
44. As he said at page 960:

"The report of the Official Receiver contains statements made by others, either in the body of the report or in separate documents annexed to it. Treating the report as an affidavit would render the former admissible but not the latter, unless appropriate Civil Evidence Act 1986 notices were given, which they were not ... The Official Receiver submits that the added words were evidently intended to render any matter asserted in the report prima facie evidence of that matter, whether or not it was otherwise admissible if contained in an affidavit. The justification for the rule suggested was that the Official Receiver would seldom have personal knowledge of the facts and the weight to be attached to the assertion would be a matter for the court. It is submitted that the report must include documents attached to it. I am conscious that I have not heard any contrary argument, but in this case it is a point that I have to decide. I agree with the Official Receiver's submission. I can see no justification for distinguishing between the main body of the report and the documents which form part by being annexed to it. The addition of the words I have referred to in 1987 were obviously intended to confer on the report an evidential status in addition to that which an affidavit would have. The words 'any matter' are entirely general and do not warrant any restriction to statements which would have been admissible under the Civil Evidence Act 1968 if the requisite notices had been served. In assessing the weight to be attached to any particular matter, the court will no doubt consider the source of the Official Receiver's information as well as any other evidence and all the circumstances."

45. This approach was followed by Vinelott J in re Moonbeam Cards Limited ante at page 1101, D to F. There are two points that in my judgment need to be borne in mind about each of these cases.
46. First, neither was apparently concerned with opinion evidence although it is not entirely clear from the reports. It would appear that each was concerned simply with an attempt to rely upon hearsay evidence in its pure sense.
47. Secondly, Hoffmann LJ commented on these cases in re Rex Williams in the following terms; at page 367 in the following terms:

"The 1986 version of the rules had merely equated the Official Receiver's report to an affidavit. Rule 3(2) of the rules of 1986 said that the report 'shall be treated as if it had been verified by affidavit by him'. The 1987 version added the words 'and shall be prima facie evidence of any matter contained in it'. The effect of these words is to make any assertion in the report, whether or not within the personal knowledge of the Official Receiver, prima facie evidence of its truth: see in re City Investment Centres Limited and in re Moonbeam Cards Limited."

48. Thus, (1) Hoffmann LJ confined his approval of the decisions to which I have so far referred, to the effect of the rule on hearsay evidence, albeit I acknowledge did not in any sense disapprove any extension of the rule. And (2) he made no comments at all on Sir Andrew Morritt's comments concerning attachments to reports.
49. As to this last point, notwithstanding the point I have just made, I am entirely satisfied that Sir Andrew Morritt's approach to attachments is correct and should be followed.
50. As to the more general position, it is clear that I am being asked to extend the reading of Sir Andrew from hearsay material to opinion evidence in the form of findings of primary and secondary fact, and also evaluatory judgments contained within the judgment of Toulson J.
51. In relation to this point, it was submitted on behalf of the Official Receiver that:

1. The rule applies only to the Official Receiver who can safely be relied upon to act responsibly;

2. Making something admissible as prima facie evidence does not mean that its weight cannot be attacked in appropriate circumstances;

3. Adopting such an analysis is consistent with the way in which the implied exception referred to below has developed; and:

4. The approach contended for gives full effect to the words "any matter" in the rule as construed by Sir Andrew Morritt in the case referred to above.

52. As to these points, I accept that the Official Receiver is an officer of the court, that he is responsible to the Secretary of State who in turn is responsible to Parliament, and thus I accept that he can be expected to act responsibly in relation to the material relied upon in applications made pursuant to sections 6 and 7 of the 1986 Act.
53. Next, I accept that any material that is truly peripheral but which becomes technically admissible on the basis contended for is likely, all other things being equal, to have little or no weight and thus little or no effect.
54. I also accept that if the phrase "prima facie evidence of any matter contained in it" has the effect of permitting hearsay evidence to be adduced, there is no logical or principled basis upon which it could be said not to extend to opinion evidence as well, and in this regard I rely, amongst other things, upon the general wording used by Hoffmann LJ, as he then was, in re Rex Williams, as well as the analysis of Sir Andrew Morritt in re City Investment Centres Limited set out above.
55. However, before deciding the scope of the express exception finally, I turn to the implied exception because of the consistency point made on behalf of the Official Receiver to which I had referred above.
56. In re Rex Williams Leisure plc ante, a case under section 8 of the 1986 Act, an application was made to strike out such parts of an examiner's interviews with directors and employees as were hearsay.
57. The Court of Appeal held that the evidence provided by the examiner under section 447 of the Companies Act 1985 which the Secretary of State could take into account under his statutory powers to determine whether it was expedient in the public interest to bring proceedings to wind up a company and which, although hearsay was established to be admissible in these proceedings, was impliedly admissible. Also in disqualification proceedings under the Act of 1986, whether such evidence untested by cross-examination of the informant was sufficient to satisfy the burden of proving that the director was unfit in the face of any opposing evidence, depended on the facts and probabilities of the particular case, and that accordingly, there were no grounds for striking out any parts of the affidavit evidence.
58. This case was concerned with hearsay evidence in its proper sense, not what I have been calling "opinion evidence". It was held in that case that the implied exception to the hearsay rule meant that any material that the Secretary of State may take into consideration under section 8 constituted prima facie evidence in section 8 disqualification proceedings, following earlier authorities concerning the evidence that was admissible on petitions by the Secretary of State to wind up companies on public interest grounds.
59. It was recognised by the Court of Appeal that what had to be established on a section 8 application was different to what had to be established on a petition under section 124A, but were satisfied that this distinction went to weight, not admissibility.
60. As Hoffmann LJ said at page 367, A to B:

"In a disqualification application hearsay evidence untested by cross-examination of the informant may be insufficient to satisfy the burden of proof against opposing evidence. It will depend upon the facts and probabilities of each case. Once the Secretary of State knows from the opposing affidavits which material facts are seriously in dispute, he may well be advised to reinforce his case by affidavits from the appropriate informants. But that is no reason why their hearsay evidence obtained under section 447 should be inadmissible. Much of what they say may be uncontested, in which case it would have been a waste of time and money to insist that they swear affidavits."

61. What followed re Rex Williams was a steady expansion of the scope of the implied exceptions, ultimately taking it beyond hearsay and into the realm of opinion evidence.
62. In the Secretary of State for Trade and Industry v Ashcroft [1998] Ch 71, it was held by the Court of Appeal that there was no distinction between an application under section 8 based on information supplied to the Secretary of State by his own officials, and an application under section 7 based on information supplied by an office holder.
63. In his judgment, Millett LJ, as he then was, said:

"The safeguards, in my opinion, are threefold: first, the information is obtained by a professional insolvency practitioner or an official in the Department of Trade and Industry, who must have judged it prima facie worthy of credence; secondly, it is considered by the Secretary of State, who must have judged it sufficiently credible to form the basis of his own opinion and to base an application to the court upon it; and, thirdly, the respondent, whose conduct is impugned has every opportunity to rebut it and, if the evidence is not later supported by direct evidence, to invite the court to reject it."

64. The underlying reasoning for admitting material was dealt with at length by Millett LJ, as he then was, at page 81 between letters F and H, in which he said as follows:

"In my judgment, there is no material distinction between the two kinds of case. A logical distinction might have been made between cases where the Secretary of State was seeking a winding up order and cases where he was applying for a disqualification order; but this court refused to make it. A similar distinction might alternatively have been made between cases where the Secretary of State was acting upon a formal report by outside inspectors, where section 441 of the Companies Act 1985 covers the situation, and information obtained by officials appointed under section 447, where there is no comparable provision; but the court refused to draw it. Once the last step was taken, I can see no discernible distinction between an application for a disqualification order by the Secretary of State based on information gathered for him by his own officials, and one based on information supplied to him by an office holder. In both cases the information is obtained by a professional man or an official acting in pursuance of statutory powers to compel the provision of information. In both cases the information will necessarily include hearsay but it will be the material on which the Secretary of State decides that a particular regulatory response is necessary. In both cases it would be nonsensical if the court could not take it into account at least unless and until it is challenged by direct evidence to the contrary."

65. The logic behind this approach was set out initially by Sir Donald Nichols Vice Chancellor, as he then was, at first instance in re Rex Williams and that rationale is reproduced by Millett LJ in Ashcroft at page 80 at B to F.
66. I need not lengthen this judgment by reading the material which should be treated as being incorporated into this judgment by reference.
67. In re Barings plc (No 2) [1998] 1 BCLC 590, in relation to disqualification proceedings brought under section 6 of the 1986 Act, an application was made to strike out the evidence in support on the ground that the implied exception did not apply because (1) the information came from a special appointee of the Secretary of State, not an official or a professional insolvency practitioner; and/or (2) because it was not obtained by an exercise of statutory powers.
68. That application failed essentially for this reason, because there was no reason why a chartered accountant appointed by the Secretary of State to collate information on which a decision to launch proceedings could be based, was any different from an official of the DTI or an office holder performing precisely the same role. Furthermore, there was no reason to limit the exception to evidence gathered by officials or office holders in pursuance of statutory powers.
69. As Evans-Lombe J said at page 596, having referred to the judgment of Millett LJ in re Rex Williams, he said this:

"It is plain from the passage in the judgment of Millett LJ that he contemplated the possibility that information presided by creditors and others might properly be part of the information upon which the Secretary of State could rely in coming to a conclusion whether or not to launch proceedings. It follows, it seems to me, that it is plain from his judgment that he was not confining the information upon which the Secretary of State was entitled to rely and thereafter to bring in evidence in support of his application, to information gathered by officials or office-holders in pursuance of statutory powers.

"I have to accept, as counsel submitted to me, that this conclusion means that the hearsay rule does not apply to evidence sought to be adduced by the Secretary of State in support of an application under this Act. I draw attention to the fact that this was clearly something which was being borne in mind by Millett LJ when he gave the judgment to which I have referred, because he is concerned to set out the safeguards which acted in his view as a protection to a respondent against abuse of what would otherwise be a freedom from the hearsay rule.

"I conclude, therefore, that the court can treat as evidence all material available to the Secretary of State on which he took the decision to proceed, notwithstanding that that material may be in whole or in part hearsay or double hearsay. When the evidence is challenged by direct evidence from the respondent, the position, as Millett LJ envisaged, changes. It may well be that if the Secretary of State does not then back her hearsay evidence with direct evidence dealing with the points which are challenged, that she may fail to establish to the court the relevant allegations and so her case may be weakened or fail. But it seems to me that at the stage when the application is presented to the court, supported by an affidavit, the Secretary of State is entitled to rely on all the evidence including hearsay which she took into account in coming to her decision to proceed."

70. Thus, the sole question that arises in a section 6 case is whether the material sought to be relied on was material available to the Secretary of State which he or she took into account when taking the decision to proceed or authorising the Official Receiver to proceed.
71. Here, there is no doubt that judgment formed the basis on which the Secretary of State authorised the Official Receiver to commence these proceedings, for such is necessarily implicit in the report attached to the claim form to which I have already referred in detail.
72. However, the cases so far considered were all concerned with hearsay, not what I have been calling "opinion evidence".
73. However, in re Barings plc (No 5) [1999] 1 BCLC 433, that issue was addressed in relation to a report from the Board of Banking Supervision and also in relation to a report from a Singapore inspector.
74. In that case, the Secretary of State did not seek to rely upon what were described as "evaluative judgments or express criticisms" of any of the respondents contained in either document and thus the court expressly did not consider the admissibility of such material. That left (a) pure hearsay statements and (b) judgments of primary or secondary fact.
75. In relation to this last category, Jonathan Parker J as he then was, said as follows:

"It seems to me to be implicit in the decision of Evans-Lombe J that findings of primary and secondary fact (as noted above, evaluative judgments are to be excluded for present purposes) are also admissible as evidence in these proceedings. But in any event, whether or not that be strictly correct, I take the view that the implied statutory exception identified in re Rex Williams Leisure plc, the wide-nature of which was explained by Millett LJ in Ashcroft (at 81-82) -- a passage quoted by Evans-Lombe J in his judgment in re Barings (in admin) (No 2) ... covers findings of fact, as well as pure hearsay statements."

76. The effect of these various decisions in my judgment, therefore, comes to this:
77. In section 6 proceedings hearsay and findings of fact contained in documents considered by the Secretary of State when deciding whether or not to authorise the commencement of proceedings under section 6 pursuant to section 7(1)(b) of the Act by the Official Receiver is admissible as prima facie evidence.
78. In my judgment, this approach means that where the Secretary of State considers a judgment, then any hearsay or any findings of primary and secondary fact contained within the judgment inadmissible as prima facie evidence in support of the application subject to the point that, if any finding is challenged and direct evidence is not adduced to support the finding, the disqualification court may decide not to follow or adopt the findings concerned.
79. It will be appreciated that in relation to the express exception there is no case that goes as far as does re Barings plc (No 5). It does in relation to the implied exception.
80. However, in my judgment, Mr Davis-White is correct in his submission that there is no principle basis for distinguishing between findings of fact and hearsay in relation to the express exception. The protections that apply in relation to hearsay apply with equal force to evidence of such findings. Such an approach, in my judgment, gives full effect to the phrase "any matter" as it has been understood in the cases to which I have already referred.
81. It will be appreciated from what I have so far said that in relation to the implied exception the judgment in re Barings (No 5) left undecided the question of the admissibility of evaluative judgments. It could be a source of debate as to whether or not a conclusion of a judge that a particular defendant has been guilty of fraud is such an evaluative judgment, but I proceed on the basis that it is.
82. It is important in this case, because as I have already said Mr Davis-White seeks to rely not merely on the findings within the judgment as to who did what, when and with what knowledge and what consequences, but also the findings by the judge that the defendant acted fraudulently or dishonestly.
83. In the end, I have come to the conclusion that there is no basis for excluding as inadmissible evaluative judgments any more than there is a basis for excluding findings of primary or secondary fact, and this is so whether one looks at the implied exception as it has been so far called or the express exception contained in Rule 3.2 of the 1987 rules.
84. The protection for the defendant is exactly the same in relation to evaluative judgments as it is in relation to findings of fact, primary or secondary.
85. That being so, it seems to me that such material would be admissible under the express exception as it would be under the implied exception, and in the result I conclude that the judgment of Toulson J is admissible as prima facie evidence of fraud on the part of the defendant.
86. My only doubt in reaching this conclusion has been caused by the judgment of Anthony Mann J in Secretary of State v Gee ante. However, having considered the law at some length, I am of the view that the approach adopted in that case by the Secretary of State was erroneous and that Anthony Mann J's concerns as to the consequences referred to by him in paragraph 7 of his judgment were well placed.
87. In my judgment, the Bairstow case is one which depends for its outcome on the fact that:

(a) it was an application under section 8, not section 6;

(b) the implied exception that applies in section 8 cases is narrower than applies in section 6 cases and thus cannot apply to judgments in other cases between different parties; and

(c) the express exception that applies to section 6 cases by reason of Rule 3.2 of the 1987 rules does not apply to section 8 cases.

88. I am happy to reach the view that I have reached. It is hard to think of a process more wasteful of both time and costs than one which requires in effect the rerunning of a lengthy civil trial as a precursor to deciding whether or not the criteria for disqualification have been met in circumstances where, for all that is known at the outset of the disqualification process, most and perhaps all of the material contained in the judgment will not be challenged.
89. As I have indicated, no prejudice in my judgment will result to a defendant in such circumstances, for it remains the case that he would be entitled to challenge, before the disqualification court, any of the findings relied upon by the Secretary of State or any evaluative judgment relied upon by the Secretary of State contained in a judgment made in previous proceedings between different parties, providing, that is, that the challenge is advanced on realistic grounds as to which, in my respectful judgment, what Templeman J said in re Armvent Limited [1975] 1 WLR 1679 at 1685 remains good law, that is to say:

"Challenge in this sense means challenge by somebody with knowledge of the facts coming along and saying the inspectors' report is wrong, and being willing to put forward an affidavit and to be cross-examined, and to be judged in the witness-box on the evidence which he puts forward in contradiction of the inspectors' report. I do not mean that everything the inspectors say is deemed to be true and that the person who comes along must challenge and give evidence on oath effectively destroying everything; but he must challenge the material parts of the report. But for myself I would go wider than that. It seems to me even if the report of the inspectors is challenged nevertheless it ought to be treated as prima facie evidence and that it ought to be left to a judge in any case having read the report and having seen the witnesses to make up his own mind whether it is just and equitable to wind up the company."

90. It seems to me that that analysis applies with equal force to an application brought under section 6 where reliance is placed upon a reasoned judgment of a High Court judge in earlier proceedings.
91. In the result, I rule that the judgment of Toulson J is admissible in these section 6 disqualification proceedings as prima facie evidence of fraud on the part of the defendant. It will be for the defendant to show in the remainder of these proceedings whether he can challenge the findings that the judge made in that case.