The High Court has disqualified Patrick Rogers and Paul Rogers from company management for five years after finding serious failures in their conduct as directors of Barnoe Limited. The order takes effect from 21 December 2005, with one month allowed for them to end any company involvement inconsistent with it.
Mr Justice O’Leary ruled on an application by the Director of Corporate Enforcement under section 160 of the Companies Act 1990. An alternative application sought restriction orders under section 150. The court held that restriction would provide inadequate protection in the circumstances and ordered disqualification.
The court found that the respondents failed to keep proper company books, operated a company bank account that was not recorded in those books, and did not disclose that account to the company’s auditor. It also found that company funds had been appropriated for personal use, that required revenue returns were not filed, and that the company was caused to trade while insolvent for a considerable period.
The Director had also alleged that two sets of financial statements were maintained to give a false impression of the company’s position. The judge was satisfied there was some evidence of two sets of books, but said the figures relied on were not accurate and did not include that allegation in the findings supporting the decision. The court described the undisclosed account and appropriation of funds, together with the failure to tell the auditor, as evidence of a lack of commercial probity.
The respondents challenged use of the company records, arguing that evidence gathered through statutory powers for a possible criminal investigation should not be used in a civil disqualification case. The court relied on its decision in related proceedings that the authorised officer had been properly appointed and could retain and use the records. It said only company records were being used in this application and that the case did not expose the company itself to an adverse finding.
The respondents also argued that proceeding could undermine their right against self-incrimination while criminal charges remained possible. The judge rejected that submission, noting they had chosen not to give evidence and had thereby exercised their right to silence in the civil case. The court said the Director retained the burden of proof and assessed the allegations individually.
The disqualification was made to protect the public from future misuse of company law structures, the judge said. Costs were ordered to follow the event. The judgment does not state the amount of costs.