Petition of Her Majesty's Secretary of State for Business Enterprise and Regulatory Reform for an order to wind up UK Bankruptcy Limited [2010] CSIH 80

Petition for winding-up:- A director of UK Bankruptcy (UK) Ltd, a company subject to winding-up proceedings, lodged answers in defence of the petition, in order to forestall disqualification proceedings against him under the Company Directors Disqualification Act 1986.

In 2009, the director sought to represent the company in the winding-up process, and a hearing took place on whether he was entitled to do so. At that hearing, the Lord Ordinary considered that on the present law, the director had no right to represent the company, but nonetheless, exceptional circumstances could arise in which the court would have to allow a company to be represented by a person who was not a qualified practitioner in order to ensure that there was a fair hearing under article 6 ECHR. The Lord Ordinary considered that the court could perhaps allow this by virtue of its inherent power and reported the case to the Inner House to consider and report on this proposal. The Lord Advocate and Advocate General compeared in proceedings, along with amicus curiae; all were in favour of a proposal to extend rights of audience to directors of companies, subject to certain safeguards.

The Lord Justice-Clerk outlined the current law on rights of audience, concluding that every extension of rights of audience beyond the traditional restrictive rules had to date been effected by way of enactment of new statutory provisions. Further, in outlining the relevant position in England, the court was in agreement with the Lord Ordinary at first instance, who doubted whether the English position could be effectively imported into Scots law, a system which is without the greater powers of case management enjoyed by England, and further without the power to strike out cases which are without a reasonable prospect of success.

Despite the general consensus among the Law Officers and amicus curiae that the present rule should be relaxed, and that subject to certain safeguards, it should be competent for a company to be represented by a lay representative, the Lord Justice-Clerk declined to so exercise the court's inherent power to extend rights of audience in this regard.

Opining that the traditional restrictive rule (found in legislation establishing the Court of Session in 1532) was not desuetude, the court considered that the extension of rights of audience on behalf of companies to unqualified persons would bring risks to the due performance of justice system. The court considered that such a matter of social policy should only be considered by the legislature, in keeping with all other extensions of rights of audience hitherto. Moreover, the court noted the negative impact of party litigants on the efficacy of court proceedings in the last decade and further considered that an extension in respect of companies, would inevitably lead to wider questions of rights of audience for other unqualified representatives e.g. trustees and commercial partners.

Case remitted back to the Lord Ordinary, Outer House, with a direction to decline the director as a representative of the company in the proceedings.