Directors faced by a disqualification Claim that has been issued should ensure they have rapid and accurate advice on their position immediately. Let our leading team help you today.
One of the most astute appointments I have ever made
A company director we successfully defended against disqualification
When deciding whether to defend the legal claim up to trial, it is vital to fully understand the costs implications should you lose and get disqualified by the court. go all the way to court.
Liability for legal costs
As with all litigated claims, the party who is successful in the litigated proceedings also benefits from an order that their opponent pay their legal costs.
Therefore a director, whilst paying his solicitor’s (and barrister’s) own legal costs through to trial, will also have to pay similar costs again to the Secretary of State if a disqualification order is made.
Variation to costs order
Sometimes different costs orders will be made during the course of the claim – often for standalone applications which might have been made. Litigation proceedings are not straightforward and often there are applications and orders made for varying reasons throughout the proceedings, which may alter the end result on costs.
For example,
- where the Secretary of State seeks to amend the disqualification claim then the litigation procedure provides that the costs of the amendment needs to be borne by the amending party (which in that scenario would be the Secretary of State).
- where costs orders may be made so as to affect the costs risk at trial could include failed applications for summary judgment or strike out and where requests for information (by the director) are contested without success.
These are commonly referred to as interim proceedings and all can lead to costs orders which conflict with the costs order made at trial.
Changes in disqualification period
The Secretary of State does not seek a specific disqualification period as part of the disqualification claim. The period of disqualification is a matter for the court’s discretion upon hearing the evidence.
However, as part of the pre-issue proceedings the Secretary of State will communicate under cover of their section 16 letter the disqualification period sought and this will normally be insisted on during negotiations (including those occurring whilst the disqualification proceedings are ongoing).
On this basis there can be a protection available on costs to offer a lower period of disqualification. If this offer was rejected but the the period awarded by the court at trial was lower than that which was offered – the court may agree that the Secretary of State should pay the consequential legal costs incurred in the proceedings after the offer was rejected.
Alternatively, where a lower period is accepted then the negotiations on costs will have to bear in mind the fact that if this lower period had been offered pre-issue, proceedings may not have been necessary.
However, it remains the rule that a disqualification undertaking offered during litigated disqualification proceedings will generally result in the Director paying the Secretary of State’s legal costs to date.
At Francis Wilks & Jones we have considerable experience of director disqualification proceedings and have been successfully advising directors since 2002. Let us help you too.
I was greatly impressed with the commercial, tactical and technical ability of the team at FWJ. They quickly got to grips with a complex set of facts and, through their hard work, had the proceedings against me dropped and a significant proportion of my legal fees repaid. I couldn’t recommend them highly enough
A director we defended against a disqualification claim and other claims brought by a liquidator
