9 March 2000
Barings plc and others; Secretary of State for Trade and Industry v Baker and others (No 4)
Court of Appeal (Lord Justice Morritt, Lord Justice Waller and Lord Justice Mummery) 25 February 2000
THE STANDARD of competence to be shown by a person as a company director was a question of law on which evidence of an expert could only exceptionally be admissible.
The Court of Appeal dismissed the appeal of Ronald Allwyn Baker against an order under section 6 of the Company Directors Disqualification Act 1986 that he was unfit to be concerned in the management of a company.
In 1995 the Barings Group collapsed under the weight of the loss of pounds 827m incurred through the unauthorised activities of Nick Leeson, the assistant director and general manager of Barings Futures (Singapore) Pte Ltd (BFS). In consequence, in February 1995, administration orders were made in England in respect of four companies in the group, and BFS was placed in interim judicial management under the laws of Singapore.
The Secretary of State instituted proceedings under section 6 of the Company Directors Disqualification Act 1986, seeking disqualification orders against ten respondents, including the appellant, who were all directors of one or more of the companies in the group. He did not question the honesty or integrity of any of the respondents. Orders were made against five of the respondents under the Carecraft procedure, against two more without opposition, and against the remaining three, including the appellant, after a hearing.
The order made against the appellant was for six years, and he appealed, contending, inter alia, that the Secretary of State was unable to discharge the onus on him to demonstrate that the appellant was unfit to be concerned in the management of a company if he did not adduce expert evidence.
Mr Baker appeared in person; Elizabeth Gloster QC, Malcolm Davis- White and Edmund Nourse (Treasury Solicitor) for the Secretary of State.
Lord Justice Morritt said that the judge had made a number of observations on the proper construction and application of the 1986 Act which should be emphasised. When deciding whether to make a disqualification order under section 6 the court had to consider the question of unfitness by reference to the conduct relied on by the Secretary of State, and to decide whether, viewed cumulatively and taking into account any extenuating circumstances, it had fallen below the standards of competence appropriate for persons fit to be directors of companies. …