The Secretary of State for Business, Energy And Industrial Strategy v Lummis & Anor

The Secretary of State for Business, Energy And Industrial Strategy v Lummis & Anor

The Defendants, as directors of an insolvent company, caused the company to enter into transactions for their own benefit, including the transfer of assets and repayment of directors' loans, without making provision for the company's contingent liabilities to HMRC. They did so with knowledge of the risk that the tax schemes might fail and that HMRC would be a significant creditor. Their conduct fell below the standards of probity and competence expected of company directors and breached their duty to creditors. Disqualification is therefore mandatory.

Parties
Claimant: The Secretary of State for Business, Energy and Industrial Strategy; Defendant: Lee Edward Lummis; Defendant: Craig Stanley Lummis
Jurisdiction
England and Wales
Judgment Date
04 June 2021
Procedural Posture
Director Disqualification Proceedings / Judgment After Trial
Outcome
disqualification orders to be made against both Defendants; length of disqualification to be determined after further submissions
Legal Topics
Director Disqualification, Creditor Interests, Contingent Liabilities, Breach of Fiduciary Duty
Insolvency Law Company Law Director Disqualification Creditor Interests Contingent Liabilities Breach of Fiduciary Duty

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 12 Party arguments 2 Amounts and remedies 7
Sign in to unlock

Parties

The Secretary of State for Business, Energy and Industrial Strategy

Claimant

Lee Edward Lummis

Defendant

Craig Stanley Lummis

Defendant

Procedural Posture

Director Disqualification Proceedings / Judgment After Trial

Legal Issues

  1. 1 Whether the Defendants' conduct as directors of an insolvent company made them unfit to be concerned in the management of a company under section 6 of the Company Directors Disqualification Act 1986
  2. 2 Whether the Defendants breached their duty to have proper regard for the interests of the company's creditors, including HMRC, when causing the company to enter into certain transactions

Ratio Decidendi

The Defendants, as directors of an insolvent company, caused the company to enter into transactions for their own benefit, including the transfer of assets and repayment of directors' loans, without making provision for the company's contingent liabilities to HMRC. They did so with knowledge of the risk that the tax schemes might fail and that HMRC would be a significant creditor. Their conduct fell below the standards of probity and competence expected of company directors and breached their duty to creditors. Disqualification is therefore mandatory.

Court Disposition

disqualification orders to be made against both Defendants; length of disqualification to be determined after further submissions

Orders

  • Disqualification orders against Lee Edward Lummis and Craig Stanley Lummis under section 6 of the Company Directors Disqualification Act 1986; length of disqualification to be determined at a subsequent hearing