Background

Our client, D, was the sole director of a company that had undertaken to build residential apartments at a site based in the North West. The funds for the building project came from individual investor deposits, which were supposed to be held in a designated account solely for the purpose of paying building costs. Unfortunately, the building project collapsed, and a winding-up order was made against the company.

The Secretary of State alleged that D had caused or permitted the company to use ringfenced investor deposits of around £4 million to make loans to third parties for purposes other than those for which the monies had purportedly been released. In response, the Secretary of State issued court proceedings against our client, seeking a disqualification order of 13 years for this alleged conduct.

At the same time, D was also being investigated by the Serious Fraud Office (SFO), which had acquired material that was relevant to the disqualification proceedings against him during its investigation.

How did JMW help?

Because the SFO investigation and the disqualification proceedings were concurrent, JMW sought a 12-month stay of the disqualification proceedings against D. There was a significant overlap between the disqualification proceedings and the SFO’s investigation. It was likely that D would have to volunteer information to the Court in the disqualification proceedings that he was not required to volunteer to the SFO in advance of its decision on whether to prosecute D.

JMW argued that the stay must remain in force until the SFO investigation had concluded and copies of the material seized by the SFO had been returned to D, so he could use it in his defence against the disqualification proceedings.

The outcome

The Secretary of State consented to a 12-month stay of the disqualification proceedings. Following this, the SFO concluded its investigation of D and decided to take no further action against him.

The Secretary of State resumed the disqualification proceedings, but after mounting a robust defence on behalf of D, JMW negotiated a reduced disqualification period from a top bracket of 13 years to 10 years, for which D was grateful.