Tuesday Law Report: Proceedings were not an abuse of process

9 June 1988 Re Barings plc; Secretary of State for Trade and Industry v Baker and others Chancery Division (Mr Justice Jonathan Parker) 5 June 1998

DISQUALIFICATION proceedings under section 6 of the Company Directors Disqualification Act 1986 would not be stayed as abuse of process on the basis that disciplinary proceedings had previously been taken against the respondent by the Securities and Futures Authority.

An application by Ronald Allwyn Baker for a stay of proceedings brought against him under section 6 of the Company Directors Disqualification Act 1986 was refused.

On 21 February 1997 the Secretary of State for Trade and Industry issued proceedings against 10 former directors of companies in the Barings Group, including Mr Baker, seeking disqualification orders under section 6 of the 1986 Act. The proceedings arose out of the collapse of the Barings Group in 1995.

Mr Baker had been appointed a director of Baring Brothers & Co Ltd in April 1992, and had been registered as a director by the Securities and Futures Authority ("SFA"). In July 1995 the SFA suspended Mr Baker's registration, and in March 1996 instituted proceedings against him before the SFA Disciplinary Tribunal.

At an early stage of the disqualification hearing, an application was made on behalf of Mr Baker for a stay of the proceedings against him, on the ground that to prosecute those proceedings would infringe the principle of double jeopardy, since he had already successfully resisted the proceedings brought by the SFA in which the same, or substantially the same, charges had been made against him.

Charles Hollander and Jasbir Dhillon (Fox Williams) for Mr Baker; Elizabeth Gloster QC, Malcolm Davis-White and Edmund Nourse (Treasury Solicitor) for the Secretary of State.

Mr Justice Jonathan Parker said that it was clear from Hunter v Chief Constable of the West Midlands Police [1982] AC 529 that the court's inherent jurisdiction to prevent abuse of process in civil proceedings extended to cases where, notwithstanding that the doctrines of res judicata and issue estoppel were inapplicable, the circumstances were such that the issue or prosecution of proceedings would be vexatious or oppressive as amounting to an attempt to relitigate a case which had already in substance been disposed of in earlier proceedings.

It was not a prerequisite for the application of that "collateral attack" principle that the decision attacked should have been one of a court of competent jurisdiction.

That was not to say, however, that the status of the previous decision, and its relationship (if any) with the subsequent proceedings, were not important factors in deciding whether the collateral attack principle applied in a particular case.

In considering whether the principle applied in the particular circumstances of the present case, the submission made on Mr Baker's behalf, that in substance the SFA was the Secretary of State in another guise with the consequence that in commencing disqualification proceedings the Secretary of State could be said to be taking a second bite at the cherry, must be rejected.

The SFA was a company limited by guarantee, and its disciplinary jurisdiction over its members derived from its rules: it was founded in contract, not in statute, and in that respect differed from the court's jurisdiction under the 1986 Act. Moreover, withdrawal of registration by the SFA only affected an individual's ability to work for companies registered with the SFA and operating in the financial services sector, whereas a disqualification order under the 1986 Act prevented an individual from being concerned in the management of any company during the period of disqualification.

To hold that the Secretary of State was, in effect, bound by the decisions of the SFA Tribunals would be to sanction the imposition of a restriction on her powers and duties under the 1986 Act which would be inconsistent both with the express terms and the underlying purpose of the Act.